Making Electric Heating Accessible and Affordable for Low-income Residents, with Sarah Moskowitz

Low-income family staying warm by huddling around a little fire.

Image caption: With affordable and accessible energy from electric heating systems like heat pumps, low-income families would no longer have to rely on natural gas or other sources of heat in cold weather. Image credit: Hanoi Photography on Adobe Stock

Script by: Hannah Kaminker  |  Audio by: Hannah Kaminker |  Blurb by: Themi Perera

Electric Heat: A Hot Topic in Chicago

In cold winter months, many people have to rely on fossil gas to heat their homes and to power cookstoves. Yet all-electric appliances, including heat pumps to heat homes, are quickly becoming a cheaper alternative over the long term, though they often entail higher upfront costs compared to gas appliances.

In Chicago, the switch from natural gas to electricity is moving forward, but it is also revealing unintended challenges for low-income residents that are applicable to the broader energy transition. In the historic city core, many older buildings lack weatherproofing and insulation against extreme winter cold. Climate and health impacts, and the high price of burning fossil fuels for heat, provide ample reasons to switch from fossil gas to electricity. But as high-income people are doing so, they leave some of the most vulnerable people behind. As a result, Chicago is now pioneering an effort to support lower-income residents making the transition to all-electric heating.

What are the Climate and Health Impacts of Gas Heating

Gas heating is powered by natural gas, which is mainly composed of methane, a potent greenhouse gas. From a climate perspective, methane’s ability to trap heat in the atmosphere is 84 times greater over a 20-year period than carbon dioxide, making it the second most important contributor to climate change. And, because it lasts for 10 to 15 years in the atmosphere, while CO2 lasts 100 years or more, reducing methane emissions will rid the atmosphere of a potent greenhouse gas much more quickly. One-third of human-caused methane emissions come from the energy sector, and a large portion of methane use comes from waste such as leaks and venting. From a health perspective, a byproduct of natural gas called nitrogen dioxide is known to reduce lung function, and cooking with natural gas stoves has been linked to childhood asthma. Natural gas’s climate impacts and more immediate respiratory impacts may pose a health risk in homes that can be reduced by a switch over to electric heating.

Why are People Flipping the Switch?

As the price of natural gas rises, electricity may become a cheaper option for many Americans. The current structure of utility companies contributes to the high costs that ratepayers are facing. One concept found in utilities is the rate base, which refers to the amount of money and resources a utility company uses to produce and deliver electricity, water, or gas services. Regulators decide whether or not the investments that companies make are considered “prudent” and these expenses are added up to form the rate base, upon which the utilities are allowed to earn a rate so they can profit. This structure means that the costs of large capital investments are paid for by an increase in a rider on ratepayers’ bills, passing the cost burden onto customers.

For electricity here in California, the threat of wildfires caused by powerlines and the high cost of building transmission means that ratepayers face high electricity rates, especially compared to gas. Meanwhile in Chicago, one main reason many residents are switching to electric heating is because of recent price hikes from the major gas utilities supplier. According to Sarah Moskowitz, Executive Director at the Citizens Utility Board (CUB) of Illinois, a retrofitting effort by the gas utility in Chicago means that customers may be facing unusually high bill riders over fifty dollars, a fixed cost applied even before any gas is used. There is a strong economic incentive in Chicago driving people who can afford to switch over their appliances to electric.

But what about those who cannot afford to move away from gas heating? According to Moskowitz, primarily low-income Black and brown communities face some of the biggest impacts of soaring natural gas prices. In addition, the rate base system which allows costs to be passed onto consumers can further exacerbate the problem. As people with the means to switch away from gas do so, this lowers the number of gas customers across which the utility company can divide its costs. This means that the people who can least afford it will bear a greater portion of the costs, a problem sometimes known as the utility debt spiral. But new legislation and funding are attempting to build a path out.

Making Heat Accessible & Affordable

In an effort to set Illinois on the path to carbon-free and renewable energy, a law that contains interesting pathways for utility justice was passed in 2021. The Climate and Equitable Jobs Act (CJA) sets ambitious clean energy goals, but does so in a way that prioritizes equity. The bill provides finance for lower-income residents and provides support for energy efficiency and renewable energy workforce development. According to Moskowitz, one particularly climate-justice-focused program is the equitable energy upgrade program, a form of utility bill financing. The law requires major Illinois utilities to file multi-year rate plans, and from these, 40% of the benefits must go toward low-income communities. Exactly how the benefit process will work is being determined. The CJA provides a framework that can be adapted for many other regions. As Chicago takes on the challenge of moving towards renewable electricity in a city with older infrastructure and high heat demand, the city may serve as a case study that other cities can look to when planning for clean energy alongside justice and equity.

Who is Sarah Moskowitz?

Sarah Moskowitz is the Executive Director at the Citizens Utility Board (CUB) of Illinois, which has represented the interests of utility ratepayers since the 1970s. CUB works to get more consumer-friendly laws passed, runs a utility question & complaint hotline, and organizes consumer education and outreach programs.

Further Reading


Transcript

Ethan: I’m Ethan Elkind, and you’re listening to Climate Break. Climate solutions in a hurry. Today’s proposal: transitioning away from fossil gas to all-electric heating. Sarah Moskowitz is executive director at the Citizens Utility Board, or CUB, which was created by the State of Illinois to advocate for electricity ratepayers. She explains why more people in places like Chicago are switching to electric heating.

Ms. Moskowitz: The Chicago gas utility has gone billions of dollars over budget and has resulted in soaring natural gas bills for customers. There’s a real economic incentive to switch away from gas for heat, and we’re already seeing that people with the means to electrify their homes are doing so.

Ethan: But switching to all-electric appliances like heat pumps to heat and cool homes can often entail higher upfront costs.

Ms. Moskowitz: But not surprisingly, in the city of Chicago, folks in the predominantly black and brown communities are the worst hit by these soaring natural gas prices, which means that the people who can least afford to bear higher bills are actually the ones who are going to get hit with them because they can’t switch away.

Ethan: Moskowitz says that the best way to ensure these low-income ratepayers can access electric heating is through monetary support, which cities can require utilities to provide.

Ms. Moskowitz: And so the city has an opportunity to negotiate a franchise agreement. And get basically the electric utility to cough up some shareholder dollars that can go towards a fund to perhaps, help offset some of the decarbonization costs.

Ethan: To learn more about how to help low-income residents afford electric heating, visit climatebreak.org.

Making Electric Heating Accessible and Affordable for Low-income Residents, with Sarah Moskowitz