Energy Insecurity in Minnesota

Energy insecurity strikes too many Americans, and too many Minnesotans. More than any other reason, high utility bills force Americans turn to pay-day loans, or even out of their homes. High energy bills literally plague the poorest among us, as the stress of a looming payment and inconsistent heat leads to worse health outcomes. This time of year, when utility bills have stacked up all winter, hits hardest.

Energy insecurity is yet another reason that it’s expensive to be poor. This regressivity functions in two ways: 1) wealthier households have more income to pay utility bills, and 2) poorer households spend more on energy per square foot of home.

Data from “Lifting the High Energy Burden in America’s Largest Cities: How Energy Efficiency Can Improve Low Income and Underserved Communities,” at at http://aceee.org/sites/default/files/publications/researchreports/u1602.pdf

Low-income households in single-family homes fare the worst, where the median low-income household spent nearly 7% of annual income on utility bills. This illustration even understates the problem, because half spent more than 7% of annual income on energy.

The racial inequities in America show up in energy spending too: the median White household spends less of its income than both the median African-American and Latino households.

Energy efficiency affects the problem too. Below, the blue bars represent annual incomes by the left y-axis; energy costs per square foot are shown in red by the right y-axis.

Data from “Lifting the High Energy Burden in America’s Largest Cities: How Energy Efficiency Can Improve Low Income and Underserved Communities,” at http://aceee.org/sites/default/files/publications/researchreports/u1602.pdf

Low-income households spend 24¢ more on energy for each square-foot of household. Renters spend 23¢ more than owners. People of color pay at least 20¢ more than their white counterparts. Older housing stock, inadequate insulation, and inefficient appliances contribute to higher energy spending per square foot.

These costs make it harder to get by, much less get ahead—especially when too many jobs don’t pay enough. Because cheaper housing costs more to heat and cool, energy insecurity exacerbates the affordable housing crisis. Because utility bills are non-discretionary, they can quickly gobble up income that could otherwise go toward savings or education—or worse, force a choice between the heat or a medical bill.

 

The solution does not match the scale of the problem

The federal government funds the Low-Income Home Energy Assistance Program (LIHEAP, or, in Minnesota, EAP), which states administer through block grants. Minnesota was awarded $102.23 million for FY 2018, which ranks 8th in the nation. It is the 22nd most populous state. In 2014, the most recent year available, over 135,000 Minnesota households received an energy assistance payment—about 6.3% of the 2.135 million households in the state. To qualify for EAP in Minnesota, a household must make less than 50% of the state median income—roughly the poorest 25% of households. It would seem that many more Minnesota households qualify for EAP than receive it. At the national level, the Congressional Budget Office estimates that only 22% of those eligible actually receive LIHEAP funds.

Perhaps too many Minnesotans slip through the cracks because the state relies on too many providers. Or, because the application requires a  detailed application and extensive financial and personal information. Or, because the limited funds are awarded first-come, first-serve.

Some utility customers, once enrolled in EAP, can find more help.These utility programs surely help, but they do not help Minnesotans not already on EAP.

Even we are the best-run state in the nation, we leave too many of our own out in the cold.

 

How can we do better?

States can leverage LIHEAP block grants with additional money, which may later get matched by federal funds. In 2010, the latest year of available data, Minnesota contributed $26 million, mostly through discounted utility rates and utility-funded weatherization, but received no federal matching funds. More dedicated state funds would help bolster the safety net here in the Gopher State.

Non-governmental organizations have had to fill the gaps. Nonprofit solar developers have found a way to direct LIHEAP and other funds into community solar gardens, like these projects. Community solar is available to renters, and can substantially lower energy costs; unfortunately, credit checks or upfront costs can exclude those that would benefit the most from a solar subscription. RREAL and the Just Solar Coalition seem to have surmounted some of those barriers, but so far demand far outstrips supply.

The Center for Energy and Environment, a utility-funded nonprofit, provides energy efficiency and solar loan programs for homeowners. Property Assessed Clean Energy (PACE) is a state-run program that lends money to property owners for energy efficiency or clean energy investments, which are repaid through special assessments. In both cases, renters are out of luck.

While projects like these help, none have yet proven the scale that would solve the energy insecurity problem in Minnesota. We need to do better.