Home Heating Help Gets Chilling Reception

By Ken Silverstein
LIHEAP funding may get cut in half

Providing financial assistance to the poor and elderly has historically received bipartisan endorsements. But this year there is broad political support to cut the program, all the culmination of budget battles on Capitol Hill.
Neither side needs the fallout from that. But the way things are going, the Low Income Home Energy Assistance Program, or LIHEAP, will get cut and that will impact millions of people. And those entities that contribute to the cause are in an even worse position to make up for the shortfalls. What then?
The best case scenario is to hope for a warm winter in which people need less energy as well as to have an overabundance of natural gas in storage so there won’t be any shortages. Even then, the price of natural gas for the neediest citizens will consume a much greater share of their fixed incomes: 15 percent compared to 3.4 percent for most folks, according to the National Energy Assistance Director’s Association.
“During tough economic times and with home heating and cooling prices on a steady incline, LIHEAP has never been more important for the protection of millions of struggling families,” says David McCurdy, chief executive of the American Gas Association, in an open letter to Congress.
LIHEAP provides seasonal help to roughly 8.9 million families – approximately 23 million people and the demand for increased assistance across the country continues to grow, according to the gas association. In 2008, 33.8 million households met LIHEAP’s eligibility requirements. Yet, there was only enough money in the program to serve 5.7 million households. To make matters worse, last year’s census data says that 15.1 percent of the nation – more than 46 million Americans – lives in poverty.
Now, President’s Obama’s 2012 budget would scale back LIHEAP funding from about $4.7 billion to $2.57 billion. Such a reduction would preclude 3.1 million families from receiving LIHEAP’s benefit, laments the National Energy Assistance Directors’ Association. The president’s nearly 50 percent cut in funding is countered by proposals in the U.S. Senate and U.S. House to reduce the program by 23 percent and 28 percent, respectively.
No-Win Situation
This is a no-win situation: The activists on one side are demanding cost-cutting while those on the other are saying it is high-time that the country’s wealthiest one percent pay a greater share of their income in taxes. If the coming winter proves brutal and natural gas demand spikes, images of freezing families will deluge the nightly newscast, which is hardly the intent of anyone. 
Can other sources of funds replace LIHEAP? While the difference can be defrayed by a cross-section of community groups in coordination with local utilities, that pool of money cannot make up for the entire shortfall. In addition, the energy assistance association says that states provide a minimal level of support, noting that the recession has eaten into their tax revenues and has made them even less capable of contributing more money.
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.
Each dollar put into LIHEAP generates $5.37 of economic activity, according to a 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 does not just assist those cold-weather regions but also those areas such as the Deep South that experience hot, humid conditions.
While utilities, states and citizen action groups are all chipping in to address the problem, some say that the biggest step the federal government can take is to promote energy efficiency and weatherization programs to insulate homes. Part of the money allocated to the LIHEAP goes toward such efforts that focus on reducing energy costs.
“In this time of high unemployment and economic uncertainty, LIHEAP is often the only thing that stands between a family’s choice to heat or eat,” says McCurdy with the gas association. “No member of Congress wants their constituents to be faced with that choice, so we ask them to act now and fund LIHEAP at $5.1 billion.”
EnergyBiz Insider has been been nominated in 2010 and 2011 for Best Online Column by Media Industry News, MIN. Ken Silverstein has also been named one of the Top Economics Journalists by Wall Street Economists.
Follow Ken on  www.twitter.com/ken_silverstein
energybizinsider@energycentral.com