Teller-Elsberg & Sovacool: Understanding fuel poverty in Vermont

Editor’s note: This commentary is by Jonathan Teller-Elsberg and Benjamin K. Sovacool. Teller-Elsberg researched fuel poverty while a research associate at the Institute for Energy and the Environment at Vermont Law School. He now works as a sales representative for Solaflect Energy in Norwich. Sovacool is director of the Center for Energy Technology at the Department of Business Technology and Development at Aarhus University in Denmark as well as professor of energy policy at the University of Sussex in the UK, and founding director of the Energy Security & Justice Program at Vermont Law School. 

[P]overty comes in many forms. One insidious form, which has been increasingly common in Vermont, is called “fuel poverty.” This is the situation in which someone spends so much of their income on household energy costs — electricity, fuel oil, gas, wood — that there may not be enough left over for other basic needs.

A recent study conducted by the Institute for Energy and the Environment at Vermont Law School, which we led, found that approximately one quarter of Vermont households were in fuel poverty in 2012 (the year of our most recent data), using the common definition of spending more than 10 percent of annual income on household energy consumption. When assessed by income decile, a staggering 72 percent of Vermonters in the lowest income bracket qualified as being in fuel poverty. In 2012, the average household in the poorest decile spent just under 28 percent of its total annual income on electricity, heating, cooling and cooking!

Another sobering finding was that a significant increase in fuel poverty has occurred since 2000. Approximately 71,000 people suffered from fuel poverty in Vermont in 2000, but in 2012 the number rose to 125,000, or one in five Vermonters. Startlingly, fuel poverty grew 76 percent during this period.

When families cannot afford to properly heat their homes, the consequences are more serious than discomfort. Fuel poverty increases the risk of stroke, heart attack, pulmonary embolism, pneumonia, asthma, arthritis, influenza, and accidents in the home. The combined results are visible in seasonal health statistics, leading to a phenomenon known euphemistically as “excess winter mortality.” In plain language, being poor can kill you.

Indeed, based on our estimation, we calculate that approximately 172 Vermonters die each year due to fuel poverty. This is twice the number dying from automobile and other transportation accidents.

What is the causal mechanism behind this hidden killer? There are three factors that affect the prevalence of fuel poverty: the amount of energy used, the cost of that energy, and the income of those using it. Increase or decrease either (or both) of the first two factors without changing the third, and fuel poverty will change in the same way. Change the third without changing either of the first two, and fuel poverty will change in the opposite direction.

The basic explanation for Vermont’s increase in fuel poverty has been rising costs for energy accompanied by stagnant incomes while consumption of energy held essentially steady. The forms of energy that had rising costs since 2000 were fossil fuels: heating oil, propane, and natural gas. While spending on electricity is also a burden for many low-income Vermonters, its costs have held quite steady in inflation-adjusted terms.

We have little control over the cost of international commodities like fossil fuels, or over the national economic trend of stagnant incomes for those in the middle and lower income brackets. Vermont can, however, address the crisis of fuel poverty through direct action on the quantity of energy used, specifically through promotion of efficiency.

Efficiency improvements can be as effective as lower prices in reducing the cost burden. An air-sealed, well-insulated home will use fewer gallons of heating oil regardless of the price, saving money compared to the same home leaking most of its heat to the outdoors. Even when energy costs are high, a household’s energy bills can be kept within reasonable limits through efficiency.

One important version of efficiency is through switching technologies and fuels. Our report noted that energy savings may be felt across the state from switching to space heating with heat pumps: even if the market penetration is only at 10 percent, Vermonters could save $15 million annually in reduced fuel costs; at 50 percent market penetration the estimate is $85 million in energy bill savings.

For this reason, among others, we urge the governor and Legislature to fully fund efforts to improve the efficiency of low-income Vermonters’ homes, both through weatherization and increased use of heat pumps. Investments in efficiency pay multiple dividends.

Addressing fuel poverty requires determination. Vermont has an old housing stock, and it will take years to weatherize the many homes that need help. That means that many people will continue to depend on fuel assistance to get by. Along with efficiency, the state budget must account for this ongoing need.

Despite Vermont’s reputation for progressive, low-carbon innovations in electricity, energy efficiency, and the smart grid, fuel poverty is a serious and growing problem in the state. For reasons including justice, health and environmental sustainability, Vermont must recognize and address its fuel poverty crisis.