Low-income energy affordability in an era of U.S. energy abundance

Abstract

In an era of U.S. energy abundance, the persistently high energy bills paid by low-income households is troubling. After decades of weatherization and bill-payment programs, low-income households still spend a higher percent of their income on their electricity and gas bills than any other income group. Their energy burden is not declining, and it remains persistently high in particular geographies such as the South, rural America, and minority communities. As public agencies and utilities attempt to transition to a sustainable energy future, many of the programs that promote energy efficiency, rooftop solar, electric vehicles, and home energy storage are largely inaccessible to low-income households. This review describes the ecosystem of stakeholders and programs, and identifies promising opportunities to address low-income energy affordability, such as behavioral economics, data analytics, and leveraging health care benefits. Scalable approaches require linking programs and policies to tackle the complex web of causes and impacts that financially constrained households face.

A measurement strategy to address disparities across household energy burdens

“…While a variety of thresholds have been developed and explored, energy-poor households in the US are commonly defined in terms of E b as those with an expenditure of greater than 6% of household income on energy based on the logic that energy expenditures should not be greater than 20% of housing expenses, which themselves should not exceed 30% of household income 8 . Calibrating our N h analysis to this level will help gauge different thresholds of energy poverty and benchmark the results of this paper to the energy poverty literature while acknowledging the continuum of experiences across household energy consumption.…”

“…Many frameworks are currently being explored to understand energy poverty and equity, while differentiating between related concepts. In a thematic exploration of energy equity, Brown et al identify energy access, energy poverty, energy insecurity, and energy burden as key concepts for understanding the issue 8 , but quantitative measurement of these concepts has been limited. Pachauri & Rao establish measures for the sustainable development context that incorporate periods when energy is available, the quality of voltage supplied, the reliability in terms of the number of disruptions, the capacity in terms of power available, the consumption levels allowed per day, and affordability of the standard consumption package as a percentage of household income 9 .…”

“…In the US, energy inequity is a significant challenge as families struggle to meet monthly bills and live paycheck to paycheck 11 . There is a growing disparity between wealthier and lower-income households based on their abilities to meet basic energy needs 8 . While per-unit residential energy prices have increased below the rate of inflation in the US since the 1980s 22 , many households still struggle to make utility bill payments and are especially vulnerable to economic shocks 21 .…”

Characterizing the Energy Burden of Urban Households in Mexico: The Impact of Socioeconomic and Temperature Conditions Across Metropolitan Areas

“…Three main directions are identified in literature (Schuessler, 2014;González-Eguino, 2015;Tirado Herrero, 2017;Agbim et al, 2020): (1) comparing the level of domestic energy services vs a predefined standard for a quantitative measure of accessibility and/or adequacy of energy services, (2) expenditurebased indicators for a quantitative measure of affordability of energy services, and (3) subjective qualitative assessments of energy-related living conditions. Studies of energy poverty in developing countries traditionally focus on accessibility of energy services (Nussbaumer et al, 2012;García Ochoa and Graizbord Ed, 2016;Sadath and Acharya, 2017;Santillán et al, 2020), while high electrification rates and rising energy costs have extended energy poverty studies to adequacy and affordability of energy services, mainly in OECD countries (Drehobl and Ross, 2016;Dubois and Meier, 2016;Thomson et al, 2017;Brown et al, 2020).…”

“…High energy burdens can result in energy insecurity and create a negative feedback loop that reinforces social inequality (Urban, 2019;Drehobl et al, 2020). According to Brown et al (2020), low-income households often make tradeoffs between meeting alternative critical household expenditures like rent, food, healthcare or telecommunications, to avoid energy shut-offs. This can lead to or exacerbate poor health due to constant thermal discomfort and stress caused by the uncertainty of affording energy bills (Agbim et al, 2020;Drehobl et al, 2020;Memmott et al, 2021).…”