It is time for Memphis to get serious about reducing energy cost burden for low-income residents

Special essay by Judith Maina, COO of Neighborhood Preservation Inc.
First featured in The Commercial Appeal

Financial planners recommend that you save 30% of your take-home income for housing. Well, for some of us, the utilities expense falls in the same percentile that really hurts the bottom line.

Typically, energy costs are considered unaffordable if they hit a threshold of above 6% of household income. Research shows that low-income households, especially renters and minority households, face disproportionate energy cost burdens.

According to the American Council for an Energy Efficient Economy, ACEEE, the numbers are as follows:

• 25% of low-income households pay 25.5% of their income for energy
• 25% of low-income multifamily households pay 21.8% of their income for energy
• 25% of African-American households pay 19.4% of their income for energy
• 25% of Latino households pay 15.9% of their income for energy
• 25% percent of renting households pay 18.5% of their income for energy

In Memphis there have been many attempts to ease the utility cost burden for low-income residents. 

The City of Memphis Division of Housing and Community Development or HCD administers the Weatherization Assistance Program for homeowners, which promotes energy efficient homes for low-income households through the installation of energy conservation measures.

Among other things, HCD’s program installs insulation, reduces air-infiltration, performs heating and cooling tune-ups and modifications. Memphis Light Gas and Water or MLGW also offers a weatherization program that covers energy efficiency repairs such as attic insulation, window replacement, and air sealing.

Neither of these programs has enough resources to help all homeowners who need their help, and the more than 55% of Memphians who are renting do not even qualify.

Recognizing this gap, Neighborhood Preservation, Inc. or NPI with $25,000 of funding from the First Horizon Bank Foundation, piloted a program to weatherize single-family rental homes and small apartment complexes, focusing primarily on installing blown insulation in the attics.

To date, NPI has completed weatherization in 21 units at an average cost of $800 per unit with estimated 10% saving on their monthly utility costs.

Some of the lessons learned from the pilot program were that potential beneficiaries: 

1. Are missing or hesitant to provide required documentation
2. Lack stable housing so that by the time they apply and are approved they have already moved on. 
3. Don’t trust advocates for the program.
4. Have a landlord who will not allow the work, even at no cost.

COVID-19 has illuminated the high cost of utilities for low-income residents. Emergency relief funds have been allocated by the federal government — for qualified applicants these funds cover utility delinquencies and help prevent cut offs.

Some utility delinquencies were present pre-pandemic and are still unpaid. Let’s not forget that the impact of a high utility burden is not only financial.

Poorly heated or cooled homes can negatively affect the physical and mental health and well being of occupants, and the correlation of exorbitant energy costs and poor-quality housing is well established.

In the news recently, there have been reports that MLGW may leave the Tennessee Valley Authority in search for a cheaper alternative energy supplier that would result in savings that presumably would be passed on to consumers.

While we have no way of knowing what will happen next in that political process, it is safe to say that any change that results in lower energy costs for Memphians would be a game changer for many thousands of families struggling to make ends meet. 

One dollar less in energy costs is one dollar more in the pocket of the consumer who is making decisions between purchasing prescription drugs, purchasing food, and keeping the lights on. A reduced energy burden is literally a monthly economic stimulus for low-income families. 

It is time for our city to get serious about new strategies to reduce the energy cost burden for low-income Memphians. Long term, this will require new ways of thinking about where our electricity comes from. There are proven zero-carbon fuels which could be part of the solution, like hydrogen, solar, and wind power.

It’s easier said than done, but let’s find the innovators and investors who are ready, willing and able to get involved. 

At the local, state and federal level, we should all support policies to incentivize clean energy programs — not just for the environment, but for the benefit of Memphians who all too frequently do not have a voice in the decisions that affect them the most.