How Families Cope with Energy Insecurity
The number of American households experiencing energy insecurity spiked during the COVID pandemic in 2020, as growing unemployment and falling incomes made it difficult for more households to balance utility bills with other financial demands. Yet the rising incidence of energy insecurity, and the often short-term focus of assistance to keep families financially afloat, belies the reality that energy insecurity is often a chronic challenge that predates acute financial crises, and persists long after.
Sanya Carley, director of the Energy Justice Lab at Indiana University’s O’Neill School of Public and Environmental Affairs, discusses the nature of household energy insecurity, and novel research into the coping mechanisms that families experiencing energy insecurity use to juggle often competing needs of energy, food, and healthcare. Carley also talks about existing public policy measures to address energy insecurity, and the need for new types of data to underpin effective policy action.
Andy Stone: Welcome to the Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone.
The number of American households experiencing energy insecurity spiked during the COVID pandemic in 2020 as unemployment and falling incomes made it more difficult for households to balance utility bills with other financial demands. Yet the rising incidence of energy insecurity and the often short-term focus of assistance to keep families financially afloat belie the reality that energy insecurity is often a chronic challenge, one that predates acute financial crises and persists long after.
On today’s podcast, we’re going to look at novel research into the coping mechanisms that families experiencing energy insecurity use to juggle competing financial demands such as energy, food, and healthcare. The research is part of broader efforts to understand the drivers of energy insecurity and the forces that perpetuate it as a foundation for the development of public policy solutions.
My guest is Sanya Carley, Director of the Energy Justice Lab at Indiana University’s O’Neill School of Public and Environmental Affairs and a Visiting Scholar here at the Kleinman Center. Sanya will walk us through her research into the behavioral and financial strategies that families often must resort to in coping with energy insecurity. She’ll also talk about existing public policy measures to address energy insecurity and the need for research to underpin broader and more effective policy solutions going forward. Sanya, welcome to the podcast.
Sanya Carley: Thank you so much, Andy. It’s great to be here.
Stone: It’s great to have you here. So you direct the Energy Justice Lab at Indiana University. Tell us about the lab and your work within it.
Carley: I’m happy to. The Energy Justice Lab focuses on issues of equity and justice within our energy systems. We start with the understanding that our energy systems are changing rapidly across the entire world, and they’re moving from predominant focus or reliance on fossil fuel or carbon-intensive energy resources and moving towards more efficient, more advanced, cleaner energy/lower carbon technologies. These technologies bring great benefits to society, particularly in the form of reduced greenhouse gas emissions, but they also are accompanied with some of the same inequities and injustices that have plagued our energy systems of the past.
So our Energy Justice Lab focuses on these challenges and thinks about, as we transition our energy systems: How do we ensure that technologies and other benefits are universally available? And how do we ensure that everybody is making decisions at the decision-making table, if you will, and how do we make sure that we can recognize and account for some of the injustices of our past?
Stone: I wonder if you could give us some perspective here. Could you define and frame the problem of energy insecurity in the US?
Carley: “Energy insecurity” refers to when an individual or a household struggles to pay their energy bill. They may, as a result, be completely disconnected from their service providers, whether it’s an electricity provider or natural gas provider. Or they may have to keep their houses at very uncomfortable temperature conditions in order to get by. So energy insecurity, like the term “energy poverty,” as well, is referring to those difficult, struggling conditions.
Stone: So how prevalent is energy insecurity in the US?
Carley: We know that energy insecurity is highly prevalent. In fact, the US government tracks it, the Energy Information Administration tracks it through their Residential Energy Consumption Survey. And what this survey finds is that approximately one in three American households struggles to pay their energy bills, and they keep their homes at uncomfortable temperatures. One in four households reports that they have to forgo paying for other important necessities such as food or healthcare in order to pay their energy bills.
Stone: In the research that we’re going to be talking about, you note the increasing pressure that households are going to have due to climate change. I wonder if you could tell us a little bit about that.
Carley: That’s right. So we anticipate that both due to climate change, as well as the energy transition, that households will increasingly face the problem of energy insecurity. And that’s for many reasons. Climate change brings erratic weather. The more extreme weather events, for example, where energy prices spike, but also that people will just simply be disconnected as a result of these energy crises. And the protections that are in place do not always cover these — what we call “shoulder months,” essentially — the spring and the fall, the non-normal, extreme weather times. And so we’ll see with increased weather and precipitation that there will be more households that really struggle to pay their energy bills.
