North Carolina takes crucial steps toward addressing energy affordability


Doors with taped-up, quarter-inch gaps spill precious heat from an antiquated propane furnace. 

A leaky roof provides the only ventilation for dirty, smelly kerosene heaters used in place of a broken oil furnace. 

A constantly dripping refrigerator drains power next to a half-broken oven, used to cook meals for an entire mountain holler.

These are the stories of energy poverty in North Carolina, as told by low-income families to the community groups who help them weatherize their homes and replace appliances.

“The winter before you showed up, I almost froze to death,” one self-described “old lady in distress” told Four Square Community Action in a letter afterward.

Hundreds of thousands of families in the state aren’t so lucky. Drafty homes and old, inefficient appliances force some of the state’s poorest residents to spend nearly as much as the wealthiest on heating, cooling and electricity. Their woes were only magnified in the pandemic.

Now, in a pair of exhaustive rulings, North Carolina utility regulators have grown the pot of money that can give these households immediate help. Even more significantly, advocates say, they’ve taken the first steps toward ensuring every poor family in the state can take more control over their energy costs.

While agreeing to raise electric rates for Duke Energy customers across the state, the panel accepted a side agreement between the company and a coalition of nonprofits, forcing the company to contribute $6 million to home weatherization and setting the stage for more systemic change. 

The decisions don’t forestall utility service shut-offs or erase pandemic-induced debts from unpaid Duke bills, and critics say they won’t outweigh the fact that rates are still going up for everyone.

But proponents are optimistic that the orders will mean that long-sought reforms, such as income-based electricity rates and financing efficiency upgrades on utility bills, could finally become reality for Duke customers.

“There’s a lot to be excited about,” said David Neal, the senior attorney at the Southern Environmental Law Center who helped negotiate the settlement. “Some of these pieces are just the beginning of what could become really big deals down the road.”

A disproportionate energy burden

Decades of redlining and other discriminatory housing policies mean people of color and low-income people — especially renters — are more likely to rely on old, inefficient appliances and live in homes built before the advent of energy conservation codes. These households end up paying a disproportionately large share of their income on energy costs, sometimes having to choose between a meal or keeping the lights on.

According to the American Council for an Energy-Efficient Economy, families making twice the federal poverty level or less spend an average of 8% on heating, cooling and electricity — more than three times the energy burden of higher wage-earners. The U.S. Department of Health and Human Services classifies fractions of 6% and higher as “unaffordable.”

The problem is especially acute in the South, where electric rates are the lowest in the nation but utility bills are the highest. One in three southerners struggles to pay for heating, cooling and powering their homes, per the Southeast Energy Efficiency Alliance. Such energy insecurity is partly due to the air conditioning necessary to get through the sweltering summer. But it’s also because the region is relatively poor and home to a large percentage of people of color.

In North Carolina, the most significant energy burden is in the eastern part of the state, served mostly by rural co-ops rather than Duke. According to the North Carolina Housing Coalition, the worst case is in Hyde County — made up largely of rural inland east of the Outer Banks — where the poorest renters spend an eye-popping 42% of their annual income on energy costs.

But the coalition’s data also show high energy burdens in Duke’s territory, which covers all but one of the state’s largest cities and most of the heavily populated Piedmont region. In the three most populous counties — Guilford, Mecklenburg, and Wake — the poorest families spend a tenth of their wages to heat, cool, and power their homes.

Each year, North Carolina receives about $100 million in federal funds to ease the energy burden for its poorest residents. Last year, when the pandemic caused massive layoffs and children and their caretakers to be homebound, exacerbating energy insecurity, Congress gave the state an extra injection of $25 million. More funding boosts are expected under the pandemic relief measure adopted in March.

But the vast bulk of this money is earmarked for paying heating bills or preventing disconnections, solving only short-term problems. Only 15% (or up to a quarter if the state gets a special waiver) can be used for weatherization assistance that reduces energy costs in the long term. What’s more, this small pool of money can’t be used on homes that have been weatherized in the past 15 years, or to make major health and safety repairs. 

