A new study confirms that low-income households, households of color, multifamily households, and renting households spend a much larger percentage of their income on energy bills than the average family, providing new evidence of the urgent need to expand energy-efficiency programs to vulnerable communities.
The report, Lifting the High Energy Burdens in America’s Largest Cities: How Energy Efficiency Can Improve Low-Income and Underserved Communities, offers new insight into the hardships faced by urban low-income households — including African-American and Latino households and renters in multifamily buildings — all of whom pay a disproportionate amount of their income for energy.
The study by the Energy Efficiency for All project (a coalition which includes NRDC and the American Council for an Energy-Efficiency Economy) highlights the energy burdens on families in 48 large U.S. cities. It casts a spotlight on the opportunities to use efficiency to reduce these burdens, while cutting power-plant pollution that drives dangerous climate change.
Energy burdens are not equal
The big picture findings from the report: The overwhelming majority of single-family and multifamily low-income households (those with income at or below 80 percent of area median income), households of color, and renting households experienced higher energy burdens than the average household in the same metropolitan area.
For example, low-income households — many of whom live in older housing with poor ventilation as well as aging, inefficient appliances and heating systems — spend, on average, 7.2% of their income on utility bills, which amounts to about $1,700 annually out of $25,000 in median household income. That is more than triple the 2.3% spent by higher-income households for electricity, heating, and cooling.
African-American households experience a median energy burden 64% greater than white households (5.4% and 3.3%, respectively), and Latino households had a median burden 24% greater than white households (4.1% and 3.3%, respectively).
Meanwhile, Memphis had the highest energy burden for low-income households, with residents spending, on average, 13.2% of their income for energy. The median annual income for low-income residents of Memphis is $19,157, meaning that a family would be paying a whopping $200 a month ($2,400 a year) for energy to keep the lights on and their homes comfortable.
In fact, in 17 of the cities in the report, a fourth of low-income households experienced an energy burden greater than 14%.
Low-income households in the Southeast and Midwest, while having among the lowest average energy prices, had the highest average metropolitan energy burdens. While this report did not establish a causative relationship, we do know that Southeastern utilities have the lowest investment in energy-efficiency programs when compared to other regions.
Why this report matters
Poverty and discrimination in rental and housing markets drive low-income households and people of color into older, less efficient buildings with higher energy costs. (Property owners may not install the best energy-saving measures and appliances because the owners are not paying the utility bills.)
High energy burdens and poor housing quality then contribute to health problems: poorly heated or cooled homes contribute to asthma, respiratory problems, heart disease, arthritis, and rheumatism. Families struggling to pay energy bills may sacrifice nutrition, medicine, and other necessities, which compound the effects of inequality.
These issues are particularly acute for low-income multifamily households. Because they are largely underserved by existing energy-efficiency programs, the average low-income multifamily household has an energy burden more than three times higher than that of the average non-low-income multifamily household (5.0% and 1.5%, respectively) and had higher utility cost per square foot. In these homes, “energy expenditures run 37% higher per square foot than in owner-occupied multifamily units (i.e. condos or cooperatives), 41% higher than in renter-occupied single family detached units, and 76% higher than in owner-occupied single-family detached units.” Further, from 2001 to 2009, while average rents in multifamily housing increased by 7.5%, energy cost for these renters increased by nearly 23%.
The picture is also shown regionally. Findings from the study show that low-income multifamily housing represented the second highest energy burden (second to low-income in aggregate) in every region of the nation except California and the Midwest.
This is important because multifamily buildings represent approximately 25% of the housing units in the U.S. and comprise 20% of energy consumed by all housing, and more than half of all low-income families live in multifamily housing.
Despite these facts, low-income multifamily buildings are largely underinvested by energy efficiency programs and represents a large untapped resource potential.
Energy efficiency can ease hardships and benefit everyone
While the energy burden numbers are alarming, opportunities abound to ease the hardship on groups that have long been underserved by efficiency programs.
While many utilities operate energy-efficiency programs, as the report notes, much more can be done to reduce the energy burden on low-income households, including targeting efficiency initiatives to the long-overlooked low-income multifamily sector. One earlier study by Energy Efficiency for All found that increasing energy efficiency in multifamily affordable housing could cut electricity usage by as much as 26%.
Utilities can step up efforts to reach out to low-income households, such as offering financing for energy efficiency projects. Another opportunity is EPA’s Clean Energy Incentive Program, an element of the Clean Power Plan to limit carbon pollution from power plants. It rewards states for early investments in energy efficiency in low-income communities.
Bringing low-income housing to the efficiency level of the average U.S. home would eliminate 35% of the energy burden experienced by this population, the study’s authors found. The potential is even higher for African-American (42%), Latino (68%), and renting households (97%).
The 56-page report, coming at a critical time in the debate over climate change, is a valuable tool in guiding policy makers on where to target energy-efficiency investment. Those are real — and critical — dollars. The average family could save as much as $300 annually on utility bills.
Energy efficiency has long been an NRDC priority because it is the cheapest and fastest way to reduce power-plant pollution that harms our health and contributes to climate change.
Cutting energy waste benefits all of us — in cleaner air, a more reliable transmission grid, and a stronger economy. (Efficiency initiatives not only generate jobs, such as work installing insulation, but also save utility customers money they can spend for other goods.) In addition, when low-income households can’t pay their utility bills, it can lead to higher costs for all utility customers.
This report should be on the reading list of utilities, energy regulators, and anyone else looking to make the electric grid cleaner, more affordable, and more reliable.
It won’t be just underserved households that benefit from greater investment in energy efficiency. It will be all of us.
Khalil Shahyd is a project manager with the National Resources Defense Council whose work focuses on the Energy Efficiency for All Project. He also promotes the expansion of green communities in New Orleans. This post originally appeared on the NRDC Expert Blog.