By Mark Hand

Customers in the Southeast pay a higher percentage of their income for electricity compared to the national average and are concentrated primarily in areas served by rural electric membership cooperatives and municipal utilities, according to a new report released by environmental group Appalachian Voices.

The poverty rate in the Southeast dropped to an all-time low of 12.8% in 2000. But since then, it has increased steadily, surpassing 16% each year from 2010 to 2012, the report said. Areas served by public power utilities typically have a higher poverty rate and electricity cost burden than those served by investor-owned utilities and are in greater need for new or expanded investments in residential energy efficiency, according to the report, "Poverty and the Burden of Electricity Costs in the Southeast: The Case for Utility Home Energy Efficiency Loan and Tariff Programs."

One way that electric utilities in the region can help customers is by expanding the number of residents eligible for home energy efficiency programs known as "on-bill financing," the report said. On-bill financing often refers to a loan made to a utility customer, such as a homeowner or a commercial building owner, to pay for energy efficiency improvements to their house or building. The regular monthly loan payments are collected by the utility on the utility bill until the loan is repaid.

"Our main goal as a campaign is to try to get Appalachian co-ops, which serve very low-income, rural communities, to develop the programs and offer it primarily to low-income residents who need it the most," Rory McIlmoil, energy policy director for Appalachian Voices and the author of the report, said in an interview.

Two of the most successful models in the Southeast are the Help My House pilot program developed by the Electric Cooperatives of South Carolina and Central Electric Power Cooperative, and eastern Kentucky's How$martKY program developed by the Mountain Association for Community Economic Development and participating rural electric cooperatives. The two programs have achieved an average savings of 36% and 21%, respectively, for their participating customers, which has resulted in respective annual savings of about $1,150 and $600, according to the report.

Among its initiatives on energy efficiency, McIlmoil said Appalachian Voices is working with electric cooperatives in North Carolina "to develop a model that works for them based on lessons that we've seen in the South Carolina program and the Kentucky program."

In 2001, the average homeowner in the Southeast spent more than $1,500 on energy. By 2009, average energy costs had increased by 33% to more than $2,000. Most of these costs are due to electricity use, which accounted for 80% of total home energy costs in 2009, according to the report.

The farm bill, recently signed into law by President Barack Obama, includes provisions aimed at helping members of rural electric cooperatives. The Rural Utilities Service provisions, for example, expand rural cooperatives' ability to make low-interest energy efficiency loans to their customers to help reduce energy costs and consumption.

Rural electric cooperatives serve 93% of the nation's "persistent poverty counties," according to the National Rural Electric Cooperative Association. A persistent poverty county is defined as one in which 20% or more of its population has lived in poverty over the past 30 years.

"The co-op record is good on efficiency. A lot of co-ops are doing and looking at on-bill financing, and they're certainly going to be able to do more of that with the new RUS program," NRECA spokeswoman Tracy Warren said.

Since the farm bill passed, NRECA has been conducting webinars for its members, giving them the details about how the new loan program will operate. About 450 people from 277 co-ops took part in a Feb. 18 webinar jointly held by NRECA and RUS to discuss the new program. Also, RUS officials are expected to attend NRECA's annual meeting in Nashville on March 3, she said.

Appalachian Voices issued its report on Feb. 27 in conjunction with Google Inc.'s launch of a new maps gallery. The environmental group was among a small group of organizations invited to provide maps as part of Google's new maps feature. Appalachian Voices' interactive maps show the percentage of income that residents in the Southeast pay for their electricity. The maps cover Alabama, Georgia, Kentucky, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.

In the report, Appalachian Voices calls for more stable sources of support for investing in energy efficiency. "Electric utilities across the U.S., particularly in southeastern states, can and should play a more central role by financing comprehensive home energy efficiency improvements," the report said. "Greater investments in energy efficiency will have the added benefit of promoting economic development and creating jobs in the energy services industry in this especially impoverished region."

On-bill financing programs have been used by U.S. utilities for many years. National Grid USA and its predecessor companies have offered an on-bill program for small-business customers since the 1990s, while UIL Holdings Corp. subsidiary United Illuminating Co. in Connecticut offers on-bill loans to commercial customers, according to an issue brief released in July 2013 by the Natural Resources Defense Council.

The major investor-owned electric and gas utilities in California all operate on-bill loan programs for commercial customers. New York passed the Power NY Act in 2011 authorizing residential on-bill loans, which is being implemented by the New York State Energy Research and Development Authority in cooperation with New York utilities.

Thirty-one of the 477 utilities in the Southeast currently offer on-bill loan programs or similar financing mechanisms. But only one of eight residents has access to financing for home energy efficiency, according to the Appalachian Voices report. Two of the programs are offered by large investor-owned utilities and 29 are administered by electric cooperatives and municipal utilities, McIlmoil said.

Alabama Power Co., for example, has an on-bill power financing program that it funds, he noted. The Southern Co. subsidiary offers energy financing at low interest rates and with no down payment for qualified residential customers. The loan payment can be added to the customer's monthly bill.

"For many families, on-bill energy efficiency loan or tariff programs would significantly aid in alleviating the impacts of poverty, and would support new and existing jobs in local communities where economic opportunities are at a premium," McIlmoil wrote in the report.