ACEEE - Experts & Thought Leaders

The 2024 election underscored a household priority: the cost of living. High inflation increased prices by 21% between January 2021 and December 2024, and housing costs—including mortgage or rent, maintenance, and utilities—remain the largest expense, consuming 33% of a typical household budget. Addressing these high costs must be a top priority for the new administration and state and local governments. ACEEE is focused on solutions that reduce the cost of owning, renting, and maintaining a comfortable home while ensuring that these efforts protect the environment for future generations. energy efficiency and managing electric demand Energy efficiency is a proven tool for lowering utility bills and making homes more affordable. For over 40 years, ACEEE has led efforts to reduce energy costs through efficiency measures. ACEEE's newly launched Pathways to Zero initiative, heading a coalition to help states adopt stronger residential energy codes, exemplifies this work. In partnership with six leading states, this program aims to develop advanced building codes that will result in the construction of homes that use energy efficiency to dramatically reduce energy use, allowing remaining energy needs to be powered entirely by renewable sources, such as rooftop solar, effectively eliminating energy bills for new homes. R2E2 These programs help communities deliver impactful upgrades such as weatherization and modern equipment Meanwhile, initiatives like Residential Retrofits for Energy Equity (R2E2) target low- and moderate-income homes, which are often older and inefficient and thus impose high energy burdens on residents. These programs help communities deliver impactful upgrades such as weatherization and modern equipment, ensuring that the most vulnerable households benefit from energy efficiency and electrification. Addressing the costs of environmental and health damage The costs of environmental damage from burning fossil fuels are significant. Recent disasters such as the Los Angeles wildfires-the costliest in history were exacerbated by rising temperatures and drought. Meanwhile, 131 million Americans—or four in ten—live in areas with unhealthy air pollution levels.  According to the International Monetary Fund, in 2022 the U.S. government spent $754 billion addressing the health and environmental consequences linked to fossil fuels. Efficient buildings powered by clean electricity are part of the solution. Promoting location efficiency through smart growth zoning Efficient land use and zoning policies reduce energy consumption and foster sustainable, livable communities. By adopting location-efficient zoning codes, cities can encourage compact, mixed-use development that supports public transit, walking, and biking. For instance, Lansing, Michigan, modified its zoning code in 2021 to allow multifamily and mixed-use developments in all commercial areas by right. Also in 2021, Raleigh eliminated requirements for off-street parking in new buildings. Both policies reduce urban sprawl and encourage walkable neighborhoods.  Reduce costs and bills Smart growth allows for the construction of plentiful new housing, built to modern building codes Implementing such zoning policies, however, does more than reduce transportation costs and create more livable, connected, and resilient urban environments. By reducing barriers to construction, smart growth allows for the construction of plentiful new housing, built to modern building codes. This drives down rents across neighborhoods and reduces utility bills for the people who live in the new buildings.   2025 action Plan for Energy efficiency and affordability Federal building efficiency standards and funding are crucial to reducing housing costs for Americans and developing advanced technologies. They are under attack. In the coming year, ACEEE will defend federal efficiency policies and incentives by collaborating with manufacturers, builders, contractors, and advocates, including to preserve key programs from the Inflation Reduction Act and the 2021 bipartisan infrastructure law such as the tax credit for new homes and the Home Energy Rebates program. building energy codes ACEEE will work to reduce the total costs of appliances and equipment while advocating for zoning reforms ACEEE also plans to continue working with local governments and community-based organizations to reduce energy waste in single-family and multifamily housing in disinvested communities. By doing so, ACEEE aims to reduce inequitable energy burdens. ACEEE will support states in developing and implementing up-to-date building energy codes. These efforts will promote clean and efficient new buildings, contributing to long-term energy savings and sustainability. ACEEE will work to reduce the total costs of appliances and equipment while advocating for zoning reforms that increase the availability of efficient, conveniently located homes.  Building a sustainable and affordable future The path forward is clear: ACEEE can reduce financial stress for American households while tackling the urgent challenges of climate change. Investing in energy efficiency and reforming outdated zoning policies can improve lives, protect the environment, and create a more resilient and affordable housing market for 2025 and beyond.

