[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
LOW INCOME HOME ENERGY ASSISTANCE PROGRAM: OVERVIEW AND CURRENT ISSUES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTHY
FAMILIES AND COMMUNITIES
COMMITTEE ON
EDUCATION AND LABOR
U.S. House of Representatives
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, NOVEMBER 13, 2007
__________
Serial No. 110-72
__________
Printed for the use of the Committee on Education and Labor
Available on the Internet:
http://www.gpoaccess.gov/congress/house/education/index.html
----------
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COMMITTEE ON EDUCATION AND LABOR
GEORGE MILLER, California, Chairman
Dale E. Kildee, Michigan, Vice Howard P. ``Buck'' McKeon,
Chairman California,
Donald M. Payne, New Jersey Ranking Minority Member
Robert E. Andrews, New Jersey Thomas E. Petri, Wisconsin
Robert C. ``Bobby'' Scott, Virginia Peter Hoekstra, Michigan
Lynn C. Woolsey, California Michael N. Castle, Delaware
Ruben Hinojosa, Texas Mark E. Souder, Indiana
Carolyn McCarthy, New York Vernon J. Ehlers, Michigan
John F. Tierney, Massachusetts Judy Biggert, Illinois
Dennis J. Kucinich, Ohio Todd Russell Platts, Pennsylvania
David Wu, Oregon Ric Keller, Florida
Rush D. Holt, New Jersey Joe Wilson, South Carolina
Susan A. Davis, California John Kline, Minnesota
Danny K. Davis, Illinois Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona Kenny Marchant, Texas
Timothy H. Bishop, New York Tom Price, Georgia
Linda T. Sanchez, California Luis G. Fortuno, Puerto Rico
John P. Sarbanes, Maryland Charles W. Boustany, Jr.,
Joe Sestak, Pennsylvania Louisiana
David Loebsack, Iowa Virginia Foxx, North Carolina
Mazie Hirono, Hawaii John R. ``Randy'' Kuhl, Jr., New
Jason Altmire, Pennsylvania York
John A. Yarmuth, Kentucky Rob Bishop, Utah
Phil Hare, Illinois David Davis, Tennessee
Yvette D. Clarke, New York Timothy Walberg, Michigan
Joe Courtney, Connecticut Dean Heller, Nevada
Carol Shea-Porter, New Hampshire
Mark Zuckerman, Staff Director
Vic Klatt, Minority Staff Director
------
SUBCOMMITTEE ON HEALTHY FAMILIES AND COMMUNITIES
CAROLYN McCARTHY, New York, Chairwoman
Yvette D. Clarke, New York Todd Russell Platts, Pennsylvania,
Carol Shea-Porter, New Hampshire Ranking Minority Member
Dennis J. Kucinich, Ohio Howard P. ``Buck'' McKeon,
Raul M. Grijalva, Arizona California
John P. Sarbanes, Maryland Kenny Marchant, Texas
Jason Altmire, Pennsylvania Luis G. Fortuno, Puerto Rico
John A. Yarmuth, Kentucky David Davis, Tennessee
Dean Heller, Nevada
C O N T E N T S
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Page
Hearing held on November 13, 2007................................ 1
Statement of Members:
McCarthy, Hon. Carolyn, Chairwoman, Subcommittee on Healthy
Families and Communities, Committee on Education and Labor. 1
Prepared statement of.................................... 3
Letter from Nassau County Department of Senior Citizens
Affairs, Nov. 2007..................................... 79
Platts, Hon. Todd Russell, Senior Republican Member,
Subcommittee on Healthy Families and Communities, Committee
on Education and Labor..................................... 3
Prepared statement of.................................... 4
Statement of Witnesses:
Barlow, Linda, vice-president of community alternative
programs, Education and Assistance Corp.................... 34
Prepared statement of.................................... 36
Caruso, Guy, Administrator, Energy Information
Administration, U.S. Department of Energy.................. 6
Prepared statement of.................................... 8
Manning, David, executive vice president, U.S. external
affairs, National Grid, on behalf of the American Gas
Association................................................ 42
Prepared statement of.................................... 43
AGA Energy Analysis, Sept. 26, 2007...................... 48
Swanson, Lawrence A., executive director, ACTION-Housing Inc. 38
Prepared statement of.................................... 39
Wolfe, Mark, executive director, National Energy Assistance
Directors Association...................................... 18
Prepared statement of.................................... 22
LOW INCOME HOME ENERGY ASSISTANCE PROGRAM: OVERVIEW AND CURRENT ISSUES
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Tuesday, November 13, 2007
U.S. House of Representatives
Subcommittee on Healthy Families and Communities
Committee on Education and Labor
Washington, DC
----------
The subcommittee met, pursuant to call, at 3:05 p.m., in
room 2175, Rayburn House Office Building, Hon. Carolyn McCarthy
[chairwoman of the subcommittee] presiding.
