Social Equity in State Energy Policy: Indicators for Michigan's Energy Efficiency Programs

State policies providing residential energy efficiency programs have emerged over the past decade with the goal of producing widespread economic and environmental benefits. While these policies have largely achieved and surpassed legislated objectives, the degree to which program benefits are distributed amongst population subgroups, particularly low-income residents, remains unclear. On average in the United States, low-income households are less energy efficient contributing towards 1 in 3 of these homes struggle to afford energy, and 1 in 5 facing decisions between energy use and other necessities such as food or medicine. Energy efficiency programs however, may offer a critical avenue in alleviating energy poverty.

This study focuses on measuring the social equity achieved through Michigan’s “Energy Waste Reduction” programs for the state’s two major investor-owned utilities (IOUs). The study establishes a novel, quantitatively sensitive measure, called the Energy Efficiency Equitable baseline (E3b). This measure is used to identify disparities that occur in policy decision-making and outcomes. Particularly, the study quantifies disparities in program investments and household energy savings on a per capita basis between low and high-income residential groups. E3b reveals trends in policy outcomes from a social perspective, illustrating high variability in social equity between energy type and providers. Broad patterns showed that gas program investments approached equitable levels, however, electric Low-Income program investments fall well below the E3b. Household energy savings also demonstrated substantial disparities, where per capita ratios reached up to 22:1 when comparing high to low-income program benefits. As states aim to transition towards clean and affordable energy, social equity must be quantitatively evaluated