Stone: Yes, and more need for A/C in the summer; more need for heating in the winter, as we’ve seen this winter in particular, in acute examples.
Carley: Yes, and with the need to also upgrade our grid and to remove coal power plants from online. There are stranded assets. There are additional expenses that are involved, and these expenses are often passed on to the consumer. And whereas many households are able to absorb those additional costs — let’s say it’s five dollars a month — other households are not. And this actually is a very large number, millions of households that are unable to absorb those extra expenses.
Stone: So you and a group of colleagues undertook a large study into energy insecurity during the COVID pandemic, during 2020, I believe. What questions were you looking to address with that research?
Carley: That’s right. Right at the onset of the pandemic, we recognized that the consumption of energy would move more into the home. So that is, as people are at work less, and they have stay-at-home orders, they are then consuming all of their energy within the home, which leads to, of course, a very large increase in one’s energy bills. So we recognized this right away, in about May of 2020 and immediately started tracking this problem.
What we did is we launched a survey of low-income households, a representative sample of low-income households all across the United States. And we followed up with this sample of individuals, approximately 2,000 households, over the entire first year of the pandemic, from May 2020 to May 2021. Over this time, we asked them many questions about their incidence of energy insecurity, whether they’d been disconnected, whether they were paying their energy bills, how they were coping, whether they had COVID or anybody in the house had COVID, who resided in the house, what their employment status was, and a variety of questions.
So what this allowed us to do was essentially create this longitudinal study of these households that we tracked over time, and it provided us information about pretty fundamental questions on energy insecurity, not just during COVID, but also generally, such as: What is the prevalence? How does it change over time? How do disconnection protections that are in place help or not help? What kinds of trade-offs do households make when they’re facing conditions of energy insecurity? And how chronic or persistent is this problem as it manifests?
Stone: You’ve noted that a lot of the research into energy insecurity has been looking at acute instances, what you call a “cross-sectional” look at the problem. You just mentioned that your research is more longitudinal. What are the implications of both?
Carley: What we found in our work is that oftentimes, households when they struggle with energy insecurity, they’re struggling from it on a routine or regular basis. So just to give you some statistics, of those that we sampled that struggled to pay their energy bills during that first year, 70% of them struggled on a regular basis, so on a multi-month basis. And of those who were disconnected over the course of the year, which was approximately 8 million low-income households, over 50% of them were disconnected on a multiple-time basis. And under 50% were disconnected only once.
Now this suggests that this problem is persistent and that, of course, it is a deep problem of material hardship. And once a household enters this state, and they start struggling to pay their energy bills, it’s really hard to get out of that state. One of the reasons for this — I think there are many reasons for this — but one of them is that when a house is disconnected from their service provider, they often have to incur a variety of different expenses. So there might be a disconnection fee. There might be a reconnection fee. There might be both. There might be, in the case of some of the interviews that we did along with our surveys, we found that accounts might disappear entirely, and people have to pay for a new account, as though they had just moved into their house the first time. We also know that when people are disconnected, they oftentimes lose everything in their refrigerator. So they might be out $100, $500, just overnight from this disconnection, and then they have to replace all of that food, of course, which is a huge expense.
We also know that when households are disconnected, and they are far more likely to be disconnected if a young child lives in the home — that’s one thing that we found. And if a young child lives in the home, and the house is disconnected, this is grounds in many places across the country for Child Services to come and remove the child from the home. And so these are households that are struggling, of course, not just financially, but also mentally and physically, with these very dire health and developmental consequences, as well, which just, of course then, perpetuates the problem of energy insecurity going forward.
Stone: Your research also revealed that there are certain characteristics of families — families that might be more likely to be energy insecure. What did you find?
Carley: Sure, so we found that certain households, certain social demographic characteristics align more strongly with being disconnected and just struggling to pay one’s bills. So we found that low-income households, the particularly low-income households are more likely to struggle. We find that households that have deficient or dilapidated or some kind of inefficient conditions — let’s say the HVAC system is broken, or there are holes in the wall, for example — they are more likely to be disconnected. And then we also find that households with young children under the age of five are more likely to be disconnected, as well as households of color and households where an individual might reside in the home who relies on an electronic medical device. All of these populations are more likely to struggle with the problem, as well as be disconnected.
