A new report released by the American Council for an Energy-Efficient Economy (ACEEE) has revealed that low-income households, as well as black, Hispanic, and native American households, pay a much larger share of their income on energy bills.
This is in turn straining their budgets and putting them at heightened risk of utility shutoffs during the COVID-19 pandemic and recession.
Compared to white (non-Hispanic) households, Black households spend 43% more of their income on energy costs, Hispanic households spend 20% more, and Native American households spend 45% more. Low-income households (those with incomes below 200% of the federal poverty level) spend three times more of their income on energy costs than non-low-income households.
The study follows ACEEE previously finding that one-fourth of all US households and two-thirds of low-income ones have high energy burdens, meaning they spend more than 6% of their income on utility bills.
Two of every five low-income households have severe burdens, spending more than 10% of their income on energy costs.
Other key study findings include:
- Older adults also face disproportional burdens. The median energy burden of older adults (65+) is 4.2%, 36% higher than the energy burden for the median household overall, which is 3.1%.
- Housing type affects these burdens. Residents of manufactured homes have 71% higher energy burdens than average households. Households in multifamily (5+ unit) buildings have 23% lower burdens than average households, but low-income households in these same buildings have burdens 81% higher than average.
- Energy burdens trends are similar across cities. Though energy burden values differ across the 25 cities, the same groups experienced disproportionate energy burdens in each city. All cities have work to do to address high energy burdens for their most affected residents.
- Some cities have more highly burdened residents. Six cities have a greater percentage of households with a high energy burden than the national average (25%): Birmingham, Alabama (34%); Detroit (30%); Riverside, California (29%); Rochester, New York (29%); Atlanta (28%); and Philadelphia (26%).
- These burdens also vary by region. Residents of the East South Central region (Alabama, Kentucky, Mississippi, and Tennessee) have the greatest percentage of highly burdened households (38%).
To address high energy burdens through energy efficiency improvements, the report recommends:
- Federal lawmakers should increase funding for the Weatherization Assistance Program and for the Low-Income Home Energy Assistance Programme (LIHEAP).
- State and local governments should fund and implement energy efficiency and weatherisation programmes, separately or in conjunction with the federal programme.
- State public utility commissions should require utility-sponsored programmes for home energy efficiency improvements to serve low-income households at specified levels.
- Energy efficiency programme administrators should seek to integrate home energy efficiency improvements with other health interventions, leveraging health-related funding streams.
- Governments, utilities, private lenders, and organisations should seek to enable accessible and fair financing options for efficiency upgrades, such as “on-bill” financing, where upgrades are paid for with energy cost savings.
- Energy efficiency programme implementers should conduct collaborative and effective community engagement to create programmes that fit the needs of specific communities and target highly burdened households.
Ariel Drehobl, senior research associate at ACEEE and lead author of the report, said:
“Even before the recession, many people with high energy burdens had to cut back on other necessities like food and medicine to afford utility bills. Now, many of the same communities that were struggling to pay bills before the global pandemic are being hit the hardest by job losses and could be at particular risk for shutoffs ahead.
“From bad insulation to outdated heating or air conditioning equipment, there’s a lot of energy that’s just going to waste in many homes. If we focus on supporting those most in need to make their homes more efficient, those investments can go a long way to reduce their bills.”
Read more about the report.