The Poorest Households Pay the Most for Electricity

Gita Subramony, ERS, for Zondits. April 25, 2016. Image credit: philriley427

A new study by Groundswell shows that the poorest American households pay the greatest share of income on electricity. According to City Lab’s summary of the study, the “bottom 20% of earners spend almost 10% of their income on electricity, more than seven times the portion of income that the top 20% pays.” The largest portion of energy-burdened families live in the South – Jacksonville, FL, tops the list of cities with the largest portion of poor residents paying over $200 in monthly electric bills.

There are several factors at play here. Low-income families are often not able to afford the latest and greatest home efficiency equipment (e.g., a brand-new Nest thermostat). Newer technologies are still at high price points that many people cannot afford. Additionally, low-income homeowners might not have access to the cash to fund major home renovations, such as more efficient heating systems, and loans might not be an option. The split incentive issue also has a disproportionate effect on hampering low-income families from having more efficient homes. These families are more likely to rent but still be responsible for their electric bills; as a result, landlords are unwilling to make household upgrades that only benefit tenants. This prevents low-income families from accessing energy efficient refrigerators and other upgrades. If only the top earners are able to have energy efficient homes, we really can’t claim to be an energy-conscious society. Efficiency should be made accessible to everyone.

Where America’s Poor Pay the Most for Electricity

City Labs, April 14, 2016

poorest households

There’s a shift underway in how Americans consume energy. That’s largely due to increasing efficiency, decreasing demand per capita, and the rapid expansion of renewable energy sources. Still, the share of income that low-income households spend on electricity rose by one third in the last decade, according to a new analysis by the nonprofit renewable energy advocacy group Groundswell. In fact, the bottom 20 percent of earners spend almost 10 percent of their income on electricity, more than seven times the portion of income that the top 20 percent pays. The report tracks the cities where the poor are hit hardest by electricity bills, and the results show stark inequalities.

Groundswell ranked cities by their proportion of poor residents who pay $200 or more for electricity each month. The $200 threshold is just shy of 10 percent of the annual income for a family of four living in poverty. It’s also significantly higher than the median monthly electricity bill in the U.S., which was $114 in 2013.

The highest energy bills for the poor are clustered around the South—that’s where 46 percent of households with high energy burdens live. Jacksonville tops the list with 14.5 percent of its poor paying $200 or more. Baltimore, Miami, Orlando, and Austin follow, all with at least 10 percent.

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