Dive Brief:
- New York will receive $158 million from the U.S. Department of Energy to implement a residential rebate program to help households install energy-efficient appliances, the agency announced Thursday. Another 11 states have applications pending.
- The Inflation Reduction Act provided about $8.8 billion for states, territories and tribes to improve efficiency in homes and lower energy bills. The rebates and electrification incentives, for products including heat pumps, water heaters and insulation, will save consumers up to $1 billion annually in energy costs, DOE said.
- U.S. residential electricity bills rose slower than inflation in 2023, as lower consumption offset higher prices, the U.S. Energy Information Administration said Monday. While some experts say lower bills are most important to consumers, others stress that the actual price of electricity remains a burden.
Dive Insight:
Electricity prices rose 3.6% over the last 12 months, outstripping the broader inflation rate of 3.2%, the Bureau of Labor Statistics reported last month. Preliminary data show that residential electricity bills increased 2% each month in 2023 compared to 2022, slower than inflation, EIA noted yesterday.
With electrification efforts primed to drive demand higher, some experts split on whether the focus should be on prices or bills.
EIA’s comparison “sends an incorrect message,” Paul Cicio, chair of the Electricity Transmission Competition Coalition, said in an email. “The data is clear, electricity prices have risen far in excess of general inflation meaning that utility bills are a significant burden to consumers on a monthly basis.”
Average U.S. residential electricity prices rose 6.2%, from 15.04 cents/kWh in 2022 to 15.98 cents/kWh in 2023, according to EIA. At the same time, monthly average electricity consumption declined slightly, to 861 kWh in 2023 from 899 kWh in 2022, “which contributed to the average bill increasing less than the inflation rate.”
“The EIA's focus on bills, rather than rates, is indeed the correct focus,” said Tyson Slocum, director of Public Citizen’s Energy Program. “Higher electricity prices offset by declining consumption suggests the critical role energy efficiency programs play in helping households save money.”
Cicio said the Federal Energy Regulatory Commission can help by bringing competition to transmission reform, “which will lower electricity prices for consumers and facilitate the upgrades to the electricity grid that our country needs for the next era of electrification.”
Slocum said states and utilities need to expand opportunities for households to access affordable efficiency options, and in particular for renters.
“Increasing funding for weatherization upgrades and efficient appliance replacement are key to reducing households' consumption footprint and monthly utility bills,” Slocum said. “Such direct support for efficiency improvements are far more effective for moderate- and low-income families than market-based rate structures, which can often be punitive for poorer families.”
New York’s residential rebate award from DOE gets at these goals and is a sign of more to come, officials said.
Arizona, California, Colorado, Georgia, Hawaii, Indiana, Minnesota, New Hampshire, New Mexico, Oregon and Washington have also submitted funding applications for home energy rebate programs.
DOE’s Home Efficiency Rebates Program offers $4.3 billion in formula grants to reduce the upfront cost of whole-home energy efficiency upgrades in single-family and multifamily homes. The agency’s Home Electrification and Appliance Rebates Program offers $4.3 billion in formula grants to state energy offices to reduce the upfront cost of efficient electric technologies. The program also provides $225 million in grants to tribal nations and communities, DOE said.
“States across the country are getting closer to putting money in the hands of consumers to upgrade their homes with new, energy efficient appliances and clean energy tools that will cut monthly utility costs,” Energy Secretary Jennifer Granholm said in a statement.
The rebates can result in savings up to $14,000 on home upgrades, DOE said. At least half of the rebates will go to low-income households.
New York plans to launch its rebate program in late spring or summer, initially to low-income homeowners. The state will submit an application for funding under DOE’s Home Efficiency Rebates program at a later date, the agency said.
