Households that are classified as "low-income" pay up to three times more than the average household on home energy costs. Families that devote higher portions of their income to utility bills may have to make trade-offs between heating and cooling their homes and affording other important necessities such as food, housing payments, and healthcare. Lower incomes, less energy efficient housing, and limited access to energy efficiency programs all contribute to the higher energy burdens faced by low-income families.
There are four key approaches that utilities must consider as they rethink their low-income approach:
Improve the holistic understanding of the low-income assistance programming
Traditional limited income assistance is often restricted to financial incentive or assistance-based program. A broader approach to assistance requires a fundamental understanding of energy burden and the relation between customer income and energy consumption. Exclusively focusing on financial assistance for low income is often reactionary and is devoid consideration of a longer-term more sustainable solution, such as energy efficiency programs.
Leverage data and analytics to proactively identify low-income customers most in need
Utilities can leverage data to identify customers in need, and more proactively catch at-risk customers before they fall into a cycle of debt while establishing key performance indicators (KPIs) to track programs. Analytics enable utilities to adopt more personalized assistance through improved segmentation by energy burden and bill behavior to predict when an individual account might fall into need.
Develop new programs to reduce the gap between the support currently provided and the support they need
The national median energy burden is 3.1%, but for low-income customers the energy burden is nearly three times more at 8.1%. While LIHEAP assistance meets the needs of many low-income customers, it may come up short completely meeting the needs for low-income customers. Utilities can leverage analytics to both identify the low-income customer segments where LIHEAP comes up short and develop supplementary low-income programs tailored to their needs.
Execute through collaboration and community partnership
Creating programs to address the unique needs of each segment of a low-income population is imperative to reducing energy burden, but it cannot be done by the utility alone. The goals and objectives of low-income support extend well beyond that of a single utility. The socio-economic challenge associated with low-income customers can only be solved with significant public-private and peer utility partnership. A community-based partnership model targets those neighborhoods most in need and educates community ambassadors (e.g., church leadership, non-profit partners) on the utility assistance programs.
Conclusion
Energy affordability remains a national crisis as low-income households increasingly experience disproportionally higher energy burdens than the average household. Solving this challenge is not a simple exercise of allocating funding to help offset energy bills. The pandemic revealed the amount of vulnerability that exists within these communities. As disconnect moratoria begin to expire across the country, there is significant urgency for utilities to have programs and processes in place to assist these low-income customers. By prioritizing energy burden, utilities can create equitable, cross-sectoral policies and programs to stabilize their customer base and communities through greater access to affordable energy for all.
