NRRI The National Regulatory Research 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, Arizona June 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 , 35.9 million people in poverty, vs. 1.3 million in 2002.

NRRI Myth 1: Can afford high energy bills In 2000, 31 million people or 11.3% lived in poverty 6.4 million were “working poor”

NRRI 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

NRRI Hourly Wage Needed to Afford 2 Bedroom Apartment StateHourly 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

NRRI Myth 2: Problem Not Serious Impact on healthPercentage W/out food22% W/out medicine or dental care38% Took less meds. Didn’t fill prescription 30% Sick due to cold home21% Related illness resulting in dr. hospital visit 5% Sickness due to hot home7%

NRRI Myth 2: Problem Not Serious Impact on shelterPercentage Missed rent/mortgage payment 28% Moved in w/ family/friends 9% Homeless4% Heat disconnected17% Used stove for heat30%

NRRI Myth 2: Problem Not Serious Impact on shelter cont’d Percentage Unable to pay entire energy bill 51% Electricity disconnect8% 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 data 15,000 households /out heating 4,496 w/out elec 1,509 w/out natural gas Additional 14,595 disconnected residences are vacant Vs. 5,8000 in 2000

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

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

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

NRRI Myth 3: Energy Conservation Not Practiced Energy 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%

NRRI Consumer Education Recommendations 1. Targeted consumer education 2. Use of stakeholder groups

NRRI Targeted consumer education

NRRI Targeted consumer education

NRRI Consumer Affairs Federal Commissions Consumer Protection Stakeholders Utilities Billing Houses Billing Parties State Policymakers State Agencies AG Federal Policymakers Stakeholder Organizations & CBOs Consumer Protection Organizations Use of stakeholder groups

NRRI Stakeholder groups

NRRI