And just to give you a statistic here, one thing that we find is that those who identify as a Black household are three times more likely than white households to be disconnected. And Hispanic households are four times more likely to be disconnected than white households.
Stone: What’s the connection with the young children?
Carley: Well, young children that reside in a home might have greater energy needs. The household might have just more material hardship in general because they need to make sure that they have enough food, and they’re facing, of course, this “heat or eat” dilemma. And they also need to make sure that they have appropriate medical care, learning care, education care, and so forth. And so I think that these various forms of material hardship add on. They add on top of each other.
Stone: Okay, so a second paper looks into coping strategies that the households are actually using to navigate energy insecurity. Could you tell us about that research?
Carley: We find that over 55% of all low-income households over the first year of the pandemic used some kind of coping strategy. And a coping strategy here could be something that’s financial, such as carrying debt, for example, or balancing across all of your bills, strategically paying down one bill or another. Or it could be behavioral, and that is some kind of technique to keep your body warm, for example.
And so 55% of households use some of these strategies, but we also find that the majority of households use multiple of these strategies at once. So a household might, for example, carry debt at the same time that they seek assistance, and that they take a payday loan, for example, in order to pay their energy bill. We also find that the most common coping strategies are also the riskiest to one’s health. So these include one, the most common, is carrying debt, which is 27% of all low-income households in the United States. The second most common is to use some kind of temperature strategy, a risky temperature strategy, which we define as burning trash within your home to create heat; using your oven to create heat, whether you open your oven door or you flare your stovetop, for example; using a fireplace for space heat; using a space heater for heat, which is one of the leading causes of fire within the United State. Something that we learned about through our survey that is fairly common is using a dryer for heat. So if you disconnect the dryer vent, and you run the dryer, it creates steam heat, essentially, which can warm one’s body. So this is 26% of all low-income households that use one of these strategies.
We also find that other common strategies that are more risky include bill balancing and forgoing expenses of food and healthcare. The less common strategies are the less risky. Those include asking for help, for example, from a friend or a neighbor or a family member; looking into government resources, such as through the Low Income Home Energy Assistance Program or the LIHEAP program, which offers bill assistance for households when they struggle to pay their energy bills; or to call up the utility company and ask for help — ask to be put on a payment plan, ask if they could forgive some of your debt, ask if there are any other options that they could help you with. So these different techniques are far less likely for households to engage in.
Stone: I would imagine there is a combination of sociological issues at play there, as well as just not having the information that these programs are available. Is that right?
Carley: I think that’s right. I think that the programs administratively are difficult for households to navigate. They oftentimes have to anticipate that they will be in jeopardy ahead of time, in order to seek the assistance that they need. They may not know that these programs exist. The programs may not have funds available when they need them. There are a variety of barriers such as these things that keep households from tapping into the government resources as much as one might hope that they could.
Stone: Let’s talk a little bit more about those two solutions, the government solutions. One is LIHEAP and WAP — Weatherization Assistance Program. And one is very much providing assistance in the immediate term, and one is more potentially of a solution, where you’re actually weatherizing these homes. Talk a little bit about those two types of solutions that are out there at this point.
Carley: Yes, that’s a great question. There are multiple solutions, but I think that they all need to work together, and it’s important for us to think not just about the energy policy solutions, but to think also about housing solutions, for example, and food solutions, and how much — because this is such a predominant form of material hardship, how we can access those other resources, as well. But specifically the Low-Income Home Energy Assistance Program is a band-aid. It’s an immediate relief for households that are struggling to pay their energy bill.
Typically a household can only access it once per year, and they need to be able to go through with all of the paperwork and meet all of their criteria in order to receive that assistance. The Weatherization Assistance Program is to help an individual or a household weatherize their home — so to seal the cracks, for example; make sure that there are not big gaps around windows. And the Weatherization Assistance Program is, as you noted, it’s a preventative technique. Note that I said before that households that have these deficient conditions are far more likely to lead to disconnections. So if we can actually address these households through a WAP-like or other kind of weatherization program, we then can prevent households from entering that state of energy insecurity.
