States Prepare for Home Heating Crisis
By Christine Vestal, Staff Writer
Even if they get a boost in federal aid to help low-income citizens pay their home energy bills, state officials say that a record number of poor people will be at risk of suffering hunger and hypothermia and that many will need temporary shelter.
The situation is expected to be most severe in cold northeastern states where more people rely on home heating oil, which has risen in price much faster than other energy sources. Governors in those states warned President Bush in an August letter that without more federal money, "an unprecedented crisis is waiting to unfold."
Since then, the economy has worsened and energy costs have remained high.
"With a record number of families already struggling to pay their home energy bills, states are seeking more federal money to cover the rising cost of fuel this winter," said Mark Wolfe, director of National Energy Assistance Directors' Association (NEADA), which represents state officials.
Experts expect average home energy prices to increase 17 percent this winter compared to last year, with heating oil soaring 30.1 percent above last year's prices. In addition, climbing jobless rates have contributed to a 9.5 percent increase since last year in the number of people unable to pay their energy bills. According to NEADA, 15.6 million households owed almost $5 billion as of March 31, 2008, an increase of almost $640 million over the same period in 2007.
As a result, some states are pitching in their own money, and many local communities are setting up shelters in fire stations, community colleges and empty shopping centers for individuals and families that can't heat their homes, said Meg Power, energy adviser for the National Community Action Foundation , which advocates for the poor.
In July, the National Governors Association asked Congress for nearly double the $2.6 billion it gave states in fiscal year 2008, which ends Sept. 30. For fiscal year 2009, states and advocates for the poor are seeking $5.1 billion - the maximum funding allowed under a 1982 federal block grant known as the Low Income Home Energy Assistance Program (LIHEAP), which helps states provide support to people who struggle to pay home energy bills.
This week, House leaders included a proposal to fund LIHEAP at $5.1 billion in a draft continuing appropriations bill for 2009 that has been stalled by debates over the administration's proposed Wall Street bailout. The proposal - which has received strong bipartisan support in both houses - exceeds Bush's 2009 budget by $3.1 billion. (Congress is scheduled to adjourn Sept. 24, but the session could be extended.)
If Congress and the president approve the proposed LIHEAP funding, it would be the largest energy assistance grant since the program began. The previous high water mark was in 2006, when total LIHEAP funding reached $3.2 billion. States received $2.2 billion in 2005 and 2007.
Last year, states used LIHEAP grants to help 5.6 million low-income households pay their home energy bills, writing an average check of $355 directly to energy companies. For people who rent and do not directly pay home energy bills, states provide smaller cash benefits to offset the monthly portion of their rent payments designated for utility bills.
Under LIHEAP, states are allocated federal money based on a complex formula that takes into account the state's poverty rate and heating and cooling degree days. Benefit levels are established based on available funding and the number of eligible recipients.
The funding formula provides proportionally more money per person in colder states than in warmer states, making less federal aid available for cooling.
While LIHEAP helps, it is only a fraction of what most Americans will pay to heat their homes this winter. According to NEADA, average household energy bills are expected to rise to an average of $1,152 this year, up from $986 last year.
Already, a handful of Frostbelt states have taken extraordinary measures to help people pay for spiraling energy costs.
In Alaska, an energy-producing state where winter comes early, rising crude oil prices have fattened state coffers, allowing governor and Republican vice-presidential candidate Sarah Palin to send every citizen in the state a $1,200 check to help pay energy bills.
New York Gov. David Paterson (D) launched a broad state initiative earlier this month, including a 48 percent increase in the low-income heating oil benefit, bringing the total amount of the subsidy to $800 per recipient.
Massachusetts Gov. Deval Patrick (D) called for $10 million in additional state funds for low-income energy assistance. Maine Gov. John Baldacci (D) added $4.2 million to the state's energy assistance fund, and Connecticut Gov. M. Jodi Rell (R) approved $14 million to help people pay their home energy bills.
In addition, several states are offering free in-home energy audits and weatherization services to help people lower their heating bills.
But collapsing state budgets have made it difficult for other states to respond. Rhode Island, which traditionally has provided its own heating assistance fund, announced it would cut its program because of an overall budget crunch.
Nationwide, the cost of natural gas is up 18.9 percent, propane is up 13 percent and electricity is up 10.1 percent, according to the U.S Energy Information Administration.
At the same time, the jobless rate - 6.1 percent in August - is at a five-year peak, according to the U.S. Department of Labor , and the number of Food Stamp applications is higher than in any year since the program began in 1964, serving 28 million people - an 8 percent increase over 2007, according to the U.S. Department of Agriculture.
"This year, it's not just poor families who will need help. Middle-income families can't pay home energy bills because they're so squeezed by the price of gasoline," Wolfe said.
Last year, high oil prices pushed some states to look for cheaper alternatives. Venezuelan-controlled oil-refining company, Citgo Petroleum Corp., donated 45 million gallons of free home heating oil to nearly 200,000 households and hundreds of homeless shelters in 18 states in a move that bought good publicity for the country's controversial socialist leader, Hugo Chavez.
Citizens Energy Corp. , a nonprofit organization run by former U.S. Rep. Joseph Kennedy II (D-Mass.), helped engineer the deal with Citgo and is working on similar arrangements to help low-income residents this year, according to Brian O'Conner, a spokesman for the group.
In addition to looking for cheaper energy prices, at least 20 states impose electric utility surcharges to fund low-income energy-assistance programs, which totaled $3 billion in 2007. Charitable contributions to state energy-assistance funds last year were about $156 million and are expected to reach about the same level this year.