One in every three Americans struggle to pay their energy bills, and that burden is three-times greater on low-income households.

One in every three Americans struggle to pay their energy bills, and that burden is three-times greater on low-income households.

One in three U.S. households faced challenges in paying energy bills in 2015

Nearly one-third of U.S. households (31%) reported facing a challenge in paying energy bills or sustaining adequate heating and cooling in their home in 2015. According to the most recent results from EIA’s Residential Energy Consumption Survey (RECS), about one in five households reported reducing or forgoing basic necessities like food and medicine to pay an energy bill and 14% reported receiving a disconnection notice for energy service. Households may have also used less energy than they would prefer to: 11% of households surveyed reported keeping their home at an unhealthy or unsafe temperature.

The 2015 RECS asked about these and other challenges, including paying energy bills and repairing broken equipment in the home. Households experiencing these circumstances, often considered components of household energy insecurity, may be making difficult financial tradeoffs about which basic needs to fulfill.

The 2015 RECS questionnaire captured both the occurrence of household energy insecurity and the severity of household energy insecurity in 2015, measured by the frequency of energy insecure events lasting anywhere from a few weeks to most of the year. Of the 25 million households that reported forgoing food and medicine to pay energy bills, 7 million faced that decision nearly every month. Of the 17 million households who reported receiving a disconnection notice, 2 million answered that this occurred nearly every month.

Occasionally, households may lose the use of heating or air-conditioning equipment entirely. This can occur when equipment breaks and a household cannot afford to fix it, as well as when a household cannot afford fuel for their equipment. The 2015 RECS results show that seven million households (6% of the national total) experienced the inability to use heating equipment at some point in 2015 and 6 million (5%) experienced the loss of air conditioning. These issues occurred during a year when overall energy-related expenditures were at their lowest point in over a decade.

Only minor differences were found across geographic regions of the country and between urban and rural respondents. This suggests that a household’s ability to afford energy and maintain equipment is more related to structural features and demographic characteristics than to geography and associated climates. For instance, households that included children, who had residents that identified with a minority racial group or as Hispanic, or were low income experienced more energy insecurity. Households experiencing energy insecurity were also more likely to live in homes built before 1990. 

Additional information on household energy insecurity and energy usage in all homes is available in 2015 RECS reports, tables, and a public-use microdata file. Specific questions on this product may be directed to Chip Berry

Rural families overburdened by high energy costs

July 18, 2018 Khalil Shahyd

Rural families face the highest energy burdens of any household group in America and spend a much larger percentage of their income on energy bills than the average family, according to a new study published today by Energy Efficiency for All (EEFA) and the American Council for an Energy-Efficient Economy (ACEEE). The report, “The High Cost of Energy in Rural America: Household Energy Burdens and Opportunities for Energy Efficiency,” provides new evidence of the urgent need to expand energy efficiency programs to vulnerable communities in rural regions throughout the U.S.

The report is the first to focus on the energy burdens shouldered by those living in rural America. It builds on a previous report, Lifting the High Energy Burdens in America’s Largest Cities: How Energy Efficiency Can Improve Low-Income and Underserved Communities.

This report couldn’t come at a better time in a moment when the Trump administration’s Council of Economic Advisers released a report misreading and manipulating data to declare that the war on poverty has been a success. The administration’s aims are cynical at best and harmful to the wellbeing of many households and communities across the nation by punishing the poorest and most vulnerable. As this new report shows, poverty and deprivation not only persist but multidimensional and includes high energy burdens and increased vulnerability to utility shut offs. And it may be worsening in many of our bedrock communities and neighborhoods across rural and urban communities alike.

Overall, the rural energy burden report finds that while burdens vary greatly by region, rural households throughout the United States have a higher median energy burden (i.e., spend a higher percentage of household income on energy bills) than others in their overall region, as well as a higher burden compared with metropolitan households. Nationally, the median rural household energy burden is 4.4 percent, which is almost one-third higher than the national rate of 3.3 percent and about 42 percent above the median metropolitan energy burden of 3.1 percent.

