Low- and middle-income consumers shoulder a disproportionate energy burden, and energy equity and energy efficiency seems further away than ever, in the midst of a pandemic-induced economic slow down.
October is Energy Awareness Month and, considering the current situation with the pandemic and deteriorating economic picture, we are focusing on the concept of energy equity and citizens in the lower and middle income categories who are facing considerable financial hardships.
COVID-19 has hit hard – but nowhere harder than with our most vulnerable populations. The widespread unemployment caused by the pandemic has taken a bite out of the savings of many, especially those with lower incomes, with 44 percent of those households with incomes of $50,000 saying that their savings have dropped since March.
One-in-four adults have reported having trouble paying their bills, with this increasing to 46 percent among those with lower incomes. Although about half of those who lost their jobs because of the pandemic have returned to work, many of those at risk, including minimum wage-earners, minorities, mothers with young children and those without secondary education, are returning to work at a much slower rate. The economic recovery could be impacted by the congressional stalemate, despite Federal Reserve Chair Jerome Powell’s statements that failing to provide additional stimulus would weaken the economy.
With COVID-19 cases rising month-over-month in 27 states in September, the way forward is not yet clear. However, as moratoriums on shutoffs are lifted, an estimated 10 million households won’t be able to pay outstanding utility bills.
Utilities, including energy and water, represent more than 20 percent of a low-income household’s monthly expenditures, a significantly higher portion than that of middle class wage earners. The energy burden is also disproportionate across racial lines. In comparison to white households, Black households spend 43 percent more of their income on energy costs; Hispanic households spend 20 percent more; and Native American households spend 45 percent more.
Tilting the balance even more is the inability of many low-income households to reach energy equity with their better-paid neighbors. Although energy efficiency measures would pare down their electric bill, many are living paycheck-to-paycheck and don’t have the extra cash on hand for an HVAC tune-up or to upgrade to ENERGY STAR® certified appliances.
However, in conjunction with energy demand reduction mandates, many states are now requiring utilities to fund programs to help low- and moderate-income customers conserve energy. Energy efficiency investments for lower income homes are particularly important for quality of life and safety, ensuring that homes have enough heat, hot water and lighting and eliminating the use of unsafe space heaters, hot pots and other hazardous equipment. Low-income efficiency programs also help avoid utility shut offs, a benefit for both customers and the utility.
This winter will be unusual in many respects, since the same pandemic that has put the squeeze on vulnerable, low- and moderate-income households also has stranded many at home, where they are working and their children are engaged in online learning. The workday drop is no longer as significant, even if the load shift to residential doesn’t affect the grid as dramatically as commercial and industrial use. Although overall demand is down, residential demand has gone up by 6 percent, according to the EIA.
With the increased usage, heating, water heaters and electrical systems may be subject to more breakdowns from additional wear and tear. Many lower-income households aren’t going to have the extra funds to make an emergency repair, but utilities can help. HomeServe offers a suite of emergency home repair plans for a variety of home systems. Partner utilities can receive royalties that could help to fund repair plans and HVAC tune-ups provided by HomeServe for low- and moderate-income customers who otherwise couldn’t afford them. The HomeServe Cares Foundation also funds pro-bono repair jobs for qualifying homeowners in partner communities and helps to support programs through grant funding.
HomeServe has a network of licensed and insured local contractors that have undergone rigorous vetting, including background checks and post-job surveys, to work in utility customers’ homes. Our U.S.-based call center has live agents available 24/7/365 to handle customer claims. HomeServe plans cover electrical and gas service lines, water heaters, in-home electrical and plumbing systems and HVAC systems – everything homeowners need to stay warm and comfortable all winter while protecting against the economic shock of an emergency repair. To learn more about our programs and discuss how our partnerships can help address energy equity, contact us.