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The Southeast Has an Energy Problem, and Minorities Are Hit the Hardest

Energy poverty has become so severe in the Southeast that many households pay 600 percent more of their annual income on energy than the national average. In Memphis, the community is banding together to fight back.

The United States has a major energy problem.

The problem is especially stark in the Southeast, where many American families are faced with the decision of whether they must heat their homes sufficiently or forgo basic needs such as medicine and meals, simply to be able to pay the fluctuating monthly expenses of energy.

Though the Southeast has been hit the hardest, energy has become a major financial burden throughout the entire South, so much so that a term for its severity has been coined: energy poverty. Energy poverty, or high energy burden, is calculated as the percentage of income that a person or household spends on energy — but it translates in a variety of ways. High energy burdens have been linked to increased health risks such as asthma and heart disease. The disparity is worse financially: While the average family pays an average of 3 percent of their income on energy, low-income families living in energy poverty are paying upwards of 20 percent of their income on energy expenses.

The Southeast has the highest rates of energy poverty of any region in the country, a situation compounded by its comparative lack of initiatives to address the many effects that stem from that fact. High clusters of poverty in the Southeast, coupled with the lack of disposable income to cover home improvements such as weatherization, forces low-income families already living in financial poverty to experience a disproportionately high monthly expenditure on energy. Yet recent non-profit, community-based, and governmental cooperative efforts, like the current one taking place in Memphis, Tennessee, are aiming to tackle that disparity. The Memphis City Council has taken notice of the exorbitant effects high energy burdens have had on its residents and implemented a community-based approach to increase weatherization for little to no cost for its poorest residents in a remarkably short turnaround.

In June of 2016, a national report led by the efforts of the American Council for an Energy-Efficient Economy showcased the disproportionate energy burdens of low-income families throughout America. One finding in particular was that the Southeastern U.S. has a significant issue with high energy burdens, with minority groups faring the worst by far. In 2013, social scientists found that an energy burden greater than 6 percent of a person’s income crosses a threshold into unaffordability. Throughout the southernmost part of our nation, low-income families were frequently found paying rates that climbed to 12 to 24 percent of their income, sometimes more.

The ACEEE’s findings raise an interesting paradox: Given that the Southeastern U.S. hosts the nation’s lowest utility costs, shouldn’t this translate to lower energy burdens for its residents? Unfortunately, it does not.

Ariel Drehobl, co-author of the ACEEE report, explains that the report was intended to highlight the high energy burdens of low-income families across the nation.

“[For] our study, we measured the energy burdens, but we didn’t quite look at the exact causes of why the burdens were higher in certain places. I have some ideas of why energy burdens are likely higher,” Drehobl says. “Some of these reasons would likely be because the Southeast region has lower income on average compared to the rest of the U.S.; the Southeast normally has lower investment in weatherization and energy-efficiency programs from utilities.”

There have been countless studies and census reports that have portrayed the South as the “poverty belt” of America. In recent years, high concentrations of poverty have been located throughout the South. Another factor that could additionally be attributed to the high energy burdens of the Southeast are the high persistent poverty-ridden clusters that are found in the region. According to the Department of Agriculture’s Economic Research Service, “Persistent poverty also demonstrates a strong regional pattern, with nearly 84 percent of [total] persistent-poverty counties in the South, comprising of more than 20 percent of all counties in the region.” The South being home to some of the nation’s poorest residents creates an increased risk for those same families to experience high energy burdens. While poverty itself is a large factor into energy poverty, it is not the sole cause.

Jayant Kairam, director of California Clean Energy with the Environmental Defense Fund, spoke to a few of the contributing factors that explain why residents in California and the Western U.S. experience comparatively lower energy burdens than their Southeastern counterparts. “Wages are stagnated and all types of costs for individuals have gone up: housing, tuition, health care,” he says. “Those who can least afford it are where the pain is most burdensome. Energy burdens are a reflection of inequality.” Families in the bottom fifth of income earners spend nearly 33 percent more of their budget on energy costs than the national average of $2,500 a year, which is generally 12 percent of the annual household budgets.

