Energy Justice: Addressing Energy Burden Inequalities and the Electricity Grid’s Infrastructure Inequities

Within President Biden’s first several days in office, the administration issued Executive Order 14008. This Executive Order focused on tackling the climate crisis within the United States, but also made a commitment to deliver environmental justice in all communities across the country. The Environmental Protection Agency (EPA) defines environmental justice as the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.

Through the Executive Order, the administration directed federal agencies to make achieving environmental justice part of their missions by developing programs, policies, and activities to address the disproportionately high and adverse human health, environmental, climate-related, and other cumulative impacts on disadvantaged communities, as well as the accompanying economic challenges of such impacts. As a result of the Executive Order, different federal agencies instituted several measures to assure environmental justice was embedded within their respective agencies. EPA Administrator Michael Regan committed to integrating environmental justice considerations into agency actions and plans. He conducted a multistate tour of communities historically and disproportionately impacted by pollution before launching enhanced air monitoring and enforcement. The Department of Health and Human Services and the Department of Justice both established new Offices of Environmental Justice. As different federal agencies implemented and set up action plans to address environmental justice, some sought to address the inequalities within the country’s energy infrastructure and provide greater access to clean affordable energy. This article focuses on the issue of energy burden, efforts taken by the Biden administration to address the issue, and how federal programs can be used as a form of restorative justice to address the harms of energy burden on low-income and minority communities.

The Department of Energy (DOE) defines energy justice as “the goal of achieving equity in both the social and economic participation in the energy system, while also remediating social, economic, and health burdens on those historically harmed by the energy system.” How Energy Justice, Presidential Initiatives and Executive Orders Shape Equity at DOE, Off. of Econ. Impact & Diversity (Jan. 3, 2022). This year the DOE established a new office, the Office of Energy Justice Policy and Analysis, which focuses on creating a policy framework to permanently reduce energy burden and increase access to low-cost clean energy capital in disadvantaged households. Along with President Biden’s commitment to combatting the climate crisis and increased focus on environmental justice, the president also committed through the Justice40 Initiative to direct 40% of the overall benefits of certain federal investments (i.e., investments in the areas of climate change, clean energy, and energy efficiency; clean transit; affordable and sustainable housing; training and workforce development; the remediation and reduction of legacy pollution; and the development of critical clean water infrastructure) to flow to disadvantaged communities. As the Justice40 Initiative commits to directing benefits of clean energy and energy efficiency to disadvantaged communities, it is important that these benefits reach key energy justice issues such as issues of access, distribution of harms, and energy burden.

Energy Burden

Energy burden is the percentage of gross household income spent on energy costs. According to the DOE’s Low-Income Energy Affordability Data Tool, the national average energy burden for low-income households is 8.6%, almost three times higher than the energy burden for households that are not low-income. According to a 2020 report from the American Council for an Energy-Efficient Economy, 67% of low-income households experience a high energy burden (above 6% of the gross household income), and 60% of those households have a severe energy burden (above 10% of the gross household income). Ariel Drehobl et al., How High Are Household Energy Burdens? (Am. Council for an Energy-Efficient Econ., 2020). When you take into consideration the demographics within these statistics, the median energy burden of Hispanic households is 20% higher than for white households, the median energy burden of African American households is 43% higher, and the median energy burden of Native American households is 45% higher than for white households. Residents of the east southcentral part of the United States (Alabama, Kentucky, Mississippi, and Tennessee) see the greatest percentage of highly burdened residents, and 38% of low-income households in the Southeast suffer an energy burden of 6% or higher. See id.

The effects of COVID-19 only exacerbated the issue of energy burden within these communities. As many people faced unemployment, we stayed in our homes, weathering the storm of the pandemic but using more electricity. Additionally, the impacts of climate change–driven heat waves have increased the need for more air conditioning and caused additional spikes in electricity bills during the summer. In parts of the United States, some energy customers faced potential shutoffs due to their inability to keep up with their utility bills, what some are calling the “utility debt crisis.” Utilities sent out more than 471,629 disconnection notices in April 2022 for residential customers across New York. Residential electricity customers were not the only ones facing electricity shutoffs in New York; for commercial electricity customers there were more than 77,651 disconnection notices distributed overall, with almost 2,544 disconnections executed. Some states, New York included, made electric and gas utility bill credit programs available for low-income families to stave off shutoffs. In Colorado, an organization called Energy Outreach Colorado helped to pay over 25,000 past-due utility bills during the pandemic, providing more than $13 million in aid to customers.

