By Arjun Makhijani, PhD – Unaffordable energy bills impact all of society—including those who can afford to regularly pay their own bills. The direct impacts of unaffordable energy for families experiencing economic stress include ill-health, hunger, utility shutoffs and even evictions because of their inability to pay all the monthly bills. But the indirect impacts on society at large are also great: the cost of added emergency room visits, increased absences from work, lower productivity, childhood learning loss, loss of tax revenue, the cost of providing shelter to those who become homeless, and the cost to landlords of finding new tenants. Unfortunately, the benefits to society of making energy universally affordable are not well recognized, and rarely, if ever, considered when policymakers and regulators make decisions about electricity and natural gas rates that have a direct impact on affordability. Specifically, electricity and gas rates directly affect affordability; yet the wide financial and health impacts on low-income households and society as a whole are not a part of the utility ratemaking process. There is a powerful case that that should change.  

The Direct Impacts of Unaffordable Energy

Every aspect of the health and well-being of low- and moderate-income families is impacted by unaffordable bills. They must decide between paying utility bills or the rent, buying their prescribed medicines, or buying enough food. Unaffordable household energy costs are traditionally defined as being more than six percent of gross income, which is also a common threshold for being eligible for government assistance for helping pay utility bills. The six percent limit is satisfactory for many, but still may remain too high for those with the lowest incomes or those with high housing and health cost burdens. 

Detailed data on impacts are available through surveys of those who have received federal heating bill assistance through the Low Income Home Energy Assistance Program (LIHEAP) in the prior fiscal year, covering the experience of the recipients over the prior year, and in some cases, including housing, over five years prior to the survey. Results included:¹

• “36 percent went without food for at least one day” in the past year.
• “41 percent went without medical or dental care” in the past year.
• “30 percent used their kitchen stove or oven to provide heat” in the past year.
• “31 percent did not fill a prescription or took less than the full dose of a prescribed medication in the past five years.”“13 percent of respondents had their electricity shut off due to nonpayment, seven percent had their gas service shut off, and 15 percent had at least one of the two shut off” in the past year.
• Almost half of the households that had utilities shut off used candles or lanterns for lighting, increasing the risk of fires.²

One of the least recognized but most devastating impacts of the complex of household financial stresses is an increased risk of becoming unhoused. While the cause is not singularly utility-bill conflicts with rent or mortgage payments, over a five-year period (Fiscal Years 2014 to 2018³), 23 percent of LIHEAP recipients surveyed had become unhoused— a rate of 4.6 percent per year⁴. That equates to an estimated average of 1.2 percent per year of LIHEAP recipients, based on reported five-year totals. The rest (an estimated 3.4 percent per year) became unhoused and moved in with friends or family members. The problem has been growing steadily among those surveyed since 2003, when a total of 13 percent of respondents became unhoused. In the 2011 survey, 18 percent reported becoming unhoused in the previous five years, and the rate jumped another five percent in the 2018 survey. One percent of the respondents in the 2018 survey had mortgage foreclosures in the prior year alone, skewed towards families with children. This means that roughly two percent of homeowners were foreclosed in the prior year, since only 45 percent of those surveyed owned their homes.⁵

All these impacts are the result of the combination of financial stresses that low- and moderate-income households face. Qualitatively, the LIHEAP-recipient survey is oriented to eliciting data about “the choices that low-income households make when faced with unaffordable energy bills…,” presumably making that criterion a primary element of reporting by those surveyed. Still, it is not possible with available data to ascribe a specific quantitative damage estimate that can be attributed to utility bill-created conflicts alone. A principal reason is that gathering the necessary data is not part of ratemaking. Yet, it should be noted that the data regarding impacts, including the rate at which families become unhoused, are only for those who received LIHEAP assistance in the fiscal year prior to the survey. Comparable data are not available for the 83 percent who did not receive that aid.

The rates at which households cannot meet their basic needs quantify one dimension of the impacts of unaffordable energy. But they do not indicate the extent of the harm to physical and mental health suffered by members of these households. How many people who had to forgo medicine or take less than the prescribed dose became more ill? How many of them could not go to work as a result? How was household income impacted? How many children could not focus as well at school because they went hungry the day before? Were those who moved in with family or friends able to attend the same schools? Did that increase the cost of travelling to work? How many suffered prolonged homelessness?

The National Bureau of Economic Research has estimated the impact of homelessness on mortality risk: “a 40-year-old homeless person has a mortality risk similar to a housed person who is nearly twenty years older and a poor housed person who is nearly ten years older.”⁶ Put differently, over a six-month period in 2019, the risk of dying for someone who had been between the ages of 18 and 54 in 2010 was about 1 in 500 for an average person, while that of a homeless person was almost four times as high: 1 in 130. Restricting the comparison to housed low-income families, becoming unhoused doubled the risk of dying.⁷ In other words, any cause of homelessness, including that arising from utility bill-rent/mortgage payment conflicts, literally results in an increase in deaths.

