Rising Energy Costs Overshadow Sustainability Efforts in U.S. Utility Sector

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With the average electricity rate in the United States increasing by nearly 3% and the cost of summer cooling projected to rise by 8% this year, both residential and business electric utility customers are becoming increasingly concerned with energy prices. According to the J.D. Power 2024 Sustainability Index, only 21% of electric utility customers are aware of their utility provider's carbon reduction initiatives, despite the fact that 80% of U.S. utility customers are served by a utility that has set a 100% carbon reduction target. Energy prices are nearly three times more likely than environmental issues to be cited as the most important energy-related concern among customers.

Utility Communication and Customer Awareness Challenges

Utilities face significant challenges in gaining customer support for sustainability targets, which are essential for justifying rate cases, supporting infrastructure projects, and promoting consumer usage and behavioral changes. Andrew Heath, vice president of utilities intelligence at J.D. Power, explains that without increased awareness and reduced pessimism about climate change, utilities face an uphill battle. Effective communication of the goals and benefits of clean energy strategies is crucial for building the customer participation required to achieve these sustainability targets.

Key Findings from the 2024 J.D. Power Sustainability Index

Sustainability Awareness Slowly Increases: Awareness of sustainability efforts among electric utility customers has increased slightly, with 21% aware of their utility's greenhouse gas emission reduction goals, compared to 19% in 2023. The overall sustainability score, which measures customer awareness, engagement, and advocacy for local utility climate initiatives, has risen to 32 out of 100, up 5 points from the previous year.

Affordability Prioritized Over Environmental Concerns: When asked about the most important energy-related issues facing their families or businesses, 18% of respondents cited energy prices, while only 6.4% pointed to environmental issues.

Growing Pessimism About Addressing Climate Change: An increasing number of customers, 21%, now believe that "nothing" or "very little" can be done to mitigate climate change. Additionally, the percentage of customers who view climate change as a "serious" or "very serious" issue has decreased to 51% from 53% in 2023.

Skepticism About Achieving Clean Energy Goals: On average, only 28% of customers believe their local electric utility will achieve its clean energy goals. There is significant variability among utilities, with top performers seeing more than 35% of customers expressing confidence in goal achievement, while others have less than 25%.

Top-Performing Utilities: The highest-scoring utilities in the 2024 index are the L.A. Department of Water & Power and Sacramento Municipal Utility District, each scoring 39. Other top performers include NextEra Energy and Con Edison, both scoring 38.

Utility2024 Sustainability Index Score
L.A. Dept. of Water & Power39
Sacramento Municipal Utility District39
NextEra Energy38
Con Edison38
Edison International37
Southern Company37
DTE Energy37
Salt River Project36
Puget Energy35
Portland General Electric34
CPS Energy34
Dominion34
Exelon34
Pacific Gas and Electric33
CMS Energy33
Duke Energy33
Xcel Energy32
Emera32
Sempra Energy32
Entergy32
Pinnacle West32
Ameren31
Berkshire Hathaway Energy31
PSEG31
National Grid31
Duquesne Light30
PPL Corporation29
Alliant Energy29
OGE Energy Corp.28
Evergy28
Eversource28
AEP27
WEC Energy Group27
FirstEnergy25
Avangrid24

Evaluating U.S. Electric Utilities: A Comprehensive Overview

The J.D. Power Sustainability Index evaluates electric utility customer awareness, support, engagement, and advocacy for local utility climate sustainability programs and goals. The index applies to the 35 largest U.S. electric utility companies and cities, each serving 500,000 or more residential customers. It is based on responses from 73,255 business and residential electric utility customers collected from June 2023 through May 2024.

For more information about the J.D. Power Sustainability Index visit J.D. Power's Sustainability Certification Program.

 

Environment + Energy Leader