Report Looks at access to Affordable Electricity and Gas
A report issued by the American Council for an Energy-Efficient Economy sheds light on the energy burden of American households; in particular, lower income households. The report looks at how much of their income households spend on electricity and other energy bills.
The report looks at what percentage of household income is spent on utility bills. It breaks down various demographics including income, race, and homeownership status. The report defines a high energy burden as paying more than 6% of income on energy bills. A severe energy burden is defined as paying more than 10% of household income on energy. Taken has a whole, over two thirds of low-income American household face either a high or severe energy burden.
Renters have higher energy burden (lower affordability) than homeowners
The report highlights several demographics as having higher burdens than average. These include:
Low-income households with older adults
Native American, Black and Hispanic Households
Those living in mobile homes
The report doesn’t seek to explain why renters do worse than homeowners in this metric. But possible factors that could impact the energy burden of renters include:
- Income – renters on average have a lower income than homeowners
- Lack of weatherization and energy efficiency – Since landlords typically aren’t the ones paying electricity bills, they are not incentivized to invest in improvements aimed at lowering utility bills. Renters aren’t likely going to be living in the home long enough to make such investments themselves.
- Older Homes – Rental properties are more likely to be older homes. The report shows that households living in homes built before 1980 have an above average energy burden
Geographical Breakdown: Affordable Texas Energy compared to other areas
The study looked at 25 metro areas. Two of these areas, Dallas and Houston, are in Texas. Both Dallas and Houston performed better than the national average in terms of affordability (called energy burden in the study) for low income households. The percentage of low income households with high or severe energy burdens was 6.7% and 7.1% respectively. This compares to a national average of 8.1%.
This might be taken as a surprise given that, in general, Texans spend more on electricity than other parts of the country. Texas electricity rates tend to be lower than other areas. But a warm client leads to more kilowatt hours of electricity used on average by Texas households. It should also be noted that energy utilities don’t just include electricity. They include natural gas for heating, cooking etc… In parts of the country where heating is more of a priority than cooling, gas bills will be higher relative to electricity bills.
How higher electricity bills impact households
High electricity bills can impact households in several different ways including:
- Health and comfort
- Mental Health
- Inability to benefit from economic development and get ahead financially
The Importance of weatherization in reducing energy costs
The report discusses weatherization as an important way to save money and reduce energy bills. Of course, it also helps the environment by reducing our carbon footprint and reliance on fossil fuels.
Weatherization refers to the practice of using insulation, caulking, and sealing techniques to reduce energy consumption. This is accomplished by weatherizing your home with various materials that will effectively keep you from having to spend money on utilities throughout the year. In fact, these techniques can reduce household energy consumption by about 30% which means more money for other uses. These changes are fairly simple ones that don’t require any major renovations or structural changes. The challenge is that the households that could most benefit from such cost reducing measures are also the ones least likely to be able to afford them.
What electric companies could do to improve access to low cost affordable electricity
The report doesn’t talk specifically about what electric companies can do to reduce energy burdens. The focus is more on what can be done at the state, municipal, and community level. These recommendations include:
- Set specific goals with regard to energy affordability
- Identity specific groups effected by energy insecurity and build programs for them
- Increase funding at all leaves for energy efficiency and weatherization
- Offer financing options
Impact of electricity deposits on energy burden
Though it wasn’t specifically addressed in the report, it is worth mentioning another factor other than electricity bills that can add to the energy burden of low income Texas households. This is the effect of deposits. Most electricity providers in Texas will ask for a deposit for new electric service if the applicant doesn’t meet certain credit thresholds or has a limited credit history. This tends to impact those who are already struggling financially. This further adds to their energy burden. There are no deposit electricity plans available to people with credit issues. These tend to be prepaid plans.
To read the full report: Visit Here