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Energy costs higher for rural households, says new report

WASHINGTON, D.C. — A report released in July sheds light on a growing issue in Rural America: The increasing energy burden that segment of the population faces.

According to the report issued jointly by the American Council for an Energy-Efficient Economy (ACEEE) and the Energy Efficiency for All (EEFA) coalition, rural households spend on average 4.4 percent more of their income on energy bills to cover air-conditioning, heating, lighting and appliances than their counterparts in more metropolitan areas of the United States.

In states such as Kentucky and Tennessee, the East South Central region in the report, the energy burden rises to 5.1 percent.

The report findings come as no surprise to Rory McIlmoil, who manages Energy Savings for Appalachia as part of Appalachian Voices, an advocate group for the region. “What we are seeing, in Appalachia specifically, is that rural areas experience higher levels of poverty and lower housing quality than other areas, even other rural areas in other parts of the country,” he said.

“We work with a lot of individuals and they struggle significantly with energy costs, particularly in the winter months in the mountains when heating costs are the highest. That causes a major problem in terms of their ability to pay for other basic needs and services.

“It’s an issue that not only affects their pocketbooks, but also their quality of life,” he added.

McIlmoil served as a reviewer of the report prior to publication. The 2018 report is a follow-up to a 2016 version, which left out information for rural areas due to insufficient data. ACEEE report author Dr. Lauren Ross said there was an outcry in the industry for rural numbers, which led to the focus in the 2018 report – a decision heralded by McIlmoil.

“While there’s a lot of data and there have been reports on rural energy wastes and burden, this is, from what I’ve seen, the most comprehensive report that brings it all together, looks at all the barriers as well as the full suite of solutions and ways to achieve those solutions effectively,” he said.

“We believe that this report does bring something new to the table because it not only focuses on the problem, it focuses on the many aspects of the solution such as building up local workforces, generating or taking advantage of capital and then also getting local government support and bringing local stakeholders to the table to make sure that these issues are addressed as effectively as possible.”

One solution featured heavily in the report is the need for increased energy efficiency measures in rural areas, a factor that Ross says contributed to the follow-up report’s importance.

“A growing body of research points to the scarcity of energy efficiency investments in rural areas, despite the known opportunities for their energy savings,” she said. “We wanted a resource that would draw attention to the disproportionate amount of income that rural households devote to energy costs and the lack of investment in energy efficiency in these communities.”

The report finds that “energy efficiency upgrades can lower household energy burdens by as much as 25 percent,” translating to more than $400 annual savings for some subgroups.

Keith Dennis, associate director for strategic initiatives at the National Rural Electric Cooperative Assoc., sees both the benefits and challenges of increased energy efficiency for rural Americans in his work with more than 900 rural electric co-ops that distribute electricity to 42 million people across 56 percent of the country.

“While there is a difference between the amount of money that people in rural areas versus people in metropolitan areas spend, there is another big difference in terms of what size house you have and what your income level is,” he explained.

“The total amount of energy that low-income folks use is less than the total amount of energy that high-income folks use. That leads to a couple of challenges with low-income people when it comes to traditional energy-efficiency things.

“Obviously if people are using less electricity in the first place, it can be harder to find big cost-effective savings.”

The report recognizes these challenges as well, stating: “While raising the efficiency of the housing stock in rural areas can help alleviate high energy burdens, comprehensive energy efficiency programs and services have not taken hold in many of these communities.

“Further, many rural households lack the discretionary income – and therefore the upfront capital – to invest in energy efficiency upgrades such as a more efficient HVAC system or improved insulation, or they do not have the authority to undertake upgrades because they are renting their home.”

One solution advocated for in the report that both Dennis and McIlmoil say is of particular benefit to their constituents is on-bill financing through electric utilities, which allows customers to finance needed energy efficiency improvements and pay off those loans alongside monthly electric bills.

Though the programs differ throughout the United States, McIlmoil said they are beneficial in his region because they are generally debt-free and are available to both homeowners and renters. “These programs can result in the investment for energy efficiency improvements in the home without resulting in an extra financial burden,” he said.

To read the report, visit