The National Association of State Utility Consumer Advocates

Resolution 2005-05

HIGH WINTER ENERGY COSTS RESOLUTION 

WHEREAS the cost of home heating energy has always burdened low income households disproportionately compared with households of all other income levels; and

WHEREAS one of the most effective means of measuring this disparity is to evaluate the energy burden of a household by dividing the cost of home energy by the gross income of the same household to determine the percentage of income needed to meet energy costs; and

WHEREAS in 2005, the National Energy Assistance Directors Association (“NEADA”) determined that all low‑income households used, on average, 15% of their gross household income for energy costs (6% for heat alone), while all households used, on average, only 3% of their gross household income for energy costs (1% heat alone); and

WHEREAS in 2004, elderly households in receipt of Supplemental Security Income paid nearly 19% of their income for energy, and households in receipt of  Aid to Families with Dependent Children paid 26% of their income for energy; and

WHEREAS the Energy Information Administration (“EIA”) has forecast dramatic increases in the cost of energy which will have an immediate and deleterious short term effect on the already disproportionate energy burden on low‑income households; and

WHEREAS, based on EIA data from September 2005, the average family heating with oil could spend as much as $1,666 during the winter of 2005‑2006.  This would represent an increase of $403 over the costs for the winter of 2004‑2005 and an increase of $714 over the costs for the winter of 2003‑2004; and

WHEREAS the EIA anticipates that heating fuel expenditure increases from the winter of 2004 to the winter of 2005 are likely to average 73% for natural gas in the Midwest; 19% for electricity in the South; 31% for heating oil in the Northeast; and 41% for propane in the Midwest; and

WHEREAS, the Center on Budget and Policy Priorities (“CBPP”), an independent, bipartisan research institute, calculated (http://www.cbpp.org/10-6-05bud.htm) that the average low income household (income below the greater of 150% of the federal poverty guidelines or 60% of the state median income) will incur an average heating bill increase of $500 for the 2005‑2006 winter; and

WHEREAS the easily predictable outcome of the combination of the extreme energy burden currently facing low‑income households and the anticipated increase in home energy costs is the creation of a “perfect storm” which will result in an unparalleled challenge to the energy safety net below low‑income households; and

WHEREAS these increased costs for home energy during the winter of 2005‑2006 were predicated on the foreseeable actions in the marketplace based upon historically accurate and verifiable facts, factors, formulae and information; and

WHEREAS short‑term and long‑term effects of Hurricanes Katrina and Rita including the damage and destruction to the production, storage, transportation and infrastructure of the natural gas and crude oil industries, and the resulting escalation of home energy costs as a result of the depletion of reserves and the inability of the industries to quickly recover from the devastation remains to be calculated; and

WHEREAS the severe constraints on state and local government budgets already strain the ability of those  entities to reinforce the low income safety net; and

WHEREAS the nonprofit, faith‑based, and other community‑based organizations, secondarily charged with the task of assisting low‑income households with problems such as the imminent energy crisis are similarly constrained by limited resources and increasing energy costs; and

WHEREAS the Low Income Home Energy Assistance Program (“LIHEAP”) is a federally‑funded, state‑administered energy plan designed to provide funding to the states to assist low‑income households in meeting the costs of home energy; and

WHEREAS since the winter of 2001‑2002, the national appropriation for LIHEAP has wholly failed to match the pace of the increase in home heating costs; and

WHEREAS the anticipated funding for the 2005‑2006 LIHEAP Year fails to keep pace with inflation and would fail to be even minimally adequate to compensate for the anticipated spikes in home energy and home heating energy now predicted by the EIA; and

WHEREAS  in 2005, NEADA determined that LIHEAP funding between the 2001‑2002 and 2004‑2005 fiscal year increased by 21.4%, but  the share of a low‑income households’ heating expenditures met by the average LIHEAP grant fell from 49.4% to 25.2% for heating oil, from 52.3% to 33.4% for natural gas, and from 35.5% to 23.1% for propane; and

WHEREAS in 2005, NEADA determined that between 2001‑2002 and 2004‑2005 the price of oil for heating increased by $624, and the price of natural gas for heating increased by $352, and the price of propane for heating increased by $489, yet, the average LIHEAP grant increased by $3; and

WHEREAS, according to the EIA, while the average cost of home heating fuel for the coming winter may rise precipitously: heating oil by  98%, propane by 55%, and natural gas by 58%, the national appropriation for LIHEAP, since the winter of 2001‑2002, has risen by only about 20%; and

WHEREAS the proposed 2005‑2006 executive federal budget appropriation called for a decrease in funding of approximately $250 million with no emergency contingency funding; and

WHEREAS the House of Representatives Labor‑HHS‑Education Appropriations Committee has proposed FY 2006 LIHEAP funding at $2.006 billion in regular funding and no emergency contingency funding; and

WHEREAS the Senate Appropriations Committee has proposed FY 2006 LIHEAP funding at $1.8 billion  in regular funding and $300 million in emergency contingency funding; and

WHEREAS the CBPP calculates that, in order to maintain 2005‑2006 LIHEAP purchasing power, taking into consideration general inflation, at the same level as 2004‑2005 LIHEAP, the national appropriation should increase to $3.025 billion; and

WHEREAS the CBPP calculates that a mere 5% increase in the number of eligible applicants for LIHEAP assistance would require additional national 2005‑2006 LIHEAP funding in the amount of $150 million; and

WHEREAS the CBPP calculates that to hold beneficiaries of LIHEAP assistance harmless in the face of the entire expected price increase would require additional 2005‑2006 LIHEAP funding in the amount of $2.033 billion; and

WHEREAS the CBPP calculates that the total minimum federal appropriation required for the 2005‑2006 LIHEAP is $5.208 billion; and

WHEREAS LIHEAP remains a targeted block grant program with the built‑in flexibility and an established federal‑state partnership to effectively and efficiently deliver the funding necessary to ease the crisis on increasingly unaffordable energy costs for low‑income households; and

WHEREAS the current appropriations and proffered amendments clearly are insufficient to deal with the anticipated increases in home energy costs; now therefore be it

RESOLVED that NASUCA urges Congress to appropriate FY 2006 LIHEAP regular funding of at least  $5.208 billion, as recommended by CBPP, and to appropriate an additional $500 million for emergency contingency funding to assist low‑income households in meeting the exorbitant home energy costs anticipated for the winter of 2005‑2006; and

BE IT FURTHER RESOLVED that NASUCA authorizes its Standing Committees to develop specific positions and to take appropriate actions consistent with the terms of this resolution to secure its implementation, with the approval of the Executive Committee of NASUCA.  The Standing Committees or the Executive Committee shall notify the membership of any action taken to this resolution.

 

Submitted by:

Michael D. Chrysler, Chair, Consumer Protection Committee

November 16, 2005

Approved by NASUCA 91969