poverty in the USA
by Dr Meg Power
There is a dramatic contrast
between the focused nature of UK fuel poverty policy and the scattering of
US national and state policies aimed at low-income energy consumers. The
difference evokes a sensation of longing in American fuel poverty that can
only be described as "focus envy".
Meg Power - Dr Meg Power is
President of Economic Opportunity Studies (EOS) of Washington DC
* All financial data
converted to sterling at $1.75:£1
THE KALEIDOSCOPE OF US
Neither poverty in general, nor fuel poverty in particular, tops the
domestic agenda of America's two main political parties. There is no
consensus on what percentage of fuel expenditure (the energy burden in US
terms) is unacceptably high. Further, there is a regional weighting of
political interest, with representatives of cold weather states exhibiting
greater concern in mitigating the impact of high fuel bills.
The "Sunbelt" is represented
both by more Members of Congress and by more fiscal conservatives. In the
unlikely event that a national target date for ending fuel poverty were
agreed, the manner in which our energy distribution system is structured
means the national government would lack the legal tools to ensure a unified
policy was implemented. It could not require reporting on benchmarks except
as a condition of federal funding.
Fifty-one regulatory bodies
set residential rates and the standards for consumer protection, including:
disclosure of disconnection rules; debt collection and debt management
procedures; and utility spending on schemes for the energy poor. In rural
areas, where income poverty is especially acute, distribution of electricity
is by non-regulated cooperatives.
Fifteen percent of low-income
homes are heated by delivered oil, propane or wood, none of which is subject
to price regulation. That said, there has been some national funding for
both bill subsidies and energy conservation for more than a quarter of a
In the past decade the
decentralised utility system has generated many
initiatives designed to reduce the energy burden. Discounts, efficiency
investments, pricing schemes and debt management are all elements of one or
more of the packages of state/local/private programmes. Every significant
investment is approved by regulators and costs charged to either residential
ratepayers alone or to all classes of ratepayers.
We applied the UK's Social
Action Plan Indicators and fuel poverty criterion, 10% energy burden, to the
US for 2005. The findings are set out below.
US FUEL POVERTY BASED ON
* Number of households in fuel poverty: 15.9 million
* Number of households with prepayment meters: Hardly any who are in fuel
poverty. Consumer groups have opposed this as a choice for customers with
payment problems and prevailed at most regulatory commissions to date.
* Self-disconnection: Not applicable, see above.
* Debt repayment levels: No data are shared by utilities. They alone decide
when to write off bad debts and the data only become public the following
* Disconnections for debt: Reports are only required by a handful of state
regulatory bodies. Those reports indicate rising trends in disconnection and
longer periods prior to reconnection.
* Growth in the Registered Priority (vulnerable) Group: No 'registers'.
Customers with life support equipment must notify utility. Other groups are
protected in a few states.
* Switching to competitive
suppliers: In the US there is no competition for small or low income users
offering better rates than the regulated rates, except in Georgia's gas
* Tariff/payment choices: Nearly all US consumers are 'credit customers'.
Here the indicator of progress might be enrolment in utility discount and
other low-income services.
* Efficiency measures/advice provision: Only significant energy efficiency
interventions are assessed (currently around 7-8 million homes). Most
programmes base participation on income, not usage. Energy advice is not
quantified as a separate measure.
FUEL POVERTY IN THE UNITED
Fuel poverty in the United States is closely linked to low household income
and associated factors such as age, housing tenure and geographical
Income: In 2005, 36%
of fuel poor households had incomes higher than the Federal Poverty
Guideline and 5% were ineligible for the federal Low Income Home Energy
Assistance Program (LIHEAP). However, the 2005 median income of the energy
poor was £4,330; only 5% had incomes higher than £15,000*. There is
considerable variation in energy expenditure; the fuel poor had median
annual energy expenditure of £975, but 25% spent more than £1,330. Just 15%
were receiving any combination of income support or non-cash assistance,
such as housing subsidies, food stamps, or assistance for the disabled. The
rest relied on wages, unemployment compensation, and disability support or
retirement income. Only the last two are indexed to inflation. Age: 39% of
fuel poor householders were 65 years old or older. The average 2004 income
for this group was £6,461. Half of them lived alone. LIHEAP prioritises
outreach to vulnerable elderly, making this one of the few programmes open
to all ages in which the elderly are not underrepresented in proportion to
Households using fuel oil or propane for heating, residents of Southern
states and tenants are all disproportionately represented among the fuel
poor. The last two are under-represented among national programme
participants as a consequence of programme design features.
To see the full report