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Efficiency upgrades can be a financial boost for low-income homeowners, but asbestos, mold and other issues sometimes found in older homes can keep those improvements financially out of reach, even with incentives.
A new Minnesota law aims to bridge that gap.
The state’s existing Conservation Improvement Program failed to incentivize utilities who operate programs for low-income property owners for the cost of “pre-weatherization” services — such as removing asbestos or lead paint — a restriction that deferred as many as a third of potential clients from receiving energy efficiency assistance. Clients in need of pre-weatherization work typically struggled or failed to complete projects since utilities could only cover expenses directly related to energy efficiency.
That will now change with the new Energy Conservation and Optimization (ECO) Act, which updates the Department of Commerce’s Conservation Improvement Program. The ECO Act, signed by Gov. Tim Walz in May, permits utilities to receive credit, for the first time, for pre-weatherization and other preparatory work.
Utilities and energy efficiency nonprofits working with low-income building owners applauded the change and said they may revisit clients who could not be served in the past. The law also requires investor-owned utilities to significantly increase the amount they spend on low-income weatherization projects.
With a new influx of money and a loosening of restrictions, advocates say the ECO Act could eventually improve the comfort of thousands of low-income residents while reducing their energy burden through lower utility bills. They also see opportunities to build a larger and more diverse workforce for energy efficiency projects.
The law calls for investor-owned gas utilities such as Xcel Energy and CenterPoint Energy to begin next year spending 1% of the utilities gross operating revenue from residential customers, up from 0.4%. For investor-owned electric utilities, the low-income requirement increases from 0.2% now to 0.6% in 2024. Those companies include Xcel, Minnesota Power and Otter Tail Power.
The changes mean that in the Twin Cities, Xcel and CenterPoint will be spending collectively at least $16 million by 2024 on low-income electric and gas weatherization projects.
The law allows for 15% of the low-income spending to be applied to pre-weatherization. The Commerce Department will release what measures in that category will qualify next March.
Unrelated to the legislation, pre-weatherization also got a boost when on July 1 the Commerce Department began permitting money in its weatherization programs to be used for removing insulation with asbestos and mold.
State Rep. Jamie Long of Minneapolis said House members believed assisting low-income households in reducing their energy burden was an important part of the bill.
“We know that when we are transitioning towards clean energy and deploying energy efficiency there’s a risk that the benefits are only going to go to wealthier households and those who can afford to put solar in or afford to insulate their homes,” Long said. “I think it’s going to mean a lot of cost savings for a lot of households by reducing their energy costs and making their homes more comfortable.”
Weatherization improves insulation, replaces heating and cooling systems, upgrades wiring and lighting, and supports a host of other building upgrades. Studies have shown that low-income people, and people of color in particular, pay a higher proportion of their income toward energy bills than wealthier households.
“The permanent savings from energy conservation are the most meaningful to low-income households because these folks have the most trouble paying their bills,” said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota.
By 2024 Xcel Energy’s low-income weatherization for electric-related work nearly triples to $7 million and doubles the gas budget to $2.8 million. “We’re committed to reaching and exceeding these goals and look forward to identifying new energy efficiency opportunities to assist customers who have a critical need for these services,” the company said in a statement.
CenterPoint Energy spokesperson Ross Corson said the gas provider already had been spending $4 million annually on low-income weatherization, far above the state’s mandated $2.5 million budget. The ECO Act boosts the 2022 spending to $6 million.
CenterPoint Energy has several low-income deferrals because conditions do not allow continued weatherization, such as asbestos abatement and lead paint remediation, Corson said. The ECO Act “helps remove barriers to serving these customers that have kept some of the neediest from receiving help,” he said.
Jed Norgaarden, executive director of Sustainable Resources Center, Inc., said his organization annually does around 400 to 500 low-income weatherization single-family and multi-family projects in Minneapolis and Hennepin County. The pre-weatherization issues he’s seen that have not been covered in the past include poor attic insulation, inaccessible crawl spaces that need to be sealed up, and moisture problems.
For example, insulation made with vermiculite sometimes has asbestos embedded in it. Remediation can cost as much as $7,500 when completed by a qualified asbestos abatement contractor, Norgaarden said. Other deferred efficiency improvements can cost homeowners anywhere from a few hundred to several thousand dollars, he added.
The Conservation Improvement Program’s inclusion of pre-weatherizing “is absolutely great,” he said, even with the 15% limitation. The Sustainable Resources Center will call back clients who could not get the service in the past because of restrictions.
“Nothing is more heartbreaking than walking away from residents that can use the help and are in need of the help,” Norgaarden said. “We have had to walk away and tell them we are really sorry, we can’t do that. But now we’ll be able to go back to them.”
The resources center spends an average of $12,000 on weatherizing homes, saving clients several hundred dollars annually in utility bills. Clients pay nothing for the improvements such as new windows, new energy-efficient appliances, furnaces, and air conditioning. With more money for the conservation program coming and the strong possibility of additional federal money from the Biden administration, Norgaarden sees a rare opportunity to expand the program to reach more property owners in need of renovations.
Others believe the law opens opportunities to bring more people of color into the efficiency field through expanded training efforts. Jamez Staples, president and CEO of Renewable Energy Partners, operates a training center in north Minneapolis. Many homes in the neighborhood are good prospects for energy efficiency projects and he sees the influx of new money as a chance to train more residents for jobs.
“This just further increases the need to have that type of training at our site,” he said. “We’ll make sure that we have high-quality programming to meet the needs of this community so that they can actually participate in the emergence of that growing sector.”
Staples and his partner, Michael Krause, say the Twin Cities continues to have a gap between trained personnel and the growing number of efficiency projects. A home energy disclosure ordinance in Minneapolis saw energy audits conducted on more than 6,200 homes in 2020, its first year, with inspectors recommending 4,200 needed additional insulation or other work, Krause said.
“The amount of work out there is potentially huge,” he said.