Inefficient use of energy presents a serious challenge to the "affordability" of a housing unit. It can cause high utility bills that impose a burden on especially low-income households. Often, residents of low-income households cannot pay their utility bills. It is common to find that utilities make up a larger proportion of low-income families' income than families at median income.

What is the Burden on Families?

In the report, The Cold Facts: The First Annual Report on the Effect of HOME Energy Costs on Low-Income Americans, it was found that Americans with a median household income faced an average total energy cost burden of $1,914 from October 2000 - September 2001. This accounts for an average of 4.6 percent of household income.

The report states however, that families living on low wages, disability payments, or a fixed income like Social Security, faced an average energy cost burden of $1,531 for the same period. This accounts for approximately 19.5 percent of a low-income families' annual income being spent on home energy costs. Overall, the average low-income family spends about one in five of their dollars on home energy costs every year.

What is the Burden on the State and Federal Governments?

On the federal level, the U.S. Department of Housing and Urban Development (HUD) spends more than $3 billion annually to pay all or part of the utility expenses in more than 4 million low-income households.

Utility costs also strain the resources of local, state, and Federal agencies. In the United States, utility bills account for almost 27 percent of the annual operating budgets of public housing authorities.

How does Energy Efficiency Impact Affordability?

According to the Alliance to Save Energy, a 25 percent reduction in energy costs would reduce combined rent and energy costs by 8 percent for the average unit. Nationwide, this would bring 1,182,000 additional housing units within the standard affordability guideline of 30 percent of household income for housing costs including rent and utilities.

What are the Benefits to Grantees?

By taking measures to stop energy loss, grantees will help fulfill the HOME Program's mission by making housing more affordable. Additionally, grantees will find energy efficiency is also financially beneficial. Increasing the efficiency of existing and new buildings can lower costs in the long run, providing additional dollars to fund other activities.