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Low income customers and energy savings: An SECC investigation

The Smart Energy Consumer Collaborative has been conducting research on all types of consumers across the United States since 2011.

Along with our longitudinal study of consumer attitudes and behaviors, called the Consumer Pulse and Market Segmentation Study (Waves 1–6), we have conducted focused research on topics ranging from the customer experience, smart energy technologies and a host of products and services that may be offered by electricity providers. We have also published research that spotlights the attitudes and behaviors of particular demographic groups, including renters, Millennials and low-income consumers.

This spotlight on lower income consumers aims to understand the attitudes and behaviors of energy consumers with incomes less than $50,000/year. An income of $50,000 annually corresponds roughly with the U.S. median household income, which the U.S. Census Bureau determined as $59,039 in 2016.

Thus, this report focuses on energy consumers in the lower half of annual household incomes. These consumers, like all consumers, pay for the energy needed to light, heat and cool their homes. However, these consumers often tell us the energy programs and services currently offered by industry stakeholders do not meet their needs, and they often do not have the financial resources to invest in new energy-related technologies. Thus, this research seeks to build a deeper understanding of who these consumers are and how industry stakeholders can reach them more effectively and design programs that better meet their needs.

The U.S. Department of Health and Human Services (HHS) has established the U.S. Federal Poverty Guidelines (FPG) to determine eligibility for various federal safety net programs such as Head Start, Children’s Health Insurance Program (CHIP) and Special Supplemental Nutrition Program for Women, Infants and Children (WIC). Of particular relevance for this research are HHS’ Low-Income Home Energy Assistance Program (LIHEAP) program and the U.S. Department of Energy’s Weatherization Assistance Program (WAP) for Low-Income Persons. The FPG are determined from the Census Bureau’s poverty threshold measure, which looks at total household income before taxes, excluding capital gains and noncash benefits such as public housing, Medicaid or food stamps, and is adjusted annually based on the Consumer Price Index. The FPG takes into consideration household size, and the 2017 FPG (relevant for this research) is $12,060 for a single-person household and $24,600 for four people.

LIHEAP is a federally-funded block grant that distributes funds to states, the District of Columbia, state and federally-recognized tribes and tribal organizations and U.S. territories. The grantees use the funds to help make home energy bills more affordable for low-income households. Although the household eligibility criteria may vary somewhat by state, eligibility is typically determined to be 150 percent of the FPG. Thus, in 2017 the LIHEAP eligibility threshold for a single-person household was $18,090 and $36,900 for a household of 4 people.

For this research, we have divided lower-income consumers into two groups: consumers with household incomes less than $25,000 per year (low-income (LI) or <$25K) and those with incomes between $25,000–$50,000 per year (low-to-middle income (LMI) or $25K–$50K). We compare these two lower-income groups to consumers with household incomes of $50,000 or more (higher income (HI) or $50K+) per year.
The research sought to examine the attitudes, values, interests and engagement of these lower-income energy consumers.

The study’s “consumer segments” were ranked as Green Champions, about 30 percent of the population and early adopters of high tech solutions; Savings Seekers, about 20 percent and adopters of tech that will save them money; Status Quo, who are the 18 percent who aren’t interested in changing their behavior; Technology Cautious, the 17 percent who want to use energy better but don’t look to technology for the answers; and Movers and Shakers, the 15 percent who want new technology to prove itself before they adopt it.
Each of the five studies leveraged for this research had its own research objectives, for which we asked specific questions of the respondents. However, in many instances, we used the same question in each of the studies (e.g., the consumer segmentation questions and many demographic questions). One of the high-level observations from our research is that there is consistency in the results across the five studies.

In this research, wherever possible, we averaged the results across the studies for which we asked comparable questions. This meta-analysis approach uses data from multiple, nationally-representative surveys and provides us with greater confidence that findings are even more robust and generalizable than would be possible from any one study.


Attitudinal differences among consumers in the three income groups are also evident in their motivations for saving energy. In the general population, “saving money” and “environmental benefits” rise to the top as reasons consumers are interested in saving energy. But, in line with the segmentation results, LI consumers are even more likely to emphasize “saving money” or “reducing need for foreign sources of energy” as primary reasons to save energy.

Likewise, LI consumers are less likely than those with higher incomes to note the importance of saving energy for “environmental benefits”, “future generations” or being “socially responsible.” Hence, a focus on more immediate concerns is clearly evident in the reasons LI consumers cite for saving energy, especially when compared to higher income consumers who also embrace longer-term benefits.

Although some may envision struggling young families when they think of lower-income consumers, people over 55 years old are in fact the largest cohort of LI consumers. And this finding is consistent with the overall aging of the U.S. population.

According to SECC’s survey data, consumers over 55 years old are the largest cohort in all three income groups (HI, LMI, and LI). However, a slightly larger proportion belong to the LI group (46 percent compared to 43 percent overall).


Digging a little deeper into one commonly available, low-cost energy management tool — a smart (or programmable) thermostat — we find HI consumers reported higher rates of adoption than the LI and LMI groups. We find the same adoption pattern with online billing — a convenient service offered widely by electricity providers, banks and service providers of all types. Our data also tells us that among those not currently using these tools, LI consumers are far less likely than LMI or HI consumers to be interested in adopting either tool. Thus, not only are fewer LI consumers using either of these tools, they are less interested, a point we discuss later in this report.



