How a global energy crisis could affect the US

Mark Wolfe is an energy economist and serves as the executive director of the National Energy Assistance Directors’ Association (NEADA), representing the state directors of the Low Income Home Energy Assistance Program. He specializes in energy and housing affordability and related finance issues. The opinions expressed in this commentary are his own.

Energy is an essential component of our day-to-day lives. We use it to cook our food, stay warm in the winter and cool our homes in the summer. But home energy prices have risen during the pandemic while more people are struggling to just get by. For too long, lower-income American families have been forced to choose between paying their home energy bill and paying for food, medicine and other essentials.

That’s hopefully about to change. On Thursday, Senator Ed Markey and Rep. Jamaal Bowman introduced the Heating and Cooling Relief Act, with the specific purpose of ending energy poverty in this country. The bill would significantly increase funding for the government’s Low Income Home Energy Assistance Program (LIHEAP). LIHEAP, which I represent, helps low- and moderate-income families pay their home energy bills. Currently, LIHEAP can only reach between about 16% and 18% of eligible families due to underfunding.

Other approaches have helped families pay their energy bills, but they have either stalled or have been severely underfunded. The enhanced child tax credit provides monthly payments to families to help them raise their children, but it expired at the end of 2021. The program had been extremely successful. In fact, an analysis of Census Bureau data last year by the Center on Budget and Policy Priorities found that 91% of families with incomes of less than $35,000 used their funds for basic expenses, including utility bills. A proposal in the Build Back Better bill would extend the credit for another year, but that bill has been stalled in the Senate.

Outstanding energy bill debts remain at very high levels. For example, in California, families are overdue on about $1.9 billion in utilities bills. In New York, it’s $1.3 billion, in Massachusetts it’s $630 million and in Georgia it’s $79 million. Many of the families will have to enter into potentially onerous repayment plans, and those who cannot repay their utility debts will be faced with power shutoffs.
The Markey/Bowman bill would directly address the utility bill payment crises by significantly increasing the authorized annual spending level for LIHEAP from the current appropriation level of about $3.8 billion to $40 billion. It would also ensure that no eligible family of four would pay more than 3% of their income on home energy (low-income families typically spend about 8.6% of their household income on home energy, compared to just 3% for higher-income households).

It would also expand the program to assist moderate-income families by raising the income eligibility ceiling from 150% of poverty level (or 60% of state median income) to 250% of poverty level (or 80% of state median income).
What’s more, the bill would provide emergency funds to help these families pay higher energy bills due to increased air-conditioning needs during periods of extreme heat. The need for this type of assistance is likely to increase, given that, according to the UN Intergovernmental Panel on Climate Change, heat waves are five times more likely to occur with the current state of climate change.

The bill would also allow states to use their grants to weatherize about one million low- and moderate-income units each year. In order to meet national climate goals, this would require, where possible, that program funds be used to purchase appliances and heating and cooling systems that would run on electricity produced from renewable energy sources.
Passing the Markey/Bowman bill will be a major step in taking this difficult burden off the backs of millions of low- and moderate-income families. Congress should pass this bill and find the funds to pay for it. It’s long overdue.
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