Newly minted Governor Tom Wolf unveiled his budget proposal for his first year in office. The plan includes several notable elements, including a big boost in funding for education.
What caught my eye was a smaller step forward - a $50-million investment in energy efficiency. Specifically, as the Department of Environmental Protection states in a press release, this money “…will provide grants for projects to improve energy efficiency at small businesses, local government units, schools and non-profits, with larger grants awarded for collaborative projects.”
The timing for this investment is propitious, to say the least. The Public Utility Commission (PUC) for the state is in the midst of deliberations regarding the next round of energy efficiency upgrades pursuant to Act 129. Enacted in 2008, this law has completed its first two “phases” and Phase III is next. Pennsylvania businesses and residents statewide have benefited from audits and direct installation of a variety of energy-efficient products thanks to this law, saving energy and reducing pollution to boot. This track record underscores the key role ramping up investments in energy efficiency–including the affordable multifamily housing sector–can play in a smart compliance strategy for meeting EPA’s Clean Power Plan to reduce carbon pollution from power plants.
Now the Governor and PUC can take the state to the next level, making it more competitive on energy-efficiency with many higher ranking states. A new budget for utility energy efficiency programs is now in play, and Phase III will be hammered out over the course of 2015.
And there is good evidence that programs can bear more fruit for residents, especially those who pay a disproportionately large portion of their household budgets on energy. A whopping 46 percent of the many renters in Pennsylvania pay more than 30 percent of their income on rent and utilities. This is something that should concern us all, including homeowners. As Zillow’s chief economist reminds us in a recent interview about increasingly unaffordable rental housing: “[I]t’s a problem where owners can be lulled into a false sense of confidence, thinking, ‘That’s a problem for some other group. Not me.’ It’s a problem for everyone, because today’s renters are tomorrow’s buyers.”
Utility bills are a huge part of the cost of rental housing, including in multifamily structures. That’s a threat to affordability, and a tremendous waste of energy since many of these buildings are old and inefficient. In fact, we recently commissioned a study by respected analysts at Optimal Energy to determine just how much more energy remains to be saved in affordable multifamily homes. I say “remains” because to their credit the PUC and utilities tackled this part of the residential sector in Phase II and consequently programs at the two biggest utilities - PECO and PPL - have already saved nearly 12,000 MegaWatt-hours.
So there’s a lot of opportunity to reduce waste in Pennsylvania’s multifamily buildings, which is why NRDC partners with groups in the state and nationally to promote energy efficiency for all.
As the PUC takes up Phase III, we have several recommendations for improving the regulatory framework which we’ve shared with state officials in Harrisburg (I’ll post a spiffy new fact sheet with more detail soon):
- Continue the government, education, and nonprofit (GEN) carve-out and specific reduction targets for multifamily housing;
- Require utility programs to achieve significant, whole-building savings rather than relying on efficiency programs that only skim the surface of available savings;
- Ensure that electric utilities develop multifamily affordable housing programs with single points of contact for customers regardless of whether the buildings are on commercial or residential rates;
- Require coordination across utility programs, consistent with the Act 129 statute, to make it easier for building owners and tenants to participate;
- Encourage electric utilities to build partnerships with the Pennsylvania Housing Finance Agency (PHFA) and other organizations that are active in multifamily housing; and
- Ensure that cost-effectiveness tests capture all the benefits provided by energy efficiency for multifamily affordable housing.
Pennsylvania’s made substantial progress in boosting the efficiency of buildings since 2008, thanks to actions by utilities driven by forward-thinking legislative and regulatory policy. And there’s a lot more to do. NRDC and our Energy Efficiency for All partners look forward to working with the governor and his staff, regulators and utilities on all the good work ahead.