“No one has more to gain from electrification than low-income and moderate-income households.”

With that, Scott Blunk set the agenda for a small team that had gathered at a Utah ski resort earlier this year to address a thorny challenge: How does a not-for-profit municipal utility that has committed to eliminate carbon from buildings ensure that its most disadvantaged customers aren’t left behind during the transition?

Blunk, a strategic planner with the Sacramento Municipal Utility District (SMUD), had assembled a diverse group of stakeholders with expertise in energy policy, green building, energy efficiency retrofits and program implementation.

SMUD had previously launched the nation’s most aggressive initiatives to encourage all-electric homes. The utility offers homebuilders incentives worth up to $5,000 for each all-electric new single-family home built under its All-Electric Smart Homes program. Homeowners, meanwhile, can claim incentives worth up to $13,500 toward the gas-to-electric conversion of existing homes under SMUD’s Go-Electric Bonus Package.

Now Blunk wanted to figure out how to extend the reach of the utility’s building electrification push to its low-income customers. Initially he outlined a goal of launching a full-fledged low-income electrification program within a year.

In the end, SMUD achieved the same goal by embedding electrification within its existing low-income energy efficiency program. On August 1, Blunk’s colleague Darin Schrum, who runs SMUD’s low-income energy efficiency program and attended the Utah workshop, got the green light to begin incorporating electrification into retrofits.

By the end of November, SMUD contractors had installed 105 air-source heat pumps, 13 heat pump water heaters and 10 induction stoves/ranges for low-income households across Sacramento.

Embedding electrification in an existing program

The SMUD equitable electrification team was in Utah for Rocky Mountain Institute’s annual e-Lab Accelerator. Each year, the event brings together around a dozen teams comprising a half-dozen stakeholders to tackle discrete electricity industry challenges over several days of informal facilitator-led discussions.

The meetings are intended as a safe space for representatives from utilities, government agencies, energy companies and nonprofit organizations to find common ground and solve problems. All parties agree to abide by the same attribution rules: Participants can talk about what was discussed during sessions, but no one can be quoted without the speaker’s consent. Greentech Media’s correspondent, who was invited by RMI to report on the event* and shadowed the SMUD team, operated under the same rules.

For three days, the SMUD team in Utah talked about challenges involved with delivering energy services to the low-income sector: an alphabet soup of funders and program implementers, program restrictions, lack of funding, and barriers to stakeholder collaboration, among others.

For Blunk, a guiding principle for the group’s discussions was the belief that low- and moderate-income households should be able to transition to gas-free electric appliances at the same rate as the rest of the population. The team saw potential benefits of that transition for building owners and tenants alike.

Landlords could see lower tenant turnover and attract higher rents. Tenants can live in safer, more comfortable homes with improved indoor air quality.

Recent research indicates that gas-burning appliances are responsible for producing hazardous levels of air pollution inside homes. One meta-analysis found that children living in a home with natural-gas cooktops have a 42 percent increased risk of asthma.

Low-income tenants in SMUD territory could see lower utility bills with electrification too.

According to a study by the consultancy E3, because SMUD’s electricity rates are among the lowest in California, customers in existing single-family homes who replace gas-burning furnaces and water heaters with electric air-source heat pumps and heat pump water heaters could save up to $750 annually. For customers in existing low-rise multifamily buildings, the shift could result in utility bill savings of around $300 annually.

On the third day in Utah, a member of the SMUD group proposed a shortcut. Was there anything stopping the utility from installing electric heat pumps, heat pump water heaters, or induction cooktops in low-income homes today?

According to Darin Schrum, SMUD’s low-income energy efficiency program provided services to nearly 6,300 households in 2018. But those homes weren’t being electrified.

Under its integrated resource plan, SMUD will invest $1.7 billion over the next 20 years to electrify buildings and transportation in pursuit of achieving net-zero emissions by 2040. SMUD wants to electrify all 75,000 low-income households, and 80% of all homes, in its territory by that year.

Schrum said electrifying low-income homes could be done under his existing program. It would just require a change of mindset.

Putting numbers on the board

After the SMUD team returned to Sacramento, they set about incorporating electrification into the low-income energy efficiency program.

“There was already support at the board and executive level. It was more identifying how we were going to support those strategic directives,” Schrum told GTM in a recent interview. On August 1, he received the formal go-ahead.

“The marching orders were: Put some numbers on the board, and we’ll figure out how we’re going to organize a process later,” Schrum said. They started with the biggest carbon-saving measure: fuel-switching space heating.

“We started working with our vendors to transition any home in our low-income program that was being retrofitted and having their HVAC replaced, to make every effort to retrofit with a heat pump,” said Schrum.

Vendors who participated in SMUD’s existing Home Performance Program were already familiar with qualifying heat pump models for the Go-Electric Bonus Package.

SMUD counts any gas-to-electric space heating conversion as a fuel-switching. Schrum said SMUD is now fuel-switching more than 80 percent of the low-income homes it goes into.

Any customer enrolled in SMUD’s energy assistance program qualifies for an in-home energy audit and weatherization services. Services are provided at no cost to the customer.

Since the launch of its electrification efforts, SMUD has recruited low-income customers for a pilot program of extended services, including installation of heat pumps and induction ranges.

“We base our recruitment on smart meter data that indicates inefficient equipment, meaning the customers most effected are recruited for further assistance,” said Schrum.

Interviewed with Schrum, Blunk commented on how much faster and easier it was to embed electrification in SMUD’s existing low-income energy efficiency program.

“Instead of starting on August 1, we would have started, like, August 1, 2021,” he said. “It’s maybe a little more chaotic for Darin. But it allows us to build the plane while we fly it and adjust along the way.”

Schrum hasn’t been given a dollar limit on the low-income electrification retrofits.

“If anything...[exceeds] $15,000, I start scrutinizing it pretty heavily,” he said. “And with a full electrification, we have a lot of stuff coming in between $10,000 and $15,000.”

In older homes, a full electrification might require upgrading an outdated 100-amp electrical service panel to a 200-amp unit and pulling additional wires off the distribution line feeding the home to support electric appliances requiring 220 volts.

In low-income homes where SMUD can’t make structural changes or replace HVAC units, the utility provides customers a bundle of energy-saving products including LED light bulbs, surge protectors, a Dyson fan, and, soon, portable induction hot plates.

*Disclosure: RMI provided room and meals for Greentech Media’s correspondent at e-Lab Accelerator. GTM retains full editorial control over coverage of the event and its outcomes.