Energy Poverty: Low-income Households Hit Hardest By Rising Power Costs

Low-income households spend disproportionately more of their income on electricity costs in NZ, yet many are still unable to meet basic energy needs according to public health researchers.

There's a stark income disparity in energy costs - low-income households spend over 7.5% of their income on electricity, while high-income households spend under 1.5% according to Dr Kimberley O’Sullivan and co-authors from the University of Otago. They lay out the evidence in the latest Briefing from the Public Health Communication Centre.

“Our research shows those most vulnerable to energy poverty have already cut back on electricity use as much as possible. As prices continue to rise, there is no wiggle room for these households. In many cases people tell us they are only keeping the lights and the fridge on, they are cutting back on washing, showering, cooking, and rarely or never heat their homes.” says Dr O’Sullivan.

The health consequences of energy poverty are severe and impact the health system, with cold, damp, and mouldy housing costing over $38 million a year. “As well as causing physical health harm, energy poverty contributes to broader wellbeing impacts and increases the risk of severe mental distress. Living in energy poverty exposes many people to unsafe indoor temperatures which translates to the excess winter deaths,” she says.

Dr O’Sullivan says using the most common method of estimating energy poverty with data from the 2018/2019 Household Economic Survey shows 360,000 households in New Zealand are in energy poverty, increasing to 595,000 when housing costs are included.

The Briefing points out that other countries use a stronger model to measure energy poverty which includes information about the thermal performance of housing. This gives a better idea of how much electricity is needed to power a home to keep it at a safe indoor temperature of at least 180C.

“New Zealand has poor quality housing so having Energy Performance Certificates would help reduce energy poverty by showing renters and buyers the operating costs of homes. It would also help us to know which houses need fixing fastest to make them healthier,” says Dr O’Sullivan.

Note: The Public Health Communication Centre (PHCC) is an independently funded organisation dedicated to increasing the reach and impact of public health research in Aotearoa New Zealand. We work with researchers, journalists, and policymakers to ensure evidence is clearly communicated and accessible. We regularly publish public health expert commentary and analysis from across Aotearoa in The Briefing.

PHCC is hosted by the Department of Public Health at University of Otago, Wellington.

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