U.S. electric utilities are increasing their investment in low-income energy efficiency programs, but the growing number of Americans considered income-challenged means a “gap” in funding exists, the American Council for an Energy-Efficient Economy said in a report published Thursday.
Most utilities “are still underinvesting in low-income programs relative to the corresponding proportion of income-qualified population in their service territories,” the report said. It noted a 14.4% gap, on average, between utility investment in programming for income-limited customers and the prevalence of low-income households, based on 2024 program reports and other sources.
The report assessed low-income investments by electric utilities making up about 60% of U.S. electricity sales, Anna Johnson, ACEEE senior policy manager and an author of the report, said in a webinar discussing the findings. Utility investments in low-income programs have risen to 13.4% of efficiency budgets overall, on average, up from about 9% in 2015, ACEEE said.
“But the bad news is that just as utilities are increasing the proportion of their budgets that are going to low-income households, we're also seeing that low-income households are increasing in the U.S. as a percentage of the population,” Johnson said. “Even as utility investments increase, we're seeing a persistent ... equity gap.”
Energy costs last year increased at about twice the rate of inflation, “which is a change from the rate of energy increases we've experienced in recent past,” Johnson said. “And this is on top of the fact that already one in six households in the U.S. are behind on their energy bills.”
The value of energy efficiency is rising, she said, because it is “one of the only direct levers that a household has available to them to reduce their energy bills.”
More than 28% of the U.S. population falls below 200% of the federal poverty line, which is the metric ACEEE used in its report. Individual states and utilities may have their own benchmarks to access programs.
Utilities in states with low-income investment targets are spending about $50 per low-income customer, while utilities operating in other states spend close to $19 per low-income customer, Johnson said.
Utilities that do not have an “equity gap” are primarily located in states with strong energy efficiency resource standards that are paired with statutorily set low-income investment requirements, the report noted. ACEEE included a menu of more than two dozen policy and program options that can be used to bolster low-income programs.
States setting low-income investment standards “is highly correlated” with having energy efficiency resource standards, which are used to set long-term targets for energy savings. The utilities ACEEE examined in its report are located in 31 states; of those, 20 had an EERS in place, and of those, 15 also mandated low-income programs, according to the report.
ACEEE’s assessment looked at policies to improve the impact of low-income efficiency investments, including expanding investments, improving outreach to target demographics, and better serving renters, multifamily housing and manufactured housing.
“There's no one size fits all perfect model that will serve the needs of all low-income households in any utility territory,” Johnson said. “So there's going to have to be a kind of a mix and match approach.”
