Front Porch Blog

The burden of rural home energy costs

Rural households spend 40% more of their income on energy costs than households in metropolitan areas, according to a comprehensive new report.

On July 18, the American Council for an Energy Efficient Economy and Energy Efficiency for All released a landmark report on rural energy burdens titled “The High Cost of Energy In Rural America: Household Energy Burdens and Opportunities for Energy Efficiency.” The report comes one year after ACEEE published a similar study focused on energy burden for urban households.

The new report analyzes the energy cost burden — or portion of gross household income spent on home energy costs (not including transportation) — for rural households across the nine major Census regions of the United States. Key findings from the report include the following:

  • The median energy cost burden for rural households across the US is 4.4%, compared to 3.3% nationally
  • Low-income households in rural areas experience an energy cost burden that is three times the burden faced by higher-income households
  • Renters, elderly or non-white residents, and those living in multi-family or manufactured homes are hit particularly hard
  • With a median energy burden of 4.6% to 5.1%, the problem is particularly pronounced in the East and Southeast regions.
chart showing energy burden by region and demographic

Graphic produced by ACEEE and EEFA

The findings, while not unexpected, paint a stark picture of how deep of a problem energy costs can be for rural communities. Through our own work, Appalachian Voices has also identified residents with energy burdens as high as 50% in the winter months when heating costs skyrocket. But the report also provides a solution, stating that “with the right policies and initiatives, those with high energy burdens could see some relief. Energy efficiency upgrades can lessen these energy burdens by as much as 25%, resulting in more than $400 in annual energy bill savings for some households.”

For the past five years, Appalachian Voices has worked to raise public awareness about how how much of an economic crisis exists in rural Appalachia due to the pervasiveness of high energy costs and inefficient homes, particularly for low-income households. This is a problem faced by rural communities across the country.

To address the widespread problem of energy cost burdens in the mountains of North Carolina and Tennessee, Appalachian Voices is advancing a type of home energy efficiency finance program called Pay As You Save(™), or PAYS. Known as an “inclusive” finance program, the PAYS system is available to everyone, including low-income households, renters and those with poor credit. We view the PAYS model as one of the best options for addressing energy cost burdens for Appalachian residents. Check out a 90-second video that explains why this model is so effective.

Unfortunately, as stated by Tom Cormons, Appalachian Voices’ Executive Director in ACEEE’s press release for the report, “[electric] utilities serving the region are way behind when it comes to making smart investments in energy efficiency. It’s time for Appalachia to benefit not just from lower energy costs, but also the jobs and economic growth that energy efficiency investments can achieve in concert with solar development and other sustainable economic initiatives.”

Tom also participated in ACEEE and EEFA’s press teleconference for the report. Read his full statement on the need to address the economic crisis of home energy costs in Appalachia below.

My name is Tom Cormons, and I’m the Executive Director of Appalachian Voices. I greatly appreciate the opportunity to join ACEEE on today’s teleconference and admire the work they’ve done with the new report to highlight the significant, but solvable problem of home energy cost burdens faced by families living in rural America.

This is a problem that Appalachian Voices has worked to tackle by creating public awareness around the social, economic and environmental impacts associated with energy waste, and by advocating for solutions — particularly inclusive financing solutions — that could not only alleviate the burden of energy costs for Appalachian residents and improve their quality of life, but also generate community wealth through millions of dollars in new local investment each year and create hundreds to thousands of new jobs in communities that need them.

For more than a century, Appalachia has provided much of the energy, in the form of coal, and now increasingly natural gas, that has fueled the growth of the country. But the wealth generated by these extractive industries has largely left the region, which, has left behind deeply and persistently impoverished communities with severe negative health outcomes, as well as a degraded environment. Other areas of the country — not to mention other industrialized nations — are reaping the benefits of the rapidly growing clean energy economy, and we need to ensure Appalachia is not left behind.

The combination of high poverty, lower-than-average incomes, older housing stock, and the lack of investment in basic energy efficiency improvements results in a situation where low-income Appalachian families, much like households living in the Deep South, face a significant energy burden that is not being adequately addressed.

This is not because the capital isn’t available. Much of Appalachia is served by rural electric cooperatives, for instance. [In fact, in North Carolina and Tennessee alone there are thirteen such co-ops serving nearly 600,000 residential properties.] Rural electric co-ops have access to two low-interest loan guarantee programs through the US Department of Agriculture which offer as much as $6 billion every year for co-ops across the country to develop energy efficiency and other renewable energy programs. And these loan programs have been available for more than four years.

Unfortunately, despite the substantial need among their ratepayers, and despite their mission to serve the needs of their members and contribute to the sustainable development of the communities they serve, only one of those thirteen co-ops has applied for that capital to date.

It is true that many of the co-ops we’re focused on offer energy efficiency rebates or loans, but these solutions aren’t accessible for the large majority of families who most need the help, and federal weatherization assistance funding falls far short of the amount of investment needed to fully tackle the problem.

We believe that the best available solution outside of vastly expanding federal weatherization assistance funding, or valuing energy efficiency as a resource in electric utility planning, is for all electric utilities serving rural communities to develop inclusive, tariffed, on-bill energy efficiency finance programs that are accessible to everyone regardless of income, credit score or whether they own their home. Such programs have proven cost-effective and hugely successful for impoverished communities in eastern Kentucky, Arkansas, North Carolina and elsewhere. But every single utility has the opportunity to follow suit, and so much more is needed if we are to tackle the growing economic crisis of energy cost burdens that plague rural communities in Appalachia and beyond.

Rory is an energy policy and finance wonk with six years of experience working on energy policy and planning in Appalachia. He joined Appalachian Voices in spring 2013 as Energy Policy Director to head up our Energy Savings for Appalachia program. His dog, Hobo, is our official Boone office mascot.


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