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Low-Income Households To Bear The Brunt Of All-Electric Homes

Switching from natural gas to electricity for U.S. homes will result in higher energy bills, which will impact mostly low-income households, new research showed on Thursday.  

The push to switch away from natural gas—a fossil fuel—to electricity in homes is aimed at addressing emissions from buildings and residential energy consumption. Yet, the push has the potential to hit financially low-income American households, Catherine Hausman, an associate professor at the University of Michigan’s Ford School of Public Policy, and Lucas Davis of the University of California, Berkeley’s Haas School of Business, argue in their paper.

According to the co-authors, the switch to electricity from natural gas is set to impact bills, but this impact would be most felt by lower-income households and could “often exacerbate existing societal inequalities.”

The research, which used historical evidence of utilities’ customer base, found that utilities that lose natural gas customers will have to pass on the costs of maintaining legacy pipeline networks to a smaller pool of customers.

According to the paper, a 15-percent reduction in the number of residential gas customers would mean that bills would rise by around $30 per year for the remaining customers. For a 90-percent reduction in nat gas customers, those bill increases would be an extra $1,500 per year.

The researchers found high rates of customer base loss in cities with large African-American populations, in parts of the Rust Belt and Appalachia, and in some rural areas.

“Thus the places where remaining customers face higher prices may be places with broader economic challenges, making it even more difficult for these remaining customers to pay rising bills,” the co-authors wrote.

The researchers offered several ideas about how this problem could be solved, including targeted electrification for areas, charging exit fees, or broadening the customer base.

Rising energy bills and rising costs of building and maintaining an all-electric new home are key concerns in the ongoing battle between many U.S. states and their cities, and the gas lobby versus environmentalists.

By Tsvetana Paraskova for Oilprice.com

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