There were an average of 6.01 million LIHEAP recipients per year in fiscal years  2014-2018. The survey indicates that an average of about 72,000 families would have become homeless each year from this group (not counting those who move in with family or friends). Households with children are disproportionately represented among families who lose their homes to foreclosure.⁸ The average period of homelessness is unknown.

Comparable data on family budget conflicts between rent, utility bills, medicines, and food for almost 30 million eligible non-recipients are not available. Many more families live in financially precarious situations. The Federal Reserve report on financial well-being of households estimates that 50 million households do not have $400 available for an unexpected expense, such as a car repair or medical bill. Such financial stresses may add to the routine bill payment conflicts, including those involving energy bills and rent/mortgage payments.

Matthew Desmond’s study of low-income renters in Milwaukee demonstrates the utility bill/rent payment/eviction dynamic. Regulations there prohibit utility shutoffs in the winter, during which time many renters are more likely to fall behind on paying energy bills due to heating needs. By the springtime, when the prohibition on shutoffs is lifted, unpaid utility bills have piled up; they must be paid to avoid shutoffs. By paying them, many low-income renters then fall behind on rent leading to a tragic increase in evictions in the summer.⁹

It should be noted that winter protection against disconnections appears to be beneficial overall, rather than a zero-sum game in regard to evictions. Alison Lodermeier’s research has shown that evictions tend to decrease during the period of shutoff protection because there is an increase in rental payments during this time. While the rate of evictions rises when the protections are lifted, in agreement with Desmond’s research, the rate does not rise so much as to negate the impact of earlier decreased evictions.¹⁰ The temporary winter protection against disconnections is, in effect, a loan from the utility, which reduces the overall rate of evictions compared with a situation with no such protection.

There is also evidence that when investments are made in whole house improvements for purposes of improving health and reducing energy bills that financial conflicts are greatly reduced. A pilot project in Baltimore resulted in an eight-fold decrease in foreclosure notices for low-income owner-occupied households receiving such investments.¹¹

Societal Cost

The financial stresses created when low-income families cannot afford the essentials have enormous costs for society as a whole. For instance, ill health may be exacerbated when they cannot fill their prescriptions fully. That may translate into poorer attendance at work, which not only lowers household earnings but also impacts employers and colleagues, reduces overall economic activity, and increases healthcare system costs for everyone. It also reduces the taxes that low-income families pay and increases the need for assistance, impacting all taxpayers and ratepayers.

Even very approximate estimates of three areas of societal cost related to families becoming unhoused illustrate the depth of the impact on society at large of the severe financial stresses of faced by low- and moderate-income households, of which unaffordable energy is one principal component:

• The costs of public shelter. 
• The costs of added medical care, in this case, more emergency room visits.
• The costs associated with unhoused families moving in with family or friends.

Cost of Shelter

The cost of shelter depends on the type of shelter provided (e.g. emergency, transitional). It also varies widely across the country by location. The U.S. Department of Housing and Urban Development has estimated the cost of emergency shelter for family shelters in two large cities (Washington, D.C. and Houston), one medium-size city (Kalamazoo, Michigan) and one relatively rural area (upstate South Carolina). Emergency shelter costs ranged from $2,272 to $6,039 per month. For transitional housing¹², the range was $1,328 to $7,319 per month. For permanent supportive housing, it was $1,079 to $2,043 per month.¹³

A 2015 study estimated an average duration of homelessness of about seven months. Average household size for those displaced was two people.¹⁴ Available data on available beds indicate about 30 percent would be housed in emergency shelters, a little less than that in transitional shelters, and the rest in permanent supportive housing.¹⁵ Assuming this mix, a reasonable order of magnitude estimate for each homelessness event is about $17,000 (rounded, 2024 dollars). Applying this to the estimate of 72,000 households rendered homeless each year among LIHEAP recipients gives a total cost to society of roughly $1.2 billion. Only a part of this would be directly due to utility bill payment conflicts with mortgage or rent payments; however, the data for calculating that fraction are not available. What the dynamic in Milwaukee researched by Matthew Desmond indicates is that paying utility bills to keep the lights on can push the finances of some families over the edge and lead to evictions. There are, of course, many other causes of becoming unhoused as well, such as loss of a job or ill health.

