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The Consequences of Energy Poverty: And What you Can Do About It Roger Colton Fisher, Sheehan & Colton Public Finance and General Economics Belmont, MA.

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Presentation on theme: "The Consequences of Energy Poverty: And What you Can Do About It Roger Colton Fisher, Sheehan & Colton Public Finance and General Economics Belmont, MA."— Presentation transcript:

1 The Consequences of Energy Poverty: And What you Can Do About It Roger Colton Fisher, Sheehan & Colton Public Finance and General Economics Belmont, MA November 2004

2 Home Energy Unaffordability b b Home energy is a crippling financial burden for low- income Missouri households. Missouri households with incomes of below 50% of the Federal Poverty Level pay 38% or more of their annual income simply for their home energy bills. b b The number of households facing these energy burdens is staggering. More than 115,000 Missouri households live with incomes at or below 50% of the Federal Poverty Level. 150,000 additional Missouri households live with incomes between 50% and 100% of Poverty.

3 Home Energy Affordability Gap b Actual low-income energy bills exceeded affordable energy bills in Missouri by nearly $285 million at 2003 prices. b In contrast, Missouri received a gross allotment of federal energy assistance funds of $40.8 million for Fiscal Year 2003.

4 Home Energy Insecurity Scale: Pulling it all together b Payment troubles b Paid, but go without basic needs b Paid but significant energy deprivation

5 The nature of scales b Continuum with end points and interim markers b Indicators: “evidence” about households b Thresholds: classifications based on evidence b Everyone fits somewhere, but no-one fits more than one place

6 Home energy insecurity thresholds b Thriving: Generally accepted standards of well-being. b Capable: Secure, even if not completely within standards of well-being. b Stable: No risk of immediate crisis. b Vulnerable: No immediate danger, but temporary or inappropriate avoidance means. b In-Crisis: Immediate needs that threaten household’s physical or emotional well-being.

7 Non-energy impacts of energy unaffordability: Education b 22% were found to be a frequent mover over a two year period. More than 70% of all frequent mover households had children under age 18 b Third grade students who have changed schools frequently are two-and-a-half times as likely to repeat a grade as third graders who have never changed schools. b Frequently-mobile students are more likely to be below grade level in both reading and math.

8 Non-energy impacts of energy unaffordability: Hunger b 46% reported that they either “often” or “sometimes” went without food in order to pay their home energy bill. b Nearly half of those households reporting that they go without food “often” or “sometimes” in order to have money to pay their home energy bills live with incomes below 50% of the Federal Poverty Level. b More than three-quarters live with incomes below 100% of the Federal Poverty Level.

9 Non-energy impacts of energy unaffordability: Health care b 45% reported that they either “often” or “sometimes” did not take their medicine, or took their medicines in a dosage less than prescribed by their doctor, in order to pay their home energy bill. b Many low-income Missouri households skip seeing doctors and dentists altogether because of unaffordable home energy bills. Nearly 80% of those households reporting avoiding medical appointments “often” in order to save money to pay their home energy bills live with incomes below 100% of the Federal Poverty Level.

10 Non-energy impacts of energy unaffordability: Employment b Nearly one-in-six frequent mover households cited an energy-related reason as the primary reason for their most recent move. Most frequent mover households citing energy reasons indicated that the primary reason for their move was to find lower energy bills. b More than one-quarter of frequent mover households had income from wages. 80% lack paid leave time. b 32 hours devoted to process of relocation. Valued at average low-wage hourly wage ($8.63/hour). An aside: economic development impacts of energy assistance

11 Non-energy impacts of energy unaffordability: Housing b Energy insecurity affects the housing of low-income Missouri households by forcing those households to abandon their home for all or part of a day due to their inability to heat or cool it. b A substantial proportion of low-income households overall, as well as in every demographic category, closed off one or more rooms of their homes because they could not afford to heat or cool that space.

12 Missouri Low-income Households: Home Energy Insecurity Scale Classifications b Thriving b Capable b Stable b Vulnerable b In-Crisis b 0.4% b 2.0% b 3.0% b 45.5% b 49.1%

13 The Earned Income Tax Credit b Country’s primary anti-poverty program. b Refundable tax credit (cash back). b Average refund: around $2,000. b 3-year retroactive refund application. b 1/3 used to pay for past-due utility bills. b Only % of eligible claim. b Potential for innovative CAA/fuel fund role.

14 Energy Prices and Food Stamps b “Excess shelter deduction” in Food Stamps. b Food Stamp eligibility based on “countable income.” Shelter expenses above 50% an income deduction.Shelter expenses above 50% an income deduction. Shelter = rent/mortgage + utilities.Shelter = rent/mortgage + utilities. b If income lower: Some qualify / Some qualify for more.Some qualify / Some qualify for more. b Important in times of increased gas/FO prices. b $3 reduction in income yields $2 in benefits. b Customers indifferent as to source of dollars.

15 HUD Utility Allowances b Section 8/Public Housing (tenant-paid utilities). b Electricity *** Heating/Cooling *** Water/Sewer b Year-round -- not seasonal b Revised HUD Public Housing Guidebook provisions. b Annual review of utility allowances. b Adjustment when “rates” change by 10% or more.

16 Affordable Housing b Insert “Energy Star” into RFP/specifications for affordable housing. b Insert energy discussion in state and local Consolidated Plans.

17 Utility Rate Refunds b When utility money is not utility money. b Supplier refunds / rate refunds appropriate. b Refunds can come years after-the-fact. b LI mobility is 35%+: x total population. b Refunds returned to other than those who paid. b Refunds do not “belong” to current customers. b Concept of “cy pres” is established concept. b Kansas ad valorem tax refund/Colorado rate refunds.

18 Imposition of new fees b Increased fees/fees apply when changing service (moving). Harm to poor: LI have higher mobility/LI are more often tenants rather than homeowners.Harm to poor: LI have higher mobility/LI are more often tenants rather than homeowners. b Field collection fees/field payment fees. Harm to poor: LI are disproportionately payment- troubled/closed field offices/unbanked customers/huge percentage bill increase.Harm to poor: LI are disproportionately payment- troubled/closed field offices/unbanked customers/huge percentage bill increase. b Move disconnect fees higher/disaggregate disconnect and reconnect fees. Harm to poor: LI more often disconnected/huge barrier to reconnection/diversion of income.Harm to poor: LI more often disconnected/huge barrier to reconnection/diversion of income.

19 New/higher interest rates/late fees b Increase late fees/impose late fees on budget billing and/or payment plans. b Harm to poor: LI more often in arrears/more often on deferred payment plans. b Response: Late fee not cost-based now/interest rates going down/expenses paid through other fees/expenses not incurred. b Issue to watch for: LI exemption tied to LIHEAP, reaching fraction of LI population.

20 For more information: (Library or News)

21 For more information:


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