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Energy Poverty: Effects on Housing and Household Wellbeing

NLIEC 2005June 15, 2005

Donnell ButlerDavid Carroll

Carrie-Ann Ferraro

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Organization of Presentation

• Introduction – 10 minutes

• Arizona Analysis – 20 minutes

• Phoenix Area Analysis – 10 minutes

• Local Area Analysis – 5 minutes

• Indicators of Wellbeing – 10 minutes

• Conclusion – 5 minutes

• Questions / Feedback – 15 minutes

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Purpose of the Project

• Furnish information about the energy needs of low-income households in Arizona to policymakers and program managers

• Explore the linkages among energy poverty, housing affordability, and household well being

• Demonstrate how existing data sources can be used to obtain useful information for policy formulation and program design

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Status of the Project

• Preliminary Report – Presented NLIEC Board with an overview of available information

• NLIEC Conference – Press conference and presentation

• Final Report – Additional details that are responsive to suggestions from NLIEC Board and conference attendees

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State Level Analysis

Methodology

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Data Sources for Arizona • 2000 Census Public-Use Microdata (PUMS)

– 5 Percent Sample has about 19,000 LIHEAP eligible records

– Data available includes:• Household Demographics: income and poverty level,

presence of vulnerable members, race and ethnicity, languages spoken, household composition, employment, income program participation

• Housing Unit Characteristics: age of unit, unit type, home ownership

• Energy Data: Main heating fuel, energy expenditures

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Data Sources for Arizona • 2002-2004 Current Population Survey, Annual Social

and Economic Supplement (ASEC)– Statistical variances are too large for a single ASEC

annual file to allow for a useful analysis for Arizona– Three-year average of 2002, 2003, and 2004 data used

to estimate the FY 2003 LIHEAP eligible population– Data available includes:

• Household Demographics: income and poverty level, presence of vulnerable members, race and ethnicity, household composition, employment, income program participation

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Definitions

• LIHEAP Eligible/Low Income - 150% of HHS Poverty Guidelines (Arizona Standard)

• Energy Burden – Direct energy expenditures as a share of gross money income

• Energy Gap – Difference between client energy burden and any target burden

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Limitations

• Maximum Income Standard – Federal maximum income standard covers at least 50% more households

• Renters – About 15% of households pay for part or all of their energy through their rental payments

• Update – Information not yet updated for recent increases in energy prices and poverty

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State Level Analysis

Findings

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Arizona Information Needs

• Policymakers and program managers need:– State-level cross-sectional data to understand

current status for Arizona– State-level longitudinal data to understand trends

for Arizona– National-level data to understand how those

energy needs compare to households nationwide

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Number of Households

Percent of All Arizona Households

LIHEAP Eligible Households, 2000 362,8001 19.1%

LIHEAP Eligible Households, 2003 436,0002 21.4%

Arizona LIHEAP Eligible Households (2000 and 2003)

1 Source: 2000 Decennial Census PUMS 5 Percent Sample. 2 Source: Three-year Average of the CPS ASEC 2002-2004.

Arizona LIHEAP Eligible Population

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Number of Households

LIHEAP Eligible Households, 2003 436,0001

LIHEAP Recipient Households, 2003 18,6002

Arizona LIHEAP Eligible and Recipient Households (2003)

1 Source: Three-year Average of the CPS ASEC 2002-2004. 2 Source: LIHEAP Household Reports FY 2004.

Arizona LIHEAP Recipient Population

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Arizona LIHEAP EligibleEnergy Expenditures

10%

12%

27%

25%

13%

13%

0% 5% 10% 15% 20% 25% 30%

No Separate Energy Bill

Less than $500

$500 - $999

$1,000 - $1,499

$1,500 - $1,999

Over $2,000

Energy Expenditures for Arizona LIHEAP Eligible Households (1999)

Source: 2000 Decennial Census PUMS 5 Percent Sample.

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Energy Burden

• Percent of total household income spent on total residential energy.

• At the national level, the median residential energy burden was 3 percent for all households and 10 percent for all low-income households in 2003.

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Arizona LIHEAP Eligible Energy Burden

10%

17%

28%

16%

7%

4%

17%

0% 5% 10% 15% 20% 25% 30%

No Separate Energy Bill

Less than 5%

5 - <10%

10 - <15%

15 - <20%

20 - <25%

25% or greater

Energy Burden for Arizona LIHEAP Eligible Households (1999)

Source: 2000 Decennial Census PUMS 5 Percent Sample.

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Energy Gap

• The dollar amount needed to reduce a customer’s energy burden to an amount equal to a specified energy burden percentage.

• At the national level, about $4.9 billion dollars in energy assistance would have been needed to ensure that no low-income household spent more than 15% of income on residential energy in 2003. The amount required to reduce residential energy bills to 25% of income was $2.7 billion.

