The Electricity Burden: A Measure of Electricity Affordability & Crisis

The Electricity Affordability Crisis is an emerging challenge as the world transitions toward cleaner energy sources. Kern County, California, presents a vivid example of this crisis, where high electricity rates, coupled with a hot climate, impose a heavy burden on residents. This article introduces a new metric—the electricity burden—which focuses on the specific impact of electricity costs on households, particularly as we aim to accelerate the transition to fully electrified homes and transportation.

Understanding the Electricity Burden

The concept of energy burden—the percentage of a household’s income spent on energy costs—has traditionally been used to measure energy equity. However, as we move toward electrifying everything from heating and cooling to transportation, it's critical to zero in on the electricity burden. This metric specifically measures the portion of income spent on electricity, which will become increasingly significant as households shift away from fossil fuels.

For low-income households—those earning 80% or less of the Area Median Income (AMI)—total energy costs should not exceed 6% of household income to remain affordable. In Kern County, where the AMI for a family of four is $83,800, this translates to an affordable electricity cost of $4,022 per year for low-income households earning $67,040. When electricity costs exceed this threshold, the electricity burden becomes a significant strain on household finances, reaching what is defined as a high energy burden. When the burden exceeds 10% of income, it is considered a severe energy burden.

Kern County’s Electricity Usage and Cost

According to the U.S. Energy Information Administration (EIA), Kern County households consumed approximately 9,753 kWh of electricity per year in 2022. Given the high electricity rates in the region, the cost of this electricity is substantial:

• PG&E Tier 2 Rate: $0.48617/kWh
• SCE Tier 2 Rate: $0.42990/kWh

Applying these rates to the average household consumption:

• PG&E: 9,753 kWh x $0.48617 = $4,739.67/year
• SCE: 9,753 kWh x $0.42990 = $4,191.57/year

These figures indicate that the average household in Kern County is already at or above the threshold of a high energy burden. This scenario leaves little room for additional costs associated with the increased electricity demand that comes with electrifying transportation and household appliances.

The Electricity Burden Table

To clearly illustrate the impact of electricity costs on household budgets, the following table shows how the electricity burden escalates as energy usage increases. The average household energy use already constitutes a high electricity burden, and any increase, such as from adopting electric vehicles or additional electrification, could push households into a severe electricity burden:

These calculations, which reference well-established definitions of energy burden, illustrate that the current electricity costs in Kern County already place a significant strain on household finances. The move toward further electrification under the current pricing structure would exacerbate this burden, making it unsustainable for many residents.

Implications for Electrification

As we consider electrifying homes and transportation, it's evident that the current electricity burden in regions like Kern County leaves little room for increased consumption without exacerbating financial strain. The high cost of electricity in this area directly impacts the pace at which households can transition to electric vehicles and appliances, potentially stalling the broader shift away from fossil fuels.

For the transition to be equitable, it’s vital that state and federal governments target regions with the highest electricity burdens for investments in local energy infrastructure. This could include:

1. Local Energy Production: Developing locally generated power sources, such as community solar projects, to reduce reliance on high-priced electricity from investor-owned utilities.
2. Energy Efficiency Programs: Offering incentives for energy efficiency upgrades that reduce overall electricity consumption, thereby lowering the electricity burden.
3. Smart Grid Investments: Implementing smart grid technologies that enhance grid efficiency and reduce costs for consumers.
4. Distributed Energy Resources (DERs): Expanding access to technologies such as electric vehicle (EV) charging stations, smart panels, and home batteries can further distribute energy resources, improving local resiliency and lowering overall costs. Innovations in DERs, including distributed energy resource management systems (DERMS), can play a critical role in managing energy loads efficiently and ensuring that electricity is affordable and accessible to all.
5. Home-Based Energy Storage: Rather than relying solely on bulk power grid storage, deploying battery storage systems at the household level can provide greater resilience during extreme weather events and reduce dependency on the central grid. This approach enhances local energy autonomy and can significantly reduce the electricity burden, particularly during peak demand periods.

Conclusion

The electricity burden is a critical metric that must be incorporated into energy policy decisions, particularly as we move toward an electrified economy. Immediate actions, such as increasing investments in energy efficiency measures—like weatherization, LED bulbs, and more efficient appliances—are essential. These measures not only make a significant impact on lowering the electricity burden but also do so in an equitable way, especially for low-income households, including renters who may not have control over major electrical upgrades.

Additionally, continued innovation in power production, storage, distribution, and management is crucial. Smart grid technology, distributed energy resources, and home-based energy storage are vital tools in this effort. For instance, rather than focusing energy storage on the bulk power grid, which may not provide resiliency during weather events, greater deployment of home batteries could ensure local energy security and reduce overall costs. Expanding access to innovations like EV charging and smart panels through cost-lowering strategies will also help in making these technologies more equitable and widespread.

The key to the energy transformation is for policymakers, regulators, and industry leaders to find ways to lower the electricity burden. By bringing energy production, storage, and management to a local level, we can increase equitable access, lower costs, and enhance resilience. This focus will not only meet our environmental goals but also ensure that the energy transformation is both sustainable and just.

Sources

• American Council for an Energy-Efficient Economy (ACEEE): An Assessment of National and Metropolitan Energy Burden across the United States.
• U.S. Department of Energy - LEAD Tool: Provides data on energy burden across the U.S. LEAD Tool.
• California Department of Housing and Community Development: Kern County Income Limits 2023.
• Pacific Gas and Electric Company (PG&E) and Southern California Edison (SCE): Rate schedules for electricity.
• U.S. Department of Energy's Weatherization Assistance Program (WAP): Information and impact reports on energy efficiency for low-income households.
• California's Low-Income Weatherization Program: Details on state-level efforts to reduce energy burdens for low-income residents.
• National Renewable Energy Laboratory (NREL): Insights on smart grid technologies and distributed energy resources NREL Publications.