Stone: What’s the scale of these programs right now? Is there enough funding available to meet all the need?
Carley: There is, typically. Both of these programs, the WAP and the LIHEAP are woefully underfunded relative to the problem, the magnitude of the problem. Both have recently received an infusion of additional funds through the Inflation Reduction Act and through the Infrastructure Bill. So that’s promising, but I think longer-term, we need to think about how to prop up these programs more, how to enhance the funding, how to reduce the administrative burden to make it easier for households to apply. And how to work with local communities, particularly when it comes to the weatherization program, so that households trust the government, trust the contractors that come into their homes — and understand the intention of the weatherization program.
Stone: You point out in the research that there is a lack of data to support development of additional programs, public policy solutions to address energy insecurity. I wonder if you could tell us what are the specific types of data that are lacking at this point, and what types of action would having additional data unlock?
Carley: I think that we are missing two fundamental sources of data. The first is on the topic of understanding the dimensions of the problem, which I’ll note the literature has done a very good job of talking about the dimensions of the problem. But we still don’t have a firm understanding of how many households across the United States are disconnected.
Stone: Which is amazing to me, honestly, in this day and age, that we don’t know that.
Carley: It is amazing. It is amazing. I assume most utilities collect this information. It’s the utility commissions that require certain utilities within certain states to both collect the data and to submit the data to the utility commissions. But that’s for those utilities that are regulated and in the states that require this information. In the other states, there are no publicly available data on disconnections, so we really don’t have a great sense of the magnitude of the most extreme form of the problem of energy insecurity, which is disconnections.
Now, our research team at the Energy Justice Lab is focusing on this issue right now, and we are working to complete a utility disconnection dashboard, where we actually track these disconnections across states, across service territories, and across time. The other major data need is better information and more information about preventative solutions to the problem. So we have a decent understanding about how the Weatherization Assistance Program or WAP works, how much money is going into it, how much return comes out of it for the households. But there is so much more that we need to know about, for example, other preventative techniques. Is it possible that if we have solar access programs for residential homes, or community solar, for example, that we could reduce energy insecurity?
We don’t have studies on that at present. We don’t know whether this kind of preventative technique could improve or address the problem. We don’t know much about debt forgiveness programs and whether they could be improved. What is an effective design for debt forgiveness, for example, to help the millions of American households that take on significant debt on their utility bills? We don’t understand what kind of rate design most effectively addresses the problem of energy insecurity, recognizing that certain households are far more prone to suffer from energy insecurity than others. So it’s these kinds of studies that we really need right now, that are targeted at preventing the problem of energy insecurity, going forward.
Stone: So you need data to understand the problem, as well as to understand the effectiveness of possible interventions, right?
Carley: That’s right, the effectiveness of the solutions.
Stone: And it sounds like there is a lot of opportunity here for researchers in academia elsewhere to examine that data, right?
Carley: There are so many opportunities, and the government is heavily supporting this specific issue. One could argue that it’s strongly connected to the Justice40 Initiative, for example. So there is a lot of effort behind the government, behind industry to address energy insecurity and related challenges. And I think we’re just at a very important time, where we need to think deeply about collaborations, collaborations that include academia, that include industry, that include government, that include the local community, which is essential — and to think deeply about what these collaborations might look like, how to make sure they’re multidimensional and multidisciplinary, and that they are deeply involving the local communities in the solutions.
Stone: And how much of this is really on the federal government to lead the way? How much of it is state level, local level, as you just mentioned?
Carley: I think it’s all of the above. I don’t think that there are percentages in one level or the other. I think that it needs to be an all-hands-on-deck. I think local level is particularly important for very targeted solutions, understanding that there are different pockets of communities that are more vulnerable, for example, and the local level can really target that. The federal government can help coordinate across a variety of different actors and provide funding, and the state level is somewhere in between. Those are just some roles that they can serve, but I think again, it’s all of them that are needed.
Stone: We talked a little bit earlier about this being a self-perpetuating problem. When people are faced with financial difficulties, health difficulties, it actually makes it much more difficult for them to rise out of that in the future, to overcome those issues. Utility disconnections were — and the ban on those disconnections were a good thing during COVID. A lot of those have expired now. Where do we stand with that, and how important are the preventions on those disconnections?
