The Implications of Energy Conservation Pricing for Low-Income Households Owen, Jason
Energy conservation pricing has been implemented as a method of meeting the demands of growing electricity consumption through conservation and changes in demand patterns. RIB and TOU rates, two such pricing regimes, have the potential to subject low-income customers to a disproportionate energy burden. Energy poverty is often described as conditions in which the costs of energy is such that certain households struggle to pay for other essential items, such as rent, food and clothing in order to pay their energy bill. This problem is amplified by the fact that low income households, which are at the greatest risk of facing a disproportionate energy burden, are most often the least able to alter their use of energy or pay for energy efficiency improvements. Based on BC Hydro’s bill impact analysis and further analysis done for this paper, the RIB rate likely does not have a disproportionately adverse impact on the average low-income customer. There is, however, in all likelihood a certain portion of customers who consume more than the average amount of electricity for their income group and are in energy poverty or at risk of becoming so. Unlike the RIB rate, where customers who consume less electricity experience fewer negative impacts, TOU pricing requires substantial change to use patterns and enabling technology in order for the customer to benefit. The burden of capital expenditures required to implement TOU, equally distributed among residential customers, is less likely to be offset by conservation potential and off-‐peak energy consumption for the low-income customer base. Energy efficiency programs, which often provide assistance to homeowners to install energy efficient retrofits, require that the participant pay for at least a portion of the costs and are generally funded through energy rate increases. Customers already faced with a disproportionate energy burden cannot likely afford to participate. Considering the conservation potential in the residential sector identified in the CPR study and the prevalence of energy poverty in this province, there is clear potential for electricity conservation through household energy efficiency improvements targeted at low‐income customers.
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