U.S. May Hike Aid for Poor’s Utilities

Members of Congress, feeling heat from constituents over rising energy costs, are preparing to approve a big budget increase for a once-obscure federal program that helps the poor pay their utility bills.

California, where an estimated 2.1 million low-income households are eligible for assistance, would receive a proportionately larger share of the money than ever before.

The House may vote as early as this week to appropriate $300 million in current-year emergency funding--twice as much as requested by President Bush--for the Low-Income Home Energy Assistance Program. The Senate is talking about doubling the figure again, to $600 million.

Even bigger increases appear likely for 2002. The president is seeking $1.7 billion, up from $1.4 billion this year. In the Senate, there’s talk of a $3.4-billion budget.

“There’s been a change in mood,” said Rep. Bernard Sanders, a Vermont independent who has joined Democrat Barbara Lee of Oakland and Republican John M. McHugh of New York in a campaign to boost the emergency funding bill to $800 million. “People in California, among others, are now concerned about this issue in a way that had not been the case. . . . Plus the fact that oil prices are going up all over this country.”

Passage of the emergency appropriation may be Congress’ first direct response to the energy price spikes and supply shortages that have bedeviled California and other parts of the country.

The assistance program, which arose from the 1970s energy crises, works directly with utilities to help lower low-income households’ air-conditioning and heating bills and avoid utility cutoffs for nonpayment.

To be eligible for this assistance in California, a family of four must earn less than $33,125 a year. Priority is given to low-income families whose fuel bills consume a large proportion of their incomes, and to the elderly, the disabled and families with young children. The average benefit is $326 per year.

California officials also use about a fourth of the program funds to offer free home weatherization services to low-income families, as well as providing more energy-efficient appliances.

Supporters acknowledge that LIHEAP’s surging popularity represents a remarkable comeback: Several years ago, lawmakers were talking about killing the program.

One Senate Democrat, John D. “Jay” Rockefeller IV of West Virginia, even wants to expand the concept by creating a federal program to help poor people buy gasoline for long drives to work, school or medical appointments.

Rockefeller has proposed initial funding of $500 million to provide gas subsidies of $25 to $75 a month to low-income workers who must commute more than 30 miles a day or 150 miles a week.

While Rockefeller’s gasoline subsidy appears to be a longshot for now, more money is clearly headed toward LIHEAP.

“We finally have the attention of the administration on the need for some additional funds,” said Sen. Jeff Bingaman of New Mexico, the new Democratic chairman of the Senate Energy Committee. Bingaman wants to disentangle the assistance program from the array of other energy policy issues that Congress will be debating this year, so it can boost funding sooner rather than later.

Sen. John F. Kerry (D-Mass.) said there is “far greater support” for a funding increase now than ever before. But he cautioned that more work lies ahead “with the fiscal straitjacket imposed by President Bush’s budget-busting tax bill.”

The surge of support for the program is broad and bipartisan, even though the program offers nothing to more affluent Americans who also would like relief from higher energy expenses.

That sentiment appears to be particularly strong in California, where big rate hikes approved in response to the power crisis are showing up in electricity bills. Southern California Edison’s residential customers, for example, will pay 21% more on average, with some increases topping 40%.

California regulators provided a rate-hike exemption to low-income households that sign up for a state-approved discount program, but so far only about 60% of those qualified have done so. And the exemptions have no bearing on high natural gas prices, which increased bills in Southern California by an average of 60% last winter.

An Inexpensive Way to Show Action on Crisis

For members of Congress who find themselves on the hot seat, the federal program is a comparatively cheap way to counter the perception that they are doing little to help people cope with the energy crisis. Those eligible for assistance include a large number of senior citizens, an important political constituency for Republicans and Democrats alike. And the program is endorsed by utility companies because it helps people pay their heating and cooling bills.

Still, some California Democrats assert that more money for low-income energy assistance is no substitute for broad price controls on wholesale electricity, which the Bush administration and many Republican lawmakers have opposed.

“The problem is if the LIHEAP money is used to pay energy rates that are 3,000% higher than they should be, the [money] isn’t going to go very far,” said Rep. Jane Harman (D-Redondo Beach).

Nationally, 29 million households are eligible for this assistance. But only about 5 million will receive subsidies this year, said Mark Wolfe, executive director of the National Energy Assistance Directors’ Assn. Many eligible households never apply for assistance, and some states run out of money long before they run out of potential recipients.

In California, fewer than 10% of the 2.1 million eligible households will receive program assistance unless funding is increased, state officials say.

From the late 1970s through most of the 1990s, the share of the average family budget devoted to energy gradually declined. Then, suddenly, the trend reversed: From 1998 through 2000, average family spending on energy rose from 3.8% to 4.8% of after-tax income, according to federal officials.

In California, state officials assisted as many families during the first five months of this year as they did in all of 2000.

Although the program has enjoyed bipartisan support, it received a political boost when Sen. James M. Jeffords of Vermont abandoned the Republican Party and became an independent, handing the Democrats control of the Senate and Bingaman the chairmanship of the energy committee.

Sen. Frank H. Murkowski (R-Alaska), the former energy committee chairman, already had called for increasing its annual budget from $1.4 billion this year to $3 billion next year. But Bingaman immediately raised the stakes, calling for a $3.4-billion budget and identifying the assistance program as a priority.

Supporters are attempting to build support for the program outside the Northeast and Midwest by showing lawmakers from other regions that their constituents stand to benefit if funding is increased.

Once funding reaches $2 billion, a new outlay formula will take into account population changes since 1980 and give more consideration to hot weather.

State’s Share Would More Than Triple

If Congress approves a $3.4-billion budget, California’s share would jump from $63 million to $201 million, said Jim Benfield, executive director of the Campaign for Home Energy Assistance. The funding formula gives the state 4.6% of the available assistance, even though the state is home to 14.6% of the nation’s poor and pays among the highest natural gas prices in the country.

“It seems like the program is in play more than ever before,” said Wolfe, of the National Energy Assistance Directors’ Assn. “What they’re talking about now is taking LIHEAP from a regional program that primarily serves the Northeast and Midwest and making it into a national program. It’s because caseloads are increasing.”

Although the funding increases under consideration could be affected by growing concern about the possibility of future budget shortfalls, there’s no question that the assistance program has come a long way: Several years ago, there was talk in Congress of killing it.

“No longer are we debating the survival of the program,” said Dana Johnson, deputy chief of staff for McHugh. “Now it’s to make sure there are adequate funds.”

And new sources of revenue are being discussed. The administration’s comprehensive energy plan calls for diverting to the assistance program an unspecified portion of government royalties from wells drilled on federal land if energy prices rise beyond a certain level.

But some critics worry that linking funding to new drilling on public land could pit environmentalists against advocates for the poor.

For more information about California’s LIHEAP program, phone (800) 433-4327 or check the state’s Web site:

https://www.csd.ca.gov/LIHEAP.htm