The report also finds that over a quarter of all rural low-income households devote more than 10% of their income to energy expenses. That’s a lot, and for a household it often means deciding between keeping heat or lights on vs paying rent, buying food or paying for medicines or school supplies. Such high energy burdens increases the likelihood that these households will see their utility services shut off at some point. Once shut off, additional fees increase the cost of reestablishing service, and inability to pay leads to arrears that damage credit ratings that make reopening services or even qualifying for better housing difficult or impossible.

Energy efficiency upgrades such as adding insulation and sealing air leaks can lessen these energy burdens by as much as 25 percent, resulting in more than $400 in energy bill savings annually for some households. These improvements also make homes more comfortable and healthier. And more efficiency reduces the need for power plants to generate electricity from fossil fuels, cutting energy bill costs and avoiding climate-warming pollution for everyone.

Rural communities face unique barriers to accessing energy efficiency

According to the U.S. Department of Agriculture, rural households make up roughly 16 percent of all U.S. households and are spread across 72 percent of the nation’s land area, making rural housing stock much less dense than in urban and suburban areas. In this study, rural was defined by utilizing U.S. Department of Agriculture’s rural-urban commuting area codes to map those regions not located in a metropolitan census tract.

Due to the lower densities of the population over wider areas, the cost of delivering energy and energy efficiency services to rural households is on average higher than for their urban counterparts. Energy costs are vastly higher than the national averages and higher than in metro areas.

Because of the uneven build out of infrastructure, rural households often must rely on less efficient methods of accessing energy for critical needs. Further, the lower density in rural communities has meant that rural land and housing values tend to be lower, leaving limited options for financing regular home repairs and updates, allowing homes to deteriorate over time.

Rural families are also more likely to be impoverished. Approximately 43 percent of households in rural areas have incomes below 200 percent of the federal poverty level, increasing vulnerability to high energy burdens. Low incomes, high energy use, non-ownership status, and inefficient housing stock are some of the key drivers of high energy burdens, which can place significant financial stress on families and other households.

Finally, rural households are much more likely to live in manufactured housing than their urban counterparts. More popularly known as mobile homes—which are built in a factory, transported to a site on a flatbed truck, and installed on-site—manufactured housing tends to be less energy efficient and more costly to repair than traditional homes. About 20 percent of all rural households live in manufactured homes, making provision of energy efficiency services costlier and less likely to happen.

Uneven impact of high energy burdens in rural communities

Within rural communities, some groups face even higher burdens than the overall rate for the region, making them most vulnerable to changes in energy costs, usage, and housing options. For example:

Low-income rural families experience the highest median energy burden at 9 percent, which is almost three times greater than the non-low income rural median of 3.1 percent. Some low-income households are even worse off: In several regions of our nation, fully one-quarter of the low-income rural households have a median energy burden greater than 18 percent.

Residents of rural manufactured housing experience a median energy burden that is 32 percent higher than the overall rural energy burden.

Residents of multifamily housing with 2–4 units have a median energy burden that is 20 percent higher than that of rural single-family households.

Rural renters experience a median energy burden 29 percent higher than that of owners.

Households of color in rural areas have energy burdens 19 percent higher than that of their white counterparts.

Elderly households have shown the most significant vulnerability with energy burdens 44 percent higher than that of non-elderly households.

Within rural communities, some groups face even higher burdens than the overall rate for the region, making them most vulnerable to changes in energy costs, usage, and housing options. For example:

Low-income rural families experience the highest median energy burden at 9 percent, which is almost three times greater than the non-low income rural median of 3.1 percent. Some low-income households are even worse off: In several regions of our nation, fully one-quarter of the low-income rural households have a median energy burden greater than 18 percent.

Residents of rural manufactured housing experience a median energy burden that is 32 percent higher than the overall rural energy burden.

