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Achieving Meaningful Energy Savings for Low-Income Customers

In the United States today, nearly 28 percent of families live on incomes less than 200 percent of the federal poverty line. And although they may be the least able to bear it, low-income families face disproportionately higher energy burdens than wealthier households. They spend a far larger percentage of their total household income on paying utility bills than the average U.S. householdIn fact, a recent report found that, for families living in large cities, the median low-income household’s energy burden was more than three times as high as that of non-low-income households. This provides the context for why improving the efficiency for low-income households is so important. 

Of course, for any household, taking action to improve energy efficiency in the home helps lower bills. But for many low-income customers, there are real barriers to taking part in traditional home energy efficiency programs. 

  • High upfront costs: Energy efficiency investments are often beyond the budgets of low-income customers, even with help from utility incentives. 
  • Split incentives: When a landlord is responsible for the cost of an upgrade, but it’s the tenant paying the utility bill that gets the savings, there’s no real incentive for the landlord to make the investment. Equally, if the landlord pays the bills, why should the tenant spend on cost-saving measures? Since many renters have lower incomes, this can have a big effect on low-income participation in rebate-based efficiency programs. 
  • Lack of information: Low-income families may be more likely to struggle with limited internet access or language barriers. Or their community may not have trusted communication channels in place with the utility. So, getting reliable information about how to save energy in their homes is a problem in many low-income communities. 
  • Lack of trusted workforce: Even if a household is aware of what needs to be done, it can be difficult to secure trained, skilled contractors to provide improvements, or even to receive an estimate. 
  • Household roadblocks: Low-income customers are more likely to live in aging buildings, with electrical, structural or other health and safety issues that need to be remedied prior to any deeper energy efficiency upgrades proceeding. 

These are real barriers that literally leave thousands of low-income households out in the cold, and missing out on opportunities for deep energy savings. 

What’s the solution? 

More and more utilities are now delivering specialized programs for low-income customers, designed to help overcome these hurdles. 

ACEEE recently published a report identifying some of the most successful of these programs. 

Every utility will have their own reasons for delivering services to the income-qualified sector. For some, an energy efficiency program’s measure of success is its ability to deliver the greatest possible savings and get the maximum number of eligible people to participate. For others, providing the biggest impact and reduction in usage for each participating household is most important. When reviewing 70 electric efficiency programs and 46 natural gas programs in their report, the authors determined that comparing only “participation” data, or only “savings per program participant” may not give the full picture of the energy savings or other benefits achieved in the low-income sector overall.  

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So, they used the metric of “savings per low-income customer,” accounting for the overall reduction in energy savings across the entire low-income population (not just program participants), to give a better sense of how well each utility’s low-income energy efficiency effort was serving its low-income customer population as a whole. 

Big Impact Across the Customer Base 

For the programs with the biggest impact across the customer base, the most successful utilities in the sample averaged electric savings ranging from 54.9 kWh to 90.1 kWh per low-income customer, which is about 6-10% of the average household’s monthly electricity usage.

The median electric savings per low-income customer for the 70 utilities was about 10 kWh (average savings across the entire low-income population, not just program participants). These top-ranked programs demonstrate how a robust program model can make such a large impact. 

The average natural gas savings per low-income customer for the top five utilities ranged from 5.09 to 12.61 therms. Again, compared with the median savings per low-income customer across the whole sample of about 1.6 therms, these figures are impressive.  

Although top efficiency programs are aiming to both maximize participation and help participating households achieve deep savings, the participation component can provide the biggest stumbling block. While dedicated low-income efficiency programs are becoming commonplace, they are still only serving a tiny fraction of the eligible customer base—around 1 percent of the estimated low-income population in the utilities’ service territories. Given the low-income sector challenges in enacting efficiency upgrades, this represents a significant savings potential. Franklin Energy delivers efficiency services for some of the leading programs in the country, providing comprehensive electric, gas and water saving programs, and can help to tap the potential opportunity in your community. 

We know that participation is a direct function of program budgets. The correlation between spending and savings is extremely strong—those that can spend more dollars on their low-income customer base typically reach more participants and achieve higher savings. 

Increased focus and funding for these programs will result in higher energy savings and allow for greater participation. Customer engagement through efficiency programs can result in reduced customer service calls, fewer billing inquiries, and a reduction in accounts in arrears. As programs mature, utilities will be able to leverage new, multiple funding sources, get creative with program design and delivery strategies, and achieve genuinely deep energy savings for more and more low-income customers. 

Determine your program needs and goals, and draw upon the experience and knowledge of industry experts to serve this important customer sector and to inform a solution that is customized and works for your community. 

To learn more about engaging your community's low-income sector and providing savings where they're most needed, schedule an appointment with a Franklin energy expert today. We'd love to help!

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References 

Census Bureau (2017) American Community Survey 5-Year Estimates. https://factfinder.census.gov/faces/nav/jsf/pages/programs.xhtml?program=acs 

Drehobl, A., and L. Ross (2016) Lifting the High Energy Burden in America’s Largest Cities: How Energy Efficiency Can Improve Low-Income and Underserved Communities. Washington, DC: ACEEE. http://aceee.org/research-report/u1602 

ACEEE (2017) Making a Difference: Strategies for Successful Low-Income Energy Efficiency Programs: http://aceee.org/research-report/u1713 

Greg Nettleton, BPI
Written by Greg Nettleton, BPI

Residential Product Manager
Customer experience is key, and Greg Nettleton knows how to deliver it every time. From strategy to program design to budget, he keeps the customer in mind every step of the way. In his role, Greg drives best practices to reach results for clients and deliver value to their customers. With decades of experience, he has overseen implementation of efficiency program delivery and worked extensively in the residential energy sector. Greg holds a bachelor’s degree in anthropology from Grinnell College, is certified as a BPI building analyst/envelope professional, a verifier for ENERGY STAR® for homes, and is a HERS certified home energy rater.

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