What is Energy Poverty?

Energy poverty is a phrase that is fairly new, getting traction let’s say in the last five years or so. It is being more accurately defined as it gets debated. Energy Consumers of the Carolinas, an organization devoted to the education of customers in the Carolinas, will take several looks at the topic in the next few months. This column is just about the basics. While the Carolinas are highlighted here, this issue applies across the U.S.

Energy poverty is not self-evident. Driving by glass towers in Charlotte, along elegantly reclaimed river fronts in Greenville or elegant homes on the Charleston's Battery don’t suggest that there is any issue with energy. Looking over the rolling Piedmont or the flat-lands in eastern North and South Carolina may actually spark a sense of bounty and fulsomeness.

Even with an awareness of the poor - finances - there is a need that is certainly related to money, but it is more than money. It is energy, most specifically, electricity.

Some 20 percent of U.S. households did not buy other household essentials so they can pay gas or electric bills in 2015 (latest figures available). There is little reason to think that figure has changed. “Of the 25 million households that reported forgoing food and medicine to pay energy bills, 7 million faced that decision nearly every month. Of the 17 million households who reported receiving a disconnection notice, 2 million reported that they received a notice nearly every month.” (source) Note: This column is about U.S. energy poverty. A global look adds issues that are not prevalent in the U.S.

Let’s take a look not nationally, but closer to home. Carol Hardison (left) leads Mecklenburg County’s Crisis Assistance Ministry, which provides help and advocacy for people in financial crisis, helping them move toward self-sufficiency. Carol reflected on what she learned her first day as CEO after 18 years in information technology leadership at Charlotte-based Duke Energy. “On my first day I met a grandmother who had to choose between food for her family and electricity after an accident at work left her without income for two weeks. Later that day I met a man facing his utility disconnection after diabetes hospitalized him causing income loss from his barber shop. After working in and around power plants for over a decade I never imagined that thousands of local citizens found keeping energy flowing into their own homes so challenging. A disconnection notice suddenly changed in my mind from being a business process supported by the IT system I worked on for decades to the face of a grandmother trying to keep a warm home for the children she was raising.” Energy poverty can be reflected in statistics, but it is about people.

The region of the U.S. matters. In South Carolina, the Charleston Post and Courier summed up the energy poverty issue well in February. “Part of the cost is geography: In the South, a reported 64 percent of homes primarily heat their homes with electricity in the winter. That’s compared to 34 percent of homes in Western states, 22 percent in the Midwest and 16 percent in the Northeast.”

The South needs energy for heating and cooling for more time year-round compared to other areas. Many of our readers probably have had the feeling that we go from AC to heating season fast. There’s seemingly no break, no time off for the HVAC.

“Energy burden” is the term used to describe a family’s heating and electric expense, viewed as a percentage of income. The burden becomes heavy at a level of six percent of income, say some energy sources. Some say ten percent is the level. There are multiple facets of energy poverty.

Wealth relationship. Energy is affordable relative to income or assets. In a previous blog of ours we noted that people with lower incomes will likely spend a higher percentage of their income on energy. That can put them in a category of energy poverty.

Energy costs have to be considered with other family needs. Costs of health care coverage are up five percent this year (source). How about a used car? “The average price for a 3-year-old compact car has increased by 3.9% in the first quarter of the year, while the average price for a 3-year-old subcompact car has increased by 3%.” (source) The price increases of groceries over the last ten years have outpaced overall inflation by five percent, with various meat products in the top ten (source).

Cycles of shortage and more energy use. It takes resources to save resources. A classic “double bind” no-win circumstance. Homes that are not energy efficient take more energy (money) to heat and cool. More money out of the house. That is less money to up-fit a residence to be energy efficient.

What kinds of costs are these? Look at blown-in insulation for an attic, for instance. One estimate range from Homeadvisor said in Greenville, SC, this could be roughly $1,000-2,000. A new water heater can go from $350 for a small unit to more than $1,000 for a large one. A new furnace as winter approaches? “The national average cost of furnace replacement is $4,242, with most homeowners spending between $2,526 and $6,075.” (source) Saving money on a monthly basis costs money up-front.

It is about information, too. “Resources” may be more than money, too. It can be less information and contacts to make the right energy efficiency choices. In the Carolinas there are groups addressing this issue, working with poor households to find long-term energy solutions. We will feature those in future blogs.

Access. “No one would argue that a single light bulb and cell phone charger are adequate to eliminate poverty … Chargers increase connectivity and access to information.” (source) Electricity is more than heating, cooling or light. Access to energy increases connectivity to look for work, study, and get information. Energy helps as an equalizer for the poor. More than a convenience, electricity is a tool for advancement.

None of these traits about energy poverty suggest that they have a short-term fix, much less an easy fix. Yet all are short-term when the poor need energy to exist on a day-to-day basis. Energy poverty is a beyond a personal need, too; it is a societal need because it provides economic mobility, opportunities for advancement and a certain standard of living. It is worth our attention and action.