We’ve been thinking a lot about data centers, as I imagine many of you have—what they will mean for affordability and the climate, the costs of mining the next cryptocurrency. But I’ve also been thinking a lot about the tendency to treat our minds as data centers, demanding 24-7 processing of information that sucks a lot of our energy, while foregoing our deep human understandings that are rooted in relationships. Good data will back us up, but our observations, questions and intuition are the start of making sense of flaws in the energy system.
I’ve been working on energy justice for 17 years. How many of us, especially those of us who have been in this work a long time, thought we would be further along by now?
Let me start with stories of two people who have been prominent in my life. My best friend, who I’ll call Cal and who grew up about a half mile away from me as the crow flies in suburban New York. The other is a resident I’ll call Lena, who lives in Highland Park, Michigan, a two-square mile island fully surrounded by the City of Detroit. My hope is that through their lives, and their experiences with the energy system, we can bring affordability issues into focus.
A minor disclaimer: These portraits are 90% factual representations of Cal and Lena. In a few places, I’ve added details from another person in a similar situation to paint a more complete picture of how people experience cheap or exorbitant energy costs.
Let’s start with Cal. His father is a retired financial advisor, and since high school, he has been extremely driven and developed extraordinary work habits. He somehow managed to get his mile time down to 4:52 even though he was far from the most talented runner on the team. But he would train until red in the face, impervious to the difficulty of it. He just ticks away like a metronome.
He earned his B.A. two masters and a PhD from two elite universities, then became a professor of energy economics at another elite universities in New England, not the one the president is feuding with but a close cousin with a huge endowment.
After he got married, he moved into a 4,000 square foot newer construction home in a leafy suburb with plenty of room for a family. He checked the home energy score of the house before buying, noted it had energy star appliances from top to bottom, an efficient HVAC system, and was decently air-sealed and insulated, though he would add about a foot of attic insulation shortly after moving in.
Cal also noted the large south-facing roof and the nook in the three garage where he would showcase an EV charger and home battery bank, drawing from his rooftop solar panels. He made these upgrades strategically and sequentially, sometimes waiting for a new incentive or pilot program to make the deal even sweeter. When he’s not working on his nearly net zero home, Cal advises some of his state’s energy leaders and has an early spot in line for utility pilots, even ones that are only designed to benefit a few thousands households. He layered federal tax credits, state renewable energy credits, and utility incentives like a stack of pancakes, the sweet syrup of highly subsidized clean energy filling his plate.
When I press Cal about the subsidy he’s taken from other ratepayers, he begrudgingly admits that yes, you could frame it that way, but then he quickly offers important caveats. These so-called subsidies are temporary and needed to spur market transformation and economies of scale, he contends. One could even argue that as a pioneer, he’s doing a service for customers that will be later adopters and benefit from lower costs systemwide. And he notes he has something in common with Warren Buffet, his belief that he should be charged more, at least as much as working class customers, but so long as loopholes exist, how can he not exploit them? Because if not to him, wouldn’t those benefits just go to the wealthy family next door? Or just back into the state’s general fund if they go unused, where they could be used for who knows what kind of poorly designed programs or unwise spending.
So Cal cashes in, and his energy bill is good evidence of that. If you are ever looking at maps of energy burdens and wondering how the median energy burden could be just 3%, half of the widely used 6% threshold for affordability, well, it’s people like Cal who balance the equation. Even with his state’s sky high electricity rates, Cal has an energy burden well below 1%, and could afford to comfortably pay five times more than what he’s currently paying for energy without batting an eye. But Cal is still Cal, ever the schemer, the optimizer of the system. Two years ago, he had the gall to complain when the university finally ended its free EV charging program, which had basically covered all of his commuting costs for more than 8 years.
