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Low Income Energy Solutions
Ken Silverstein, Editor-in-Chief - EnergyBiz Insider, Nov. 1, 2006
Natural gas costs are still a problem. Prices may be down from their record highs of a year ago but they are still too much for society's most vulnerable citizens. The low income households still need help paying their energy bills and the assistance available to them from the federal government is too little. That's the view from the American Gas Association. While the total funding of the federal government's Low Income Home Energy Assistance Program (LIHEAP) is now $5.1 billion, only about 15 percent of the 38 million eligible low income households have received federal assistance. The shortfall is often defrayed by other groups, which have increased their funding for heating assistance by 183 percent from 2000 to 2005.
"Utility programs provided significant help for needy families to manage their energy bills this past winter, yet the need continues to grow and is far greater than utility and civic programs are able to fulfill, despite our best combined efforts," says Dave Parker, CEO of the American Gas Association. Some advocacy groups say that the total need is around $18 billion a year.
Budget constraints and other pressing needs often take precedence. But the solution is multi-faceted. Beyond government backing, community action groups, consumers and utilities all have a role to play. 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.
The states, meanwhile, are doing their part. The Maine Public Utilities Commission voted to increase funding for its low income heating assistance by 20 percent. The commission will manage an account that is funded by the state's utilities and is targeted to all those who qualify. Altogether, the fund has risen from $5.8 million last year to nearly $7 million this year. Last winter, 23,161 utility customers participated in the program.
The issue of home heating assistance first gained resonance in the late 1970s when a senior citizen living in Green Bay, Wis. had forgotten to pay to his bill and Wisconsin Public Service -- after a few attempts to contact him -- turned off his service. He froze to death. Congress then acted in 1981 to create LIHEAP.
A resource called The Cold Facts says that average Americans may spend around 5 percent of their take-home pay on utility bills. Low income residents, conversely, will spend an average of 19.5 percent of their annual income on utility bills. When it's cold, they spend more. A sustainable energy burden is 6-8 percent of household income, says Roger Colton, an attorney in Boston who advocates for the low income.
Utilities Involved
The fear is that the poor will be disconnected or they will forego food and medicine. So, what's the answer? Besides LIHEAP, some states mandate consumer charges that are allocated to help those in need while others allow customers to voluntarily add $1 or so to their bills. At the same time, many utilities are providing discounted services to the elderly and poor while others donate generously to community groups that spearhead such efforts.
"Some utilities pay lip service," says Colton. "But the majority really has come to understand that it is in their own interest to address this problem."
The Nebraska Public Service Commission has adopted a winter moratorium on disconnects for low income natural gas ratepayers. The rule states that a utility may not shut off a customer between November 1 and March 31 if the customer can document their eligibility for low income energy assistance. Others who are in late with their payment must come up with a quarter of their unmet obligation plus most of their most recent bill. Then they have to enter into a payment plan.
Utilities provide varying degrees of support. The reasons for doing less are mostly philosophical. That is, some make a point of saying that it is the government's role to maintain a safety net and that their central function is to provide safe, reliable and low cost service to their customers. At the same time, most utility customers are more concerned with their own bills and say that the utilities and their stockholders should shoulder the burden.
Southern California Edison, for example, will serve its most needy customers with a one-time grant of up to $150. In New Jersey, all electric and natural gas customers pay into a universal service fund that is used to help low income residents. The needy are not required to pay any more than 6 percent of their annual income toward utility bills, with the balance paid from the universal fund. During 2005, the program served 120,000 households and provided $74 million in assistance.
"Utilities are the first line and they are doing a lot," says George Coling, executive director of the National Fuel Funds Network that contributes $150 million each year to the effort. "But there is still a gap."
Despite dipping natural gas prices, low income residents have not gotten much relief on their energy bills. Congress has increased the level of assistance for those most in need. But, the federal government can only do so much. It then becomes the responsibility of others to pitch in. They are. But shortfalls persist and so the long-term solution to the problem remains out of reach.
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