Washington, DC 20002
Iris J. Lav
Board of Directors
David de Ferranti, Chair
John R. Kramer, Vice Chair
Henry J. Aaron
Barbara B. Blum
Marian Wright Edelman
James O. Gibson
Beatrix Hamburg, M.D.
Richard P. Nathan
Robert D. Reischauer
Juan Sepulveda, Jr.
William Julius Wilson
STEEP SPIKE IN ENERGY COSTS INCREASES
The report includes data on the amount of funding each state will need in 2006 to keep LIHEAP recipients from paying more out-of-pocket for their heat this winter.
Projections issued by the Department of Energy indicate that home heating prices will average 47.5 percent more this winter than last winter. This is the steepest one-year increase in these costs since 1974, before LIHEAP was created. LIHEAP helps cover the cost of home heating and cooling bills for roughly 5 million very poor households, including many low-income elderly individuals.
“People who are poor enough to receive LIHEAP benefits, such as elderly widows living below the poverty line, are not in a position to absorb a big increase in home heating costs,” said Richard Kogan, a senior fellow at the nonpartisan think tank and co-author of the report, Out in the Cold. “If these households don’t receive more help paying their utility bills, many of them will face excruciating choices between heating their homes, paying the rent, having enough food to last through the month, and meeting other basic needs. Serious hardship is virtually certain to ensue.”
The choice of whether to “heat or eat” is a real one for many poor households. A recent study by researchers from Stanford University, the University of Chicago, the RAND Corporation, and UCLA found that when poor families’ heating bills go up during cold winter months, they reduce their spending on food by roughly the same amount as the increase in fuel expenditures.
Another recent study found that children in families that receive LIHEAP assistance are less likely to be underweight than children in families that are eligible for LIHEAP but do not receive it because of program funding limitations. (LIHEAP funding has never been sufficient to cover more than a fraction of the poor families eligible for assistance, and so is distributed by local officials on the basis of greatest need.)
$5.2 Billion Needed for 2006 to Protect Recipients from Higher Heating Bills
To protect households currently receiving LIHEAP assistance from
paying more for heat this winter and accommodate a small expected increase in
* This estimate assumes a five percent increase in LIHEAP participation for 2006. That estimate may be too conservative. LIHEAP participation has risen by an average of six percent annually since 2002, largely because increases in energy costs in those years led more eligible households to apply for the program. This year’s increase in energy costs is nearly three times as great as the average annual increase since 2002.
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The Center on Budget and Policy Priorities is a nonprofit, nonpartisan research organization and policy institute that conducts research and analysis on a range of government policies and programs. It is supported primarily by foundation grants.