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Fuel (energy) 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

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 century.

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.



* 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 year.

* 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 markets.

* 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 States is closely linked to low household income and associated factors such as age, housing tenure and geographical location.

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 their numbers.

Other groups: 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 click here




  Source: Opportunity Studies