Low-Income and Underserved Communities Have Highest Energy Cost Burdens

A report by the American Council for an Energy-Efficient Economy titled “Lifting the High Energy Burden in America’s Largest Cities: How Energy Efficiency Can Improve Low Income and Underserved Communities” found that low-income households, renters, and African-American households face greater energy cost burdens than higher income households, homeowners, and white households.

The authors used American Housing Survey data to compare energy cost burdens, defined as the proportion of household income spent on energy costs, by income, tenure, and race across 48 of the largest U.S. cities. The median energy cost burden for all cities was 3.5 percent of a household’s income. Low-income households had the highest median energy cost burden at 7.2 percent. African-American households had energy cost burdens of 5.4 percent, Latino households of 4.1 percent, and renter households of 4.0 percent.

The authors were able to determine the extent to which a home’s energy inefficiency contributed to energy cost burdens for different household groups by comparing each group’s annual utility costs per square foot with that of the median household. Inefficient housing accounted for 35 percent of the excess energy cost burden among low-income households, 42 percent for African-American households, 68 percent for Latino households, and 97 percent for renter households. Excess energy cost burden is the difference between a specific group’s median energy cost burden and the median energy cost burden for all households.