MILWAUKEE (CN) — Maria Beltran and her husband own a house on Milwaukee’s north side where they live with their two grandchildren. They live on a fixed income and have struggled to keep up with their energy bill for years.
The family’s power is supplied by WeEnergies, Wisconsin’s largest energy utility serving nearly 2.5 million households. Today, Beltran owes WeEnergies over $1200 on top of her monthly bill of $140, which she says she can barely afford on its own.
“My power was turned off for the entire month of August, and all the food in my fridge and freezer went rotten” Beltran said. “I pay toward my debt every month, but it feels like the bill just never goes down. Between medical debt and energy debt, life is stressful.”
Beltran’s experience not unique in Wisconsin or even the United States, where one in four households experience burdensome energy costs according to the American Council for an Energy-Efficient Economy. The group defines “energy burden” as paying at least 6% of one’s annual income toward lighting and heating their home. Although power costs have been climbing for years, some experts believe that relief is on the horizon.
The state of clean energy
The International Energy Agency released its 2024 Energy Outlook offering Wisconsinites some relief in the face another big rate increase on Wednesday. According to the report, renewable energy will increase in the United States more than fourfold from 2023 to 2035, blowing the national goal of 100% decarbonized electricity by 2035 out of the water and raising the share of renewables in the national energy mix to nearly 75%.
This growth is in large part credited to the Inflation Reduction Act of 2022. The act as signed by President Joe Biden included $30 million in targeted grant and loan programs for clean energy investments, reducing the cost to consumers by 30% or more and putting the U.S. on a path to reduce emissions by 40% before 2030 — the single largest climate investment in U.S. history.
How does this shift in energy generation effect the cost of energy for consumers? Brent Warner, head of IEA’s Power Sector Unit, said energy costs are nationally high now because consumers are essentially paying for nonrenewable energy for their day-to-day lives while simultaneously investing in the clean energy future.
“Inflation is causing the operation of the existing fleet to be more expensive and things like labor, natural gas transport and steel materials are affected, which, on top of necessary construction of clean energy facilities, can be a lot” Warner said. “Affordability is a big issue, but people have to endure these costs until the transition is complete.”
According to Warner’s group, the cost to build a coal or natural gas plant may be lower than that of a wind farm, but the cost of transporting the gas to a facility to convert it into electricity evens things out. With wind power, the levelized cost — the cost of a unit of energy over the lifespan of the generation facility — is much lower because that’s needed is for the wind to blow.
When utilities invest in services to provide or improve energy, they pass those costs dollar-for-dollar to consumers as levelized costs. Things like tree-trimming, equipment maintenance, materials and labor all appear as operational costs alongside the cost per kWh of energy.
These extra costs will never go away, but as renewable energy overtakes coal and natural gas, they will have a stabilizing effect. Once you build wind and solar projects there are very few operational and maintenance costs, protecting the consumer from energy spikes during times of high inflation in other sectors of the economy.
It won’t cost more to run your house on that clean electricity, either. A single unit of solar or wind power costs the same as a unit of energy generated from natural gas or coal, according to the IEA report, and the price is estimated to decline as the technology becomes more advanced. The levelized cost of coal, natural gas, wind and solar power all stand in the range of 5 cents to 8 cents per kWh in 2024.
The Wisconsin case
Wisconsin consumes six times the amount of energy it produces, making the cost of nonrenewable energy — which must be carted in via thousands of miles of underground pipelines — high and climbing. At the same time, clean energy investment has yet to produce the stabilizing effect that the IEA predicts will come.
WeEnergies, Wisconsin’s largest renewable energy investor, has pledged to spend $7 billion by 2028 on the transition to clean energy.
In April, the utility applied with the Public Service Commission (PSC) — a board of three governor-appointed commissioners who represent consumer interests and decide whether utilities are allowed to change rates or services in Wisconsin — to raise energy rates 18% over the next two years. This would be the third and largest increase in as many years, and hundreds of people have flooded the commission with personal stories of energy insecurity and opposition to the proposal.
Brenden Conway, a spokesman for WeEnergies, said the additional revenue from the increase will primarily go toward clean energy initiatives like the Paris Solar Center and the Darian Solar Center, currently under construction and projected to be operational by the end of the year. The solar farms together have the capacity to power 135,000 homes.
“We want to reduce outages and invest in renewable infrastructure,” Conway said. “There is a lot of confusion about what is part of this filing, but customers are only paying for the services they are getting from WeEnergies.”
Clean energy accounts for only about 13% of Wisconsin’s energy mix, and of the 114 power generation facilities currently in operation, 76 provide renewable energy. Most of Wisconsin’s power comes from natural gas, but, as wind and solar power begin to take over families like Beltran’s will see the stabilizing effect of clean energy reflected on their bills.
Roxana Ayala, a senior research analyst at ACEEE, said families with low or fixed incomes are the most effected by high energy costs, and the promise of future change will not help them cope with energy insecurity now. Beltran agreed.
“Clean energy is the goal, but the utility and the government should pay for that because we just can’t afford it,” she said.
Conway doesn’t want customers to simply grit their teeth and endure until Wisconsin catches up to the national trends, though. “I will say what we have always said — if customers are struggling with their bills, they have to reach out to us,” he said.
WeEnergies employed a Low Income Forgiveness Tool (LIFT) after the pandemic to help customers catch up on overdue balances exceeding $300, and all utilities in the state are working with the PSC to create a Percent of Income Payment Plan (PIPP) program.
With five new wind and solar projects being proposed over the next couple of years by WeEnergies, households may see a cooling effect on their energy bill very soon.