Energy Efficiency for All (EEFA) and the Environmental and Energy Study Institute (EESI) held a briefing to discuss the role of energy efficiency in reducing the cost of housing, especially for low-income families who must spend a greater percentage of their income on energy bills and so have a heavier “energy burden” than higher-income households. According to a 2016 study of America’s largest cities by EEFA and the American Council for an Energy-Efficient Economy (ACEEE), the median low-income household spent 7.2 percent of its income on energy, twice as much as the median for all households (3.5 percent). The energy burden is even greater for rural households. A new EEFA/ACEEE report released this month finds that rural households have a median energy burden of 4.4 percent, and rural low-income households are even worse off, shouldering a median energy burden of 9 percent. In this forum, a panel of experts on housing and energy policy reviewed federal energy efficiency services and programs that are serving the most vulnerable U.S. citizens.
Ellen Lurie Hoffman, Federal Policy Director, National Housing Trust
- Ellen Lurie Hoffman introduced Energy Efficiency for All (EEFA), a partnership of the Energy Foundation, Elevate Energy, National Housing Trust and Natural Resources Defense Council. With a national network of 13 state-based coalitions and local partners, EEFA is working to increase the energy efficiency of multifamily affordable housing across the country. Energy efficiency upgrades are a cost-effective way to reduce energy consumption and pollution, maintain housing affordability, and create healthier and more comfortable living environments but are implemented far less in multifamily rentals than in any other type of housing.
- An EEFA survey found that approximately 50 percent of residents with incomes below $40,000 a year must make financial sacrifices to pay their utility bills.
- According to Lurie Hoffman, current energy efficiency programs are not adequately serving low-income populations. Federal rental assistance only meets the needs of the 25 percent of low-income renters who are qualified for it – meaning 75 percent of low-income renters are not getting assistance.
- There are two main programs for federal rental assistance: Project-Based Rental Assistance (PBRA) and Low Income Housing Tax Credits (Housing Credits).
- Project-Based Rental Assistance (PBRA) is administered by the U.S. Department of Housing and Urban Development (HUD); it mostly helps elderly and disabled residents. Lurie Hoffman noted that, every year, appropriators must be made aware of the funding needed to operate this program.
- Lurie Hoffman explained that most affordable housing gets built because of the Low Income Housing Tax Credit. This credit provides affordable housing across all states and has financed over 2.8 million affordable apartments in the United States.
Ariel Drehobl, Senior Research Analyst, Local Policy, American Council for an Energy-Efficient Economy (ACEEE).
- ACEEE is a non-profit research association that advances energy efficiency in the United States.
- Ariel Drehobl defined the term “energy burden” as the percent of a household’s income that is spent on energy. The median energy burden for the United States is 3.3 percent (i.e., approximately 3.3 percent of a household’s budget goes toward paying bills for electricity, gas and/or other types of energy). A household’s energy burden is higher in rural areas (4.4 percent) and for certain demographic groups. The average rural low-income household has an energy burden of 9 percent.
- A high energy burden can have adverse health, economic, and social impacts. Drehobl explained that persons in inefficient homes generally have increased rates of asthma and stress.
- Increasing energy efficiency is a long-term solution to the problem of high energy burdens.
- Drehobl discussed the high-level findings of the two analyses published recently by ACEEE. ACEEE found that urban areas in the Southeast and Midwest generally have the highest energy burdens. The demographic groups that have the highest energy burdens are African Americans and low-income populations.
- The energy burdens of rural households are 40 percent higher than the national average. For rural households, the energy burden is highest in the Northeast and Southeast regions of the United States. In these regions, 5.1 percent of a household’s budget goes toward energy bills.
- Investing in energy efficiency can reduce household energy burdens by 25 percent, saving households approximately 400 dollars a year.
- ACEEE found no correlation between low energy rates and low energy burdens. Energy can be a cost burden even if rates are low (an inefficient home consumes more energy, which negates the savings that would result from lower rates).
- Drehobl offered five policy recommendations:
- First: Federal weatherization assistance programs should be expanded, and an increase in funding is needed to meet current demand.
- Second: States should set low-income spending targets for their energy efficiency programs. Currently, about 20 states have a low-income goal.
- Third: States should expand their energy efficiency programs, making sure to include low-income households (which generally benefit the most from increased efficiency). This can include creating new programs as well, or building off existing programs.