Let’s turn from Cal to Lena in Highland Park, Michigan. Highland Park’s Ford Factory was the first automotive assembly line in the world, cranking out Model Ts in just 93 minutes, about 1/8th the previous time needed at half the cost, or $350. Worker pay more than doubled even as their shift hours dropped. For all that prosperity a century ago, Highland Parkers breathe in some of the worst industrial air pollution. Lena, like many of her neighbors, has permanently compromised lungs. She pulls a wheeled tank of oxygen around the house with her throughout the day and her symptoms have been exacerbated by bad ozone days, factory emission releases, and until recently, winds from the south that brought the smoke from Detroit’s infamous incinerator, the second largest in the world when it was built in the 1980s. Thankfully that has been shut down.
Highland Park, like Detroit, suffered a wave of white flight and disinvestment in the 1950s and 60s and was left with a trail of debt when much of its tax base moved north into the suburbs. By a court decision, Detroit was on the hook for 83% of the maintenance costs of its water system, which Highland Park is now part of, even though Detroiters account for less than a 1/3 of the customers the overbuilt system serves. When water bills soared, the Mayor responded by saying there was nothing stopping anyone from going down to the Detroit river to fill a bucket. More than 100,000 water shutoffs ensued, prompting a visit from the United Nations Special Rapporteur for Human Rights.
As with energy insecurity, water insecurity exacerbates and snowballs into greater financial hardship. In hard hit neighborhoods 12-26% of the homes that were foreclosed in Highland Park and Detroit had liens from unpaid water bills as a major contributor to the foreclosure. Like Detroit, Highland Park was subject to governance by an unelected state emergency manager who had no connection to the community and cared about balancing the books and pleasing debtholders above the public welfare.
As with water, the City of Highland Park was unable to pay its energy bills. So DTE decided to remove 1,100 streetlights, leaving residents, Lena included, mostly in the dark. She connected with a grassroots organization called Soulardarity that advances a vision of energy democracy and self-sufficiency, replacing the lights with community-owned solar streetlights.
But Lena needs a lot more than just light outside. A walk through by a contractor estimated she will need upwards of $50,000 in home repairs, more than the value of the house itself. Her old knob and tube wiring has meant she, like up to 75% of her neighbors, are deemed “deferrals” for weatherization, even after two years on a waiting list. She has an old gas boiler, which chugs plenty of gas but fails to circulate the warmth upstairs to her bedroom. In the summer, fans and a single room A/C keep her home barely habitable. It doesn’t help that DTE energy’s reliability is abysmal and Lena could lose power from an outage even under sunny skies. Winter bills exceeding $600 are common for her, and she spends upwards of $3,500 annually, even in a 1,600 square foot home.
Lena consistently faces bills she can’t pay, on frequent occasions, and bears the shame of multiple shutoffs, times when she could not help provide care for her grandkids. She contends her estimated bills were out of whack for years, and even while she was contesting them to the company, she was racking up hundreds in late fees. When she had to pay a bigger deposit after a shutoff, she took out a payday loan of $500, thinking she would pay it right back, but then another emergency came up and she thinks she paid more than $1,000 in interest before she could finally pay it off for good and get the collection agencies off her back.
When she went to a public hearing on DTE’s rate case, the first to ever be held in Detroit, she was given three minutes to tell her story. The chair of the MI Public Service Commission recently admitted, “Well, unlike the evidence that’s part of the record, we’re not able to actually base a decision based on comments. They are not subject to cross-examination.”
Lena just had her boiler serviced again but doesn’t know if it will survive another winter. She has been quoted $12,000 to replace it and has no idea how she will get by if and when this happens. Now in her 80s, she is well aware of her own mortality, too, and wonders if perhaps her boiler will, by some miracle, survive just long enough.
Cal and Lena are portraits from the extremes of affordability.
I’ve been battling for affordable energy for more than a decade, rooted in my experience working with residents like Lena in Highland Park and Detroit. I’ve been an expert witness in 8 PUC dockets and counting. For the small wins that we’ve seen, like increasing the carve outs for low-income programs, these are overwhelmed by ever-climbing energy bills, and a corresponding, inhumane spike in shutoffs that punish Lena for the structural conditions of her community and the shambles they have been left to piece back together.