The 887-page Project 2025 policy agenda for a conservative administration swings an axe at federal clean energy programs. The Heritage Foundation-led plan would repeal the Inflation Reduction Act and the Infrastructure Investment and Jobs Act and eliminate many Department of Energy programs. That includes efficiency tax credits, home energy rebates, industrial demonstrations, appliance standards, the entire Office of Energy Efficiency and Renewable Energy, ARPA-E research, loans for clean energy projects, and much more.  Project 2025 To pick one important example, while Project 2025 does not mention “weatherization” once, it says the whole “Office of State and Community Energy Programs . . . should be eliminated or reformed” (page 369). That office includes the Weatherization Assistance Program (WAP). The proposal echoes budgets President Trump proposed while in office, which would have also zeroed out WAP. Ending federal weatherization assistance would stop tens of thousands of low-income households annually from getting home improvements that lower their bills year after year while making homes safer and healthier. It would be a painful mistake. A proven program for reducing utility bills It funds and trains a network of CAPs around the country to implement the weatherization work Created in 1976 by a law signed by President Gerald Fold, WAP has improved the energy efficiency of more than 7 million homes of low-income families. It funds and trains a network of community action programs (CAPs) around the country to implement the weatherization work, either through contractors or their direct employees.  Reducing winter heating costs After an energy assessor identifies problems in a home, weatherization workers make needed improvements, such as sealing air leaks, adding insulation, and replacing old HVAC equipment. The improvements reduce winter heating costs (for gas, electricity, propane, or oil) and summer cooling costs (for electricity). Households that have been weatherized with the program's assistance save an average of $372 every year, according to a national laboratory evaluation. Safety and health Well-sealed home can maintain safe temperatures for days longer if heating or air-conditioning is lost Weatherization also protects safety and health. It helps residents keep their homes from getting dangerously cold or hot, and it reduces indoor allergens and irritants, including dust and mold. This reduces asthma rates, ER visits, medical costs, and missed work and school days. And with power outages from extreme weather becoming more frequent, a well-insulated, well-sealed home can maintain safe temperatures for days longer if heating or air-conditioning is lost, saving lives.  Basic home repairs In addition, many homes receive basic repairs, like mold remediation or fixes to leaking roofs, that are needed before energy work can begin (if the “pre-weatherization” is extensive, CAPs use other funds). More than 68,000 homes were weatherized through the program with federal funds in 2022, according to data from the National Association for State Community Services Programs. Program funding Terminating the central program in the Department of Energy would likely shut down the entire network The number of homes weatherized has varied significantly over the years based on funding; the 2021 Infrastructure Investment and Jobs Act provided a significant boost set to last across five years. Funding for the program comes from a combination of the Department of Energy, the federal Low Income Home Energy Assistance Program, states, and utilities. Terminating the central program in the Department of Energy would likely shut down the entire network. Weatherization improves lives For the families helped by WAP, the benefits are meaningful. Bennie Tillman Jr., of Athens, Georgia, said his house was drafty in the winter and expensive to cool in the summer. However, after contractors paid for by the weatherization program, added insulation, and sealed gaps, Tillman’s monthly bills in the hottest and coldest months were reduced by roughly $200. Or consider Nikia Pickett of Baltimore, whose young son experienced frequent asthma attacks. Weatherization helped significantly. “Not having the exposure to the outside elements and the things that trigger his asthma—those things significantly decreased his asthma attacks,” said Pickett. Weatherization has been attacked before Both chambers of Congress advanced appropriations bills largely maintaining or increasing funding President Trump proposed four budgets that would have eliminated funding for WAP. However, both chambers of Congress advanced appropriations bills largely maintaining or increasing funding for the program, and over the four years increased the program’s funding by 27% in real dollars. Trump administration delays in the implementation of weatherization funding received bipartisan rebukes. Eliminating WAP would require congressional action. But Trump has previously attempted to impound funds to withhold dollars allocated by Congress in several areas, and some powerful conservative voices are calling for him to do so again more widely if he is elected in November. More weatherization funding, not less, is needed The next presidential administration and Congress should increase funding for weatherization, not cut or shrink a program with a strong record of reducing costs for American families. WAP’s budget is small compared to the task at hand. About 30% of households meet the program's income requirements; many have high energy bills, drafty homes with poor insulation and old heating and cooling equipment, or members with asthma. It is easy to casually suggest eliminating a federal program. For a family that sees its energy bill reduced by hundreds of dollars year after year because of weatherization or has a child with asthma who can breathe well again, it is no small matter.