Carley: That is an excellent question. It’s so important for us to think about disconnection protections. During the pandemic, within the first few months of the pandemic, many states did put these moratoria on the utilities essentially, so that they couldn’t disconnect any of their customers. And these moratoria were very cut-and-dried. They were, “You will not disconnect.” However, we actually see some evidence that in some places there were still disconnections, despite the moratoria.
In our research we find that when these very strong moratoria were put in place, that it did, in fact, reduce disconnections overall. And it also reduced the prevalence of households forgoing their expenses on other goods, such as food. So this suggests that they were effective; however, they were very short-lived. So in many places, they lasted for a month, for example, or two months, maybe three. California was the longest at over a year. But as they expired, we saw this huge increase in disconnections, actually at rates that were higher than before. Because as you can assume, what happens is that when the protections are in place, that households might change their strategies. They might start to accumulate more debt, and then afterwards, that debt then leads them into disconnection.
So this suggests a few things. It suggests that we need to think deeper about debt forgiveness and how to help households manage the debt that they accumulate. It also means that we need to think more deeply about how we design our disconnection protections. Now just a bit of background here: We have, or states have a variety of different kinds of ongoing protections, so they might be seasonal. They might be date-based, for example, they turn on on a certain date every year. Or they might be weather-based, so if the weather gets above a certain temperature or below a certain temperature, then people are protected. They might also apply to those who have compromised medical conditions or those that might have young children in the home, for example.
Now what we know about these protections is that they’re mostly way out of date. They don’t account for climate change and changing weather conditions, and they are often very difficult to understand. Some of them are just so complex, and let’s say for an individual that has a medical condition, they need to have a doctor’s note every single year. They need to have that note already submitted, so that they can anticipate being disconnected and prevent themselves from being disconnected, for example. And they need to be able to follow the legal language of the code, because these protections aren’t well advertised in any given place, across much of the country.
And so, with these temporary moratoria, what we can learn is how important it is to have very clear language, effective language, and to be quite concrete, if you will, about who is protected and who isn’t. We also learned during the pandemic that households with young children are more likely to be disconnected. As I noted before, there are only four states with protections for households with young children. So there are things that we can learn from the pandemic and from these temporary moratoria about how to improve and bolster the disconnection protections that we already have.
Stone: You just mentioned a lack of funding for some state-level protections. Earlier in our conversation, you mentioned that LIHEAP and WAP are both woefully underfunded, you said.
Stone: And that funding has to come from either Congress or the state level — state legislatures. And that implies that there may be a political component, potentially a political barrier to getting the type of funding we’re talking about here. Can you talk about that? Is there significant pushback on these types of programs or funding of these programs that also needs to be taken into consideration?
Carley: I think the pushback is just that there are constraints to budgets, and there’s only so much money available, and there are a lot of very intense and immense social challenges across the United States, as well as across the world. So there are only so many resources for different problems. I think universally, we can agree that energy insecurity is very concerning. It’s a vexing problem, and it’s one that all can support as a problem. I think we need to recognize it as a problem, however.
I think the government can do more to say, “This is a challenge. We recognize that it’s a challenge. We recognize the definition of energy insecurity, and we would like to put additional resources behind it to track the problem, understand the problem of disconnections.” So part of it is a resource constraint issue, but part of it is also just an acknowledgement and an engagement issue.
Stone: Well, that research that you talked about, that will make it much more recognizable, hopefully.
Carley: That’s right. Data will be very helpful here.
Stone: Sanya, thank you very much for talking.
Carley: Yes, of course. Thank you for having me.
Stone: Today’s guest has been Sanya Carley, Director of the Energy Justice Lab at Indiana University’s O’Neill School of Public and Environmental Affairs and a Visiting Scholar here at the Kleinman Center.
Check out the Kleinman Center for Energy Policy website for an archive of more than 140 podcast episodes, as well as research and upcoming in-person and virtual events. To keep up with the center, subscribe to our monthly newsletter on our website. Our address is KleinmanEnergy.upenn.edu. Thanks for listening to Energy Policy Now and have a great day.