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Soaring Electricity Prices Plunge More People into Energy Poverty

By Edited Nov 30, 2016 0 0

When you think of people living without access to a basic electricity supply, your thoughts may turn to developing countries, such as Africa. However, in the United States there are households with incomes that are so low that they dare not turn on a light or heat their homes to an adequate level for fear of being unable to afford the consequent utility bill. With electricity prices continuing to rise, these households are facing increasing stresses and strains as they cut back on other spending to try to pay for essential energy for heating, lighting, and cooking.

Figures presented by Meg Power in her article on Fuel Poverty in the USA, published in “Energy Action”, suggest that as many as 15.9 million American households may be living in fuel poverty. However, it is difficult to secure a global figure because the information is tucked away with different utility companies, both public and private, across the 50 states. A coordinated response would require federal intervention to secure the necessary data. This contrasts with the situation in the U.K. and mainland Europe, where governments have taken a more centralized, coordinated response to energy poverty.

What is Energy Poverty?

In the U.K. and Australia, energy poverty is defined as a low-income household spending 10% or more of its after-tax income on energy. In the U.S. there is no such definition. Energy poverty is rolled up with poverty in general and assistance with energy costs is based on the total household income rather than the amount spent on fuel.

The advantage of the U.S. approach is that everyone on a sufficiently low income can access assistance. However, it makes no distinction between people’s real situations. The U.K. and Australian approach recognizes that there is interplay between income, energy expenditure, and the energy efficiency of the home.

Effects of Energy Poverty:

Lack of money to pay essential bills can cause stress and tension within a household. This can lead to arguments between family members. Such stresses can contribute to domestic violence and marital breakdown. Living with continual stress can trigger mental health issues, including anxiety and depression, in susceptible individuals.

Inadequately heated homes can also contribute to physical health issues. The World Health Organization (WHO) recommends that, in cold climates, the room that is occupied most often is heated to 21 degrees centigrade, while other rooms are heated to 18 degrees centigrade. Studies have indicated that children who occupy rooms heated to less than the recommended temperatures are susceptible to respiratory problems, such as asthma or bronchitis. People who are vulnerable, including the elderly and disable people, may be more prone to ill health if their homes are not adequately heated. In the northern hemisphere, the mortality rate has been shown to increase in the colder winter months.

An indirect health risk exists when people redirect money from their food budget to enable them to pay their bills. This means that they may skip meals or miss out on adequate nutrition by eating cheap, unhealthy food. Either of these two options can leave individuals more prone to illness.

Redirecting cash from the household’s mortgage or rental budget to pay energy costs can result in a buildup of bad debt. If the situation continues for any length of time, the household could face repossession or eviction as a result of the missed payments.

When homes are inadequately heated, problems such as dampness and condensation can arise. These issues make for unpleasant living conditions.

Why is Tackling Energy Poverty Such a Challenge?

The U.S. is a big country. Weather conditions vary significantly from state to state. Energy poverty is more of an issue in northern states, where households must spend money heating their homes. While people living in the more southerly states will spend money cooling their homes, it is well-established that heating costs exceed cooling costs. Energy poverty, therefore, is predominantly an issue for the northern states. Securing a national solution to a localized problem presents a considerable challenge.

Each of the states within the U.S. has its own regulations for energy supply. The thresholds for debt recovery and disconnection are set by individual power companies, making it difficult to establish a coordinated approach. Data is not shared between the power companies. The requirement to share details of disconnections with the state regulator only exists in a small number of states. This makes it difficult to establish how many customers in the U.S. are disconnected due to energy poverty.

What Help Is Available for Households Experiencing Energy Poverty?

There are two programs in the U.S. that offer help to those experiencing energy poverty. Firstly, there is the Low Income Home Energy Assistance Program (LIHEAP), which offers help to households with income below a specified level. LIHEAP helps households by making payments toward energy costs.

Secondly, there is the Weatherization Assistance Program (WAP), which supports low-income households by helping to make their homes more economical and fuel efficient. The benefits of making a home more energy efficient are that it costs less to bring it up to a comfortable living temperature and it then retains the heat for longer. As a result, less energy is required to heat the home.

Renewables Can Help To Alleviate Energy Poverty:

Providing access to alternative, renewable sources of energy can help to alleviate energy poverty. By installing more efficient technology, households can see their energy bills reduce in line with decreased energy usage. An example of this approach is the installation of solar panels that can capture energy from the sun and use it to help generate heat within the home. Installation of solar panels requires capital investment, which may be outwith the budget of low-income households.

The Energy Company Obligation (ECO) Fund

The U.K. government has introduced the Energy Company Obligation (ECO), a fund that has been established and operated by the large energy providers. The aim of this initiative is to fit energy efficient technology and insulation in the homes of those on low incomes. The costs of these measures are passed on to every consumer via a small levy on retail gas and electricity prices.

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