Addressing the Cost of Home Heating for Working Families
This article series is sponsored by Consumers Energy and went through our normal editorial review process.
For more than a third of American earners, paying monthly bills is a challenge. For some – nearly a fifth of American residents – that struggle can include choosing which essential commodity to go without during peak usage periods: Food, medications or the electricity to power and heat their homes.
According to a 2016 report put out by the nonprofit Groundswell, the bottom 20 percent of the country’s earners commit almost 10 percent of their monthly earnings to paying their power bill. That can be a substantial hit to the pocketbook for struggling families or retired couples that have other costs like school, transportation and added medical expenses to factor into the monthly take-home pay.
Rising power rates also cost poor communities more than middle- or upper-income earners, Groundswell points out, because they usually can’t afford the newer homes on the market that use less power and are better insulated.
“Over the last decade alone, electricity expenditures as a proportion of low-income household budgets increased by a third, while falling for higher earners,” the authors state.
Data released this July by WalletHub shows that overall energy costs can pose a bigger problem for families, especially in homes that rely both on electricity and different fuel sources for power. For the average family, juggling those costs may include factoring all or part of the following: Electricity, heating fuel, natural gas (for cooking and heating). Average energy costs for running the home can run over $200 per month.
Heating Energy Assistance
Fortunately, there are a number of programs that are designed to help out low-income residents. But again, they vary from state to state in what they offer and the extent of relief they can provide.
The federally funded program Low Income Heating Energy Assistance Program (LIHEAP) provides some assistance for low-income families that are at risk of not being able to pay their energy bills. Conditions for eligibility are based on the earner’s income level, size of family, expenses and other factors. In many cases the program will pay to have the home checked for leaks and make recommendations, even if the resident doesn’t qualify for LIHEAP.
But there are often difficulties with qualifying for LIHEAP assistance. For one, states administer the federally funded program and set their own conditions for qualifying. Poorer states, or states that don’t have a large budget for social programs, may not have the funds or the developed programs that others provide.
And the qualification criteria can differ as well. In some cases qualifications require applicants to meet federal poverty guidelines (150 percent below the level set by the federal government); in other cases, the cutoff is more lenient, based on state average earnings.
For example, applicants in the state of Connecticut can qualify for assistance if they only meet 60 percent of the state’s median income. Homeowners can have up to $15,000 in liquid assets in the bank and still qualify. Renters qualify if at least 30 percent of their income goes to rent. Other types of assistance is available as well, such as covering energy bills that don’t relate to heating.
In Alaska, residents qualify if they are at least 150 percent below federal guidelines, have heating costs of at least $200 a month and meet other requirements set by the state and determined by the kind of domicile they are living in. Alaska’s LIHEAP program won’t cover fuel for cooking.
In some states, the federal LIHEAP program is supplemented by private organizations that either administer part of the LIHEAP benefits or provide other benefits through nonprofits and for-profit entities.
In Michigan, a variety of nonprofit and for-profit organizations help low-income families who are having problems paying for their heating bills. Residents can apply for assistance based on the utility services and area of residence. Veterans can also apply for assistance through local affiliated programs.
In Jackson County, Mich., the United Way administers a program for low-income customers of Consumers Energy. Through its CARE plan, qualifying families can receive up to 50 percent credit on their bill during the winter and 30 percent during the winter toward a two-year repayment plan. Residents can also access home improvement options designed to reduce heat loss.
Other organizations spread throughout the state, like The Heat and Warmth Fund (THAW) provide financial assistance, access and advocacy for low-income residents who can’t pay their energy bill or have other challenges.
Addressing America’s energy affordability challenges
Nonprofit energy assistance helps low-income earners overcome temporary challenges in paying their bills on a seasonal or yearly basis. But what is the real, long-term answer to America’s energy affordability issues?
The nonprofit Energy Efficiency for All (EEFA) suggests that to truly address the challenges that the country’s lowest earners face, energy efficiency must be affordable for all consumers. Energy-efficient homes that don’t require supplemental upgrades and energy sources that are affordable for today’s growing families must be part of the answer.
“Low-income households participating in energy efficiency programs report direct benefits that improve their quality of life,” write Ariel Drehobl and Lauren Ross in their report Lifting the High Energy Burden in America’s Largest Cities: How Energy Efficiency Can Improve Low Income and Underserved Communities.
Low-income utility programs that are tracked on a demographic basis do play an important role in addressing energy affordability issues. But so do clean energy initiatives and exploring new ways to deliver affordable programs. Ensuring that multi-family housing is available and energy efficient could “cut the sector’s electricity usage by as much as 26 percent” suggest the writers, who extracted data from several states to determine the impact that energy efficiency would have on multi-family housing
But better power options also play a role in reducing energy costs, the writers argue. Their data is based on the studies conducted by the Obama administration in formatting the Clean Energy Plan. States that support energy solutions that take the place of coal-produced energy, such programs that include solar, natural gas and wind are cheaper and more efficient and offer long-term sustainable energy that translates to better economic outcomes for low-income families and more energy efficiency for the nation.