In many ways, the U.S. energy system is a modern marvel. Over the past century, electricity has become universal, reliable and relatively affordable, providing households of every kind with equal opportunity to benefit from this basic service. But over the last few decades, policymakers have sought to modernize the regulatory framework that led to these achievements. Many of these policy efforts have succeeded in achieving their stated purpose, but others have failed to generate anticipated gains. Common across all reform efforts, though, has been a distinct lack of focus on how new policies or new business models or new technologies in the energy space might impact the most vulnerable among us. In particular, there has been little regard at all for whether reforms might actually address the compelling needs of low-income consumers, a user group that has long struggled to afford this utility service. The following provides a brief accounting.The Public Utilities Regulatory Policies Act of 1978 (PURPA) was one of the earliest attempts to reform the energy sector. Among many other things, it sought to make the energy market more competitive by eliminating or otherwise reforming the policies that were long used to protect energy monopolies. Similar reforms were sought in the 1990s via the Energy Policy Act of 1992, which provided the basis for pursuing “open access” of certain components of electricity service, yet another effort to introduce competition into a sector that had long been dominated by monopoly providers.
Around the same time, individual states began to deregulate their energy markets, again in the hope of fostering competition in the provision of electricity services and driving down rates for customers. California, for example, deregulated its energy sector in a way that enabled consumers to choose their electricity provider and removed other regulatory protections that manybelieved limited consumers’ exposure to better prices.
More recent reforms have emphasized energy efficiency and fuel diversification by encouraging greater use of renewable energy. To these ends, more than half the states in the nation have adopted Renewable Portfolio Standards (RPS), policies that mandate electric companies to use a certain share of renewable energy resources like wind and solar when producing electricity. States have encouraged greater use of “smart” technologies to increase energy efficiency, bolstering reliability, and provide consumers with more control over how much energy they consume.
Together, these many reform efforts constitute an impressive attempt by policymakers to continue improving electricity throughout the country. Unfortunately, the benefits of these various efforts have been minimal for low-income consumers. Indeed, these reforms oftentimes have had only negative impacts on these customers. For example, monthly electric rates have grown considerably in recent years, but wages have stagnated and job opportunities have grown harder to come by, forcing low-income consumers in particular to allocate larger and larger percentages of their income – be it from a paycheck, unemployment, or some other government program – toward their utility bill. In addition, new services and programs – like “smart” energy and distributed energy systems – that promise cost savings typically come with large price tags, putting them far beyond the reach of many consumers, especially those with low or fixed incomes.
This is a shame because low-income households, which already struggle to make ends meet, should not be burdened with having to choose between keeping the lights on or keeping food on the table. As policymakers contemplate further reforms in this sector, they should focus more on how any new policies or programs might impact lower income constituents. Otherwise, there is a real risk that electricity – that basic, fundamental service that we all take for granted – might become yet another thing beyond the reach of the less well-off. In a country already plagued by significant economic and social divides, we should strive to do better when it comes to something as elemental as electricity.