- Fourth: There should be support for the financing of energy efficiency programs geared toward the owners of multifamily buildings and rural homes. Increased financing is needed to make owners more likely to participate in energy efficiency programs.
- Fifth: Demographic data should be collected that tracks the participation in energy efficiency programs.
Carmen Bingham, Affordable Clean Energy (ACE) Project Coordinator, Virginia Poverty Law Center
- The Virginia Poverty Law Center provides lawyer assistance to low-income populations.
- Carmen Bingham stated that work needs to be done on energy efficiency to help alleviate poverty in Virginia.
- Utility bills can be so high that some individuals are driven to take out predatory loans (or payday loans) to help pay their bills. These loans can result in a cycle of debt.
- Bingham stressed that we need to be looking at rates versus bills. While Virginia may have low base rates for energy, added rate adjustment clauses (or RACs) can significantly increase the overall bill. While rates haven’t increased, energy bills have.
- The southern and western parts of Virginia, as well as its Eastern Shore, are particularly energy-burdened.
- Bingham stressed that it is incumbent upon the utility companies to assist low-income populations improve their homes' energy efficiency. Since 2015, the Virginia Poverty Law Center has pushed for utility companies to provide energy efficiency programs to low income populations.
- Bingham described two pilot programs that are providing weatherization to serve low income populations.
Dave Rinebolt, Director of Special Projects and Counsel, Ohio Partners for Affordable Energy; former Program Director, DOE Weatherization Assistance Program
- Dave Rinebolt described the infrastructure and history of low-income weatherization. The first weatherization programs were in Maine during the 1970s, and in 1976 the federal (U.S. Department of Energy) Weatherization Assistance Program (WAP) was authorized. By 1992, the WAP was transformed into a whole-house program based on building science best practices.
- Rinebolt explained that the American Recovery and Reinvestment Act of 2009 bolstered the weatherization program, granting it approximately $2 billion dollars in additional funding.
- The Weatherization Assistance Program serves clients with incomes that are up to 200 percent of the federal poverty level. The WAP has weatherized more than 7 million homes since its induction and more than 1 million homes during the four-year ARRA-funded programs.
- Clients for these programs are self-selected: those with the lowest incomes or the highest energy burdens apply to the program. Rinebolt noted that people with lower incomes generally use less energy than those with higher incomes.
- Low-income customers and their housing stock are in need of assistance, and we need landlords who are willing to implement weatherization measures.
Sarah Ralich, Energy and Construction Manager, Action Housing
- Sarah Ralich noted that approximately 60 percent of affordable housing in Pennsylvania was built more than 20 years ago.
- Ralich explained that weatherization and the preservation of affordable housing benefits everyone. When investments are made in energy efficient housing, residents have lower energy bills, gain health benefits, and lower pollution generated by energy production.
- Ralich provided two Pennsylvania case studies to illustrate the benefits of investments in energy efficiency:
- The first case study examined a building in Pittsburgh, the Residences at Wood Street. This building was built in 1923 and serves the homeless population or those at-risk of being homeless. After energy efficiency improvements, the building saves approximately $75,558 per year, which makes a big difference in keeping the project financially sustainable.
- The second case study looked at the Broadview Manor Apartments in Pitcairn, which serve elderly residents. After adding an upgraded ventilation system and other efficiency measures, the building has improved air quality, residents are saving money on their electricity bills, and the indoor temperature is more comfortable.
When monthly bills for electricity and fuel take a large bite out of small paychecks, residents are often forced to choose between heating/cooling and other necessities like food and medicine. But high energy burdens are not simply a result of low incomes and/or high energy prices. Housing that is not well constructed and maintained, with air leaking through roofs, walls and windows, coupled with inefficient appliances, lighting and heating/air-conditioning, can lead to high energy usage and costs even if utility rates are low. Making homes more energy efficient and reducing energy costs per square foot can reduce utility bills and lighten the energy burden for low-income families and individuals; improve their comfort, health and quality of life; and reduce the environmental impacts of energy use. EEFA/ACEEE studies have found that the U.S. Department of Energy’s Weatherization Assistance Program, which retrofits single-family homes for people who live at or below 200 percent of the federal poverty level, saves families an average of $283 per year. In addition, affordable-housing developers rely on the Low-Income Housing Tax Credit (LIHTC) to build and preserve energy efficient, multi-family affordable housing. For the lowest income households, rental assistance from HUD and the Low Income Home Energy Assistance Program (LIHEAP) from the U.S. Department of Health and Human Services provide critical lifelines.