Residents of multifamily housing with 2–4 units have a median energy burden that is 20 percent higher than that of rural single-family households.

Rural renters experience a median energy burden 29 percent higher than that of owners.

Households of color in rural areas have energy burdens 19 percent higher than that of their white counterparts.

Elderly households have shown the most significant vulnerability with energy burdens 44 percent higher than that of non-elderly households.

Energy Efficiency and Weatherization Services Can Provide Multiple Benefits to Rural Communities

Rural communities can achieve multiple benefits from energy efficiency investments. Efficiency can help low-income rural households reduce energy burdens and increase available income for other necessities.

High energy burdens are not just abstract or technical issues, they impact real life decisions and living qualities for millions of Americans.

Weatherizing a home for families living at or below 200 percent of the federal poverty level—which is just over $12,000 for a single person household and $25,000 for a four-person household—saves an average single-family home $283 per year. A full retrofit of a rural household to be as efficient per square foot as its metropolitan counterpart would yield savings of $119 per year for those families. Households residing in rural manufactured homes would see savings of $458 per year; over one-quarter of their energy bill and a full 1.5 percent of their household income. Rural renting, low-income, elderly, and non-white families would all save over $100 per year if they had the same utility costs per square foot as the metropolitan median household.

As our report shows, we can support increasing energy efficiency of rural homes in several ways, including;

• Aggregating and sharing training resources and workforce development across larger regions to ensure job demand and a capable contracting crew to meet service needs
• Improving demographic data collection to better target and reach customers
• Share program administration costs and resources by partnering smaller co-ops with larger utilities
• Bundle funds through fuel-blind programs so a single energy efficiency program can address all end uses together
• Create specific programs to target mobile and manufactured homes
• Partner with local community, nonprofit, and religious organizations to address certain necessary expenses for efficiency upgrades

A U.N. report noted 18.5 million Americans suffer extreme impoverishment.

By improving housing efficiency with the goal of reducing energy burdens, we can have an impact on a wider range of issues/ These “non-energy benefits” include improved health, increased job opportunities, and a better quality of life in rural communities. The benefits far outweigh the costs. This study shows it’s time to turn our attention to a more energy efficient rural America.

Low-Income Household Energy Burden Varies Among States — Efficiency Can Help In All of Them. Nationally, low-income households1 spend a larger portion of their income on home energy costs (e.g., electricity, natural gas, and other home heating fuels) than other households spend. This measure is often referred to as a household’s “energy burden.” One recent study found that low-income households face an energy burden three times higher than other households.2 High energy burdens can threaten a household’s ability to pay for energy, and force tough choices between paying energy bills and buying food, medicine, or other essentials.

But national averages do not tell the full story. While families facing a high energy burden live in every state, there is also significant regional variation in the energy burdens that low-income households face. As seen in the map to the left below, low-income households (those making less than 80% of the Area Median Income) in many Southeast states face energy burdens of 10% or higher. Many factors contribute to high energy burdens, including a home’s heating fuel and local weather. Another key factor is high consumption of electricity.

In the five states with the highest low-income energy burden—Mississippi, South Carolina, Alabama, Georgia, and Arkansas—low-income households use 36% more electricity than the low-income national average. In these states, electricity is the dominant heating fuel and high air conditioning demand also contributes to high consumption. These factors contribute to the relatively high total energy burden, despite households paying lower prices per kilowatt of electricity, as shown in the map on the right. While weather, home age, and home size can also have an impact on energy consumption, low-income households in this region generally consume more energy and more electricity than most other regions, even when controlling for these factors.

One way to address high energy burdens is by implementing cost-effective energy efficiency measures to help reduce consumption of electricity and other fuels. Efficiency is a low-cost resource across the country and can reduce household energy costs regardless of climate, heating fuel, or energy price factors in a state. The map on page 2 presents analysis from a new study which found cost-effective efficiency improvements, such as insulation and more efficient lighting and appliances, in low-income households can reduce electricity consumption by 13% to 31%. These measures reduce a household’s energy costs, freeing up money for other vital budget items.