Regulators in Massachusetts recently approved a utility’s plan to offer households with heat pumps a lower electric rate during the winter and to offer a further discounted rate for low-income households. This approach from Unitil, which serves a small portion of the commonwealth, should be improved upon and replicated across the country as regulators consider similar proposals from other utilities.   principles and goals  To maximize benefits for energy-burdened households and the entire electric system, utilities, and their regulators should consider several broad principles and goals as they consider new rates to support heat pumps:  Maintain a price signal for efficient heating, especially during times of peak demand;   Limit participation to households with heat pumps;  Reduce energy burdens for low-income households; and  Get efficient heat pumps for low-income households.  Opportunities to improve differing rate proposals  With typical electric rates, households that use heat pumps for winter heating are often being overcharged The actual cost of distributing electricity to households is usually lower in the winter, in part because utilities build their systems to meet the highest electric demands, which are most often on hot summer days. With typical electric rates, households that use heat pumps for winter heating are often being overcharged relative to their costs to the electric system.  Lower volumetric distribution rate Unitil’s plan, approved late last month, will offer households with heat pumps a significantly lower volumetric distribution rate, the distribution cost per amount of electricity used during the winter months. The company will offset some of that rate reduction with a slightly higher fixed charge each month, but a household using a heat pump for space heating will still save a lot of money, potentially hundreds of dollars a year. Unitil will also offer participating low-income households a further 40% discount on that rate.  Electric space heating rate Under National Grid’s proposal, low-income households wouldn’t be able to apply for a discount  National Grid, another Massachusetts utility, took a different approach for its proposed optional rate, eliminating the volumetric distribution rate in favor of a fixed charge for any participating household, regardless of the heating source. Under National Grid’s proposal, low-income households wouldn’t be able to apply a discount if they chose that rate option. In Minnesota, Xcel also has proposed an electric space heating rate. Like Unitil, Xcel is proposing a lower volumetric rate in the winter, but it would vary the rate based on the time of day and automatically apply a discount for low-income households.  new rates lines How each proposal for new rates lines up with the four principles above has significantly influenced support or opposition: nobody commented in opposition to Xcel’s proposal in Minnesota, Unitil’s proposal received support from the Massachusetts Department of Energy Resources, but National Grid’s proposal has been opposed by many stakeholders in the Commonwealth. Evaluating the three proposals based on the four principles listed above, it becomes clear why the Unitil and Xcel plans were better received than National Grid’s plan:   Maintain a price signal for efficient heating, especially during times of peak demand. While there is usually plenty of room for new electric demand in the winter, that doesn’t mean we should incentivize inefficient use and waste. Unitil’s proposal would reduce the volumetric rate without eliminating it, helping maintain a price signal for efficient electricity consumption. Xcel goes even further in the right direction, adjusting rates upward during times of high electricity demand and downward when there’s less electricity use (known as a “time of use” rate), providing an incentive for shifting use away from the most expensive hours of the day. National Grid’s proposal to charge a flat distribution fee regardless of consumption does not maintain that price signal.  Limit participation to households with heat pumps. Not all electric heating is efficient—heat pumps are, but electric resistance is not. Utilities should limit participation in electric heating rates to households that have a heat pump. This is where Unitil’s proposal is the best of the lot. Xcel’s would enable participation for any electric space heating, not just heat pumps, which could incentivize inefficient electric resistance heating. National Grid’s proposal also moves in the wrong direction, enabling participation by any household regardless of heating fuel, a recipe for simply subsidizing inefficient electric use.  Reduce energy burdens for low-income households. Too many households are struggling to afford their energy bills, often with disastrous consequences. Any rate design proposal should lower energy burdens for low-income households. Unfortunately, National Grid wouldn’t allow any low-income household participating in its proposed optional rate to also receive a discount for energy assistance. This contributed to vigorous stakeholder opposition to its proposal. Again, Unitil’s proposal was better, allowing low-income households to participate in the heat pump rate and receive the 40% discount on top of that. Xcel’s proposal has one even better feature: applying the discount for energy assistance automatically for all eligible low-income households, to keep energy burdens below 4%. Get efficient heat pumps for low-income households. Admittedly this last principle isn’t rate design, but it is equally important and intertwined. If only wealthier households are adding heat pumps, then a reduced winter electric rate for households with heat pumps will be regressive, with lower-income households paying higher rates. So any heat pump rate has to be paired with a robust program to fund the installation of efficient heat pumps for low-income households. Those low-income households with heat pumps should automatically be given the heat pump rate and energy assistance to ensure their overall energy burden doesn’t increase.   efficient and affordable electric heating The recent proposals in Massachusetts and Minnesota are among the earliest for new optional rates to account for the differing costs and benefits of electric heating, but they won’t be the last. The Colorado legislature has mandated a proposal from utilities to encourage heat pump adoption in coming years, and more states are expected to do the same. The early proposals offer important lessons for other utilities and state regulators on the right and wrong, ways to encourage efficient and affordable electric heating.