Ken Silverstein EnergyBiz Insider Editor-in-Chief

Low income energy assistance doesn't get enough money to support all of those in need. Budget constraints and other pressing needs are almost always an impediment. That's why the solution must extend beyond government backing and into the hands of community action groups and utilities that are at the heart of the issue.

The primary mechanism to get relief to the poor and elderly is a state-and federally-funded program known as the Low Income Home Energy Assistance Program (LIHEAP). It assists households with incomes of up to 150 percent of the federal poverty level, providing assistance to either reconnect households or prevent imminent disconnection. Benefits are paid directly to the household's electric utility.

LIHEAP is funded for $1.9 billion for the current fiscal year with an additional $300 million in emergency funds. A bipartisan group of U.S. lawmakers are also considering an increase in the 2006 federal appropriation for LIHEAP of up to $4 billion. The spending bills for the 2006 budget year began on October 1.

"We are in the midst of a home energy crisis,'' says Carol Clements, chairperson of the National Fuels Fund Network. "In some cases energy prices have increased as much as 85 percent over the last five years, while funding for LIHEAP has remained level. Funding for LIHEAP must be increased if it is to remain an effective program." Fuel funds and other charities provided $108 million in support last year.

The program provides assistance to individuals who are having trouble paying their electric, natural gas or other energy bills. Homeowners, renters, roomers and subsidized housing tenants are all eligible. The cash-based system provides up to $300 in a direct payment to a utility while the crisis program is allocated for emergencies that include the reinstatement of service that has been shut off for nonpayment or the repairing of leaking pipes and broken furnaces.

To the extent that utilities can help address the problems, they will be reducing their own bad debt and collections expenses. Altogether, they provided $1.4 billion in the form of assistance and discounted rates to consumers last year. Chicago-based ComEd, for example, is providing $2 million to supplement LIHEAP funds available to about 269,000 of its customers, or about 8 percent of its residential customers

Persistent Shortfalls

The U.S. Energy Information Administration estimates that natural gas prices will rise by as much as 77 percent this winter in the Midwest and up to 33 percent in the Northeast. For the average family, winter heating costs for natural gas users could jump from $957 to $1,568.

In a letter to President Bush, the bi-partisan lawmakers looking to increase LIHEAP funding wrote that it is a safety net for millions of Americans who are paying a greater percentage of their budgets on utility bills. Between 1981 -- when the program was established -- and 2005, federal home energy assistance increased by 4 percent. That's far less than the recent spikes in home heating.

"Unfortunately, the amount of LIHEAP money that has been appropriated in the past is only enough to help about 15 percent, or 4 million of the 30 million households eligible for assistance," writes Sen. Jeff Bingaman of New Mexico, top Democrat on the Senate Energy Committee.

A sustainable energy burden is 6-8 percent of household income, say advocacy groups. The majority of utilities are actively working to address the issue. But the matter extends beyond them to consumers and other dedicated organizations. The federal government's resources are stretched thin while the states and the activists have key initiatives but the shortfall still persists.

Many utilities understand the need. Pacific Gas & Electric has a program that cuts electric and gas bills by 20 percent. Nicor Gas in Naperville, Ill., meantime, provides one-time grants to needy households. Similarly, Washington state-based Puget Sound Energy gives more than $6 million annually to help low-income customers.

KeySpan has given $3 million to help families in the New York area and New England while Entergy has also given the same amount for its southeast region. Sioux Falls, N.D.-based Northwestern Energy will chip in $1 million to help the disadvantaged pay for heating costs but it also wants oil and gas producers to do the same, given their unprecedented profits.

"Households with lower or fixed incomes spend a disproportionate share of their annual income on energy costs and only about half of those eligible consumers are getting grants available to them," said Lorde Nock, manager of Universal Services, which is a package of assistance programs that helps about 21,000 PECO customers in Southeastern Pennsylvania each year.

While utilities, states and communication 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 and save money. Some of the proposals now in Congress would do just that.

Still, the cost of energy is jumping with such rapidity that a growing number of low-income households now require assistance with their home heating bills. But constant demands on federal resources means broad cooperation is needed to solve the problem. While utilities and others have rallied to support the cause, the problem is becoming increasingly expansive.

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