NRRI

The NationalRegulatoryResearch Institute

Myths Regarding Low-Income Consumers: Implications for Consumer Education

NRRI

Myths Regarding Low-Income Consumers: Implications for Consumer Education

2005 Joint Low Income Energy Conferences

Phoenix, ArizonaJune 14, 2005

Presented by:Francine Sevel, Ph.D. NRRI Senior Consumer Affairs Program Manager

NRRI

Overview of Myths

1. Low-income consumers can afford high energy bills

2. Problem of energy affordability is not serious

3. Low-income consumers do not practice energy conservation

NRRI

Myth 1: Can afford high energy bills

Low-income households spend a greater % of household income on energy

Choose between energy services and food, rent, other bills

NRRI

Myth 1: Can afford high energy bills

2003 official poverty rate:12.5 percent, vs. 12.1% in 2002.

2003, 35.9 million people in poverty, vs. 1.3 million in 2002.

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Myth 1: Can afford high energy bills

In 2000, 31 million people or 11.3% lived in poverty

6.4 million were “working poor”

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Myth 1: Can afford high energy bills

$15.37 national housing wage $14.00 is the median hourly wage

in US >$10.00 earned by ¼ of

population

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Hourly Wage Needed to Afford 2 Bedroom Apartment

State Hourly Wage

CA $21.24

MA $20.93

NJ $20.35

MD $18.25

NY $18.18

Ct $17.90

HI $17.60

AL $17.07

NV $16.93

NH $16.79

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Myth 2: Problem Not SeriousImpact on health Percentage

W/out food 22%

W/out medicine or dental care

38%

Took less meds. Didn’t fill prescription

30%

Sick due to cold home 21%

Related illness resulting in dr. hospital visit

5%

Sickness due to hot home 7%

NRRI

Myth 2: Problem Not Serious

Impact on shelter Percentage

Missed rent/mortgage payment

28%

Moved in w/ family/friends

9%

Homeless 4%

Heat disconnected 17%

Used stove for heat 30%

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Myth 2: Problem Not Serious

Impact on shelter cont’d

Percentage

Unable to pay entire energy bill

51%

Electricity disconnect

8%

Heating system broke-unable to pay for repair

10%

Unable use AC—due to inability to pay to fix

12%

NRRI

Myth 2: Problem Not Serious

PA 2004 disconnect data15,000 households /out heating4,496 w/out elec1,509 w/out natural gasAdditional 14,595 disconnected

residences are vacant

Vs. 5,8000 in 2000

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Myth 2: Problem Not Serious Percentage of Electric Accounts in Arrears 4/1/03-3/31/04

2004

32%

23%

9%

19%22%

19%

23%

11%11%

20%

0

1,000

2,000

3,000

4,000

5,000

6,000

Acc

ou

nts

in t

ho

usa

nd

s

0%

5%

10%

15%

20%

25%

30%

35%

Source: NRRI/NARUC Staff Subcommittee on Consumer Affairs Low-Income Energy P olicy Survey, 2004.

Per

cen

tag

e

Total Residential Accounts

Accounts in Arrears

P ercentage in Arrears

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Myth 2: Problem Not Serious Percentage of Gas Accounts in Arrears 4/1/03 - 3/31/04 2004

Source: NRRI/NARUC Staff Subcommittee on Consumer Affairs Low-IncomeEnergy P olicy Survey, 2004.

33%

21%19%

14%

17% 17% 18%

13%

10%

22%

13%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Acc

ou

nts

in t

ho

usa

nd

s

0%

5%

10%

15%

20%

25%

30%

35%

Per

cen

tag

e

Number of Residential Accounts

Number Accounts in Arrears

P ercentage of Accounts in Arrears

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Myth 2: Problem Not Serious Percentage of Gas Account Disconnections 4/1/03 - 3/31/04 2004

Source: NRRI/NARUC Staff Subcommittee on Consumer Affairs Low-Income Energy P olicy Survey, 2004.

4%

3%

4%

9%

5%

7%

10%

3%

5%5%

4%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Acc

ou

nts

in t

ho

usa

nd

s

0%

2%

4%

6%

8%

10%

12%

Per

cen

tag

e

Number of Residential Accounts Number of Disconnections P ercentage of Disconnections

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Myth 3: Energy Conservation Not PracticedEnergy Savings Actions by LIHEAP Recipients

Percentage

Plastic on windows 44%Lowered heat at bedtime 76%Used fans/opened windows 78%Kept shades closed during day in summer

83%

Washed clothes in cold water 65%Used compact fluorescent light bulbs

44%

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Consumer Education Recommendations

1. Targeted consumer education2. Use of stakeholder groups

NRRI

Targeted consumer education

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Source: NRRI/BIGresearch, FEB-03, n=18,793

Community advocacy organizations

My church or synagogue

Social service agencies

State government

The billing utility

Neighborhood group

Friend or relative

Other

Finding Help Paying Utility Bill:Less than $15,000 vs. $15,000 and more

$15,000 or more Less than $15,000

NRRI

Targeted consumer education

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Source: NRRI/BIGresearch, FEB-03, n=18,793

Community advocacy organizations

My church or synagogue

Social service agencies

State government

The billing utility

Neighborhood group

Friend or relative

Other

Finding Help Paying Utility Bill:55 and above vs. less than 55

Less than 55 55 and above

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Consumer Affairs

FederalCommissions

Consumer Protection Stakeholders

Utilities

BillingHouses

BillingParties

StatePolicymakers State

AgenciesAG

Federal Policymakers

StakeholderOrganizations

& CBOs

Consumer Protection

Organizations

Use of stakeholder groups

NRRI

Stakeholder groups

NRRI

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Source: NRRI/BIGresearch, FEB-03, n=18,793

Community advocacy organizations

My church or synagogue

Social service agencies

State government

The billing utility

Neighborhood group

Friend or relative

Other

Finding Help Paying Utility Bill:Hispanic vs. All Others

All Others Hispanic