How Low-Income Customer Programs Lower Energy Costs for Everyone

This briefing by RMI argues that affordability programs for low-income utility customers reduce system-wide energy costs by lowering utility debt and collection expenses, which are otherwise passed on to all ratepayers.

• Household utility debt in the United States increased by 31 percent from $17.5 billion at the end of 2023 to $23 billion as of June 30, 2025. This has left approximately 21 million households behind on bills, with projected shutoffs rising to as many as 4 million in 2025 from 3.5 million in 2024.
• Arrearage management plans (AMPs) help customers eliminate debt through gradual payments and forgiveness. An evaluation of Pepco's AMP showed that participating customers saw bill coverage rates increase by 16 percentage points and average shortfalls decrease by $370, while collection actions dropped from 36.7 to 1.8 per customer.
• Percentage-of-income payment plans (PIPPs) cap bills at a set proportion of income to prevent new arrears. A pilot program in California resulted in average arrears declining by $131 per household and an 11 percentage point increase in the share of participants with no past-due balance during its first year.
• Low-income discount rate (LIDR) programs reduce bills for eligible households. In New York, the Energy Affordability Program (EAP) limited the growth of arrears for participants to 50 percent between 2020 and June 2022, compared to an 89 percent increase for nonparticipants, saving the residential customer base an estimated $89 million in arrears relief.
• Low-income energy efficiency programs, such as weatherization, lower long-term bills and reduce bad debt write-offs. Pennsylvania’s Low-Income Usage Reduction Program (LIURP) for 2021–2022 saw average net arrears fall by $25 statewide, with larger reductions for PPL ($99), PECO ($51), and Duquesne Light ($39) participants.
• Affordability programs provide system-wide benefits by reducing uncollectible balances and collection costs. RMI analysis indicates that reductions in utility debt alone can offset nearly half of the costs associated with these programs.

APA

RMI (2025). How Low-Income Customer Programs Lower Energy Costs for Everyone. https://rmi.org/resources/how-low-income-customer-programs-lower-energy-costs-for-everyone/

Chicago

RMI. How Low-Income Customer Programs Lower Energy Costs for Everyone. 2025. https://rmi.org/resources/how-low-income-customer-programs-lower-energy-costs-for-everyone/.

Wikipedia

{{cite report |author=RMI |title=How Low-Income Customer Programs Lower Energy Costs for Everyone |date=15 October 2025 |url=https://rmi.org/resources/how-low-income-customer-programs-lower-energy-costs-for-everyone/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025how, author = {{RMI}}, title = {{How Low-Income Customer Programs Lower Energy Costs for Everyone}}, institution = {RMI}, year = {2025}, month = oct, url = {https://rmi.org/resources/how-low-income-customer-programs-lower-energy-costs-for-everyone/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }