One in 9 American households lived in poverty in 2020, a startling statistic given that the country has among the highest average per capita incomes in the world. Poverty rates exhibit sharp racial and ethnic disparities: nearly 1 in 5 Black households and 1 in 6 Hispanic households live in poverty compared to 1 in 12 for non-Hispanic White households.
Energy insecurity is one manifestation of deprivation. In 2020, more than 1 in 4 of all households in the United States reported some form of energy insecurity, such as forgoing food or medicine to pay energy costs, leaving their home at an unhealthy temperature, receiving a disconnect notice, or an inability to operate heating and cooling equipment.
Energy insecurity is often measured as the energy burden: the percentage of household income that is spent on fuel and electricity. Low-income households typically spend 16 percent of their total annual income on energy, compared to 4 percent for other households. Black households are nearly twice as likely to report some form of energy insecurity compared to white households. Hispanic and Latino households are about 1.6 times more likely compared to white households.1
Energy insecurity is a threat multiplier. Low-income households often make partial bill payments to avoid service interruption, and thereby accrue debt that exacerbates their precarious finances.2 Households that cannot afford to heat their homes in winter or cool their homes in summer often suffer from an array of adverse mental and physical health outcomes.
Household energy expenditures on heating and cooling depend on location, weather, type of energy, and other factors. Many households that do not have access to a natural gas pipeline rely on heating oil and propane which generally are more expensive than gas or electricity.
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The U.S. federal government has two programs that aim to alleviate energy poverty. The Low Income Home Energy Assistance Program (LIHEAP) was established in 1981 to help low-income households pay for heating and cooling costs, for crisis assistance, weatherization assistance, and services (such as counseling) to reduce the need for energy assistance. The Department of Energy’s (DOE’s) Weatherization Assistance Program (WAP) was established in 1976 to help low-income families reduce their energy consumption by making their dwellings more energy efficient through insulation, space-heating equipment, energy-efficient windows, water heaters, and efficient air conditioners. In both programs the federal government makes annual grants to states, tribes, and territories, who then disperse the funds to individual households
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Over the past two decades LIHEAP has distributed from $1.1 to $3.6 billion dollars per year. WAP is typically funded at an order of magnitude lower. One time, major pulses of additional funding came from the American Recovery and Reinvestment Act of 2009 (ARRA) and the American Rescue Plan Act (ARP) of 2021
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The benefits of LIHEAP and WAP are well-documented. Each year millions of low-income families have their utility bills directly lowered by these programs. LIHEAP recipients are more likely to be more housing secure than low-income families not receiving any assistance. Children in households that received LIHEAP were less likely to be hospitalized for acute medical problems and had better development outcomes.3 Millions of households have avoided the shut-off of gas and electricity, had those services restored, and had malfunctioning equipment upgraded. WAP generates a 4:1 monetary return on energy efficiency investments.4
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But is this sufficient? Several metrics indicate that these programs fall well short of the need:
- LIHEAP served an average of just 19% of eligible households from 2010 to 2020. In most years LIHEAP literally runs out of money
- Some states require an asset test in addition to income that reduces the proportion of the eligible population that is served by LIHEAP and is biased against households with the lowest incomes.5
- WAP is funded at a minuscule level compared to LIHEAP, despite the large suite of economic, mental, and physical health, and climate benefits that flow from improved building energy efficiency.
- Corrected for inflation, funding levels in the 2000s were lower than in the 1980s, except for one-off stimuli from ARRA and ARP. Funding for WAP dropped by an order of magnitude from 1979 to 2012.
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At a deeper level, federal energy poverty programs are deeply flawed because they view energy poverty as a transitory state that is resolved by a pulse of income. Their criteria are a narrow set of economic and demographic indicators.
A more effective and equitable approach to energy poverty rests on two principles. The first is that the threat to well-being is not just economic. It encompasses all aspects of well-being supported through energy services: thermal comfort, hygiene, illumination, food storage and preparation, communication, mobility, and access to information via the internet. Deprivation of energy services diminishes people’s ability to be and do the things they value. The second principle is that race, ethnicity, place, and class play a dominant role in energy poverty.6 Viewing the problem from this lens would bump energy poverty up the priority list in Washington, and lead to much higher levels of funding based on criteria that cover all aspects of well-being touched by energy services.
1 U.S. Energy Information Administration, Residential Energy Consumption Survey, Link
2 Heflin, C., London, A.S. and Scott, E.K. 2011. Mitigating Material Hardship: The Strategies Low-Income Families Employ to Reduce the Consequences of Poverty. Sociological Inquiry, 81(2), 223–46. Available online: https://doi.org/10.1111/j.1475-682X.2011.00369.
3 Frank, Deborah A., Nicole B. Neault, Anne Skalicky, John T. Cook, Jacqueline D. Wilson, Suzette Levenson, Alan F. Meyers, et al. “Heat or Eat: The Low Income Home Energy Assistance Program and Nutritional and Health Risks Among Children Less Than 3 Years of Age.” Pediatrics 118, no. 5 (November 1, 2006): e1293–1302. https://doi.org/10.1542/peds.2005-2943.
4 U.S. DOE Weatherization Assistance Program National Evaluations: Summary of Results. Link
5 Graff, Michelle, and Maureen Pirog. “Red Tape Is Not so Hot: Asset Tests Impact Participation in the Low-Income Home Energy Assistance Program.” Energy Policy 129 (June 1, 2019): 749–64. https://doi.org/10.1016/j.enpol.2019.02.042.
6 Bednar, Dominic J., Tony Gerard Reames, and Gregory A. Keoleian. “The Intersection of Energy and Justice: Modeling the Spatial, Racial/Ethnic and Socioeconomic Patterns of Urban Residential Heating Consumption and Efficiency in Detroit, Michigan.” Energy and Buildings 143 (May 15, 2017): 25–34. https://doi.org/10.1016/j.enbuild.2017.03.028.