Braided Funding is Reshaping Affordability for Utility Customers
As affordability pressures mount, utilities are turning to braiding, which combines multiple funding sources to serve more income-qualified households that single programs can‘t reach.
Across the country, more customers are feeling the strain of rising energy costs, pushing affordability to the forefront of utility priorities.
At its core, utility affordability means customers can reliably access essential energy services with bills that are manageable and predictable, and do not force tradeoffs with other basic needs. For an increasing share of U.S. households, that standard is becoming harder to meet.
The urgency is showing up across the utility industry. Policymakers in a growing number of states have made affordability a stated priority through executive orders, energy plans, legislation, and regulatory engagement. The issue is also surfacing alongside rate cases and major infrastructure proceedings, including those tied to data center load growth. At the same time, many utility demand-side management (DSM) program costs are facing increased scrutiny and tighter budgets even as customer needs grow.
Utilities are being asked to deliver meaningful affordability outcomes in an environment where both expectations and constraints are increasing.
One effective lever is braided funding, which combines existing utility program incentive dollars with funding from the public and private sectors to do more for customers with the offerings utilities already have in place.
This article explores how braiding works, why it is emerging as a response to affordability constraints, and what two utilities have learned from putting it into practice.
The affordability challenge facing utilities
Utilities are accountable for outcomes shaped by factors they do not fully control. Collectively, supply costs, large-load impacts, legislative mandates, and cost allocation rules influence customer bills. And while the underlying drivers are complex and beyond their reach, utilities must be able to explain those factors to customers and regulators. Utilities have greater influence over other factors, including the design and delivery of energy efficiency programs, customer engagement, and rate design.
Affordability pressures touch every customer segment, but they are most acute for income-qualified households, customers who spend the highest share of their income on energy and have the least margin to absorb rate increases or unexpected bills.
The strain shows up in the numbers: roughly 23% of households were unable to pay an energy bill at least once over a 12-month period, and more than 21 million households are in arrears.
The energy efficiency and DSM programs designed to serve these households face their own limitations, including historically small budgets and siloed delivery models, which prevent the most comprehensive solutions from reaching those who need them.
Why so many homes never get served
Deferrals illustrate these underlying constraints clearly. When a home enrolls in a weatherization or DSM program, an auditor visits to determine which measures to install. If the auditor identifies existing conditions that make the work unsafe or ineffective, the home is deferred: the efficiency work does not move forward until those issues are resolved.
The scale of deferrals is large. About 19% of income-eligible households were initially deferred from the WAP in 2023 due to repairs needed to address pre-existing conditions and health and safety issues. A 2024 ACEEE survey found that resolving the conditions that cause a deferral costs between $2,000 and $25,000 per home, with a mean of $13,870. Deferrals delay savings while expending auditor time and resources on households that never get served.
The issues that trigger deferrals include health and safety (H&S) conditions and structural deficiencies: envelope damage such as roof leaks, floor or framing damage, foundation problems; unsafe or outdated electrical systems; plumbing leaks; failed gutters; and the presence of pests, asbestos, or mold.
Because these repairs do not produce energy savings on their own, utility DSM funding—which is justified by the savings they generate—typically cannot fund them. The U.S. Department of Energy‘s Weatherization Assistance Program (WAP) can cover this work but cannot reach enough homes on its funding alone. As a result, the prerequisite repairs fall into a gap between funding sources, and the programs stall there. The customers who experience the deepest energy burden are also the ones most likely to be turned away at the audit stage.
The braiding solution
Braiding offers a path forward. It combines multiple funding streams on a single project while keeping each stream’s compliance, reporting, and attribution requirements intact. In practice, this usually means pairing utility DSM dollars with federal WAP funding, and sometimes layering in other state and local resources, as well as philanthropic donations from corporations, hyperscalers, and/or data centers.
Braiding vs. stacking
Both braiding and stacking extend a program’s reach by bringing in additional funding sources to serve more homes, but they differ in how costs are attributed.
Under braiding, multiple funding streams support a single project, with each measure’s cost assigned to one source so that no expense is paid twice.
Stacking, by contrast, allows multiple funding sources to contribute to the same measure or project cost, subject to program rules on cost caps and attribution. Braiding’s strict single-source attribution helps prevent double-counting of savings and double-dipping of incentives.
The braiding model succeds because the funding sources cover different aspects of the apartment or home’s upgrades. To allow weatherization work to move forward, WAP typically funds the structural and health and safety measures that resolve the conditions causing deferrals. Then, utility DSM funds the energy efficiency measures themselves—such as HVAC, insulation, air sealing, lighting, and water heating—that produce the savings utilities are accountable for.
The model can turn a modest investment into an outsized one: relatively small health and safety investment can unlock a significantly larger energy efficiency investment. A home that would have been deferred at the audit stage becomes a candidate for a full retrofit. Auditor time stops being wasted, and the utility’s DSM dollars extend to homes that single programs cannot.
Notably, braiding is not necessarily easy. Each funding source carries its own eligibility rules, reporting requirements, and compliance tracking, and those do not dissolve when the funds are combined. Three things make it work in practice:
- A delivery partner with WAP access, typically a community action agency or community-based organization.
