What is an Energy Burden?

Generally, an affordable home energy bill is recognized as 6% or less of a household’s gross income4. A household is considered to have an energy burden when more than 6% of that household’s income is utilized to pay for their home energy costs.

Home energy costs disproportionately impact families with low incomes.

Low-income households experience higher energy burdens not only because of their low incomes, but also because low-income homes tend to be less energy efficient.

On average, low-income households pay approximately 16.3% of their total family income towards home energy costs while higher income households pay approximately 3.5% of their total family income5.

HOW IS AN ENERGY BURDEN CALCULATED?

If a household spends a total of $2,000 annually on utility bills and the annual household income is $20,000, the energy burden is 10%. A household’s energy burden provides an indication of energy affordability6.

Annual Utility Bills ÷ Annual Household Income = Energy Burden

WHO PRIMARILY EXPERIENCES ENERGY BURDENS?

Low-income households usually have older and less-efficient heating and cooling systems and appliances. These homes typically are older and are in poorer repair. This leads to energy waste.
Generally, low-income, BIPOC, renters, and elderly, as well as households residing in manufactured housing and older buildings, have disproportionally high energy burdens.

Renters also have higher energy burdens. The median renter energy burden is 13% higher than that of the median owner14.

WHAT ARE SOLUTIONS TO ADDRESS ENERGY BURDENS?

By combining energy efficiency with renewable energy, energy burdens are further reduced. Efforts that reduce the energy usage of a household, address the associated energy bill and energy burden. Renewable energy is a viable tool for supplying energy at a more cost-effective rate than fossil fuels.

Energy efficiency and weatherization measures not only help to lower energy bills for low-income households but also improve indoor air quality, safety, and comfort.

WHAT ARE THE PROBLEMS
ASSOCIATED WITH ENERGY BURDENS?

Emotional Stress

Energy burdens create emotional stress for all members of the household. Low-income families often must cut back on other necessities to pay their energy bills.

Economics/Poverty

Households with energy burdens are more likely to remain trapped in the cycles of poverty4.

HOW IS COVID-19 IMPACTING ENERGY BURDEN?

Energy burdens continue to increase as COVID-19 continues. The COVID-19 pandemic has further stressed existing economic burdens for low-income households. It also disproportionally impacts BIPOC communities due to many of the policies that have led to systemic economic and social exclusion. More households, especially in BIPOC communities, are having difficulty paying their energy bills due to job losses, reduced income and higher energy bills resulting from more time at home.

In addition, many moderate-income families have been pushed into low-income status. The financial impacts of COVID-19 have resulted in a new class of residential customers who cannot afford to pay their energy bills and are also unaware of the various programs that can help them pay those bills11.

WHAT IS THE NATIONAL/REGIONAL/DELAWARE ENERGY BURDEN?

Energy affordability is a national crisis. With low-income households, BIPOC communities, renters, and older adults experiencing disproportionally higher energy burdens than the average household nationally, regionally, and in metro areas.

Sources

  1. https://www.energy.gov/eere/slsc/low-income-community-energy-solutions
  2. Lawrence Berkeley National Laboratory (LBNL) report.
  3. https://dnrec.alpha.delaware.gov/climate-coastal-energy/sustainable-communities/weatherization/
  4. https://www.energy.gov/sites/default/files/2021-12/ACEEE%2C%20Household%20Enegy%20Burdens.pdf
  5. https://www.energy.gov/sites/prod/files/2018/03/f49/WAP-fact-sheet_final.pdf
  6. https://www.dollarenergy.org/high-energy-burdens-low-income-households/#:~:text=Energy%20Burden%20%3D%20Annual%20Utility%20Bills,burden%20is%200.1%20or%2010%25.
  7. https://theconversation.com/energy-is-a-basic-need-and-many-americans-are-struggling-to-afford-it-in-the-covid-19-recession-140416
  8. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5036749/
  9. https://www.seealliance.org/blog/what-is-energy-insecurity-versus-energy-burden/#:~:text=People%20who%20are%20unable%20to,a%20state%20of%20energy%20insecurity.&text=Age%20and%20quality%20of%20a,all%20contribute%20to%20energy%20insecurity.
  10. https://www.publichealthpost.org/research/is-energy-insecurity-making-us-sick/#:~:text=We%20found%20that%20energy%20insecurity,%2C%20and%20poor%2Dquality%20sleep.
  11. https://www.nclc.org/images/pdf/special_projects/covid-19/Rpt_More_Covid_Util_Arrearage_Svc.pdf
  12. https://www.nature.com/articles/s41560-020-0582-0
  13. https://nascsp.org/liheap-wap-working-together-to-reduce-energy-burden/
  14. https://documents.dnrec.delaware.gov/energy/information/otherinfo/Documents/EEAC/2018-1/Scope%20of%20Work%20LI%20Advisory%20Committee;%20vFinal;%202017-12-22.pdf
  15. https://documents.dnrec.delaware.gov/energy/information/otherinfo/Documents/EEAC/2021-04-14/LI-Workgroup/Empowerment-Grant-Annual-Report-2020.pdf