May 26, 2016

How Much Should You Spend On Energy? Answering Your Questions

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Right now at Inside Energy, we’re taking a close look at the energy assistance programs that help low-income families pay their utility bills, keep warm in the winter and keep cool in the summer. In the first of the series, Dan Boyce reports on the burden that energy bills can create for the poor.

As Dan was reporting his story, we asked you, our fabulous audience, to help us with the direction of our investigations. We asked you to submit questions about energy assistance and the program designed to provide it. We got several great questions – so great, in fact, that we decided to answer them all.

But first, a bonus: We help you find out how much of your income you spend on energy.

To get a sense of how your spending on energy compares with those living in poverty, give our calculator a try.

You asked: What types of bills get paid? How do amounts vary across states?

Short answer: Families across the country can get federal funding for heating, cooling, emergencies, or making their homes more efficient. In winter of 2015/2016, almost $3.4 billion was distributed nationally, ranging from about $5.6 million in Hawaii to about $381 million in New York.

The main source of energy assistance is a federal program, known as LIHEAP (Low Income Housing Energy Assistance Program). The Administration for Children and Families distributes LIHEAP funds to states, which must decide each year how to distribute the funds. Generally, states offer a mix of heating assistance, cooling assistance, emergency or crisis funding, and weatherization assistance (funds to improve the energy efficiency of a home or apartment). States can spend up to 10 percent on administrative costs and roll up to 10 percent of their allocation over to the following year.

States can set their own eligibility requirements for qualifying for LIHEAP, and the federal guideline sets a base eligibility requirement of income lower than 150 percent of the federal poverty line, or 60 percent of a state’s median income. States can’t set the eligibility requirement to be lower than 110 percent of the federal poverty line.

Each year states are required to submit plans for how they’ll spend and administer their LIHEAP funds. Here’s an example from North Dakota. Below is a chart that shows how each state allocated its portion of LIHEAP funds for the winter of 2015 and summer of 2016.

How states divided up their shares of federal LIHEAP funding

Get the data: CSV | XLS | Google Sheets | Source and notes: Github

You asked: What is being done to provide conservation for these living quarters? Are we literally ‘throwing $ out the window’ rather than fixing it?

Short answer: The federal government makes funds available for states to distribute specifically for improving low-income households’ energy efficiency. So, we are fixing it – but more families still need assistance than receive it.

As we showed above, LIHEAP funds DO go to improving the energy efficiency of homes, through states’ allocations to weatherization. It’s true, though, that the percentages are usually small, and the kinds of improvements that improve a building’s efficiency are expensive. The Department of Energy has its own Weatherization Assistance Program, or WAP, that sends additional funds to states for weatherizing the homes of low-income families. And some state-level programs make efficiency improvements using donated funds.

Still, according to Mark Wolfe, executive director of the National Energy Assistance Directors’ Association, there just isn’t enough funding available right now to meet the total level of need in the country. Given that federal LIHEAP funding has been flat the last few years, that’s not likely to change soon.

We also put the second part of the question to Wolfe. Are we wasting money by paying bills for potentially energy inefficient homes?

“We’re not throwing money away. Bills have to be paid,” Wolfe said. “It’s better than having the person’s power shut off.”

He pointed out that the level of need is huge. As Inside Energy’s Dan Boyce reported, the Congressional Research Service estimates that only 22 percent of people eligible for LIHEAP receive it. According to the National Energy Assistance Directors’ Association, nearly 30 percent of all households in the country are eligible, based on the federal guidelines (though with states’ specifications, that number could be lower). NEADA also reports that in fiscal year 2014, more than 72 percent of LIHEAP funding went to households with people over 60, under 5 and living with disabilities.

You asked: How much money is really contributed in locations where one can voluntarily contribute by checking a box on their monthly utility bill?

Short answer: It depends on where you live.

This question came from a listener in Tulsa, Oklahoma, whose utility company is Public Service Company of Oklahoma. The company told us that its donation program, which you can contribute to by designating an amount either on your monthly paper bill or using online and automatic bill payments, raises about $80,000 each year for the “Light A Life” program. That includes a corporate donation from the utility, and other community fundraising. Light A Life is administered by The Salvation Army of Oklahoma, but PSO separately pays the administrative costs of the program. That means that all donated funds go to assisting families.

Various programs of these types exist across the country. In Colorado, Energy Outreach Colorado provides the option to add a donation to your monthly bill. EOC distributes Colorado’s federal energy assistance funds, in addition to the money donated on bills and through various other channels. EOC’s annual report for 2015 shows that it collected about $1.76 million in donations, and that 5 percent of its overall revenue goes to administrative costs.

More questions about energy assistance, or anything else? Ask us below!