Electricity Burden and the Myth of Virginia’s Rate Utopia
Wednesday, August 15th, 2018
The Affordable Clean Energy Project (ACEP) of Virginia Poverty Law Center has a new interactive map that provides a visual representation of Virginia’s households electricity burden, further dispelling the myth of Virginia’s “rate utopia.”
On average Virginia households experience an already higher than average electricity burden of 3.1%, compared to a national average of 2.7%. “Electricity burden” is the percentage amount of your household income that is spent on electricity costs. Financial advisors agree that an average of 6% for your entire energy burden is “affordable.” Virginian’s higher than average electricity burden is unaffordable for over 75% of Virginia’s households.
Last year, ACEP released the report, “The Myth of Virginia’s Rate Utopia: A comparison of Rates, Riders, and Bills” in response to one of Virginia’s largest utility company’s continual mantra of having “low rates.” In the report, ACEP showed that in comparison to peer sister utilities in the southeast, Virginia’s two for-profit monopoly electric utility companies – Dominion Energy (Dominion) and Appalachian Power Company (APCO) – have at best average rates for the region, and that the utility companies actually fell in ranking during the ten years since re-regulation for both rates and for residential customer bills. At a December 2017 meeting of the Commission on Electric Utility Regulation, the State Corporation Commission (SCC) staff provided a report to the legislators comparing Dominion’s and APCO’s bills since Virginia re-regulated the electric utility market in 2007. Over that ten-year period, SCC staff illustrated how Dominion’s residential customer bills had risen 29%, and APCO’s residential customers saw a 73% increase during that same period. It is important to note that while APCO’s bills have taken a sharper rise, residential customers from either utility on average see nearly equal bill amount.
This new report confirms what Virginia’s low-income families already knew – that electricity costs in Virginia are too costly. And for struggling families, these higher than average electricity burdens have significant consequences. This past spring, Richmond made headline news when a story in the New York Times reported that Virginia’s capitol city had one of the highest eviction rates in the country. Electricity burden is a known contributing factor to evictions. Families with limited income are sometimes forced to choose between paying their electric bill or paying the rent.
Energy efficiency is least cost measure that can help low-income households reduce their electricity burden here in Virginia. Often, low-income households are already using less electricity than the average Virginian household simply because of the size of their homes; however, the structural condition of these homes increases the energy burden because the energy cost per square foot is greater. Per Energy Information Administration (EIA) data, a low-income household spends on average $1.23 per square foot for utilities, while a non-low-income household will spend $0.98 per square foot.
The difference between electricity “rates” and electricity “bills” is felt by households through their electricity “burden.” Energy efficiency measures can help to reduce the electricity burden for Virginia’s low-income families who struggle to afford their utility bills, not to mention their housing, food, clothing and other essential needs.