Energy-inefficient appliances and antiquated homes contribute to the energy burden problem. Most low-income households live in energy-inefficient housing, with poor insulation and old appliances, which results in a higher energy cost. Segregation, redlining, and the history of racist policies within this country contribute to the problem, leading to difficulty with opportunities for wealth accumulation by minorities and confining low-income and minority communities to substandard housing. In addition, low-income and minority communities face barriers in obtaining lending for the upfront capital to acquire energy-efficient upgrades. Compounding this issue is the lack of homeownership within low-income communities. In these communities, many residents are renting, leaving them with little incentive to update appliances since they do not own the appliances and the rental property owners do not bear the utility costs. Simple home energy–efficient solutions that can make a significant difference, such as caulking leaky windows or insulating attics, can also be out-of-reach for lower-income community members. When low-income households are faced with the spending decision that pits purchasing necessary medicine or food to feed the family versus purchasing insulation for their attic, the insulation will likely take a back seat.

Burdens Created by Infrastructure and the Electrical Grid

As low-income and minority communities attempt to lessen the blow of energy burden to their financial means, the disproportionately negative impact on these communities from the infrastructure of the electrical grid only further complicates the issue. Much of the U.S. electrical grid was constructed between the 1950s and 1960s, with many of the transmission grid components having a 50-year life expectancy. Not surprisingly, the United States sees more blackouts than any other developed country, and as the effects of climate change, in the form of more extreme winter and tropical storms, batter the outdated power system, low-income communities and communities of color are disproportionately affected. Many have seen the images from February 2021, when Texas experienced a crippling winter storm and resulting power outages. Downtown Austin was fully lit and electrified. Meanwhile, less than a block away, a historically Black and Hispanic East Austin neighborhood was without power and residents were in the dark without heat. N’dea Yancey-Bragg & Rick Jervis, Texas’ Winter Storm Could Make Life Worse for Black and Latino Families Hit Hard by Power Outages, USA Today (Feb. 20, 2021). An analogous situation occurred in Dallas during the same winter storm. Many downtown Dallas residents were without power for multiple days, but the Highland Park neighborhood—one of the wealthiest neighborhoods in Texas—had power throughout the entire storm. This left many residents questioning how the Electric Reliability Council of Texas, the grid operator for the vast majority of the state, determined to manage the rolling blackouts with the escalating demand for energy during the winter storm. The class and ethnic differences were not lost on struggling residents, as one woman tweeted, “4 bricks, a terracotta pot, and some candles will heat a room for anyone who needs it. It’s so wild that this is how we’re living in our minority-majority communities, but Highland Park, Uptown, Preston Hollow, and Farmers Branch never even lost power.” Amanda Harris (@_amanda_jean), Twitter (Feb. 16, 2021). The failure of the Texas electrical system during this event left millions without electricity, which resulted in at least 194 people losing their lives as a result. Zach Despart et al., Analysis Reveals Nearly 200 Died in Texas Cold Storm and Blackouts, Almost Double the Official Count, Hous. Chron. (Apr. 2, 2021).

As we pursue grid modernization through efforts such as President Biden’s Bipartisan Infrastructure Law (which authorized the Transmission Facilitation Program, under which DOE is authorized to borrow up to $2.5 billion to support the construction of new and upgraded high-capacity transmission lines), it is important that these low-income and minority communities are not left behind. The hope behind the Transmission Facilitation Program is that expanding transmission capacity through new and upgraded transmission lines will improve grid reliability, allow new clean power onto the grid, reduce costs, and improve energy equity. Large-scale transmission upgrades are predicted to reduce consumer electric bills by more than $100 billion by 2050 and decrease the average electric bill rate by more than one-third, saving a typical household more than $300 per year. As minority and low-income communities continue to face rising energy burdens, it is important that these communities have access to the benefits of renewable energy and can take advantage of energy-efficient technology. For these aspirations to be achieved, however, particularly for low-income and minority communities, policy makers and utility systems need to also focus on the distribution sector of the grid.

