for those in colder regions and vice versa. This underscores the necessity to appropriately consider variations in energy needs due to climatic and circumstantial factors when establishing levels of 'adequate energy services' (Boardman, 1991, p.227) or a socially and materially necessitated level of domestic energy services' (Bouzarovski and Petrova, 2015, p.31).

**In summary, while expenditure-based measures might seem straightforward at first, there is a lot of discussion about how exactly to measure these indicators** . In addition, these types of indicators might simplify the concept of energy poverty and reduce it to the affordability aspect of energy poverty. In the following, we explore four expenditure-based measures in more detail.

# Ten Percent Measure

**The 10-percent measure relies on an absolute threshold, defining energy poverty as the share of households that spend a significantly high portion of their household budgets (10 percent or more) on energy.** For monitoring progress over time, it is recommended to use absolute thresholds instead of relative thresholds, or in other words, a fixed standard of what households should be able to count on to meet their basic energy needs, rather than a cutoff point about the overall distribution of energy spending in a country.<sup>25</sup> A common approach used is to rely on a threshold of 10 percent to define the energy poor. Under this definition, energy poverty is the share of households that spend a significantly high portion of their household budgets (10 percent or more) on energy. Ten percent is a threshold related to a minimum level of energy consumption to maintain an adequate level of warmth, originally measured as 10 percent for the UK. A broad set of studies uses this definition because it allows tracking progress over time and comparing energy poverty rates across countries. This measure has also been used in several World Bank studies on energy prices and was used in a World Bank report across a large set of countries in Europe and Central Asia (Olivier & Ruggeri Landerchi, 2017).

**The 10-percent measure has been widely used in the literature despite being criticized for several reasons. The measure was originally developed for the UK and, therefore, lacks strong empirical justification for other countries, and it also fails to account for households in precarious situations that restrict their energy usage and consume less energy than needed.** While many reports rely on a threshold of 10 percent (hereinafter: 10-percent measure), this measure was originally developed for the UK context (Hills, 2012). It originally was the 2M measure (twice the national median) of the energy expenditure ratio (energy expenditure (modeling consumption and prices) and total UK people's income) in 1990 (King Baudouin Foundation, 2018). The application of this measure to other countries' contexts has been highly criticized to date (see, for example, Thomson et al. (2017) and Schuessler (2014)). More recently, experts have even recommended moving away from this definition in the UK, where the measure was originally developed (Hills, 2012). This method is also problematic as it leads to a binary distinction of energy poor/non-poor, while energy poverty may also be a continuum. Additionally, it does not capture vulnerable households that limit their energy use and under-consume energy (or the "hidden" energy poor)<sup>26</sup> . This shortfall can be overcome by using theoretical energy needs instead of actual energy bills, but calculations of theoretical energy bills are data-intensive and may require additional modeling tools. The 10-percent measure can be beneficial in comparing energy

> 25 A similar approach is used to track changes in income poverty over time based on absolute measures. 26 Energy poor households may go unnoticed as they limit their residential heating to save energy. These households may tolerate colder room temperatures to prevent high energy bills. However, under this definition, they are no considered energy poor and therefore, may not meet eligibility criteria for social policies designed to protect them.

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