The ACEEE also found direct correlations between high energy burdens and low wages. But the issue doesn’t stop simply there. “In California, while we have some of the highest energy rates in the nation, we [also] have some of the lowest per capita [energy] expenses because of energy efficiency policies that [date] back to the 1970s,” Kairam says.

“Energy burdens are a reflection of inequality.”

Kairam is alluding to the creation in 1974 of the state’s California Energy Commission, which serves as the state’s primary energy planning and action agency, and oversees development of initial energy efficiency and energy conservation policies.

But while California took the initiative to implement energy efficiency standards, much of the South did not. There are several factors that could explain the comparatively high energy burdens of residents of the Southeastern U.S. Due to the temperate climates and lower per capita energy rates, there has previously not been a large investment in energy efficiency for many populations, especially low income — until recently. As one team of researchers from Duke University’s Nicholas Institute for Environmental Policy Solutions and Georgia Institute of Technology explained:

The South is the largest and fastest growing region in the United States, with 36% of the nation’s population and a considerably larger share of the nation’s total energy consumption (44%) and supply (48%). At a simplistic level residents of the south are using more energy per square foot than their counterparts in the rest of the nation.… This energy-intensive lifestyle may be influenced by a range of factors including: the South’s historically low electricity rates, the significant heating and cooling loads that characterize many southern states, its relatively weak energy conservation ethic (based on public opinion polls), its low market penetration of energy-efficient products (based on purchase behavior) and its lower than average expenditures on energy-efficiency programs.

The dangerous combination of situations in the South has thus created the perfect storm for energy poverty in the Southeast.

While most Americans have some form of an energy burden, the ACEEE report found that African Americans spent almost twice as much per square foot on energy as their white counterparts. “On average, African-American and white households paid similar utility bills, but African-American households experienced a median energy burden 64 percent greater than white households (5.4 percent and 3.3 percent, respectively),” the report states.

The issue is similar for Latino communities, which experience energy burdens 24 percent greater than their white counterparts. These statistics are likely indicators of problems of inefficient housing stock and behavioral norms toward energy. Compounding upon this, income inequality is much more pronounced in the South and especially the Southeastern part of the U.S. as compared to the rest of the nation.

The lack of central heat combined with the high cost of energy on a fixed income make for a troublesome storm in any season. The aftermath of these conditions can be quite costly. According to a 2011 report published by the National Energy Assistance Directors’ Association, 24 percent of energy-burdened individuals skipped a meal in an effort to avoid utility shutoffs.

The ACEEE researchers discovered that there are many direct benefits of using energy efficiency to lower high energy burdens. While some benefits of energy efficiency apply more directly to individual families such as low monthly energy bills and improvements to the quality of homes, other benefits of energy efficiency can contribute to an overall healthier community. As stated in the report, “Energy efficiency programs benefit the entire population by reducing environmental pollutants, which tend to affect low-income communities disproportionately.” Additionally, the benefits of energy efficiency don’t stop with residents — benefits for the utility include less stress onto the grid due to decreased demand generation.

While the Southeast performs badly as a region, Memphis, Tennessee, earns the distinction of having greatest energy burdens for its poor. The ACEEE report also showed that Memphis accordingly fared the worst on a variety of statistics affected by energy burdens.

There are two zip codes in particular in Memphis — 38126 and 38105 — that are among two of the poorest in the city. These zip codes house a population of greater than 50,000 people; both groups are engaged in a monthly struggle to afford basic necessities.

Residents of both these Memphis neighborhoods experience median energy burdens of greater than 25 percent of their incomes each month — a full 20 percentage points higher than the ACEEE’s affordability threshold of 6 percent.

Since the ACEEE report last summer, Memphis has taken notice of its energy problem. A new initiative has been championed in large part by Councilwoman Patrice J. Robinson, who represents Memphis’ third district and serves as chairwoman of the Committee on Memphis Light, Gas, and Water. The committee’s initial steps encompassed exploring program designs that began with targeting just the zip codes showcasing the most urgent need in order to have an immediate, transformative effect on these most disadvantaged areas.

