Reducing Energy Burden: Resources for Low-Income Residents

Person adjusting a wall thermostat with dollar sign symbol on the display

Imagine: It’s January and you are sitting in your living room with the heater running during the first snowfall of the winter. You are worried about how high your electricity bill will be next month, but it’s too cold not to run the heater. You suspect your apartment is not well insulated, because the heat escapes and the entire room cools down if the heater is turned off for too long. You are grateful you have a warm place to stay, but you know next month’s electricity bill will be expensive.

Your sister calls you to chat about the upcoming snowstorm. She and her family are also blasting the heat – it's too cold not to. But, she says, her energy costs have been cut almost in half since she had a local nonprofit take a look at her energy bill. “It's called All in Energy," she says. “You should schedule a call!”

All in Energy, you discover, is an organization that helps people lower their bills through energy efficiency, renewable energy, and income-based discounts. During your video call with Jon, an energy specialist list, you learn that you are among the 25 percent of U.S. households with a high energy burden. Jon looks at your energy bill to help you understand your utility costs and find ways to save money. Jon shows you that your third-party competitive electricity supplier is charging you 40 percent more for electricity than you would be paying if you hadn’t signed up when that pushy salesperson showed up at your door a few years back. You were right to notice that your energy bill was extremely high; you just didn’t understand why.

This isn't an unusual story in Massachusetts – in fact, this fictionalized scenario is based on real-life accounts MAPC and All in Energy have heard throughout 2021, when MAPC partnered with All in Energy to help Massachusetts residents reduce energy costs.

Energy burden is defined as the percentage of a household’s income spent on home energy bills. In Massachusetts, the average energy burden is about three percent. However, the average energy burden for low-income populations is about 10 percent, and, in certain neighborhoods, energy burden is as high as 31 percent. This means that some low-income families are spending close to a third of their income on energy bills alone, sometimes forcing them to choose between paying their utility bills and spending money on essentials like food, rent, or medicine.

Data Source: US Department of Energy Low-Income Energy Affordability Data.
Data Source: US Department of Energy Low-Income Energy Affordability Data.

Many of these low-income residents in Massachusetts have also been targeted by predatory third-party competitive electricity suppliers. Once trapped in a contract, people may pay more for their electricity than if they were paying their utility’s basic service rate or their municipality’s community choice aggregation rate. In 2018, Massachusetts residents spent $76.2 million more on electricity because of predatory third-party competitive electricity suppliers. According to the Massachusetts Attorney General’s Office, “Low-income households participate in the individual residential electric supply market at twice the rate of non-low-income households, and on average pay rates that are 25 percent higher."

Local community choice, or “green municipal aggregation,” programs can help protect individual residents from predatory offers, provide more predictable, stable, and often lower rates, and provide cleaner energy than many third-party suppliers or basic utility services typically do.

Cold winters typically cause a home to use more energy in the winter months than they do during the summer, as air conditioners transition to space heaters and the demand for hot water increases. In Massachusetts, winter temperatures are expected to be colder than last year, and energy consumption is estimated to rise 5.4 percent. In addition to increased demand, current inflated fuel prices could cause winter heating bills to rise even more. The U.S. Energy Information Agency predicts as 14 percent increase in natural gas prices, a seven percent increase in electricity prices, and a 42 percent increase in propane prices in the Northeast this winter. These inflation rate shifts are the highest since 2008, as a reopening economy and global supply chain issues push consumer prices higher.

After reviewing your bill, Jon finds that you are eligible for the R-2 income-eligible electric rate, which will save you an additional 20 to 35 percent on your utility bill every month compared to the basic service offer. Jon shows you how to apply and find additional resources through your Community Action Agency. Jon also helps you sign up for New Start, a utility debt forgiveness program offered through your electric company, Eversource. You accumulated some debt earlier this year, when you missed a few payments due to unexpected hospital bills. The program can help you eliminate your debt  in as little as 12 months as long as you make on-time payments. Jon also shares information on your municipality’s green municipal aggregation program. Once your contract with the predatory competitive supplier has ended, you can choose to participate in this program and still retain your R-2 discounted rate.

Finally, Jon offers you free energy efficiency measures for your home, including a programmable thermostat and high-efficiency shower head. At the end of your appointment, you have a new understanding of your utility bill and how to minimize your energy costs. You will receive your energy efficiency products soon, and you plan to upgrade other appliances in your home through the Mass Save Program. You tell a couple of other moms at your son’s school about your experience, and the story continues….

Energy Burden Resources

Energy burden has been an issue of increasing concern during the COVID-19 pandemic. Moratoriums on utility shut-offs were instituted in many states starting in March 2020, which ensured that utilities would not be cut off for families in need. Nonetheless, utility debt has gone up sharply. Across the United States, the total amount of residential utility debt increased from $194 million to $351 million, an 80 percent increase in one year. The utility debt for low-income customers increased only about 25 percent, because low-income utility customers already had more debt at the start of the pandemic.

Energy efficiency measures can help reduce utility bills by lowering a household’s energy use and can make your home healthier and safer. Pollution caused by fossil fuel power plants has been linked to asthma, heart attacks,and lung cancer. Cutting energy consumption in the United States by 15 percent for one year could help save six lives a day.

There are numerous incentives, tax credits, and resources for advancing clean energy in the United States and here in Massachusetts, but these resources have not been distributed equitably. Since 2006, more than $18 billion in clean energy tax credits have been awarded nationally. However, these credits for weatherizing homes, installing solar panels, purchasing electric vehicles, and more have predominantly gone to high-income households. The bottom three income quintiles (60 percent of U.S. households) have received about 10 percent of all credits, while the top income quintile (20 percent of U.S. households) has received 60 percent. Targeting and prioritizing low-income households with clean energy and energy assistance programs can help expand access to clean energy, make energy bills more affordable, and vastly improve worsening health disparities for low-income residents. Prioritizing equity can help ensure that clean energy is accessible and affordable for everyone.

MAPC recently hosted Health, Housing, Energy, Equity: Energy Efficiency Resources for Low- and Moderate-Income Residents. This three-part series for local leaders in government, housing, community development, and public health highlighted the connections among these various fields and explored the many clean energy programs available for residents in Massachusetts. Recordings of the three sessions are available on the MAPC Affordable Access Regional Coordination training website, as are additional resources and funding opportunities. As part of the trainings, MAPC has also created a matrix of available clean energy offerings in Massachusetts to make it easy to find and compare different programs.

While existing programs can help individual households lower their energy burdens, Massachusetts residents would also benefit from new policies and programs that remove the inequities built into our energy system and make clean energy more accessible to all. These policies should focus on reducing energy burdens for low-income households and communities of color and redirecting resources to these communities along the lines of the White House’s Justice40 initiative. Here in Massachusetts, the Energy Efficiency Advisory Council’s Equity Working Group, Global Warming Solutions Act Implementation Advisory Committee Climate Justice Work Group, and the state’s new Environmental Justice Policy are making strides in this direction, but there is still much more to do.