By Steve Haner

A national industry group that advocates for home energy efficiency contractors has produced another report on how energy costs squeeze the poor the hardest, with Richmond one of its examples. The data was then used as an excuse to call for (you guessed it) the return of an energy carbon tax which paid those same contractors to do energy home improvements.

The American Council for an Energy Efficient Economy (ACEEE) is correct that the lowest income households struggle with basics like electricity, natural gas and other fuels, along with food, rent and clothing. It sucks to be poor. My big concern with the new report (full text here) is it doesn’t seem to account for the various government and private programs that provide hard cash to help with these bills, including the nascent Percentage of Income Payment Plan.  

Richmond has a slightly deeper problem than the nation as a whole. Nationally 15% of low-income households face an “energy burden” because they spend more than 6% of their income on it, but in Richmond that exceeds 17%. The big disparity is among renters (13% nationally but 16% in Richmond.)

The pitch of RGGI as the solution came Thursday morning in this from Virginia Mercury, which outlined the problem and then spent the final three paragraphs on the suspended Regional Greenhouse Gas Initiative, or RGGI. Mercury did a similar story back in April, based on a state report about energy assistance programs, and it also ended with a hard pitch for RGGI dollars to return. From the April report:

‘Since the first RGGI auction that Virginia participated in back in 2021, RGGI has provided nearly $400M for low-income energy-efficient housing,’ said Chelsea Harnish, executive director of the Energy Efficiency Council, a group that supports RGGI involvement and backed a bill this session that would increase transparency in energy efficiency program determinations. ‘There are no alternative funding options available at either the state or federal level for these programs in terms of program design nor funding levels.’

That final quote in the April article is false. It ignores how Virginia has created a major funding stream feeding this “industry,” forcing ratepayers of both Dominion Energy Virginia and Appalachian Power Company to pay an extra amount on every monthly bill to subsidize utility-managed energy efficiency programs. The link in the article goes to a 2024 state law that will likely increase the reliance on Other People’s Money for these questionable expenditures. So, Mercury was perfectly aware of them. It just left them out.

Mercury also ignores where the RGGI dollars come from: ratepayers. To the extent advocates are correct that energy costs are especially burdensome on the poor, reinstating RGGI will greatly increase those costs. When it was suspended by the Air Pollution Control Board, RGGI was costing Dominion customers more than $4 for every 1,000 kilowatt hours of usage. 

Since then the underlying cost of the RGGI carbon allowances, which were driving the tax amount on Dominion bills, has exploded. These are facts the Virginia Mercury, with its one-sided coverage, has ignored. What had been $3-$5 on most monthly bills would probably now be $8-10 per month if reinstated, making it the largest of the bill adders for that utility.

Poor folks with their poorly insulated housing and older appliances typically use way more electricity per month than the rich and middle class. That report from the ACEEE set the median monthly bill in Richmond at $150, meaning half of households pay more. Their RGGI taxes would be among the highest. That’s another fact the news hawks at Mercury omit.

The Mercury reports that another hearing on the pending lawsuit to reinstate RGGI is set for Monday.  The estimated cost to consumers of a decision to stick them with this tax again, based on the new auction prices, should be Exhibit A. Yes, any low-income customer who ends up getting home insulation or new Energy Star appliances might have benefits exceeding the tax, but nobody claims more than a small percentage of folks will benefit directly. The contractors will, of course.  

Exhibit B should be that the cities on the ACEEE list with the highest percentages of “energy burden” are Baltimore (26%), Boston (23%), New York (20%) and Rochester (21%). All are in RGGI member states, and their utilities are adding on the carbon tax costs. 

ACEEE and Virginia Mercury could be useful allies in efforts to keep energy costs reasonable by resisting the elements of the energy transition now underway which will add to that poor family’s “energy burden.” Instead, they will double down on advocacy for government-managed programs funded by taxpayers, even when the taxes involved hit hardest the people they claim to want to help.