As I see it, conversations about affordability ignore the benefits that Cal and his contemporaries have squeezed from the energy system, not to mention the generous flow of benefits and low rates to commercial and industrial customers. Our conversations about affordability seem to accept that Lenas will always be with us, an unfortunate problem with no solution. In our approach to affordability, we have accepted a system that fails to affirm energy as a basic human need and instead skews benefits toward those who already have too much.
There is this myth that each individual household is responsible—is the cause—of its own energy bills. If Lena pays significantly more than Cal, she should have made better choices. She should have invested in home repairs and new HVAC, even as the economic foundation of her city was being pulled out from under her. She should have gotten more involved and made her case to the Public Service Commission, even though she did that on multiple occasions. And even if she did all of those things to the best of her ability, the energy system simply cannot afford to subsidize the poor, right? We cannot correct the causes of structural poverty through our energy bills. So the claim goes.
But Cal is still texting me screenshots of his dashboard of how much energy he generated and how much he got paid to send energy back to the grid through his battery while he was away at work, managing his air conditioner from a remote app on his phone, charging his car for free off of students’ tuition and the underpaid workers who staff the parking garages and come home to exorbitant energy bills like Lena’s.
This cycle is insidious, and people are in energy poverty not principally because of their own actions, but because we have allowed the energy system to pick favorites, to pick winners and losers. To say because someone has a college degree and lives in a neighborhood where clean energy contractors are abundant, they should also capture the vast majority of fancy shiny things the energy system offers.
Cal has a lot of clout in his role. He served high up in the Obama administration for a year. Cal got me a tour of the East Wing of the White House when I visited and attended holiday balls with the president’s staff. And some of his students are now carrying his same energy economics philosophy into their roles as analysts, aspiring VPs and CEOs of the investor-owned utilities. We need to to flip the script so that it is not the Lenas of the world who are responsible for their own struggles. We need not portray them as victims either, but we do need to talk about the truth of the disparities in the incentives they can’t access and the inordinate, inhumane penalties they face for falling behind.
I want to close with a message of hope. Lena and tens of millions of others in similar situations may be facing energy bills that are thousands of dollars more than they can afford. The American public and the popular media may be fixated on egg prices, but energy prices are a threat an order of magnitude greater to family budgets. That squeeze is getting even tighter. From data centers to the loss of LIHEAP to more extreme heat events, which hit precisely when LIHEAP is usually exhausted for the year, energy costs are not going down anytime soon.
But, here’s the good news. For every Lena, there are a few people who can sustainably afford their bills, and there are a handful of Cals and their businesses sprinkled in who can afford to shoulder a greater load. Commercial and particularly industrial customers have dodged paying a fair share for affordability programs, while claiming they needed discounts and tax breaks because they create jobs and contribute to economic development.
And then there are the lowly shareholders themselves. Lena’s utility, DTE, has seen its stock price increase 50% in the last four years on the backs of communities like Highland Park. I’m not expecting that we take profits out of the equation, but those 10% risk-free returns on equity need to give a bit, too. When you run the numbers, we find that the cost to ensure all households are below a 6% energy burden, tends to be on the order of $5-$10 more per month per residential customer who can afford it. We could ask Cal to start to pay back all those incentives he took advantage of for years so that Lena doesn’t have to worry about whether she will be able to survive if she outlives her furnace. I suspect if Cal knew everyone else was doing the same, he would be glad to contribute.
The affordability crisis is not a question of whether the pie is big enough. The pie is large, and the Cals of the world have been happy to gobble it up and go back for seconds year after year. If we pause to take a birdseye view and reframe what’s going on, we see that affordability is not only possible, we owe it to the people who need it most.