The value of centering energy assistance programs on energy burden
As colder weather seeps across the Northwest, most people are switching on heating systems to stay comfortable. Some may not think twice about the impact cranking up the heat has on their energy bill. But for energy burdened households — those who spend 6% or more of their income on energy costs — high energy bills pose a serious burden that contributes to chronic stress, negative health outcomes, and financial strain.
In this blog post, we’ll explore what energy burden is, how it can inform future program design, and discuss new utility programs in Washington and Oregon designed to alleviate energy burden for low- and middle-income households. In 2022, Oregon investor-owned electric and gas utilities implemented income-qualified bill discount pilot programs for eligible customers. In 2024, the Oregon Public Utility Commission will evaluate data on the uptake for these programs and consider changes that enhance the programs and their effectiveness. In 2023, Washington investor-owned electric and gas utilities rolled out income-qualified bill discount programs for the first time. Some public utilities have had these types of programs for years, Seattle City Light and Snohomish PUD are leading examples.
The scale of energy burden
To get a sense of the scale of energy burden, look to the Washington State Department of Commerce’s 2023 legislative report, which found that more than 250,000 (about 25%) low-income households are energy burdened. A low income is one of the biggest contributors to a household’s energy burden, but it doesn’t show the full picture. As seen in the figure below, a report from the American Council for an Energy-Efficient Economy (ACEEE) revealed additional groups that face higher-than-average energy burdens (median is 3.1%): older adults (65+); BIPOC (Black, Indigenous, and People of Color) households; renters; and people living in low-income multifamily or manufactured homes.
As the previous chart shows, low-income households with older adults are three times more energy burdened than the median (9.3%), and low-income households with disabilities (8.7%) and young children (7.1%) are over two times more energy burdened than the median. Energy burdened households are more likely to live in older, inefficient homes, which leads to greater temperature swings and mold. These conditions raise the risk of heat stress and respiratory problems such as asthma and chronic obstructive pulmonary disease (COPD).
Energy assistance programs play a critical role in helping provide relief from these health risks and associated stresses for disproportionately impacted households. Such programs exist but are traditionally based solely on income. For example, the federal Low-Income Home Energy Assistance Program (LIHEAP) has helped households who earn 60% below each state’s median income since 1981. Utility energy assistance programs, which are often voluntary customer contribution programs, have typically been designed for “known low-income customers” — households already in a utility’s customer database who were identified through their participation in other non-utility, low-income assistance programs like LIHEAP.
However, energy assistance programs could be designed specifically to reduce a household’s energy burden. This design could better identify which households need assistance and have historically been excluded from energy assistance programs. For example, people who rely on energy-consuming medical devices 24/7 could benefit from a program designed around energy burden. This design could also qualify energy burdened middle-income households who struggle to pay their energy bills, yet who may be left out of programs designed only for low-income households.
Washington State’s new bill discount rate programs
On October 1st, 2023, Avista, Puget Sound Energy (PSE), and Cascade Natural Gas released inaugural bill discount rate (BDR) programs for their Washington customers, joining existing programs at public utilities, Seattle City Light and Snohomish PUD. These programs are specifically designed to reduce the number of energy burdened households in their service territories. Another critical feature of these new programs is that customers can self-declare their income and household size to apply, removing another longstanding and historic barrier to accessing bill assistance.
The BDR programs are jointly administered with each utility’s local Community Action Agency who can also help connect participants with additional resources they qualify for, such as childcare and rental assistance. This cohesive network of support services streamlines the process for Washingtonians to access needed assistance. Avista, PSE, or Cascade customers who have received energy assistance from their utility or from the federal LIHEAP program within the past two years will be automatically enrolled into their utilities BDR program.
Oregon’s bill discount rate pilot programs
In 2022, investor-owned electric and gas utilities in Oregon, NW Natural, Pacific Power, Avista, Cascade Natural Gas, and Portland General Electric, launched bill discount rate pilot programs. These pilot programs stem from HB 2475, a bill passed in 2021 after considerable community organizing and engagement efforts, which authorized the Oregon Public Utility Commission to consider energy burden in assessing utility rates. Importantly, these programs are also designed to reduce the number of energy burdened households and allow customers to self-declare their income and household size to apply. A key distinction is that currently these are temporary pilot programs – the Oregon Public Utility Commission will evaluate the uptake and impact of these pilots in 2024. If all goes well, these pilot programs could be adopted as permanent programs to continue providing benefits to energy burdened households.
Energy burden is a more nuanced and precise metric for determining which households should qualify for bill discounts. These new programs are in their infancy but are clearly a step in the right direction in creating a more equitable energy assistance program design. These programs could be a model for other utilities looking to expand program access to their historically underserved customers and alleviate energy burden in their communities.
Check out this interactive tool from the Sierra Club to calculate your own energy burden and connect to state-specific energy assistance resources.