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Arizona LIHEAP Eligible Energy GapEnergy Gap for Arizona LIHEAP Eligible Households (1999)

Number of Households

Energy Gap(in Millions)

Households with Energy Burdens Greater than 5%

266,700 $222.1 M

Households with Energy Burdens Greater than 10%

166,000 $128.4 M

Households with Energy Burdens Greater than 25%

68,500 $57.0 M

2000 Source: 2000 Decennial Census PUMS 5 Percent Sample.

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ArizonaEnergy Assistance

Energy Gap(in Millions) 1

FY ’04LIHEAPBenefits 2

FY ’04SupplementResources 3

Shortfall

Households with Energy Burdens Greater than 5%

$222.1 M $ 5.7 M $16.4 M $200 M

Households with Energy Burdens Greater than 10%

$128.4 M $ 5.7 M $16.4 M $106 M

Households with Energy Burdens Greater than 25%

$57.0 M $ 5.7 M $16.4 M $ 35 M

1 2000 Decennial Census PUMS 5 Percent Sample.2 FY 2004 LIHEAP Grantee Survey for FY 2004. 3 LIHEAP Clearinghouse: http://www.liheap.ncat.org/Supplements/2004/supplement04.htm

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Arizona LIHEAP EligibleVulnerable Group Members

Number of Households

Percent of Households

Households with Vulnerable Group Members

Household with Elderly (Age 60 or older) 154,100 35%

Household with Nonelderly Disabled 64,375 15%

Household with Young Child 117,200 27%

Households with No Vulnerable Group Members

Households with No Vulnerable Groups 119,500 27%

Arizona LIHEAP Eligible Households with Any Vulnerable Group Members (2003)

Source: Three-year Average of the CPS ASEC 2002-2004.

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Arizona LIHEAP EligibleLinguistic Isolation

Linguistically Isolated Arizona LIHEAP Eligible Households (2000)

Source: 2000 Decennial Census PUMS 5 Percent Sample.

Not Isolated

85%

Spanish Isolation

15%

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• LIHEAP Eligible – 363,000 in 2000 to 436,000 in 2003• Energy Burden – Average almost 10% of income• 1999 Energy Gap – $222 million for 5% burden target• 2003 Energy Assistance – $22 million from all sources• Vulnerable households - 73% of LIHEAP eligible

households have a vulnerable household member• Spanish language isolation – 15% of LIHEAP eligible

households do not have a household member who speaks English “very well”.

Arizona LIHEAP EligibleSummary of Findings

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Metropolitan Area Analysis

Methodology

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Data Sources for Phoenix • 2002 American Housing Survey (AHS) Phoenix

Metropolitan Area Sample– Metropolitan Area Sample has about 650 LIHEAP

eligible records – Estimates are not available at the state level from the

national AHS sample– Several Metropolitan Areas are surveyed each year– Phoenix was most recently surveyed in 2002 & 1994

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Data Sources for Phoenix • 2002 American Housing Survey (AHS),

Phoenix Metropolitan Area Sample (continued)

– Data available includes:• Household Demographics: income and poverty level,

presence of vulnerable members, race and ethnicity, household composition,

• Housing Unit Characteristics: unit type, home ownership, housing adequacy, housing costs

• Energy Data: Main heating fuel, energy expenditures, heating and cooling equipment

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Definitions and Limitations

• Shelter Burden – Direct housing expenditures as a share of gross money income

• Phoenix-Mesa Metropolitan Area– Maricopa and Pinal Counties

• Limitations similar to state level data

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Metropolitan Area Analysis

Findings

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Phoenix Information Needs

• Phoenix policymakers & program managers need:

– Information related to demographic characteristics and energy needs of low-income households

– Information on the relationship between energy needs and other low-income needs, including housing, to promote the integration of programs aimed at assisting low-income households

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Number of Households

Percent of All Phoenix Households

LIHEAP Eligible Households, 2002 203,800 17.5%

Phoenix LIHEAP Eligible Households (2002)

Source: 2002 American Housing Survey, Phoenix Metropolitan Area Sample.

Phoenix LIHEAP EligiblePopulation

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Phoenix LIHEAP Eligible Energy Burden

11%

25%

27%

9%

6%

4%

18%

0% 5% 10% 15% 20% 25% 30%

No Separate Energy Bill

Less than 5%

5 - <10%

10 - <15%

15 - <20%

20 - <25%

25% or greater

Energy Burden for Phoenix LIHEAP Eligible Households (2002)

Source: 2002 American Housing Survey, Phoenix Metropolitan Area Sample.

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Shelter Burden

• Percent of total household income spent on total housing costs (including residential energy costs) .

• Affordable housing (HUD definition): “housing for which the occupant is paying no more than 30 percent of his or her income for gross housing costs, including utilities”.

• Some researchers have defined severe shelter burden more conservatively as a household that spends 50 percent or more of their income on shelter costs.

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Shelter Burden for Phoenix LIHEAP Eligible Households (2002)

Source: 2002 American Housing Survey, Phoenix Metropolitan Area Sample.

