When bills are tight, families live in fear because they have to decide between paying rent on time, buying food, or paying their home energy bill. Low-income families across the country struggle to make these decisions every day.
But this year, high home energy costs are making it even harder for struggling families to stay on top of their bills. Home energy prices are now at their highest level in more than 10 years and in some cases are increasing at more than twice the rate of inflation.
Low-income families can get help from the Low Income Home Energy Assistance Program (LIHEAP), which is the primary federal program to help families pay their heating and cooling bills. In 2023, Congress provided about $6.1 billion to help about 6 million families pay to heat and cool their homes. However, LIHEAP funding is only sufficient to reach less than one out of five eligible households. With higher energy prices this winter, it comes as no surprise that applications for energy assistance have risen to their highest level since 2009. These numbers don’t even account for possible increases in applications this summer to help families pay for air-conditioning as they deal with rising temperatures due to climate change.
The way we pay for residential energy in this country is failing our most vulnerable families. We all need energy for our homes, but price fluctuations can make energy unaffordable for many. As energy prices increase, families fall further behind on their utility bills. The national total amount of money families are behind on their electric and gas bills is about $16.6 billion almost double the level prior to the beginning of the pandemic. Nearly 20.8 million households owe on average $791, up slightly from June 2022 when the total amount owed stood at about $16.3 billion and the average amount owed was about $783.
When families cannot afford the cost of home energy, they take drastic measures to stay connected to the energy grid. The U.S. Census Bureau’s most recent Household Pulse Survey reported that nearly 47 percent of families earning less than $50,000 reduced their spending on food or medicine at least once in the last year to pay their home energy bills, up from 46.6 percent the previous year.
And when those drastic measures are not enough, families face disconnection of utility services. An estimated 4.2 million households were disconnected in the first 10 months of 2022, an increase of 29 percent in electric and 76 percent in natural gas connections as compared to the same period in 2021. And for those using delivered fuels — heating oil and propane — dealers simply won’t deliver more fuel unless they receive payment up-front.
At first glance, energy poverty appears to be an intractable problem. However, there are solutions to ending this national disgrace and beginning to view access to affordable energy as a basic right. Help must be provided to families to increase the energy efficiency of their homes to reduce their overall usage, which would lower energy bills and protect families from price spikes due to rising energy prices and extreme weather conditions.
New York State recently announced a new Energy Affordability Program that would cap energy costs for families. The program would set a ceiling of 6 percent of a family’s income for electric bills and help them increase the efficiency of their home by adding insulation and upgrading to energy-efficient electric appliances. But the solution is not to provide a checkerboard of programs where consumers are protected in some states but not in others, but rather a national program that provides a clear measure of affordability across the country.
The Heating and Cooling Relief Act, reintroduced this year in Congress by Sen. Ed Markey (D-Mass.) and Rep. Jamaal Bowman (D-N.Y.), would provide a $40 billion annual appropriation for LIHEAP to help families pay their heating and cooling bills, provide a cap on total income of 3 percent and pay for comprehensive installation of energy efficiency measures to lower the overall amount of energy used by households.
Energy poverty can be eliminated in the United States. The current piecemeal approach of state-level efforts, limited energy efficiency resources, and a chronically underfunded federal bill assistance program will never be enough to make energy affordable for all Americans. We need a national solution that caps home energy costs at an affordable level, prevents shutoffs, and provides basic energy efficiency for all low-income households.
And while there will be a cost to providing affordable home energy for low income families, wouldn’t that be better than the current system that forces families to choose between food, medicine, and energy?
Mark Wolfe is an energy economist and serves as the executive director of the National Energy Assistance Directors’ Association (NEADA) and the Energy Programs Consortium. He specializes in energy, climate, housing, and related consumer finance issues. The opinions expressed in this article are his own.