We have evaluated consumer interest in a wide array of energy-related technologies, services and other offerings, ranging from technologies like solar, battery storage and electric vehicles to services like electricity usage tracking, real-time outage reporting and consumer rewards programs, to program offerings like peak-time savings programs, prepaid billing plans and “green power” programs. In total, we have evaluated consumer interest in 35 different energy-related concepts.

Across these various concepts, our analysis reveals a clear pattern that the level of interest in a concept is lower among LI consumers and higher among LMI and HI consumers. In general, level of interest seems to correlate with income, particularly among those with the lowest incomes. Although LI consumers showed interest in a number of different concepts, their interest appears to be highest for concepts that promise energy savings and financial benefits without requiring a monetary investment. The best opportunity may be among the LMI consumers who show equal or higher rates of interest compared to HI consumers.


Consumers in general find programs and services that encourage and reward them for monitoring and taking action to control or shift their usage appealing. Similarly, offerings that provide consumers with information they can use to make decisions, such as near real-time outage reports, also appeal to many consumers regardless of income. These are the strongest areas of stakeholder opportunity for consumer engagement. In contrast, concepts such as prepaid billing plans and especially direct load control programs are less appealing across the board.

However, there is enough interest in these options across all income levels (35 percent and 25 percent respectively) to educate and promote these plans as placing consumers in control of their energy usage. Showcasing successes like Georgia Power’s “You Can Prepay” program and emphasizing consumer benefits, like control over electricity usage and the elimination of deposit requirements, may be effective in alleviating common concerns. Promoting these options as low investment ways to save money should appeal especially to LI consumers.

While consumers in the LMI “middle ground” still have limited financial resources, they represent a mix of younger individuals and working families that are generally interested in utility programs. Due to their likely higher levels of education, they are likely to experience income growth over time. For LI consumers, their daily struggle to pay bills extends to their utility bill, and thus, they have less flexibility and interest in other values related to energy than they may have if and when their income rises to the LMI category ($25K–$50K).

CHALLENGES: Concerns among LI consumers related to the cost and up-front financial investment required to make their homes more energy efficient are real and warrant specific attention. When we asked consumers to rate the challenges to saving energy at home, more than half of LI consumers rated the cost of equipment upgrades and replacements as their most pressing problem.

In contrast, this was seen as a concern by less than one-third of HI consumers. On-bill financing programs such as Pay As You Save (PAYS) are just one option that will help address the cost of these upgrades, especially for LI consumers who may not have access to attractive financing options.

Although low-income consumers had generally higher levels of interest in utility offerings that specifically promise bill savings, at least one technology also attracted noteworthy interest. Smart appliances are interesting to many consumers, regardless of their income.
This result may reflect, in part, the convenience and potential for energy savings offered by these newer, connected appliances.

Finding ways to make these appliances affordable will be a challenge for program designers, but consumer interest is there. Incentives of all types may make this investment hurdle easier to surmount. Besides utility-sponsored rebate programs, other options to consider include on-bill financing programs such as Pay As You Save (PAYS) mentioned earlier as well as grants from nonprofits and foundations. Any communication on these investments should underscore short or no payback periods to motivate adoption.

Lower-income consumers are an important yet difficult-to-reach group for every electricity provider. As we’ve seen, this group is not as con dent about how to increase their energy efficiency and they are less interested in new energy technologies. Typically an older person rather than a struggling family, low-income consumers are less trusting of their utility. They have unique needs for support and the vast majority (80 percent) have never received LIHEAP funding or been enrolled in targeted assistance programs. These consumers usually pay a high proportion of their income to meet their energy needs and they do not see their utility as a trusted partner to help solve their problems. Instead, they lean on their family, friends and social networks. And, many experience service disconnections as well as fees and penalties as they struggle to stay ahead of what they owe their electricity provider.

However, these issues are addressable — some of them easily so. Approaches that work through community ambassadors and thoughtful social media outreach provide unique opportunities for reaching these consumers. For example, an easy solution for financial support in lieu of inadequate LIHEAP funding is to create additional pools of money from “round up” programs where citizens can choose to pay their bills in whole dollar amounts and donate the difference to an assistance program.

Direct Energy’s Neighbor-to-Neighbor program in partnership with Gridmates, a technology provider based in Austin, Texas, allows citizens to directly donate money through their utility to assist neighbors in need. Prepay programs allow low-income consumers to avoid deposits and fines, and more easily understand their energy usage. Finally, there are on-bill financing programs such as Pay As You Save (PAYS) that allow people with limited means to pay for technology or weatherization improvements without a direct cash outlay. A share of the reduced bill savings is used to pay for the improvements, and consumers share the bill savings with the utility to pay for the project. When the project is paid off, consumers benefit even more.

We encourage our members to provide feedback to us on these ideas and suggestions, and also on their own efforts, especially successes, related to low-income assistance programs. We especially want to hear from SECC members about low-income consumer engagement successes since these consumers are less likely than other consumers to respond to outreach efforts. Our plan is to leverage your feedback and successes to inform other industry stakeholders so that the strategies that work can be replicated by others. We all want low-income consumers to receive the help they need and to view their utility as a trusted partner and services provider. With this report, we hope to move everyone closer to that goal.