Low income households can pay 3x the percentage of their family income on electricity; policies and programs need to adapt

Monya’ (pronounced “Monet,” like the French artist) Chapman, 53, lives with her 77-year-old mother in a house she rents in West Baltimore, a neighborhood she describes as moderate- to low-income. She earns about $30,000 a year as a pharmacy technician, which, along with her mother’s monthly social security benefits, covers rent, food, and basic necessities like soap and toilet paper.

What often breaks her budget, however, is her monthly electric bill, an amount that can be staggering, sometimes as high as $350. “We budget well, but there still is not much left over to pay a $350 bill,” she said. “I have every intention of paying it, but sometimes I can’t because we have to eat.”

Chapman is not alone. A recent review of 48 major U.S. metropolitan areas released by the American Council for an Energy-Efficient Economy (ACEEE) found that low-income households spent three times as much for energy as other higher income households, and that these expenditures are especially hard on African Americans and Latinos. Another analysis, conducted by Groundswell, determined that the toll for low-income families is even higher, that they spend as much as ten percent of their income on electricity, more than four times higher than the average consumer.

Percent of household income spent on electricity by annual household income after taxes.

Percent of household income spent on electricity by annual household income after taxes.

CREDIT: GROUNDSWELL

“These residents are facing decisions every week about whether to keep the lights on or buy groceries,” said Michelle Moore, the chief executive officer of Groundswell, which organizes communities to find ways to switch to clean energy. “If you are one of those families, you aren’t thinking about replacing your refrigerator with a new Energy Star appliance. Your decision is where to allocate your money that week.”

The ACEEE report, issued in partnership with the Energy Efficiency for All coalition, found that, on average, low-income households pay 7.2 percent of their income on utilities compared to the 2.3 percent paid by higher income families. Also, the energy burden is greatest for low-income households in the following cities: Memphis (13.2 percent); Birmingham (10.9 per cent); Atlanta (10.2 percent); New Orleans (9.8 percent); Providence (9.5 percent); Pittsburgh (9.4 percent); Dallas (8.8 percent); Philadelphia (8.8 percent); Kansas City (8.5 percent); and Cleveland (8.5 percent.)

Many of these families are renters, not owners, which exacerbates the problem. They are responsible for their energy bills, but don’t have the authority to make changes in their homes to make them more energy efficient. Moreover, “their landlords have no incentive to improve efficiency because their tenants are paying the utility bills,” Moore said.

If low-income housing could be made as energy efficient as the average American home, the low-income energy burden could be eased by as much as 35 percent, according to the ACEEE report. For African American and Latino households, the numbers would be 42 percent and 68 percent respectively, the report said.

Federal, state and local governments have tried to ease this burden by implementing programs and policies designed to help, such as bill assistance or energy efficiency and weatherization programs. Many state utility regulators require utilities to provide bill assistance programs, as well as energy efficiency programs targeted to low income customers. But state and federal programs are underutilized, according to the ACEEE report.

“There is a huge gap in efficiency in the low-income sector,” said Khalil Shahyd, project manager for the Natural Resources Defense Council’s urban solutions program. “It is underserved by energy efficiency programs,” for reasons that include lack of outreach, as well as cumbersome application and eligibility requirements.

For example, landlords must be the ones who apply for assistance, not tenants, and they may be less motivated to do so since they aren’t paying the bills. Also, states often use a cost/benefit ratio to determine assistance, balancing the expenses of achieving energy efficiency against its benefits. The test is “very good at calculating the cost of retrofit, but very poor at quantifying the benefits,” Shahyd said. The test doesn’t take greenhouse gas emission cuts into account, for instance. “It doesn’t include the health benefits of having an energy efficient home — reducing asthma, for example — or the job benefits in hiring people to come in and do the work. For every dollar invested, as much as $2 goes back into the economy.”

As a result, energy-stressed cities and communities are trying to come up with their own solutions to support low-income customers. Many churches and neighborhood groups, for example, have formed purchasing groups to establish community solar projects. They also collect donations to help hard-pressed tenants pay their energy bills, and they provide them with food, so residents can avoid having to make difficult budgetary choices.

Percentage of families living in poverty paying more than $200 a month on electricity.

Percentage of families living in poverty paying more than $200 a month on electricity.

CREDIT: GROUNDSWELL

The New York City Housing Authority, for example, recently announced a new sustainability campaign that plans to provide energy and water efficiency upgrades in hundreds of its public housing developments, including possibly installing solar panels on rooftops. The agency hopes to solicit bids from private companies to do the work, and would use the energy savings to obtain loans to finance the work and to reinvest in the program.

In California, the state public utilities commission recently approved a major funding increase to support new energy efficiency measures for Los Angeles area low-income households, specifically to address possible future blackouts from the Aliso Canyon natural gas leak. As a result, Southern California Gas and Southern California Edison is now free to use nearly $250 million in previously unused funds for measures to save money and reduce electricity and gas waste via the state’s Energy Savings Assistance Program (ESA).

In the Midwest, Minnesota Interfaith Power & Light, a coalition of faith-based organizations working to mobilize support for climate mitigation actions, joined with a half dozen other groups in 2014 to form the Just Community Solar Coalition to bring community solar to low income neighborhoods in Minneapolis. Shiloh Temple International Ministries, a Pentecostal church in the heart of North Minneapolis has offered its building’s rooftop as a host site for a 200-kilowatt solar array set to come online during the summer of 2016.

The team also is planning a second array to be built in a Minneapolis suburb on the roof of a public works building.

The first project should produce enough power to offset the electricity use in about 50 homes, according to Julia
Nerbonne, executive director of Minnesota Interfaith Power & Light.

“People who enroll in the array will be member owners in a cooperative,” Nerbonne said. “They will end up saving 7% of their electricity in the first year, with the hope of seeing significantly greater savings after year six. The array will be built by a local workforce… They will also be able to tell a new story about how electricity generation can be a wealth generator for everyday people. Ultimately, our goal is to illustrate that we can generate wealth for all people if we lean into the solar revolution.”

Still, the Minneapolis project is not without problems. The team first must overcome several obstacles, including barriers to obtaining credit, and reticence to join from potential customers, Nerbonne said. “Even when projects like ours present opportunities for low income people to be part of an array, it is not always an easy sell,” she said. “Many low income families are not quick to trust a new business. They want to hear how it goes before they enroll. It has been humbling to see that even really good ideas can be hard to sell until they are proven.”

Nevertheless, she believes that the second project will go more smoothly, because “people can go down the street and take a look at the Shiloh Array before they sign up,” she says.

In Baltimore, the non-denominational Connexion Point Church, along with several other neighborhood churches, established a program in 1993 to provide energy assistance, food, and clothing to low-income residents of the area. More than a decade later, the church began housing a Baltimore city government outreach center that provides energy assistance grants for electricity turnoff notices, referral services, budget billing assistance, and no-cost weatherization and energy efficiency services.

The church itself also has provided hundreds of individual grants to families and individuals — including Chapman — who have faced turnoff notices from Baltimore Gas and Electric. “If I go to my pastor and tell him I’m having issues paying the bill, most times they will pay it fully, and it’s so helpful,” she says.

For the past six months, Connexion’s lead pastor, the Rev. Rayner Wharton, has been working with Groundswell to bring community solar to his Baltimore neighborhood. The idea is to give low- and moderate-income customers who can’t afford to buy and install solar panels — or renters, like Chapman, who are not allowed to install them — access to clean renewable energy.

“I’m excited about the potential of community solar projects coming to Baltimore,” Wharton said. “Through subscriptions to shares of a solar garden system, low- and moderate-income households will be able receive the benefits of solar energy without having to install equipment on their roofs, sign long-term contracts, or pay significant upfront costs. Nonprofits, churches, and other community organizations will be able to potentially host or sponsor a community solar project without significant investment money.”

For her part, Chapman needs no convincing. “I would love it,” she said. “I’m in.”

Marlene Cimons is a freelance writer who specializes in health, science and the environment.