New research from the American Council for an Energy-Efficient Economy (ACEEE) shows that a quarter of low-income households in the United States spend more than 15% of their income on energy bills. Consistent with ACEEE’s previous research, the new policy brief found that on average low-income residents, Black households, and Hispanic households experience higher energy burdens—the share of income spent on energy—than other households.
ACEEE also examined household energy burdens in 25 of the largest metro areas, finding that a significant share of low-income households face severe energy burdens. In 23 of the 25 regions, one in four low-income households have energy bills that exceeded 10% of income, the level at which an energy burden is considered severe. Households facing energy burdens often face difficult choices between paying energy bills and buying other essentials, like food and medicine.
“Low-income households are more likely to reside in older and less energy-efficient homes that have inadequate insulation, drafty air leaks, and outdated heating and cooling systems. The households that are least able to afford the upfront costs of home energy upgrades are the ones that most need utility bill savings, so bringing low- or no-cost efficiency improvements to them is vital to reduce their burdens,” said Roxana Ayala, lead author of the policy brief and senior local policy research analyst at ACEEE.
In 17 of the 25 regions, the quarter of low-income households with the highest energy burdens pay 15% or more of their income on energy bills. For example, Baltimore has the highest energy burdens among the metropolitan regions ACEEE analyzed, with one in four households paying an average of 26% of income on energy bills. The Boston, New York City, and Rochester metropolitan areas also have energy burdens topping 20%.
Of the low-income households included in the Census Bureau data on which ACEEE’s new policy brief is based, about half own their homes. Low-income renters and homeowners face challenges in affording energy and housing, partly because they often live in older and less energy-efficient homes.
With the Inflation Reduction Act and the 2021 bipartisan infrastructure law providing unprecedented support for energy efficiency, policymakers and regulators have an opportunity to leverage a combination of federal, state, local, and utility funding sources to reduce energy use in low-income households through efficiency upgrades that reduce high energy burdens.
ACEEE’s brief recommends that policymakers and regulators prioritize low-income households—both renters and homeowners—for energy efficiency investments, eliminate barriers that many disinvested households face in accessing energy programs, and increase funding for federal, state, local, and utility programs for efficiency and weatherization. The brief includes an appendix listing resources that provide actionable guidance on energy equity and how to lessen the energy burdens of low-income households.
ACEEE calculated energy burdens using data from the Census Bureau’s American Housing Survey, which is published in odd years. In addition to the 25 metropolitan areas ACEEE analyzed with 2021 data, it calculated energy burdens in 10 additional regions with 2019 data. ACEEE’s new policy brief is an update to its 2020 energy burdens report.
