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As they were moving North Carolina’s new climate law through the General Assembly, some Democrats vowed a huge burst of funds into the state budget to help blunt the measure’s failure to assist low-income ratepayers.
Along with the office of the state’s top Democrat, Gov. Roy Cooper, they suggested hundreds of millions of extra dollars could be included in the spending plan to cover home repairs and energy improvements for the 1.4 million households in the state who struggle to pay their electric bills.
But the budget written by Republican legislative leaders, backed by large numbers of Democrats, and signed into law this month contained no such windfall. Instead, the federal pass-through monies for weatherization were unchanged from versions of the budget passed by both the House and Senate this summer.
The omission was a blow for Asheville Democrat Sen. Julie Mayfield, among the chief negotiators of the climate law. “What’s clearly not in there is the $400 million for weatherization that we wanted,” she told the Energy News Network. “We’ll add that to the long list of things in the budget that we were hoping for.”
Still, thanks to the federal government, the state could see upwards of an additional $70 million over the next year to help low-income households add insulation, replace appliances, or make other repairs — a welcome lift for energy justice advocates.
“We need as much weatherization help as we can get right now,” said Rory McIlmoil, a senior energy analyst with Appalachian Voices, “especially in the absence of any funding coming through from the [state] budget.”
Crisis assistance vs. weatherization
Decades of redlining and other discriminatory housing policies mean low-income people are more likely to live in drafty homes with broken or inefficient appliances. Disproportionately people of color, these households pay a large fraction of their paychecks on energy costs — above the 6% mark analysts consider affordable. Some of the state’s ratepayers spend an eye-popping third of their annual income to heat, cool, and light their homes.
The pandemic has only exacerbated this energy poverty. According to McIlmoil’s crunching of state numbers, as of September, nearly half a million households in Duke Energy territory alone — 15% of the company’s total customers — were behind on their utility bills, owing an average of $320.
Each year, the federal Low Income Home Energy Assistance Program allocates about $100 million to North Carolina to ease energy insecurity. But the vast bulk of this money is earmarked for paying heating bills directly or preventing disconnections, solving only short-term problems.
“Let’s say you’re facing a $400 bill, but you have no insulation or air sealing and you’re using electric resistance baseboard heating — 30% of that is going out the roof,” McIlmoil said. “That home is still going to need $400 next month.”
Bill assistance is critical, McIlmoil said, but it’s a band-aid. “Weatherization money is more important.”
Yet only 15% — or up to a quarter if the state gets a special waiver — can be used for energy efficiency improvements. Beyond cash assistance for bills or home improvements, advocates say systemic reforms are necessary to give customers more control over their energy use and production and lower their bills. For the most overburdened ratepayers, many are pushing a program that would cap utility costs at a percentage of their income. In states including Ohio, such schemes not only protect low-income ratepayers from unaffordable bills, but they also require energy audits.
“Then you get people into the weatherization pipeline,” McIlmoil said.
But the climate law contains no such ratemaking reforms, while opening the door to multi-year rate increases that could overcharge customers. And though it directs Duke to create an on-bill financing plan — by which the company would pay for home energy improvements and customers would pay back the loan through their monthly bill — there’s no requirement for that program to benefit poor people.
What’s more, Duke’s profit motive may get in the way of making the program pencil out for most customers, no matter their income, said Al Ripley, the director of the Consumer, Housing and Energy project at the North Carolina Justice Center. “If you make the interest rate too high,” he said, “then it’s going to make it harder for it to pay for itself.”
‘Negotiating help right now’
While arguing the state’s shift away from carbon pollution would lower energy costs, Cooper and other Democrats acknowledged the new law did little to target the most energy-burdened.
“It is critical that we get help for low- and moderate-income people with their rates,” Cooper said when he signed the climate measure. “Help has got to come from a lot of places. We’re negotiating help in this budget negotiation right now.”
But exactly what he meant was murky. Mayfield said she was told the figure was $400 million for weatherization, while Cooper’s office later said he had proposed, during budget talks with Republican leaders, “$300 million for low- and moderate-income housing and $25 million for low- and moderate-income weatherization.”
The governor’s office didn’t offer more detail about his proposal, but it was probably the more workable one: The state usually disburses about $14 million each year in weatherization assistance, according to the U.S. Department of Health and Human Services, and almost certainly lacks the infrastructure for a 28-fold increase.
In any case, neither injection of new funds made it into the $25.7 billion budget House and Senate leaders announced earlier this month, which passed easily with support from most Democrats in both chambers.
“This budget moves North Carolina in important ways,” Cooper said in a statement after signing it into law. “I will continue to fight for progress where this budget falls short but believe that, on balance, it is an important step in the right direction.”
Asked about the lack of new weatherization monies in the budget, his press office didn’t respond.
‘A significant amount of money’
Still, there will be an increase of low-income energy assistance flowing into North Carolina for at least another year, thanks to the federal government.
Last March, the state got an extra $25 million from the first pandemic-relief bill that was carried over to this fiscal year; $4 million was allocated to weatherization. This March, the American Rescue Plan Act allotted another $87 million that must be expended by September of next year. Cooper has allotted $13 million of it to weatherization.
Then, there’s the bipartisan infrastructure bill recently enacted into law by President Joe Biden, which includes $3.5 billion specifically for weatherization assistance, according to the federal Department of Energy. The exact award to North Carolina isn’t certain yet, and it will need to be appropriated by state lawmakers before it can be spent. But it could be in the tens of millions of dollars.
“People are still trying to unpack the infrastructure bill,” Ripley said, “but we expect there to be a significant amount of money for weatherization.”
Along with Ripley and other low-income ratepayer advocates, lawmaker Mayfield is also looking to utility regulators to move aggressively toward programs to help overburdened ratepayers.
“Given what’s not in the budget,” she said, “it’s going to become even more important for the utilities commission to clearly set some goals around low-income.”