By Katyayani Rajput, September 2015.
Energy efficiency is no myth. The need for energy efficiency in homes is more pressing in the case of low income households, given the high energy expenditures in proportion to their incomes. Energy burden is defined as the strain a household endures due to its annual energy expenses. It is calculated by dividing the annual residential energy expenditures by the annual income to determine the percentage of expenditure to income. This important metric determines the impact of energy expenditures on low income households and is a primary factor in determining the federal funding for Low Income Energy Assistance Program (LIHEAP) to the states.
In low income households, high utility bills become a large energy burden, rendering many households to be financially vulnerable. More overwhelming is the meagre income left over after paying state and federal taxes. According to the US Census Bureau on household income data and the Energy Information Administration (EIA) residential energy price projections for 2016, the American Coalition for Clean Coal Electricity (ACCE) estimates that 59 million US households whose annual incomes are less than $50k (pre-tax) will spend approximately 17% of their after-tax income on energy.
In the chart, the average US household is seen to spend an estimated 9% of after-tax income on energy bills. However, the brunt of household income spent on energy costs falls upon on households that make less than $50k annually before taxes. Among the lowest to lower-income strata, energy expenses can climb to a staggering 23% of after-tax income for households that earn less than $30k annually before taxes.
Applying this analysis to the Bay Area, where the income gap is further exacerbated, the median household in East Palo Alto earned less than $50,000 ($48,734 before taxes), wherein monthly income after taxes was $3,683. For the average East Palo Alto resident, energy expenditures of 17-23% can cost anywhere between $625-850 of monthly earnings after taxes, a staggering financial burden each month.
Based on the ACCE projections and the 2010 Bay Area Census, a larger proportion and dollar amount of monthly income after taxes is indeed spent on energy expenditures for the average East Palo Alto resident when compared to his neighbors:
The high energy spending figures grappled by low income households point to large potential opportunities in energy savings, and is the primary reason why East Palo Alto is identified as an area of high importance within the Bay Area.
Low Income Energy Efficiency Program
Sustainable Silicon Valley (SSV)’s Low Income Energy Efficiency Program (LIEEP) seeks to reduce high energy burdens for low income households and help with the transition to a greener economy. In the first step, free energy assessments will be offered to qualifying low income renters and homeowners in East Palo Alto’s community. The program will provide upgrades and retrofit solutions, offer alternate energy avenues such as solar, and make the homes more energy efficient. In the initial pilot, LIEEP will initially focus on auditing 10 homes and then advance the process to more homes, eventually mapping low income neighborhoods in East Palo Alto and beyond.
These free home audits will help reduce energy burden on residential households and identify potential cost savings to through reduced utility bills:
- Energy assessments are made based on city residency, with no discrimination made on country residency status or utility provider limits.
- Audits will cover issues beyond the existing PG&E Energy Savings Assistance programs such as California Alternate Rates for Energy (CARE) / Family Electric Rate Assistance (FERA) and the program will provide education guidelines to homeowners/renters on maintaining energy efficiency.
- Audits will be conducted to determine the benchmark Energy Usage Intensity (EUI) for each household for energy and carbon emissions. Based on this determined baseline EUI statistic, a list of potential upgrades, including costs, return on investments, and any rebates or discounts available will be provided to the resident.
- SSV has an exhaustive database of current rebates, discount credits and subsidized programs that can help the resident to afford these benefits and create an energy efficient home.
Additionally, audits will help:
- Provide residents with a roadmap and understanding of energy efficient appliances/retrofit solutions/upgrades, thereby educating them about alternate sources of energy and preparing them to become environment conscious citizens.
- Create energy efficient homes with increased rate of payoffs to utilities due to reduced bills, thereby lowering bill arrears and dependence on energy subsidy programs.
- Create a healthy, hygienic and comfortable environment by helping residents fix energy leaks, install improved heating, lighting and air-conditioning, and address mold/mildew problems.
- Indirect economic benefits to raise property value through energy retrofits and upgrades, thus leading to an increase in economic value of the resident and neighborhood.
- All these ancillary benefits to the residents, community and the City overtone with our primary goal of lowering carbon emissions and building a sustainable Net Positive community.
The path to building Net Positive communities will have unique challenges. During the charting stages of LIEEP, SSV identified a main barrier to carry out energy efficiency programs in low income communities is an absence of trust building. The residents often mistrust utility providers and hold a deep seated skepticism toward federal program representatives, due to unawareness of program benefits from outreach failures, and the difficulty in understanding ill-worded program content. Due to these failures, many existing affordable energy programs have seen very few adopters despite being widely offered by the state and federal governments, public utilities and local nonprofits.
To overcome the issue of distrust, SSV has allied with a highly respected community based organization in East Palo Alto, the Ecumenical Hunger Program (EHP). As a community organization dedicated to providing assistance to working families experiencing economic and personal hardship, the EHP partnership will help identify and introduce renters and homeowners seeking energy affordability to SSV. Through this partnership, SSV looks to bridge existing gaps between program providers and homeowners to ensure free weatherization and energy affordability services, and developing mutual trust and respect in collaboration with the community at large.