With support from the U.S. Department of Energy’s State Energy Program (SEP), the Colorado Energy Office (CEO) conducted a study on energy cost burdens across the state. The study identified key recommendations to inform future policies.
Ensuring an Equitable Clean Energy Future
Investing in learning the key policies and programs to reduce energy burdens is an essential step to creating a clean, affordable, and secure energy future. There is no one approach to addressing energy burden; however, it is a vital part in ensuring an equitable clean energy future.
Throughout the United States, low-income households often spend a larger portion of their income on energy bills compared to other income groups due to a variety of reasons. Household incomes vary more widely than household energy consumption, and more affluent income brackets have easier access to more efficient technologies. Although Colorado has more affordable electricity and gas rates than other states, energy cost burdens still impact many communities in the state.
A Study to Understand Energy Burden in Colorado
In 2021, CEO with support from SEP, conducted a study, Pathways to Energy Affordability in Colorado, to assess the energy cost burdens—the amount of household income spent on electricity and fuel use—across the state and inform strategies to achieve energy affordability. Alleviating access to energy and saving residents money were key drivers of the study as authors from Physicians, Scientists, and Engineers for Healthy Energy and the Institute for Energy and Environmental Research set out to determine how to accurately measure the energy burden in Colorado.
Colorado Energy Cost Burden Landscape
Average energy cost burdens by census tract shown on a blue-to-orange color divergent map, with orange color indicating high energy cost burdens. The blue-to-orange color transition point is six percent.
From the map, mainly rural and tribal areas experience the highest energy cost burdens.
About the Study
Researchers define a household as "energy burdened" if they spend more than 6% of gross income on utility/energy expenses, often exclusive of transportation expenses. To determine the percentage of households in Colorado that are considered energy burdened, the team used the census data to calculate both energy cost burden and energy use intensity, or the average energy consumed per square foot in a house or apartment.
The team sifted through the data and was able to identify a variety of factors prompting energy insecurity, such as income, demographics, housing type, fuel type, and utility service territories.
To gain further understanding of the urgent need for affordable energy, the researchers looked at qualitative data. First, they identified the current energy policy environment in Colorado to discover where nuances existed. They also looked at a suite of policies where funding was increased temporarily for utility bill assistance and studied long-term energy efficiency efforts, and energy access projects to find impactful pieces of the puzzle. To achieve greater energy affordability, the study recommended a coordinated adoption of these policy interventions to balance and leverage shorter- and longer-term energy burden reduction strategies.
While this study was income-focused, there is an environmental equity component to addressing energy burden, as income metrics can have broader implications (e.g., rural vs. urban, communities of color, older housing stock).
CEO’s study outlined key recommendations to inform future policies for those affected by energy cost burdens:
- Increase energy assistance in programs such as the Colorado Low-Income Energy Assistance Program (LEAP) and utility Percentage of Income Payment Plans (PIPP) and adjust measures over time as needed.
- Provide weatherization grants to households in the lowest income bracket.
- Increase the capitalization of the Colorado Clean Energy Fund, which would enable low- to no-interest financing with a mix of loans to weatherize homes.
- Expand solar gardens to provide low-cost electricity for low- and moderate-income electricity customers.
- Support smart appliances to increase the efficiency of electric appliances and lighting, and convert gas and propane-heated homes to efficient electric heat pump systems.
- Halt the expansion of gas infrastructure in specific areas and give priority to weatherization in those areas.
A Lasting Impact
The Pathways to Energy Affordability in Colorado study has helped act as a framework so the state can identify the volume and characteristics of energy burdened households and an array of short- and long-term strategies to reduce energy burdens consistent with Colorado’s climate and energy goals. CEO and the state have subsequently used the study to understand how different energy policies or actions could enhance or hinder energy affordability for Coloradans.
Stakeholders within the state have used this study to inform future policy and program decisions:
- The Colorado Public Utilities Commission has been working to implement clean energyi for Colorado communities, such as demand side management, electrification, renewable energy adoption, and greenhouse gas reductions, with a mind toward affordability and equity.
- Utilities have pursued education efforts for greater outreach with their service territories to increase awareness for eligible households.
- Colorado’s update to the Greenhouse Gas Pollution Reduction Roadmap includes public feedback to align this update with community feedback and perspectives.
Although these findings were published before President Biden released his Justice40 goals, this study provides a framework to enable Colorado to work concurrently with federal environmental justice priorities and achieve energy affordability across the state.
Tackling Energy Inequity Across the Country
Other states around the nation have implemented different strategies to understand and address energy inequities.
South Carolina developed an Energy Efficiency Roadmap Initiative in 2019 to review efficiency policies from previous years, reassessing according to current priorities, identifying new opportunities, and developing next steps. Guided through an advisory committee and six voluntary stakeholder working groups, the state sought to: expand coordination, engagement, and education of thought leaders, policy makers, and all levels of consumers on energy efficiency issues; create accessible and adequate funding mechanisms for cost-effective efficiency investments; and employ equitable and transparent processes to reduce energy burdens for vulnerable communities by pursuing an equitable and just transition to an energy efficiency economy.
New York’s Climate Justice Working Group was formed to identify disadvantaged communities and ensure they are well positioned to benefit from the state’s clean energy transition. The working group developed a Disadvantaged Communities Barriers to Opportunities Report, which analyzes why some communities are disproportionately impacted by climate change, air pollution, and have unequal access to energy.
Hawai'i developed the Clean Energy Wayfinders program to address energy inequities in vulnerable communities while creating jobs that launch a new generation of leaders. Through the lens of Hawai'i's rich culture and history, the Wayfinders share information and opportunities for energy conservation and clean energy adoption with Hawai'i's schools, community organizations, and households—especially those in low- to moderate-income, asset-limited, income-constrained, employed, and under-resourced communities—to help increase energy conservation and efficiencies, lower monthly energy utility bills, increase access to clean transportation and renewable energy resources, and promote green career training and employment opportunities.
The Oregon Department of Energy developed a 10-year plan to reduce energy burdens and improve energy efficiency alongside Oregon Housing and Community Services and the Oregon Public Utility Commission. The plan, which is accompanied by an interactive assessment of energy use in affordable housing, provides recommended steps for Oregon to reduce the energy burden on low-income households.
Moving Toward a Clean Energy Future
The Department of Energy's State Energy Program (SEP) provides funding and technical assistance to all 50 states, five U.S. territories, and the District of Columbia to enhance energy security, advance state-led energy initiatives, and increase energy affordability. SEP emphasizes the state’s role as the decision maker and administrator for program activities within the state that are tailored to their unique resources, delivery capacity, and energy goals.