In addition to reducing energy costs, household energy efficiency improvements result in multiple benefits for families.3 For example, properly insulating a home reduces heating and cooling costs, but also improves indoor air quality. This results in healthier environments and can decrease sick days and hospital visits for families.4,5
There are unique barriers to achieving energy savings in low-income households,6 which means efficiency programs serving low-income customers must be thoughtfully designed and implemented. The U.S. Department of Energy (DOE)’s Weatherization Assistance Program has partnered with states and community agencies for over 40 years to achieve energy and cost savings in low-income homes. DOE’s Clean Energy for Low Income Communities Accelerator (CELICA) partnered with state and local leaders that committed $335 million to help 155,000 low-income households access renewable energy and efficiency to save up to 30% or more on energy bills. CELICA also developed the Low-income Energy Affordability Data (LEAD) Tool, which provides state, city, and county data on energy burden. In addition to energy burden, there are a number of other factors that could make it difficult for low-income households to afford their energy bills, some of which can be explored through the Home Energy Affordability Tool (HEAT). More resources and tools to inform low-income program development are available at DOE’s State and Local Solution Center: energy.gov/eere/slsc.
1. There are a variety of methods for defining low-income households. Unless otherwise specified, the DOE analysis presented in this document defined low-income households as below 80 percent of the Area Median Income, as defined by the U.S. Department of Housing and Urban Development.
2. For more information, see https://www.energy.gov/eere/slsc/low-income-community-energy-solutions
3. DOE’s Weatherization Assistance Program found an estimated $2.78 in non-energy benefits for every $1.00 invested in weatherizing homes. More info is available at www.energy.gov/sites/prod/files/2017/05/f34/wap_factsheet_08.2017.pdf
4. Tonn, Bruce et al. “Health and Household-Related Benefits Attributable to the Weatherization Assistance Program. Oak Ridge National Laboratory, 2014. https://weatherization.ornl.gov/wp-content/uploads/pdf/WAPRetroEvalFinalReports/ORNL_TM-2014_345.pdf
5. Wilson, Jonathan et al. “Home Rx: The Health Benefits of Home Performance.” DOE, December 2016. https://betterbuildingssolutioncenter.energy.gov/sites/default/files/attachments/Home%20Rx%20The%20Health%20Benefits%20of%20Home%20Performance%20-%20A%20Review%20of%20the%20Current%20Evidence.pdf
6. More information on these barriers, and resources for addressing them, is available at https://www.energy.gov/eere/slsc/low-income-community-energy-solutions
DOE is grateful for support from Ian Hoffman at LBNL for his contributions to the concept and framing of this document.

Recent analysis of cost effective energy efficiency potential among households below 80% of Area Median income (AMI) showed potential household electricity savings between 13% and 31% for each of the contigous 48 states. Source: https://resstock.nrel.gov/page/publications
Data Sources Low-income Energy Affordability Data (LEAD) Tool https://openei.org/doe-opendata/datasnet/celica-data.
2009 EIA Residential Energy Consumption Survey (RECS) https://www.eia.gov/consumption/residential/
NREL ResStock Low Income EE Estimates (forthcoming) https://resstock.nrel.gov/
Additional Resources
Clean Energy Low-Income Accelerator (CELICA): https://betterbuildingsinitiative.energy.gov/accelerators/clean-energy-low-income-communities
Low-income Energy Affordability Data (LEAD) Tool: https://openei.org/doe-opendata/dataset/celica-data
Solar for All, Home Energy Affordablility Tool (HEAT) layer: https://maps.nrel.gov/solar-for-all
State and Local Solution Center: https://energy.gov/eere/slsc
Weatherization Assistance Program: https://energy.gov/eere/wipo/weatherization-assistance-program
DOE/GO-102018-5122 • December 2018
For more information, visit:
energy.gov/eere/wipo