The councilwoman’s desire to champion the cause of lowering energy burdens on Memphis’ poorest residents was further fueled by the results of the ACEEE study. “We are moving into 2017 and beyond with a renewed [Weatherization Assistance Program]/[Low-Income Home Energy Assistance Program] program, the political will to expand our utility’s weatherization grant program 30-fold, and a broad coalition of energy justice advocates seeking to transform Memphis from the most energy-burdened in the country to the most progressive weatherizer in the nation,” Robinson says.

In Memphis, the committee found that the cause of high energy burdens came down to the intersection of two key factors: high levels of poverty throughout the city — 26.2 percent within city limits, per their findings — and an aging housing stock that has seen very limited reinvestment.

To address these issues, the city council has selected a multifaceted approach. “Our resolution is about grassroots solutions. Starting with Complaint Days at NAACP Memphis up through MLGW's Neighborhood Advisory Council and the Just Energy Memphis Coalition, this has been a bottom-up solution,” Roberts says. Just Energy Memphis Coalition is an initiative to bring together leaders from county and city government, local service agencies, community development groups, and MLGW to address the high energy burdens experienced by Memphis’ poorest residents.

Their initial steps were to examine which Memphis residents were not receiving help from the city’s current weatherization and energy bill assistance programs. What they found was the current programs left a large gap between those who needed assistance and those who actually received it. The current programs offered by MLGW, as well as the few non-profit bill assistance programs offered in the city were not accessible by many of the low-income population that needed it the most. They also found that this was often due to economic factors such as poor credit scores and financial requirements, where the individual did not earn enough to be eligible for assistance. For those who did qualify for assistance, extremely limited assistance budgets only resulted in a very small segment of the low-income population receiving weatherization service and/or bill assistance.

The non-profit Southern Alliance for Clean Energy has also taken a role in finding better solutions for Memphis’ extraordinarily high energy burdens.

“One of SACE’s primary goals, and a major focus of our work across the Southeast region, is to reduce energy demand through energy efficiency measures,” says Angela Garrone, a Southeast energy research attorney at SACE and a Memphis native. “We have a long history of working with other energy experts, like ACEEE, in order to inform our strategy and stay up to date on utility energy efficiency policy trends at the national level.”

As a result of SACE’s efforts, the city revitalized a program that had very little capital to increase its reach across the city. Prior to SACE’s involvement, Memphis’ “Share the Pennies” program had provided minor weatherization repairs for Memphis’ most vulnerable populations. But as a voluntary program, its resources had been significantly limited. “[Share the Pennies] had only been able to help 200 homes in the past year — far less than the actual need,” Garrone says.

By connecting Memphis’ MLGW to the ACEEE, the SACE-brokered partnership led to introduction of a new city council resolution supporting the restructuring of the MLGW’s current funding stream for weatherization covered under the Share the Pennies/Project Care programs. “This simple policy change recommendation could result in a 30 percent increase in funding for Project Care. MLGW’s neighborhood advisory council members are continuing their work with SACE and MLGW staff to help inform these policy changes, and ensure that the program is designed in a way to bring maximum benefits to the neediest customers and significantly reduce energy burdens for customers across our city,” Garrone says.

In it’s original form, the Share the Pennies program had been extremely limited in providing assistance for Memphis’ most vulnerable citizens. Though any Memphis resident could opt into the program, MLGW CEO Jerry Collins told the Indianapolis Star that only 2 percent of residents actually did, leaving the program with just around $40,000 to fund Project Care each year. That severe underfunding led to a backlog of almost 350 requests at its peak. The city’s new opt-in program, which was recently approved by the city council, will allow for up to $2.5 million in funding for its assistance program.

Memphis is quickly turning itself into a model city for addressing quality-of-life issues for its residents. As Garrone says, “It’s rare, in these politically divisive times, to see politicians from both sides of the aisle as well as community members from diverse backgrounds, come together around one issue and work to proactively address it.”