LOW-INCOME ENERGY NETWORK

1. LOW-INCOME ENERGY NETWORK Low-income energy burden in Ontario April 7, 2005 LIEN conference - Fighting Poverty and Pollution Mary Todorow, Advocacy Centre for Tenants Ontario

2. Low-income energy burden • Electricity and heat are basic necessities and universal, non-discriminatory access to these services must be ensured for all Ontarians. • Low-income residential electricity consumers face a disproportionate energy burden. • Low-income consumers face barriers to taking full advantage of energy conservation possibilities.

3. Low-income energy burden • 14.4% of Ontario’s population (1,611,505 persons, estimated 810,000 households) are living at or below the “poverty line”. • The majority of these persons live in tenant households, and in the private rental market Source: Statistics Canada, 2001 Census of Population

4. Before-Tax Low-Income Cut-Offs (LICOs), 2003 Source: Canadian Council on Social Development using Statistics Canada’s LICOs

5. Housing affordability • 42% of Ontario tenant households (564,735) pay 30% or more of their household income on shelter costs (including utilities). • 20% of Ontario tenant households (265,995) pay 50% and over of their household income on shelter costs (including utilities). • The risk for homelessness increases where shelter costs consume more than 50% of pre-tax household income for a tenant household.

6. Housing affordability • According to CMHC’s 2001 Census-based Housing data, while Ontario renter households accounted for 31% of all Ontario households, they comprised 61.8% of Ontario households in core housing need - a significantly disproportionate share • CMHC considers households to be in core housing need if they do not live in, and cannot access, acceptable housing: • affordable (costs less than 30% of before-tax HH income) • in adequate condition (not requiring any major repairs) • suitable size (enough bedrooms for size & make-up of HH)

7. Housing affordability • 96% of Ontario Works’ beneficiaries are tenants, but only 17% of these OW beneficiaries who rent live in subsidized housing - the majority live in the private rental market • 76% of Ontario Disability Support Program beneficiaries are tenants, but only 22% of these ODSP beneficiaries who rent live in subsidized housing • ONPHA survey in Jan/Feb 2004 found 158,456 households - more than 300,000 individuals - on social housing waiting lists across Ontario; 76% of these households live on less than $20,000 per year

8. Low-income energy burden • In 2003, Ontario households in the lowest income quintile spent 45% of their pre-tax income on shelter, including utilities - more than triple the proportion as those households in the highest income quintile that spent 14% • Low-income households are particularly vulnerable to increases in shelter and utility costs - difficult to absorb, could put housing in jeopardy

9. Low-income energy burden • On electricity alone, Ontario households in the lowest income quintile spent 6.13% of their pre-tax income in 2003, over five times more than households in the top quintile that spent 1.04%. • In 2003, electricity comprised 13.48% of the shelter costs of Ontario households in the lowest income quintile, but only 7.24% of shelter costs for highest income quintile households

10. Low-income energy burden • The typical low-income family in Ontario has only a $200 “cushion” to buffer income interruptions or deal with unexpected expenditures. • Share the Warmth’s experience shows that high energy costs are the second reason for economic evictions in Ontario, right after unaffordable rents.

11. Low-income energy burden • The lowest household income quintile in Ontario has a far greater proportion of households that: • have electric heating as their principal heating equipment (27% compared to 14% for the average income household and a number too unreliable to be published for the highest quintile) • use electricity as principal heating fuel (31% compared to 9% for the highest quintile) • use electricity as principal heating fuel for hot water (42% compared to 18% for the highest quintile).

12. Average Ontario Household Pre-Tax Income Source: Survey of Household Spending 2003, Statistics Canada

13. Housing tenure in Ontario F1 Source: Survey of Household Spending 2003, Statistics Canada 1 “F” is defined as “too unreliable to be published”

14. Principal Heating Equipment F F Source: Survey of Household Spending 2003, Statistics Canada

15. Electricity as Principal Heating Fuel for Hot Water Source: Survey of Household Spending 2003, Statistics Canada.

16. Low-income energy burden • Prior to April 1st, 2005 commodity/distribution rate increases, electricity bills for an average residential customer consuming 1000 kWh per month ranged across the province from $87 to $124 per month. • For a single mother with two children on social assistance, this represents 15% to 22% of her maximum shelter allowance of $571. • For a single person working 35 hours a week at minimum wage ($7.45) this represents 8% to 11% of this worker’s total monthly pre-tax income of $1129.92.

17. Rising energy prices and low-income consumers • Higher electricity costs will increase the energy burden on low-income people who are already struggling to make ends meet. • Cost of oil and natural gas also rising. • For many low-waged workers and people on social assistance and other income security programs, it will mean choosing between heating and eating and paying the rent. • If they reduce their energy use, it may be at the expense of socially acceptable standards of living.

18. Energy conservation and low-income consumers • Conservation and energy efficiency are the cheapest, cleanest solution to energy crunch. • More efficient use of energy reduces pollution and energy bills • Toronto Community Housing retrofits: permanent 35% – 40% reduction in energy use / more comfortable homes • Challenge: environmentalists sometimes call for higher prices to spur conservation, but higher prices disproportionately affect low-income consumers who face barriers to investing in energy efficiency/ conservation

19. Barriers to conservation for low-income consumers • Typically live in older, drafty/poorly insulated buildings with inefficient appliances & heating system • Lack of capital to invest in insulation, new appliances. • Renters face split incentives: • don’t own building/ appliances so can’t benefit from long-term investment; • landlord can pass on higher energy costs • Apartment buildings: may not even have thermostat • Proposals to sub-meter won’t overcome these barriers, while landlord has even less incentive to invest in conservation/efficiency

20. Low-income energy conservation& assistance • Energy conservation program to permanently reduce bills and pollution • Bill assistance - ensures energy & housing are affordable • Education - about conservation measures and available programs • Emergency energy assistance - to help households in crisis. Need for emergency assistance should decrease as permanent measures are put into place

21. Going forward - U.K. approach • U.K.’s Warm Homes and Energy Conservation Act of 2000 formally recognized fuel poverty “as a major issue of public well-being” • Definition of a fuel-poor household is “one that needs to spend in excess of 10 percent of household income in order to maintain a satisfactory heating regime (18oC to 21oC) • U.K. Fuel Poverty Strategy, published in 2001, set targets for eradication of fuel poverty in England

22. Going forward - U.K. approach • “In England, the Government as far as reasonably practicable will seek an end to fuel poverty for vulnerable households by 2010. • Fuel poverty in other households in England will, as far as reasonably practicable, also be tackled as progress is made on these groups, with a target that by 22 November 2016 no person in England should have to live in fuel poverty. • Separate targets will be/are being set by the Devolved Administrations in respect of tackling fuel poverty.”

23. Impact of non-action • Higher energy bills • More poverty • More risk of homelessness • Reduction in quality of life • More pollution • Increased demand for short-term (& short-sighted) emergency assistance (public & charitable funds)