Energy Poverty in America: 35 Million Households Can't Afford Their Electricity Bills

The Scale of the Problem

Energy poverty is formally defined as spending more than 6% of household income on energy costs. By that measure, approximately 35 million US households face energy insecurity, according to EIA data from 2024. That's roughly one in four American homes — not a fringe problem, but a structural one baked into the relationship between energy costs, housing, and wages.

The practical reality of energy poverty isn't just high bills. It's going without food to pay the utility. It's keeping the heat off in winter until pipes are in danger of freezing. It's 3.7 million utility disconnections for nonpayment per year — households cut off entirely when they can't pay. In summer heat waves and winter cold snaps, energy poverty is a public health crisis. Heat-related deaths are disproportionately concentrated among lower-income households without functioning air conditioning.

Who Is Affected

Energy insecurity doesn't distribute evenly across the population. The burden falls most heavily on specific demographic groups:

Low-income households face the double disadvantage of high energy burden (energy costs as a percentage of income) and older, less efficient housing stock. A family earning $30,000 per year spending $3,000 on energy has a 10% energy burden — well above the 6% threshold — while a family earning $120,000 with the same energy bill has a 2.5% burden that barely registers.

Black and Hispanic households face energy insecurity at significantly higher rates than white households, according to EIA's Residential Energy Consumption Survey. The disparity reflects both lower average household incomes and residential concentration in older housing in urban areas with higher utility rates and less weatherization investment.

Native American and tribal households face the highest energy burden of any demographic group. Many tribal lands have inadequate grid infrastructure, forcing reliance on expensive propane or diesel generation. Some remote tribal communities in Alaska and the Southwest have electricity costs exceeding $0.60/kWh from diesel generators — more than 150% above the US average.

Renters face structural disadvantages. They can't make the capital investments — insulation, efficient HVAC, solar — that would lower bills, because they don't own the property. Landlords have little incentive to invest in efficiency improvements since tenants typically pay their own utilities. This principal-agent problem keeps millions of rental units poorly weatherized.

LIHEAP: The Federal Safety Net

The Low Income Home Energy Assistance Program (LIHEAP) is the primary federal response to energy poverty. The program received $9.8 billion in federal funding in 2024 and helps approximately 6 million households with heating and cooling costs, utility bill payments, and energy crisis assistance (preventing disconnections or restoring service after shutoffs).

LIHEAP assistance is administered through state agencies, which set local eligibility rules within federal guidelines. Most states use income thresholds of 150% of the federal poverty line, though some states extend eligibility to 200% FPL. The average benefit in 2024 was approximately $500–$600 per household, covering a fraction of annual energy costs for most recipients.

The program's most significant limitation is coverage. The 6 million households LIHEAP serves represent roughly one in six of the 35 million households facing energy insecurity. Funding has not kept pace with need. In most states, LIHEAP is effectively a lottery: eligible households who apply early in the benefit year receive assistance; those who apply after funds are exhausted do not, regardless of need.

Utility Disconnections: 3.7 Million Per Year

Approximately 3.7 million US utility disconnections for nonpayment occur annually. This number excludes voluntary disconnections (moving, switching providers) and includes only service terminations for unpaid bills. Behind each disconnection is typically a household that has gone through a sequence of missed payments, past-due notices, payment plans, and final shutoff notices before reaching termination.

Reconnection fees, late payment penalties, and deposit requirements make it expensive to restore service once disconnected. A household that can barely pay its regular bills faces additional barriers when trying to restore service: reconnection charges of $25–$100, deposits of one to two months' estimated bills, and accumulated arrearages that must be paid in full or resolved through a payment plan.

The COVID-19 pandemic demonstrated that disconnection moratoriums — which most states implemented between 2020 and 2021 — prevented millions of shutoffs without causing the widespread nonpayment defaults utilities feared. When the moratoriums lifted, accumulated arrearages in many states exceeded $1 billion. The episode exposed how much energy insecurity had been masked by pre-pandemic payment arrangements.

How Solar Has (and Hasn't) Helped Low-Income Households

Rooftop solar's rapid cost decline over the past decade has produced substantial savings for the homeowners who have adopted it. What it has not done, until recently, is reach the households with the highest energy burdens. The reasons are structural:

Rooftop solar requires homeownership. Renters — disproportionately lower-income — can't install panels. Even homeowners need good credit to qualify for solar loans or leases, and need roofs in good enough condition to support panels. Federal tax credits for solar have historically been non-refundable, meaning they only benefit households with sufficient tax liability — which excludes many low-income families.

The Inflation Reduction Act of 2022 began addressing this gap. The IRA created a Direct Pay mechanism allowing non-profit organizations, tribal entities, and some low-income community solar projects to receive tax credits as direct payments rather than offsets against tax liability. It also created low-income bonus credits of up to 20% on top of the base 30% Investment Tax Credit for solar projects in low-income communities — effectively a 50% credit for qualifying projects.

Community Solar: Broader Access

Community solar programs allow households to subscribe to a portion of a larger solar installation built off-site, receiving bill credits proportional to their share's output. This model works for renters, those with unsuitable roofs, and those without capital for system purchase. By 2024, 21 states had community solar programs with residential subscriptions available.

Low-income-specific community solar programs — which reserve portions of installations for income-qualified subscribers — have emerged in Massachusetts, Illinois, New York, and Colorado. Illinois's community solar program requires 25% of capacity to serve income-qualified customers. These programs can reduce participating households' electricity bills by 10–20% per year, a meaningful reduction for households with tight budgets.

What Would Actually Move the Needle

LIHEAP funding at current levels covers a fraction of the need. Community solar programs reach some renters but not most. The IRA low-income bonus credits help new solar projects but don't address the existing stock of poorly weatherized housing.

Weatherization — insulating homes, sealing air leaks, upgrading inefficient HVAC systems — has the highest sustained impact on energy costs for low-income households. The federal Weatherization Assistance Program (WAP) treats roughly 35,000 homes per year; at that rate, weatherizing all homes above the energy burden threshold would take decades. Expanded WAP funding with streamlined approval processes would reduce energy costs permanently rather than subsidizing ongoing high bills.

Utility rate design also matters. Increasing fixed monthly charges (which every customer pays regardless of usage) while reducing per-kWh charges benefits high-use customers and disadvantages low-use customers — who tend to be lower-income. Progressive rate structures that offer a lifeline rate for a baseline amount of electricity, with higher rates only for consumption above that baseline, distribute costs more equitably.

The energy transition's long-term promise — cheaper renewable energy reducing wholesale electricity costs — is real, but it will take a decade or more to fully flow through to retail rates. In the meantime, the 35 million households facing energy insecurity need practical support, not promises about future energy abundance. The gap between those two things is where energy poverty policy needs to do its work.