ACEEE Report: Utility Spending on Low-Income Efficiency Programs Lags Behind Rising Poverty Rates

The Gap Is Real, and It's Getting Wider

U.S. electric utilities have increased the share of their energy efficiency budgets directed at low-income customers from roughly 9% in 2015 to 13.4% as of 2024, according to the American Council for an Energy-Efficient Economy. That's measurable progress. But it hasn't kept pace with the growth in the population those programs are supposed to serve.

ACEEE's report, based on 2024 program data from utilities representing about 60% of U.S. electricity sales, documents an average 14.4% gap between what utilities invest in low-income efficiency programs and what would be proportional to the income-qualified share of their service territory.

"Even as utility investments increase, we're seeing a persistent equity gap," said Anna Johnson, ACEEE senior policy manager and an author of the report, during a webinar presenting the findings.

More than 28% of the U.S. population falls below 200% of the federal poverty line, the threshold ACEEE used to define income-qualified customers. That number has climbed as the investment ratio has improved, so utilities are running faster but the finish line keeps moving.

Energy Costs Are Making This Worse

This isn't an abstract equity debate. Energy costs increased at approximately twice the rate of inflation last year, Johnson said, a sharper acceleration than the country has seen in recent years. That comes on top of a baseline reality where one in six U.S. households is already behind on their energy bills.

Energy efficiency, Johnson noted, is "one of the only direct levers that a household has available to them to reduce their energy bills." Weatherization, insulation, efficient appliances. These cut the actual kilowatt-hours consumed, which means they cut the bill regardless of what the utility charges per kilowatt-hour. For households with no room in the budget, that lever matters.

The Mandate Gap Explains the Spending Gap

ACEEE's data points to a clear policy driver for the disparity. Utilities in states that have set explicit low-income investment requirements spend around $50 per low-income customer on efficiency programs. Utilities in states without those requirements spend close to $19 per low-income customer — less than 40 cents on the dollar by comparison.

The pattern holds: utilities without an equity gap are overwhelmingly located in states that combine energy efficiency resource standards (long-term savings targets) with statutory low-income investment floors. Where neither exists, the spending is discretionary, and discretionary budgets in regulated industries tend to shrink under rate pressure.

The utilities ACEEE examined are located in 31 states; of those, 20 had an energy efficiency resource standard in place, and of those, 15 also mandated low-income programs. ACEEE published a menu of more than two dozen policy and program options for states and utilities to consider, ranging from stronger investment mandates to targeted program design changes.

The Counterargument Worth Hearing

Not every utility executive or state regulator agrees that higher mandated spending is the right solution. The reasonable version of that pushback: utilities are regulated entities that pass costs to all ratepayers. Requiring them to spend more on any specific customer class raises rates for everyone else, including lower-middle-income households that don't qualify for low-income programs but also aren't flush. If the funding mechanism is a flat per-kilowatt-hour charge, the distributional effect can be regressive. This is a legitimate concern about program design, not a reason to do nothing.

ACEEE's report doesn't ignore this tension, but it comes down clearly on the side of state mandates as the most reliable mechanism. Critics of mandates would argue the data shows correlation, not causation. States with strong efficiency cultures have both the mandates and the spending, and it's not obvious which caused which. Johnson herself acknowledged there is "no one size fits all perfect model that will serve the needs of all low-income households in any utility territory" and that a "mix and match approach" will be necessary.

What Comes Next

The report's practical consequence is a policy roadmap for state utility commissions and legislators. States currently without low-income efficiency investment requirements will face increasing pressure from ACEEE's findings, particularly as energy affordability becomes harder to ignore at the household level.

ACEEE's assessment also looked at policies to improve the impact of low-income efficiency investments, including expanding investments, improving outreach to target demographics, and better serving renters, multifamily housing, and manufactured housing. Whether state commissions move fast enough, and whether ratepayer-funded programs can absorb the cost without political backlash, will determine whether the 14.4% gap closes or widens over the next ACEEE reporting cycle.