Before I answer this question, it’s important to understand how low-income (LI) households are defined. There are two federal metrics on the least amount of income a person or family requires to meet their basic needs - poverty thresholds and poverty guidelines. The former is used for calculating all official poverty population statistics and are updated annually by the Census Bureau. According to the Census Bureau, there were 39.7 million people living in poverty in 2017.The latter is a simplified version of the federal poverty thresholds for administrative purposes, such as determining financial eligibility for certain programs, and are issued by the Department of Health and Human Services (HHS). For example, eligibility for many programs at the Department of Housing and Urban Development (HUD) is defined as household income at or below 80 percent of the local area median income (AMI). Both the poverty thresholds and the poverty guidelines are the same for all mainland states, regardless of the regional differences in the cost of living. In regard to the building sector, they usually define households as LI based on poverty guidelines.
Nationally, LI households spend a larger portion of their annual household income to pay their energy costs (e.g., electricity, heating and cooling) than non-low-income households. This measure is referred to as a household’s “energy burden,” which is defined as a household’s total annual utility costs divided by its annual gross income. According to the Census Bureau, the average energy burden for low income households is 8.2%—three times higher than for non-low-income households. There are numerous drivers of high energy burdens, including physical, economic, policy, and behavioral factors (Table 1-1). There also exists significant regional variation in household energy burden. 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 due to their climate. Within these states, electricity is the dominant heating fuel and high air conditioning demand contributes to high consumption.
Low-income families with high energy burdens are then at greater risk for contracting respiratory diseases, increased stress, increased economic hardship, and difficulty in transitioning out of poverty. The Energy Information Administration’s (EIA) Residential Energy Consumption Survey (RECS) adequately captured both the occurrence and severity of household energy insecurity in 2015. Nearly one-third of U.S. households (31%) reported facing a challenge in paying their energy bills or maintaining adequate heating and cooling in their households. 11% of households surveyed also reported keeping their home at an unhealthy or unsafe temperature. About one in five households reduce or forgo necessities (e.g., food, medicine) to pay an energy bill. 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 received a notice nearly every month. With their high energy burdens, low-income families are making difficult financial tradeoffs about which basic needs to fulfill.
One way to address high energy burdens within low-income households is by implementing cost-effective energy efficiency measures, which will reduce consumption of electricity and other fuels. Increased efficiency can reduce household energy costs regardless of climate, heating fuel, or energy price factors in a state. A National Renewable Energy Laboratory (NREL) study found that cost-effective efficiency improvements (e.g., insulation, more efficient lighting and appliances) in low-income households can reduce electricity consumption by 13% to 31%. Along with reducing energy costs, household energy efficiency improvements offer multiple benefits for low-income and vulnerable communities. For example, heat pump systems provide both air conditioning and heating. Air conditioning can help protect public health for these communities as heat waves become more severe and frequent under climate change. Along with reducing high energy burdens, these energy efficient improvements can result in healthier environments and can decrease sick days and hospital visits for families.