Carlos Batlle

Recent data from the US Energy Information Administration reveals that nearly one in three households in the United States report experiencing energy poverty, and this number is only expected to rise. Federal assistance programs exist, but allocations across states have been nearly static since 1984, while the distribution of energy poverty is dynamic in location and time. We implement a LASSO-based machine learning approach using sociodemographic and geographical information to estimate energy burden in each US census tract for 2015 and 2020. We then compare the allocation to states from the Low Income Home Energy Assistance Program to an optimized allocation. We allocate funds to the most burdened households, providing them with enough assistance to reduce their energy expenditures so that their household energy burden is equal to a new maximum allowable energy burden. This markedly shifts funds from the northern cold-weather states to the southern warm-weather states.

Since their introduction decades ago, electricity markets have been largely one-sided. In most cases, end users have not even played the role of passive observers of market price fluctuations, they have directly ignored them.

Europe started to go through an extremely severe energy crisis in the summer of 2021. The Brussels-based think tank Bruegel reported that governments spent billions of euros, representing several percentage points of their gross domestic product, to shield consumers and industry from high prices ( Figure 1 ). Even when considering that substantial public support, many end users were (at the time of writing, in February 2023) still facing energy affordability issues. At that time, it was not possible to foresee the end and whether an unprecedented scenario of a period of sustained high prices could repeat itself. However, what the energy crisis showed was that although it was a gas crisis, the current regulatory power market compound proved to be fragile to political interference. In this article, we elaborate upon a proactive regulatory-driven solution with the aim to protect (certain tranches of) end users from periods of sustained high electricity prices. Thereby, political turmoil leading to potential negative consequences for the ongoing decarbonization process can be avoided. We call our proposal affordability options .