Electricity distribution lines—the ones running to your home or your business—originally were built for utilities to send electricity one way, to homes and businesses. Now consumers can generate their own electricity with rooftop solar, sending the electricity back to the utility, lowering their utility bill as a result of this solar generation. In many low-income neighborhoods, the electrical grid infrastructure, such as the transformers, lack the capacity to carry extra energy generated from rooftop solar back to the utility. Absent significant investment, which may be borne by all of the utility’s customers or perhaps by just the customer looking to install rooftop generation, these residents are unable to take advantage of newer technologies and offset their average annual electricity consumption. This directly impacts their ability to access clean energy and reduce their energy burden. A 2021 energy study found “that the total circuit capacity for generation decreases with increasing percentages of Black-identifying residents, and is disproportionately lower for census block groups with Black-identifying populations than for other racial and ethnic groups.” Eric Niller, An Outdated Grid Has Created a Solar Power Economic Divide, Wired (Sept. 16, 2021).

Federal Programs for Energy Assistance

As low-income and minority communities seek ways to participate in renewable energy generation and ease their energy burden, such as taking advantage of opportunities like community solar, there are two federal programs that can enhance these communities’ access to green energy: the Low-Income Home Energy Assistance Program (LIHEAP) and the Weatherization Assistance Program (WAP). In 1980, Congress passed the Home Energy Assistance Act in response to steep increases in home heating oil and the 1979 Iranian Crisis. The Act was reauthorized as LIHEAP in 1981. The bulk of LIHEAP funds are used to offset home energy bills for qualifying households, but states can allocate some funds for weatherization and energy-related repairs. LIHEAP particularly targets those households that spend the largest portion of their income on energy and assists them in meeting their immediate financial home energy bill needs.

Congress created WAP in 1976 as a grant program. Congressional appropriations annually provide funding, and DOE manages the program. DOE disburses this funding to each state, territory, some Native American tribes, and Washington, D.C., with funding assigned to the respective local weatherization agency to put toward weatherizing the homes of eligible individuals. The WAP program employs energy audits to help determine the most cost-effective energy efficiency projects for the homes. Weatherization typically includes a variety of projects that help a household more efficiently adapt to the changing weather patterns. WAP is the largest energy conservation program for low-income households in the country. Established under Title IV of the Energy Conservation and Production Act, the primary purpose of WAP is to assist in achieving a healthful dwelling environment and maximum practicable energy conservation in dwellings of low-income persons, specifically elderly and handicapped low-income persons, to aid those least able to afford higher utility costs and to conserve needed energy. WAP is used to increase energy efficiency of homes, reduce total residential expenditures, and improve the health and safety of especially low-income people who are particularly vulnerable, such as the elderly, people with disabilities, families with children, high residential energy users, and households with energy burdens.

Both WAP and LIHEAP were established to aid only the most vulnerable households. For WAP, household income must be within 200% of the Federal Poverty Level (FPL) to be an eligible individual. For LIHEAP, states can set household income eligibility to the greater of either 150% of FPL or 60% of the state median income, which can have significant implications in determining if one fits the eligibility criteria. Scott Belcher, How a Decades-Old Federal Energy Assistance Program Functions in Practice: A Deep Dive into LIHEAP, Nicholas Inst. for Env’t Pol’y Sols. (Apr. 2021). LIHEAP eligibility may also be categorically based instead of income based. Categorical eligibility models provide that households can be automatically eligible if someone within the household receives another government assistance program, such as the Supplemental Nutrition Assistance Program or Supplementary Security Income. As the cost of energy continues to rise, and more individuals fall within federal poverty levels, the number of households qualifying for these assistance programs will also continue to rise. From 1981 to 2010, the number of low-income families meeting federal LIHEAP eligibility standards rose from 19 million to more than 35 million. Since 1981, LIHEAP has helped millions of residents retain their electricity services. LIHEAP helps to protect public health and safety, reduce homelessness, and ensure stability of utility revenues. WAP has also served approximately seven million households over its 40-plus years of being available. DOE estimates that WAP has assisted low-income households reduce their energy expenditures by 23% per year, allowing these families to allocate their financial resources to other necessities.