- Integrated processes, so customers do not have to navigate two programs to get one outcome.
- An integrator role that aligns the compliance rules, project scopes, and partner workflows across funding sources, so the model is replicable.
While some utilities may hesitate to adopt braiding due to perceived higher administrative costs, ICF has developed streamlined coordination processes that reduce the implementation burden and enhance cost-effectiveness.
Proof in practice: How two utilities are making braiding work
Successfully braiding funding requires both sound financial structuring and strong operational partnerships. Entergy Arkansas and a prominent Midwest utility show how this model works in practice.
Partnership on the ground
Entergy Arkansas’s Low-Income Solutions Program is a long-running energy efficiency program that braids utility efficiency funding with WAP. ICF serves as the program implementer;; Better Community Development, Inc. (a community organization,) provides WAP services and installs the weatherization measures; and the Arkansas Energy Office administers WAP and partners with Entergy to fund the braided projects.
Several design choices make the partnership work. The utility and weatherization programs use a single intake process and common paperwork, reducing administrative burden for both customers and delivery partners. Utility processes are aligned to the workflows of Better Community Development and WAP, rather than the other way around, which drives higher participation and improves scalability. Shared referral pathways and pipelines let both programs serve more households, shifting the dynamic from competing for customers to coordinated service delivery.
Attribution stays clean throughout. On a braided project, each measure’s savings and costs are assigned to a single source: efficiency measures such as insulation, air sealing, and duct sealing are claimed by the Entergy program side; LEDs and HVAC replacement fall to the Better Community Development’s/WAP side; and health and safety work is split between both. This keeps each program’s accounting separate and defensible.
The results show what that model delivers. In 2024, half of Better Community Development’s multifamily WAP projects were braided with Entergy’s program funding. Since the program launched, Entergy and WAP funding have combined on 119 braided projects spanning single-family, manufactured, and multifamily homes.
On one representative braided project, roughly $2,100 in the Entergy program funding combined with about $8,200 in WAP-funded work to deliver a single $10,300 whole-home project, with no measure double-counted and no incentive double-dipped.
That split is typical across the housing types the program serves. Because Entergy’s program funding pays for the efficiency measures, the average WAP investment per home is lower, which means WAP’s fixed budget can serve more homes than it could alone. Braiding also widens what a home can receive, as a single braided project can cover the full scope from the energy audit through insulation, HVAC repair or replacement, ventilation, and health-and-safety fixes, where each program alone reaches only part of that list.
Health and safety funding as permanent infrastructure
One Midwest utility delivers braided upgrades through two programs: its multifamily program and its income-qualified programs. Within these, utility rebates are used alongside WAP-funded measures on the same projects.
Across the programs, utility rebates for HVAC, water heating, envelope, and lighting are coordinated with WAP-funded measures (such as audit-driven upgrades, health and safety, and ventilation work), with each source maintaining its own compliance and cost-tracking requirements. In the income-qualified program, utility rebates are set and applied consistently to cover the full measure cost whenever possible, whether or not a project also includes WAP-funded measures. The multifamily program goes a step further, layering an owner or property contribution onto the same project as a third funding source.
This structure is what lets the utility take on bigger work. Splitting the cost of major measures like heat pumps across funding sources expands project scope beyond what any single program could fund alone, and established partnerships with community organizations streamline intake, audits, and project delivery.
The EEA program’s H&S investment has grown substantially year over year, resulting in nearly 2,500 households served over the past two years.
Health and safety funding has been central to that progress. It began as a pilot and became a required, permanent program component because of its measurable impact on reducing deferrals and enabling project completion. Annual health and safety investment now reaches multi-million-dollar levels, precisely the scale required to actually move the deferral needle.
The income-qualified program’s health and safety investment has grown substantially year over year, resulting in nearly 2,500 households served over the past two years.
| Program Year | Total Households with Health and Safety Spend | Total Health and Safety Spend | Average Health and Safety Spend per Household |
| 2024 | 962 | $ 4,732,604 | $ 4,920 |
| 2025 | 1481 | $ 6,161,813 | $ 4,161 |
What braiding means for utilities
For utility leaders facing tight budgets and rising scrutiny, braiding turns a delivery tactic into a strategic advantage. It serves more homes per dollar, since resolving deferral barriers lets existing budgets reach customers they otherwise couldn’t. It produces higher savings per home, because whole-home upgrades deliver more durable, substantive bill impact than single-program measures. And it yields outcomes that hold up to scrutiny, providing concrete proof that program dollars are reaching the customers with the steepest energy burden.
This is the deeper lesson of braiding. Affordability pressure and program innovation are not at odds. Braiding shows how the right structure lets utilities do more with the budgets they already have, connecting with customers that traditional models leave behind, including rural markets and housing.
What turns a one-off success into a model a utility can run at scale is integration: aligning compliance, project scopes, and workflows across funding sources so the approach is repeatable rather than rebuilt for every home. ICF has established that integrator role in programs like Entergy Arkansas’, helping utilities braid utility, federal, and third-party funding into comprehensive service.