The concept of “energy burden” has recently emerged as a helpful way to understand the impact of energy costs on a household. It’s a relatively simple calculation: the annual cost of energy bills divided by the household’s annual income. But this simple calculation can lead to new insights about how Vermont families experience energy costs and how energy programs can support those families.
WHAT IS ENERGY BURDEN?
In 2019, Efficiency Vermont released an updated Vermont Energy Burden Report. The report shows the energy burden calculation by town across Vermont. This was calculated by adding household expenses for electricity, heating fuels, and transportation fuels. The average energy expenses for each town were divided by the average household income in that town to get the energy burden.
The analysis showed that Vermonters’ energy burden varies strongly across the state. Average household energy burden ranged from 6% to 20%. The highest-burdened towns tended to be in the Northeast Kingdom, while the lowest burdened towns were found in the more metropolitan areas and higher-income towns.
The highest-burdened areas weren’t always found in the communities with the highest energy expenses. In fact, there was no overlap between the top ten highest-spending towns and the top ten highest-burdened towns. The analysis found that income had a bigger impact on energy burden than energy spending.
What does that mean? Families with low incomes are far more likely to be energy burdened than families with moderate or high incomes.
ENERGY: TRANSPORTATION, HEATING, AND ELECTRICITY
In addition to the combined calculation of total energy burden, Efficiency Vermont also broke out burden by energy sector: electricity, heating, and transportation. The analysis found that transportation expenses are the highest for Vermonters, making up nearly half of energy costs, followed by thermal (heating costs), and electricity.
In dollars, this means the average Vermont household is paying around $2,600 a year for transportation fuels, $2,050 for heating fuels, and $1,160 for electricity.
While this analysis only accounted for the cost of fuel and electricity, both transportation and heating come with hundreds of dollars in fixed costs every year. For example, on top of their ongoing fuel expenses, Vermonters pay for the upfront cost and routine maintenance of their home heating system and their vehicle. In addition, vehicles require insurance and registration, snow tires, and more.
WHAT DOES IT MEAN TO BE ENERGY BURDENED IN VERMONT?
Low- and moderate-income households in Vermont typically have to balance multiple expenses on a tight budget. Energy costs compete with other critical expenses like healthcare, food, housing, and childcare. For a low-income household, spending $5,800 on energy costs (the statewide average) represents a significant portion of their annual income. These costs are critical in Vermont: in our cold, rural climate, we typically rely on cars to get to work and appointments and we need to heat our homes for around six months of the year.
For many families, these competing costs have only been exacerbated during the economic shutdown caused by COVID-19. While many families’ transportation expenses have likely decreased since March, it’s possible that their electric and cooling (soon to be heating) expenses have increased with family members at home throughout the day.
WHAT CAN WE DO TO LOWER VERMONTERS' ENERGY BURDEN?
Programs already exist to help energy-burdened Vermonters pay for energy bills. Better understanding energy burden can help us identify and connect with the Vermonters who need these programs. It can also help us learn new ways to help reduce energy burden for Vermonters.
Here are some examples of programs that already exist to help lower energy costs and reduce energy burden:
- Energy bill assistance: In 2020, Vermonters facing economic hardships from COVID-19 are eligible for help paying their electric bills from the Federal Coronavirus Relief Funds. Beyond 2020, Green Mountain Power and VGS offer discounts on bills for low-income customers. There are several other programs available to provide fuel assistance for customers in need, particularly during the winter months.
- Energy efficiency: Investing in energy efficiency can lower energy bills each month by reducing the energy needed for appliances, electronics, and home heating. Efficiency Vermont, Burlington Electric Department, and VGS all offer rebates and discounts on efficient products and services to help Vermonters save energy and money all year long.
- Low-income weatherization: In addition to the incentives offered by the energy efficiency utilities for home weatherization, the Weatherization Assistance Program offers free weatherization services to low-income Vermonters. Weatherization can make a significant difference in home heating bills and improve comfort within the home in summer and winter.
- Zero % financing: Efficiency Vermont and VSECU together offer the Home Energy Loan, which provides 0% interest for low-income Vermonters on energy efficiency projects like weatherization or efficient home heating systems. VSECU also offers discounted interest rates through its VGreen program which can help break down the monthly costs of other energy investments into easy monthly payments.
WISH ENERGY EFFICIENCY WAS MORE AFFORDABLE?
It Can Be with the Right Financing.
HOW ELSE CAN WE UNDERSTAND ENERGY USE AND EXPENSES FOR VERMONTERS?
Efficiency Vermont is undertaking a new analysis to better understand the impact of energy expenses and access to energy programs for all Vermonters. The new analysis will look at participation in energy programs by conducting a demographic diversity, equity, and inclusion analysis of energy efficiency program participation data. By looking at participation by metrics like age, race, gender, homeownership status, primary language, and more, this analysis will assess whether current programs are doing enough to meet the needs of all Vermonters. This analysis will be completed over the next year. If you have information or insight that might inform the analysis, please reach out to Efficiency Vermont.
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The views and opinions expressed in this blog are those of the authors and do not necessarily reflect those of VSECU.
About Kelly Lucci
Kelly Lucci is director of partner and customer engagement at the Vermont Energy Investment Corporation (VEIC), where she focuses on developing new partnerships and initiatives for Efficiency Vermont, most recently on making it easier for more Vermonters to weatherize their homes. Prior to joining VEIC, she served on the staff of U.S. Senator Bernie Sanders for six years, focusing on energy and environmental issues. A lifelong Vermonter, Kelly holds a degree in political science from Middlebury College and currently resides in her hometown with her husband and two sons.