Although LIHEAP and WAP have helped reduce the energy burden for millions of households, there are still many families that are either unable to access the program or are living in states where the programs are going underfunded. Historically, LIHEAP has reached less than 20% of those households qualifying for the program’s funds. Strangely enough, a household may be eligible for one form of LIHEAP funding but ineligible for another funding type. In Virginia, the state made its eligibility for heating and cooling assistance and its crisis intervention program assistance all at 130% FPL, but the eligibility for weatherization was determined to be 60% of the state median income.

Also, neither WAP nor LIHEAP accounts for households who forgo energy consumption to pay for other necessities (i.e., sacrificing electricity use to supplement the price of goods). This deficiency limits the effectiveness of the programs, and also fails to acknowledge the varying ways poverty is experienced by households throughout this country, further reducing the opportunity to provide needed assistance to struggling residents. If a household just above the FPL is not a recipient of any government assistance program and makes the decision to reduce electricity use to supplement the cost of rising gas prices or the rising cost of consumer goods, these households could be placing themselves at different health-related temperature risks as a result of not being able to qualify for LIHEAP. The structure and criteria of the programs also may be to the detriment of disadvantaged groups. It is safe to assume there are energy-burdened households identified as “non-low income” household groups that may have little disposable income due to a fixed income or their fixed costs (e.g., social security or fixed housing costs) and thus limit their expenses by reducing their electricity use. “Non-low income” households are even more vulnerable without assistance given more extreme heat from climate change and rising costs related to more people being in their homes due to changes brought about by the COVID-19 pandemic.

A state cannot use more than 15% of LIHEAP funds for low-cost residential weatherization or other energy-related home upgrades or repairs unless the state requests a waiver. If the waiver is granted, the state can use up to 25% of funds for weatherization purposes. Often states do not spend more than 15% of LIHEAP funds on weatherization. Between 2001 and 2019, there were six occasions where one of the southeastern states exceeded the 15% limit. The majority of LIHEAP funds are used for heating and cooling assistance and crisis intervention assistance, usually in the form of bill assistance. From 2001 to 2019, 75% of LIHEAP funds were appropriated to heating and cooling assistance and crisis intervention assistance. At LIHEAP’s peak level funding in 2010, the program served 22% of eligible households in response to the financial crisis, during which the average LIHEAP congressional allocation was $5 billion annually between years 2009 and 2011. Prior to that financial crisis, LIHEAP served about 15% of eligible households per year, which still remains the case today. From 2017 to 2021, the average LIHEAP congressional appropriation was under $3.6 billion, with funding hitting a peak of $4.6 billion when Congress appropriated an additional a $900 million for fiscal year 2020 through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In contrast, LIHEAP funding increased from $2.6 billion in 2008 to about $5 billion per year from 2009 to 2011. Taking into account inflation, there is a stark difference between funding received during the financial crisis versus that of the pandemic over a decade later. Moreover, peak unemployment during the pandemic reached 14.4% in May 2020; during the financial crisis, peak unemployment climbed to 10.6% in January 2010. This indicates that low-income households may be worse off as a result of the pandemic, as compared to the financial crisis.

Despite WAP assisting close to seven million homes in being weatherized since the creation of the program, more than 40 million homes are eligible for funding from the program, and the WAP budget comes dramatically short to that of LIHEAP. Although 25% of LIHEAP funds may be allocated to WAP by states, 84% of income-eligible households did not receive LIHEAP assistance, according to a Department of Health and Human Services (HHS) 2014 report. LIHEAP Report to Congress (RTC) for Fiscal Year (2014) (HHS 2014). Even though this flexibility is extremely important to help support the WAP program, most of the LIHEAP funding still goes to its primary purpose of helping low-income households cover the cost of their energy bills. In 2015, states used less than 10% of federal LIHEAP funds on weatherization.

