Utility costs are a large and growing problem for low income families. We need to explore the cost effectiveness of building major energy efficiency technologies and solar in low income housing in Texas.
Traditionally in Texas we have built low income housing with a focus on keeping the construction costs down. Super high efficiency appliances and heating and cooling systems have been deemed to be an unsupportable expense. Solar panels are almost never provided. Yet with the exploding cost of electricity we need to rethink our policy.
The fact is that rising energy costs have had such a devastating impact on low income households that many cannot afford the rent. HUD now tells us that the second highest cause of homelessness, behind not being able to afford rent, is the inability of families to pay their utility bills.
While a typical middle income household spends about 5 percent of its income on utilities, the typical low income household spends about 20 percent. On average the typical retired elderly household spends over 25 percent on utilities.
Texas has some of the highest residential electric rates in the US. The national average is 10.4 cent per kilowatt hour while the average Texas residential rate is 12.96 cents. According to government statistics the average Texas monthly electric bill is a whopping $149.29. Since deregulation took effect in Texas in 2002, the four power companies that control 70 percent of the Texas residential electricity market have increased their rates an average of 83.7 percent.
Here are some facts from recent studies of energy consumption among low income households…
- Lower-income households are more likely to live in electrically heated homes and to use inefficient appliances.
- When confronted with an increase in energy costs, lower-income families tend to make “lifestyle cutbacks”, while higher-income families tend to invest in energy conservation measures.
- Renters are not likely to invest in energy efficiency and therefore curtailment is the only option to reduce consumption.
- 70 percent of low-income households report reducing spending on food because of high energy costs.
- 31 percent of low-income households have reduced spending on medicine because of increased energy prices.
- 29 percent of low-income homes report risking loss of home energy service due to skipped or partial energy bill payments.
For a brief period Texas took action to address the problems facing low-income rate payers.
Most notably when the state deregulated and restructured electricity it set up a system benefits charge, a fee of up to 65 cents per megawatt hour, to fund, among other things, low-income rate assistance and energy efficiency.
The program began by providing low income rate payers with a 10 percent discount and then increased to a 17 percent discount.
Unfortunately the Texas Legislature raided the fund to shore up the state general fund, kicking 400,000 of the original 800,000 households off the program.
The System Benefit Charge also provided weatherization monies, about $8.9 million during FY 2003. As a result of the Legislature’s raid on the fund to balance the state budget those funds also went away.
As of August 2006, as part of a stipulation with the Texas PUC and advocates, utilities have committed to spending $5 million annually on weatherization expenditures coordinated with the Texas Department of Housing and Community Affairs (TDHCA).
It seems to me that giving some low-income households a 10 percent reduction of their electric bill may not be the most efficient method of providing help. Aside from the amount of the subsidy being very small there is the problem of the fickleness of the legislative appropriation process which, as we have seen, is prone to cut the subsidy at any time.
We need to explore investing more money at the front end in energy efficiency and in PV panels when we construct or rehabilitate low income housing. This will pay out benefits over the long term to low income residents. The additional federal housing tax credits authorized in the federal housing bill is a place to begin. We should provide extra credits to builders of low income housing who provide energy saving and energy generating features so long as the benefits are mostly passed through to the residents and not pocketed by the builder.
There is another reason to invest in the building and not in just providing subsidies on bills. Studies show that 70 cents of each dollar spent on energy leaves the community. One the other hand when a family in affordable housing spends a dollar on other goods only about 25 cents leaves the community. So, it would be better for the Texas economy to invest in efficient appliances, efficient heating and cooling systems, and PV panels instead of continuing to subsidize energy consumption.
This will require some serious collaboration among housing and energy experts. So what do you all say? I’m ready to work on a proposal if others are.