Emergency Medical Care

As one example of the impacts to the healthcare system, the cost of added emergency medical treatment for those who are unhoused compared to those who are housed is substantial. A Massachusetts assessment of added Medicaid costs of the homeless compared to housed families on Medicaid indicates added medical costs of about $14,500 per year per person (2024 dollars). This translates into an added cost of about $17,000 (rounded) for a family of two over a seven-month period.¹⁶ 

Other Costs

Shelter and added emergency medical care are significant elements of societal cost, but they are not the only ones. Depression increases among people who are evicted from their homes. Those who are unhoused experience physical risks in the form of assault. They may also become unemployed, which means a loss of tax revenue at all levels—federal, state, and local. There is also the cost of unemployment compensation. Employers lose experienced employees and must bear the cost of finding replacements. One estimate of the total of quantifiable costs of homelessness suggested a cost between about $50,000 and $200,000 per person per year.¹⁷ Assuming two people and seven months per homelessness event gives an overall cost, in round numbers of $150,000. Applying it to the 72,000 rendered homeless among LIHEAP recipients, the cost amounts to about $11 billion— applying to the 17 percent of eligible households who receive assistance. Total costs for all federally-eligible households are not available but would undoubtedly be significantly higher. In this context, two opposing factors would impact these added costs. First, the data are for those low-income households who received LIHEAP assistance, which reduced their energy burdens. On the other hand, those who do get assistance tend to be at the lower end of the income spectrum of the households that are eligible so that their energy cost burdens are at the higher end to begin with.

While the costs to those who become homeless are the most serious, the much larger number who lose their homes and move in with family or friends are also substantial. There is social and economic dislocation. Access to jobs or schools may become more difficult and expensive. Crowding may have health implications, including for people with compromised immune systems. Evictions make it more difficult to get a new rental contract. Mortgage defaults leading to repossession of homes by lenders lower credit scores, with attendant negative financial impacts and lower financial resilience.

These costs estimated above do not include the financial impacts of utility shutoffs,  adverse impact on health of using gas stoves and ovens for heating, reduced earnings due to ill health, reduced tax collections due to ill health, and added emergency room visits compared to homes that can be kept at comfortable levels of temperature and do not face ongoing financial stresses.

It bears noting again that unaffordable bills are one component of the problem of affordability, which includes housing, food, medical care, education, and transportation. It is not possible to disentangle the energy unaffordability element from the complex of financial stresses with the available data. 

Policy Implications

Utility bills are determined by (i) rates, the cost per unit of energy (kilowatt-hour of electricity or therm of natural gas), and (ii) total energy usage. The latter depends largely on a variety of technical factors, such as appliance and heating system efficiency and how well the structure is built. Renters, who are the majority of low-income households, have little control over them.

Given the direct impact of rates on utility bills and the gravity of the society-wide impacts to which unaffordable bills contribute, it is remarkable that neither the non-energy costs of unaffordable energy nor the substantial non-energy benefits of affordable energy are a normal part of ratemaking processes. In some states, such as Maryland, non-energy costs and benefits have been recognized as important in the context of estimating the net benefit-cost ratio of efficiency investments. But no state makes systematic attempts to estimate the linkages between rate increases through the ratemaking process and the risk of low- and moderate-income people becoming unhoused, suffering ill health, or going hungry to pay utility bills. The result is that unaffordable energy considerations get pushed to the margins of energy policy, limited to bill assistance programs that provide modest relief, generally to a minority of those eligible to receive it. 

It is not that energy should be made affordable by providing bill assistance alone. Far from it. Assistance is one tool, and a politically difficult one at that. Given prevailing norms, recipients are also deprived of dignity, even though low wages, high rates, and poor quality of rental housing are mainly responsible and are largely beyond their control.

Assistance, while essential, does not address the root causes of the problem. Insufficient income is the basic cause of the complex of stresses that cause essentials to be unaffordable. It is far broader than the problem of energy unaffordability. Within the realm of energy, systematically lowering bills by making clean energy and efficiency investments addresses a central cause of high bills. It addresses the high costs of supply by lowering them via subscriptions to community solar and investments to enable participation in demand response. It addresses high bills by lowering consumption via investments in efficient appliances, efficient heating systems, and home retrofits. Multiple studies have shown that discounted community solar, efficient appliances, efficient electrification of heating, and demand response can structurally reduce bills.^{18 19}

A holistic approach would be to have assistance programs that make universal enrollment possible with sufficient funding; assistance would be complemented by interventions that structurally reduce bills through increased energy efficiency and transitioning to clean energy. Eventually, investments can make energy bills low enough that those at the upper end of the low- and moderate-income spectrum would no longer need assistance to reduce their bills below six percent of income. For those below the poverty level, especially those well below it, energy cost burdens would be greatly reduced but some assistance would still be needed to make the bills affordable. The overall funds required for assistance to ensure universal affordability are drastically reduced, to levels comparable to or even lower than those usually available today.²⁰ 

Societal benefits of affordable energy are widely spread to taxpayers in the form, for example, of lower costs for shelter, higher tax revenues (from steadier employment), hospitals and health insurance companies with fewer unpaid emergency room visits, and landlords with lower costs associated with evictions and finding new renters. Utilities (and hence ratepayers) also benefit from fewer uncollectible bills and more regular bill payments. The funds needed to make energy affordable can, therefore, reasonably come from a variety of sources, including taxpayers and ratepayers.

