Regardless of income level, people today need energy to live—to heat their homes, preserve food, and function in an increasingly digital society. Energy is not a discretionary expense. But what percentage of a household’s income should be allocated to pay energy bills?
A 2016 study by the American Council for an Energy Efficient Economy (ACEEE) and Energy Efficiency for All (EEFA) found that low-income households pay proportionally more than the average household for energy, creating an “energy burden.” It defines this energy burden as its total annual energy utility spending as a percentage of total annual gross household income.
As the report explains, a utility bill that represents 3% of the annual household income for a middle-income family can amount to 8% of another family’s income, creating a disproportionate energy expenditure.
“The data we examine show that the median energy burden for low-income households is more than two times that of the median household (7.2% and 3.5%, respectively), and three times greater than higher income households (2.3%).”
Some of the disparity can be attributed to physical differences in construction. Because low-end housing is typically less energy-efficient than better-constructed, middle-income properties, individuals with lower incomes aren’t just paying a greater proportion of their income for energy, they’re paying more per square foot. Costs incurred as a result of inefficiencies can have a broader effect, the report explains, causing families to face trade-offs between energy and other basic necessities such as food and medical care.
A recent CityLab article details the energy inequity in New Orleans, LA, where for many residents, energy bills consume 20% of their income. According to author Michael Isaac Stein, energy costs in the area increased at three times the rate of rent between 2000 and 2010. Some residents are paying utility bills that are as much as their mortgage.
Is it fair that low-income individuals spend a higher share of their income on energy? What solutions are available to moderate the disproportionate expense?
The study’s authors propose a number of strategies. First, they suggest the improvement and expansion of existing low-income bill-assistance programs such as the Weatherization Assistance Program (WAP) and the Low Income Home Energy Assistance Program (LIHEAP). They also advocate for the strengthening of policies to prioritize investment in low-income energy efficiency.
What solutions do you propose for easing the inequity?