Utility bills are an essential and increasingly burdensome expense for America’s working families. Low-income households already spend 10% of their income on electricity, which is more than four times higher than the average consumer. Despite advances in energy efficiency, the long-term trend towards lower electricity prices, and decreasing per capita demand for power, America’s working families are still spending more money every year on their utility bills. Over the last decade alone, electricity expenditures as a proportion of low-income household budgets increased by a third, while falling for higher earners.
Electricity Expenditures by Income Quintile:
The consequences of increasingly expensive utility bills are acute. Costly power bills not only consume scarce resources that may be better invested in education, personal savings, or debt reduction, but also present increased risk for financial or health crises.
High utility bills put low-income families in situations that can spiral into serious financial difficulties. The majority of these households rely on unpredictable revenue streams due to the necessity of working multiple part-time jobs and a higher propensity to hold hourly positions, which makes low-income households particularly vulnerable to sudden fluctuations in their monthly power bills. A sudden cold snap, seasonally variable utility pricing, or a host of other factors can lead an otherwise stable family to quickly fall behind on their utilities.
The results can be catastrophic. Households with high energy burdens are at increased likelihood of accumulating unsustainable debt, trading off other essential purchases like food to pay their utility bill, home eviction, and even homelessness.
Personal health is also put at risk. Chronic diseases like diabetes are often exacerbated in low-income households with high energy burdens due to the challenges of refrigerating essential medications. Even otherwise healthy children in these situations face increased chances of food insecurity, hospitalization, and developmental disorders.
These energy related financial and health risks hit low income families the hardest - nearly 67% of those at or below the federal poverty line face energy insecurity . However, even households with relatively high earnings still struggle with their utility bills. Seven percent of families making more than 200% of the federal poverty line, or approximately $50,000 a year for a family of four, still pay disproportionately high energy costs. In total, an estimated 16 million Americans pay more than 10% of their total income on utility bills.
This burden is not uniformly shared by region or race. Forty-six percent of all households with high energy burdens are in the South and 50% of all families struggling with disproportionately high power bills are African American. Addressing America’s growing and concentrated energy cost challenges is essential to unlocking the full economic potential of low and moderate communities.
Community solar is a game-changer for expanding access to affordable energy for working families. Aligning residential energy efficiency programs with community solar programs could amplify cost savings, putting money back in the pockets of people who are already carrying a disproportionate cost burden for electricity. Direct community engagement through place-based programs would be an essential strategy for transforming affordable clean energy and efficiency into greater economic empowerment. Advancing this three-part agenda will open up new pathways for low and moderate income households to climb the economic ladder and build real wealth in their communities, ensuring that working families have a seat at the increasingly abundant clean energy table. For more on the recent Groundswell study on working families and energy costs, click here.