Rural Households Spend 40 Percent More of Their Income on Energy Bills
There’s a significant shift underway in how Americans consume energy. That is largely due to increasing energy efficiency leading to American households using less electricity than they did five years ago and the rapid expansion of renewable energy sources.
Still, there is big disparity in how much American households spend on electricity based on the region they live in and their income level. In 2015, nearly one-third of U.S. households reported facing a challenge in paying energy bills or maintaining adequate heating and cooling in their home. Furthermore, one in five households reported reducing or forgoing basic necessities like food and medicine to pay an energy bill and 14 percent reported receiving a disconnection notice for energy service.
Now a new report from the American Council for an Energy-Efficient Economy and the Energy Efficiency for All coalition confirms the disparity extends to rural households as well. Rural households spend 40 percent more of their income than urban households on electricity and heating bills, providing new evidence of the urgent need to expand energy efficiency programs to rural America.
Rural households comprise roughly 16 percent of all U.S. households. Unlike urban households, rural households are more geographically dispersed, covering 72 percent of the nation’s land area. Nearly 41 percent of rural households are low-income—with income below 200 percent of the federal poverty level compared with roughly one-third of urban households. Three-quarters of rural households are single-family units, with the remaining evenly split between manufactured housing and multifamily buildings. In addition, about a quarter of all rural households are renters, the majority of them in single-family housing.
The report describes the landscape of energy affordability in rural areas and highlights certain groups that face disproportionate high energy costs relative to their income. Among the main findings of the report are:
- Rural households have a median energy burden—the share of income that goes to energy costs—of 4.4 percent while their urban counterparts have a burden of 3.1 percent. The East South Central, New England, and Mid-Atlantic regions have the highest median rural energy burdens at 5.1 percent. The Mid-Atlantic region has the most pronounced difference between rural and urban households’ energy burdens (5.1 percent for rural and 3.3 percent for urban).
- Rural low-income households experience the highest energy burdens across all regions. These households have a median energy burden of 9 percent, more than twice that of the rural median and almost three times higher than their non-low-income counterparts. In several rural regions, this burden exceeds 15 percent for one of every four low-income households. The highest median burdens for rural low-income households are in the New England and Mid-Atlantic regions (10.6 percent).
- Other rural households hit particularly hard include those with elderly, non-white residents as well as those living in multifamily and manufactured homes. For instance, rural elderly households (with a householder aged 65 or older) see above-average energy burdens as compared with the national rural median (5.6 percent vs. 4.4 percent). Rural elderly households face the highest energy burden in the East South Central region of the country, at 7.2 percent. One-quarter of rural elderly households in the same region have burdens greater than 11.3 percent.
While there can be other factors that lead to higher energy burdens for rural households (for instance, rural residents tend to make less and thus have to spend a higher share on energy), a major reason is that rural areas are also typically less energy efficient and lack efficiency programs and incentives that their urban counterparts have adopted. Many rural homes and commercial buildings lack adequate insulation, weather stripping around windows, and other basic improvements that can reduce energy use and add dollars to household budgets.
These often overlooked and underserved area are crucial to advancing national and state energy and economic goals. Increasing investment in energy efficiency programs in rural America can not only address high energy burdens of rural households but also promote economic development, job creation, and improved public health.
The report accordingly identifies opportunities that can ease hardship on rural groups that have long been underserved by energy efficiency programs. It recommends expanding current low-income program offerings, exploring no-risk or low-risk energy efficiency financing options, incorporating regional workforce development initiatives, and building relationships with other service providers to strengthen program delivery. Utilities, in particular, can step up efforts to reach out to rural households by designing and delivering efficiency programs that meet their needs.