Weatherization and energy efficiency initiatives have the power to serve as restorative justice for low-income and minority communities. LIHEAP and WAP are used to address aspects of energy burden through bill payment assistance and energy efficiency measures. However, the effectiveness of these programs is mixed in achieving equity among all low-income and minority communities who need assistance in reducing their energy burdens and receiving energy-efficient benefits from the programs. Based on how both programs function, are structured, and are economically supported, there is an indication of historical preference for short-term solutions through LIHEAP (such as bill pay) over programs such as WAP, which can provide more lasting, long-term solutions with a broader range of benefits, including public health effects. It is those programs similar to WAP that have the potential to be the most effective at addressing the consequences of structural racism, such as segregation, redlining, discriminatory lending practices, and residential segregation policies, and the resulting higher rates of energy burden among low-income and minority communities.

When WAP funds are used appropriately, WAP can save households an estimated average $283 annually, along with nonenergy benefits equating to $2.78 for every dollar invested. Weatherization Works!, Off. of Energy Efficiency & Renewable Energy, DOE (June 2019). Low-income and minority households could experience healthier homes, resulting in fewer sick days and decreased medical expenses. WAP provides savings through energy efficiency measures. With average investments of $4,695 per household, families could experience an average of 7% electric savings, 17% heating savings, and a decrease of out-of-pocket medical expenses by an average of $514 after weatherization. Id. WAP should thus be funded at a level equivalent to or more than LIHEAP to provide a more long-term solution to energy burden. Energy efficiency and weatherization can help address long-term social issues experienced in low-income and minority communities, helping to increase the value of homes and provide opportunities for wealth creation for these communities, and can utilize the need for retrofits and renovations that weatherization requires to develop educational opportunities—job training and skilled, meaningful jobs for local residents.

The Biden Administration Aiding the Fight for Energy Justice

Although there are structural policies within LIHEAP and WAP that can be fine-tuned to better serve eligible individuals, the Biden administration and DOE are focused on addressing the issue of energy burden and finding unique ways to provide residents relief. On June 1, 2022, the Biden administration announced a National Initiative to Advance Building Codes, stating that “modernized energy codes can save households an average of $162 dollars each year on utility bills, which is especially significant in reducing energy burden for low-income households.” White House, FACT SHEET: Biden-Harris Administration Launches Initiative to Modernize Building Codes, Improve Climate Resilience, and Reduce Energy Costs (June 1, 2022). On July 8, 2022, the DOE awarded over $40 million to 21 organizations and five state agencies to help make families’ homes more energy efficient and lower utility costs. The organizations receiving awards will help prepare homes in historically disadvantaged communities for weatherization and electrification, along with integrating new technologies, such as solar panels, geothermal heat pumps, and exterior wall panels, in the energy retrofits. With the recent passage of the Inflation Reduction Act (IRA), low-income households have a greater chance to participate in the transition to a clean energy economy. The IRA invests $3.5 billion in WAP and supplies $4.5 billion to provide rebates for lower-income households to purchase energy-efficient appliances, $4.3 billion for rebates to cover a portion of upfront costs of installing energy-saving measures/retrofitting, and tax credits for energy-efficient home improvement measures including rooftop solar, more efficient windows, heat pumps, and energy-saving home upgrades. As the administration takes on a collaborative approach of utilizing nonprofit organization projects and models to make energy-efficiency upgrades, addressing low hanging fruits of building codes, providing tax credits and rebates, and increasing financing of state weatherization assistance programs to improve home energy performance and acquire renewable energy sources, there is hope that it will also improve the LIHEAP and WAP programs. Such measures will reduce the burden on cities and states of developing and funding their own creative solutions to promote energy justice and help their residents receive the proper housing upgrades necessary to relieve their energy burdens.