Rural areas produce much of the energy that our nation relies on. 60% of coal plants are located in and 83% of wind, solar and geothermal energy is produced in rural areas. Even so, families living in poverty in rural areas are more likely to experience energy poverty. Energy poverty is the inability to pay utility bills to heat or cool a home. A report by the Island Institute explained that the median energy burden (percent of income spent on energy bills) is 33% higher for rural households than the national median.
Inability to pay for utilities can increase exposure to heat or cold, leading to various health risks such as respiratory issues, heart problems, allergies, and kidney disorders. Climate change has exacerbated exposure risks due to a greater frequency of extreme weather conditions.
Rural areas face these energy inequities because of rising energy costs and a lack of investment. Across the country, residential electricity costs have increased 30% since 2021 and residential gas costs have increased 40% since 2019. The geographic isolation of many rural areas makes it more expensive to deliver energy and provide energy efficiency upgrades.
Investor-owned utilities in the early twentieth century didn't want to provide the same service in rural areas as in urban areas because the lower population densities in rural areas made profits too low to justify construction and investment. In 1935, the Rural Electrification Agency (REA) was created. The REA utilized a "rural cooperative model" which allowed for publicly owned and controlled electricity. Although, these rural cooperatives often lack capacity and resources to invest in more comprehensive energy efficiency programs.
Additionally, rural areas are more likely to have older homes with worse insulation. On top of older homes, 20% of rural households live in manufactured homes (commonly mobile homes), which are significantly less energy efficient and more costly to repair than traditional housing.
How do we currently address energy poverty?
The Low Income Home Energy Assistance Program (LIHEAP) is a federally funded program that provides assistance to low-income households who face a high energy burden. Assistance can range from one-time financial assistance to free energy efficiency upgrades. A study done by the American Council for an Energy-Efficient Economy (ACEEE) found that weatherizing a home for families living at or below 200% of the federal poverty line can save an average singe family household $283 per year and manufactured home households $458 per year.
Katrina Metzler from National Energy and Utility Affordability Coalition explained that rural areas have a harder time accessing LIHEAP benefits because the resources are not centralized as they are in urban areas. A 2024 survey found that only 17% of households that qualify for LIHEAP assistance utilize the program.
LIHEAP's funding formula has historically provided more funding to cold-weather states. But climate change has caused a shift in the historical energy burden being faced by rural communities. Extreme heat is now the primary cause of weather-related deaths, with 2,302 heat-related deaths in 2023. This is a 44% increase from 2021. With rising temperature, regions such as the South and Southwest have greater cooling needs, while the heating needs in regions such as the North and Northwest become less extreme.
LIHEAP is still using a funding formula from the 1980s to determine how funding is distributed to states. With changing climate, it may be time to shift the funding formula to better aid states struggling with extreme heat.
What are states doing?
9 states have implemented percentage-of-income payment plans (PIPPs). This type of program caps energy bills at a specified percentage of household income for low-income customers to keep them affordable. 14 states provide low-income households energy at a discounted rate to keep costs low.
Additionally, 10 states offer arrearage management plans, which forgive a portion of debt for each timely payment of a new bill. This helps to defeat the energy bill debt cycle than many households in energy poverty face. One missed payment can turn into growing debt that threatens disconnection from service, forcing households to pursue risky options such as emergency aid or high-cost loans.
The Rocky Mountain Institute modeled the cost of a universal PIPP, capping bills at 4% of annual income. They determined it would only cost $9.3 billion to fund this program, 0.14% of federal spending in 2024.
In 2024, Congress appropriated $4.125 billion in LIHEAP funding. Last April, the Trump administration sought to completely cut funding for the LIHEAP program, but full funding was eventually included in the appropriations package passed in February of this year.
LIHEAP is an essential program to ensure that rural households have some assistance with the crushing costs of utilities. Implementation of PIPPs, ideally at the federal level, could drastically reduce the burdens of energy costs on low-income rural families and prevent them from having to choose between buying food or having air conditioning during severe heat.
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