The main immediate issue is that the societal costs of unaffordable energy need to be recognized as part of ratemaking processes. The main action needed is that each state utility commission must make its own specific assessment of these societal costs of unaffordable energy bills and update these periodically as rates change. These assessments can provide the basic data needed to evaluate the non-energy costs of rate increases and compensatory investments that should be made to offset them.

1. APPRISE. (2018). NEADA National Energy Assistance Survey Report. Survey method is in Chapter II; quotes and data are from p. ii and Chapter IV. ↩︎
2. Almost 6,000 fires a year are caused by the use of candles for lighting. National Fire Protection Association. Candle Safety,  Accessed: September 22, 2025. ↩︎
3. Federal fiscal years run from July 1 to June 30; the period covered is, therefore, July 1, 2013 to June 30, 2018. ↩︎
4.  The term “unhoused” refers to all those who lose their homes, including those who find shelter with family or friends. The survey did not indicate whether or not any respondents had become unhoused more than once or for how long they remained unhoused, so the rate may be even higher for an individual year. ↩︎
5.  APPRISE. (2018). NEADA National Energy Assistance Survey Report, Tables IV-20, IV-21A and IV-21B; for percent of homeowners, Table III-4. The calculation assumes that a substantial majority of low- and moderate-income homeowners had mortgages and/or home equity loans. ↩︎
6.  Meyer, B.D., Wyse, A., and Logani, I. (2023). Life and Death at the margins of society: the mortality of the US homeless population. National Bureau of Economic Research. NBER Working Paper No. 31843. Abstract. ↩︎
7.  Meyer, Wise, and Logani 2023. Values are rounded; they are estimated by reading Figure 1. ↩︎
8.  Meyer, Wise, and Logani 2023, Table IV-21B. ↩︎
9.  Desmond, M. (2017). Evicted: Poverty and profit in the American city. Crown. 15-16. ↩︎
10.  Lodermeier, A. (2023). Credit Access and Housing Insecurity: Evidence from Winter Utility Shutoff Protections. ↩︎
11.  Makhijani, Mills, and Makhijani, 2015, p. 166. ↩︎
12.  The term “transitional housing” means time-limited housing meant to transition the unhoused from emergency shelters to permanent housing. ↩︎
13.  Spellman, B. (2010). Costs associated with first-time homelessness for families and individuals. DIANE Publishing. Costs adjusted to 2024 dollars, using Bureau of Labor Statistics Rental Cost Index data at www.bls.gov/pir/ntr/NewTenantRentIndex2024q4.xlsx ↩︎
14.  Makhijani, A., Mills, C., and Makhijani, A. (2015). Energy Justice in Maryland’s Residential and Renewable Energy Sectors. Institute for Energy and Environmental Research, 164. ↩︎
15.  National Homeless Information Project, Distribution of HIC Beds: Continuums 2015. https://www.nhipdata.org/local/upload/file/2015%20Distribution%20of%20Bed%20Units(1).pdf This document shows data for shelter distribution in many locations across the United States. A simple (unweighted) average for each shelter type gives 27% housed in emergency shelters, 53% in transitional housing, and the rest in “permanent supportive housing.” We have applied these fractions to simple averages of costs of each type for the four locations in Brooke Spellman et al, 2020, cited above. ↩︎
16.  Koh, K. A., Racine, M., Gaeta, J. M., Goldie, J., Martin, D. P., Bock, B., … & Song, Z. (2020). Health care spending and use among people experiencing unstable housing in the era of accountable care organizations: an analysis of spending and utilization among people enrolled in the Boston Health Care for the Homeless Program from 2013 through 2015. Health Affairs, 39(2), 214-223. The data used were for the years 2013 to 2015. They were converted to 2024 dollars using the Federal Reserve index for urban medical costs at https://fred.stlouisfed.org/series/CPIMEDSL. ↩︎
17.  As cited in Makhijani, A., Mills, Christina Mills, and Annie Makhijani, A. (2015). Energy Justice in Maryland’s Residential and Renewable Energy Sectors. Institute for Energy and Environmental Research,  and converted to 2024 dollars. ↩︎
18.  Makhijani, A. et al. (2023). Energy Affordability in Maryland: Integrating Public Health, Equity, and Climate. Institute for Energy and Environmental Research and PSE Healthy Energy. ↩︎
19.  Lukanov, B. et al. (2022). Pathways to Energy Affordability in Colorado.. PSE Healthy Energy and Institute for Energy and Environmental Research. ↩︎
20.  See Lukanov et al. (2022) and Makhijani et al. (2023) cited above. ↩︎