Energy & Environment

Taking The Heat

States are ponying up millions to keep homes warm.
by | December 2005

If gasoline prices were a hot topic this fall, then this winter's buzz is likely to be about "the other" gas. Prices of natural gas are near record levels. That means that heating bills for many households will exceed last winter's by about $300, on average.

It's not just natural gas that's getting pricey. So are heating oil and propane, other fuels commonly used to keep homes warm. The high cost of heat may have very dangerous consequences. Low-income families, whose budgets are already pinched at the gas pump, may find themselves this winter deciding between heating and eating.

To avert a crisis, some states are spending unprecedented sums to help low-income residents pay their utility bills--in some cases going from no contribution to multimillion-dollar sums for state-run heating programs that supplement the federal low-income heating assistance program (LIHEAP). Connecticut put $24 million into its fund; New Mexico is contributing $23 million this year; Pennsylvania is considering adding $15 million. Ohio Governor Bob Taft released $75 million in unspent federal welfare dollars for heating help. "This is the first year we've seen this many states taking concrete action on this program," says Mark Wolfe, executive director of the National Energy Assistance Directors' Association. "The states seem to be saying that they're not going to wait for people to freeze."

If it's unusual for states to budget this much for heating aid, they may have to get used to it. Most economists believe that high energy prices are here to stay. The federal block grant to states for LIHEAP- -roughly $2 billion a year--hasn't changed much in 20 years. Congress is debating increasing the grant but is stalled on the question of how to pay for it. "The bottom line," Wolfe says, "is that the price of energy has gone up very quickly, but the program structure is still based on cheap energy."

In addition to funding increases, several states are changing their own rules to make sure residents get the help they need. Pennsylvania, for instance, increased its minimum LIHEAP benefit from $50 to $100. Indiana, Ohio and California have expanded eligibility for LIHEAP so that more households qualify. New Mexico Governor Bill Richardson is marketing the program in town hall meetings. The average LIHEAP benefit in New Mexico is $450, and Richardson wants to sign up 61,000 households to receive it--6,000 more than last year.

Like other states, New Mexico also toughened up rules preventing utilities from disconnecting customers for nonpayment. Shutoff protections may keep people from freezing to death. But some fear that by winter's end, some consumers will be left with a pile of outsized utility debt. "The second wave of this crisis will come in the spring, when a lot of winter shutoff protections expire," says Olivia Wein, a staff attorney with the National Consumer Law Center. "That's when the sticker shock will really set in--the arrearages will be phenomenal."

So, too, for states and localities themselves. In Connecticut, the one-two punch of higher gasoline prices for fleets and fuel for heating state buildings is expected to cost at least $24 million more than originally budgeted. "We're just like homeowners, looking at their bills and wondering how to make ends meet," says Rich Harris, a spokesman for Governor Jodi Rell. "The state is having the same conversation."


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