Phoenix LIHEAP Eligible Shelter Burden

Number of Households

Percent of All Phoenix Households

Shelter Burden Less than 50% 98,500 48.3%

Shelter Burden 50% or Greater 105,400 51.7%

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Energy Burden when Shelter Burden is 50% or Greater for Phoenix LIHEAP Eligible Households (2002)

Source: 2002 American Housing Survey, Phoenix Metropolitan Area Sample.

Phoenix LIHEAP Eligible Shelter Burden of 50% or Greater

33%

67%

99%

0% 20% 40% 60% 80% 100%

Less Than10%

10% - <25%

25% orGreater

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• Energy burden distribution is similar to Arizona.

• 52% of Arizona LIHEAP eligible households experience severe shelter burden.

• Energy burden has a substantial impact on housing affordability.

Phoenix LIHEAP EligibleSummary of Findings

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Neighborhood Level Analysis

Methodology

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Neighborhood Data Sources

• 2000 Census Summary File 3 (SF3)– Data is limited to entire population; does not offer

estimates of LIHEAP eligible population – Data available includes:

• Household Demographics: income level, age of householder, race and ethnicity, languages spoken, household composition, income program participation

• Housing Unit Characteristics: age of unit, unit type, home ownership

• Energy Data: Main heating fuel

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Neighborhood Data Sources• 2000 Census Special Tabulations

– Estimates of the LIHEAP eligible population can be obtained from the Census Bureau for small areas, including Census Blocks, Block Groups, and Tracts

– Data available includes:• Household Demographics: income and poverty level, presence of

vulnerable members, race and ethnicity, languages spoken, household composition, employment, income program participation

• Housing Unit Characteristics: age of unit, unit type, home ownership

• Energy Data: Main heating fuel, energy expenditures

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Neighborhood Data Needs

• Local program managers need local-level information about the population in their communities in order to:– Effectively implement programs

– Target outreach initiatives

– Improve integration of energy assistance programs with other programs designed to assist low-income households

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Indicators of Wellbeing Analysis

Methodology

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Indicators of Wellbeing Data Sources• Effects of Energy Poverty on Housing and Household

Wellbeing

• 2003 National Energy Assistance Survey of LIHEAP Recipients:– Sponsored by NEADA

– Survey instrument is publicly available

– Interviewed a nationally representative sample of over 2,000 LIHEAP-recipient households from 20 states

– Documented the choices that LIHEAP-recipient households make when faced with unaffordable home energy bills

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Limitations

• Survey Response Challenges:– Relying on Respondent Memory– Response bias (e.g., prideful responses) – Inability to control response situation

• Population– Having received benefits, LIHEAP recipients

might be better off than LIHEAP eligible

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Indicators of Wellbeing Analysis

Findings

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Indicators of Wellbeing Housing Problems

4%

9%

4%

28%

0%

5%

10%

15%

20%

25%

30%

Didn't make full rentor mortgage

payment

Evicted from home orapartment

Moved in with friendsor family

Moved into shelter orbeen homeless

Housing Problems

Pe

rce

nt

of

Ho

us

eh

old

s

Source: 2003 National Energy Assistance Survey.

Housing Problems Experienced by LIHEAP Recipient Households (2003)

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Indicators of Wellbeing Household Wellbeing

22%20%

30%

38%

0%

10%

20%

30%

40%

Went without food forat least one day

Went withoutmedical or dental

care

Didn't fill prescriptionor took less than the

full dose

Unable to pay energybill due to medical

expenses

Other Expenses

Pe

rce

nt

of

Ho

us

eh

old

s

Sacrifices to Wellbeing by LIHEAP Recipient Households (2003)

Source: 2003 National Energy Assistance Survey.

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Indicators of Wellbeing Effects on Health

21%

14%

7%5%

0%

5%

10%

15%

20%

25%

Became sickbecause home was

too cold

Needed to go to adoctor or hospital

because home wastoo cold

Became sickbecause home was

too hot

Needed to go to adoctor or hospital

because home wastoo hot

Health Problem

Pe

rce

nt

of

Ho

us

eh

old

s

Source: 2003 National Energy Assistance Survey.

Health Problems Experienced by LIHEAP Recipient Households (2003)

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Indicators of Wellbeing Summary of Findings• In the last five years, due to their energy bills:

– 28% of respondents reported that they missed a rent or mortgage payment.

– 22% of respondents reported that they went without food for at least one day.

– 38% of respondents reported that they went without medical or dental care.

– 21% of respondents reported that they became sick because their home was too cold

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• Using existing data sources, one can develop a broad array of information about the energy needs of low-income households.– All data used for this presentation are publicly available.

• Data is available to explore linkages among energy poverty, housing affordability, and household wellbeing.

• Information can be used by policymakers and program managers to make effective decisions related to program design, operations and evaluation.

Conclusion

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Energy Poverty: Effects on Housing and Household Wellbeing

NLIEC 2005: June 15, 2005

Donnell Butler (donnell-butler@appriseinc.org)David Carroll (david-carroll@appriseinc.org)

Carrie-Ann Ferraro (carrie-ann-ferraro@appriseinc.org)

http://www.appriseinc.org/Phone: 609-252-8008