‘We love the word leverage’

That, say many advocates, is why Duke’s Helping Home Fund is so critical. Since 2015, the program has expanded the total amount of weatherization and HVAC replacement funds available to low-income Tar Heels by about 20%, and it’s helped to fill in gaps.

The North Carolina Community Action Association, the statewide network of the community action agencies established under the War on Poverty, administers the program. It has mastered the art of piecing together as many pots of money as possible, often using the Helping Home Fund to help qualify a family for weatherization assistance.

“At the association, we love the word ‘leverage,’” said Sharon Goodson, the group’s executive director. “We will leverage the heck out of any investment we get, so we can give families everything we possibly can to help them get the necessary energy assistance.”

Duke has contributed $23 million to the fund since its inception, Goodson said, serving some 5,000 customers at or below 200% of the federal poverty level. The $6 million shareholder contribution ordered by regulators amounts to a 26% increase. 

To be sure, advocates acknowledge, wrangling with the utility to extract these funds through settlement agreements every time it seeks a rate increase isn’t ideal. “It would be easier to administer the program over the long term and more successful if the funding streams were constant and in predictable amounts,” said Al Ripley, director of the Consumer, Housing and Energy project at the North Carolina Justice Center.

But the contribution is meaningful because action agencies can use the program to unlock other funds. “It’s just been a great model for how to expand both bill-saving energy efficiency upgrades and things that really improve the comfort and indoor air quality of a lot of those homes,” Neal said. 

As for the amount, he admitted, “it’s not enough to meet the need.” But, he added, “it’s also not the only thing that Duke committed to.”

In the settlement agreement with the North Carolina Sustainable Energy Association and the Southern Environmental Law Center — acting on behalf of the Housing Coalition, the Justice Center, the Natural Resources Defense Council and the Southern Alliance for Clean Energy — Duke agreed to propose systemic changes that could help low-income customers lower their energy costs.

‘More prescriptive than any order’

The commission didn’t just accept the agreement in its two orders, one for Duke Energy Carolinas and the other for Duke Energy Progress. The firsts of this magnitude under the leadership of Commission Chair Charlotte Mitchell, the 200-page decisions include a host of prescriptive directives and timelines that give advocates cause for hope.

In the coming weeks, the company must convene a stakeholder group of housing affordability advocates, clean energy groups, consumer interests and others to begin analyzing data on low-income customers in the state and programs to assist them — including allowing customers to finance efficiency upgrades on their monthly utility bills, minimum bill concepts that don’t disproportionately burden households with relatively little energy use, and rates based on income. 

These measures could be critical the next time Tar Heels face economic and public health crises together. “A well-designed affordable rate for low-income households that includes ways to forgive or affordably pay off past-due amounts,” Neal said, “that’s the place we ought to head, and it would have made the most difference during the pandemic.”

By the midpoint of 2022, the workgroup must present a list of recommendations that have “wide or consensus” support. “In addition to the report identifying stakeholder consensus,” regulators write in their order, “it should also identify programs that were studied and supported by a number of stakeholders but may not have reached full consensus.”

Those terms, combined with a public input period to follow the report’s submission, make it harder for Duke to block popular proposals. The working group must also identify measures that can be enacted unilaterally by the commission, creating more openings for reform. “It is more prescriptive than any order I can ever remember reading,” said Ripley, who’s worked at the Justice Center for nearly two decades. 

But if these changes materialize, says Rory McIlmoil, senior energy analyst with Appalachian Voices, they’ll come too late for the 400,000 Duke Energy households who’re behind on their utility bills now, owing a total of more than $100 million. They won’t help the lowest-income families who, after June 30 of this year, could have their service disconnected for nonpayment. And it doesn’t offset the fact that all customers will soon start paying more for their electricity, increasing energy insecurity. “They are making low-income people, who are already struggling, pay more,” he said.

In this context, the Helping Home Fund contribution is “just pennies on the dollar,” McIlmoil said. “They’re throwing an ounce of water at a big fire.”

Still, for Goodson and her colleagues, every ounce makes a difference. “People write us letters,” she said. “When you hear these stories, it takes you to a whole different place about what our work is really about.”

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