October 31, 2008
The less fortunate can rest a little easier. Congress has doubled the funds provided to them to better enable those residents to keep their homes warm during the winter.
Federal spending on the Low Income Home Energy Assistance Program, or LIHEAP, will now be $5.1 billion. The increase has been included in a budget bill aimed at keeping the government running past the current fiscal year that ended Sept. 30. The measure passed in bi-partisan fashion before it was sent to President Bush for his signature, all in an effort to help needy families during tough economic times and through March 2009.
"Although there are winter utility shut-off moratoria in place in many states, not every home is protected against energy shut-offs in the middle of winter," says Olivia Wein, staff attorney with the National Consumer Law Center. "In a brief span of time, energy bills have walloped low-income households."
The group, which lobbied Congress for the increase in funding, says that average residential heating bills are projected to be considerably higher in the coming winter -- at least a quarter more than in previous years for those who use natural gas. It also notes that cost of electricity, used to both heat and cool homes, is rising. Notably, supply shortages are causing the cost of the underlying fuel to escalate while an increasing number of power plants are running on natural gas and are passing on their added costs.
According to the National Energy Assistance Directors' Association, the number of households receiving LIHEAP assistance has risen from 4.2 million in 2002 to 5.7 million in 2007 -- still a small percentage of those who actually need the help at 15.6 percent of the 38 million eligible households. The shortfall is often defrayed by a cross-section of community groups in coordination with local utilities, all of which have appreciably increased their funding ! for heating assistance.
The energy association goes on to say that those families getting such help carry a higher energy burden than most Americans and spend on average 15 percent of their income on home energy bills. That compares to about 3.4 percent for other households. To bring more needy families in to the fold, the law did ease its minimum income restrictions.
"Congress is to be commended for funding LIHEAP at a record level," said Richard Shelby, executive vice president for the American Gas Association. "This positive action will help ensure that millions of low-income American families will stay warm this winter and be better able to manage the rising cost of heating their homes."
Utilities, of course, are on the front lines. To the extent that they can help address the problems, they will be reducing their own bad debt and collections expenses. In fact, it's smarter economically and otherwise to provide assistance than to spend time and resources trying to collect.
Front Lines
Each dollar put into LIHEAP generates $5.37 of economic activity, according to a recent study on the economic impact of LIHEAP funding published by Entergy Corp. The demand for such help will only keep rising so as to keep pace with the increase in energy prices and the current economic downturn, the utility says. It notes that LIHEAP d! oes not just assist those cold-weather regions but also those areas such as the Deep South that experience hot, humid conditions.
Consider Chicago-based ComEd, which puts up some of its own cash to help the needy as well as offers a variety of assistance programs that include budget billing and deferred payment plans. It provides $1 million in summertime aid to its constituency along with grants to families who meet the necessary requirements in the winter. Within the context of LIHEAP, it says that about 186,000 ComEd families, or 6 percent of its residential base, took advantage of the assistance program.
"We expanded the eligibility requirements and there are dollars available as we hope to provide a total of $18 million in assistance this year to customers most in need," says Anne Pramaggiore, ComEd executive vice president of regulatory, customer operations and external affairs.
While utilities, states and communication action groups are all chipping in to ! address the problem, some say that the biggest step the federal govern ment can take is to promote energy efficiency and weatherization programs to insulate homes and save money. Part of the $5 billion just authorized for LIHEAP goes toward such efforts that focus on reducing energy costs.
"In addition to providing financial help with seasonal heating or cooling bills through our EnergyShare program, Dominion is now expanding its partnership with the state to help families stay comfortable and save money," says David Heacock, president of Dominion Virginia Power. Its weatherization program may include repairing heating and cooling equipment, insulating exterior walls and insulating and venting attics.
During an economic hardship, the national government has extended the resources it gives to helping the needy. The majority of utilities are also actively working to address the issue while many community groups focused on the low income and the elderly are dedicated to the cause. Despite the push, shortfalls in funding will continue. Great! er awareness, then, becomes a critical component to closing the gap.
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Ken Silverstein EnergyBiz Insider Editor-in-Chief
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