Present: Representatives McCarthy, Clarke, Sarbanes,
Platts, and McKeon.
Staff present: Tylease Alli, Hearing Clerk; Alfred Amato,
Legislative Fellow for Education; Denise Forte, Director of
Education Policy; Lamont Ivey, Staff Assistant, Education;
Deborah Koolbeck, Policy Advisor for Subcommittee on Healthy
Families and Communities; Danielle Lee, Press-Outreach
Assistant; Joe Novotny, Chief Clerk; Margaret Young, Staff
Assistant, Education; Chad Miller, Minority Professional Staff;
Susan Ross, Minority Director of Education and Human Resources
Policy; and Linda Stevens, Minority Chief Clerk/Assistant to
the General Counsel.
Chairwoman McCarthy [presiding]. A quorum is present. The
hearing of the subcommittee will now come to order.
Pursuant to Committee Rule 12(a), any member may submit an
opening statement in writing which will be made part of the
permanent record.
Before we begin, I would like everyone to take a moment to
ensure that your cell phones and BlackBerrys are off. My
BlackBerry is off. Last time, I did not do it.
I now recognize myself followed by the ranking member, Buck
McKeon from California, for his opening statement.
I want to thank everyone here for coming.
We will be discussing a very serious issue facing our low-
income families. With energy costs consistently on the rise,
more and more families must make the tough decision on whether
to heat their homes or put food on the table.
This morning, I met with a group from Island Harvest, which
feeds our poor on the island. I know everybody thinks Long
Islanders are very wealthy people, but we have a large
population of homeless, and besides our veterans, we have more
and more people who are homeless today.
I think that concerns me the most, is the children. If they
cannot afford to have heat in their homes, that means they most
likely do not have food on their plates, and I think that is
something, speaking as a nurse--no heat, no food--we are going
to end up seeing these children and our elderly and our
disabled in hospitals, which is going to end up costing more
money. This is a decision that no one should ever be forced to
make.
Unfortunately, heating costs will only increase as we enter
into the winter months. Oil is trading at nearly $100 per
barrel, even though in the last couple of days we have seen it
come down, but it is fluctuating. And the prices of other
heating sources, such as natural gas, propane and electricity,
have all increased by record number, according to the Energy
Information Administration. These increased costs make it
extremely difficult for low-income families to heat their
homes, placing their families and loved ones in harm's way.
That is why the federal government created the Low Income
Home Energy Assistance Program, or LIHEAP. This great program
has been helping low-income families heat their homes since
1981. Currently, over 5 million households receive LIHEAP
assistance. That is people that are receiving the assistance.
Those that do not even apply are probably making the numbers
even larger.
Just last week, the House passed language in the Labor-HHS
appropriations bill to provide $2.4 billion for the LIHEAP
program. Unfortunately, we saw President Bush veto this vital
legislation just today, placing the health and wellbeing of
millions of families at risk this winter.
Studies have shown that the energy burden on low-income
families is much higher than wealthier families. According to
the American Gas Association and the Department of Health and
Human Services, low-income families spend nearly 20 percent of
their income on heating and cooling costs, compared to 7
percent for standard households. It is clear our nation's low-
income families spend a much greater portion of their income on
heating and cooling costs, and they deserve and need assistance
from the federal government.
There are things that can be done to reduce the monthly
energy bills at home. To be very honest with you, this morning,
before I flew down here, I pulled out every single plug in my
house--every single plug. I turn the TVs off. I turn my
computer off. I pull everything out. And the house right now is
set at 54 degrees. And let us hope my pipes do not burst.
But I have been doing this for a number of years. Being
that I am not there for 5 days a week, I figure I can cut down
on energy just doing my small part. But I am not there. What
happens to the families that are living there and have the high
costs?
I also check to make sure I have not left any lights on
that are not being used and turn my heat off when I am not at
home. And I guess I grew up--you know, my mom and dad went
through the depression years--and when you walk through a room,
you turn the light off. I was taught that as a child. I think a
lot of people have forgotten that.
And we also must also work to develop clean and renewable
and cost-efficient fuel to put an end to the energy crunch in
this nation.
We will hear from a panel of experts today who will offer
their views on the LIHEAP program and provide this subcommittee
with ideas and suggestions to improve the delivery of this
program.
I now want to yield to Mr. Platts from Pennsylvania.
[The statement of Mrs. McCarthy follows:]
Prepared Statement of Hon. Carolyn McCarthy, Chairwoman, Subcommittee
on Healthy Families and Communities
Thank you all for coming today. We will be discussing a very
serious issue facing our low income families.
With energy costs consistently on the rise, more and more families
must make the tough decision whether to heat their homes, or put food
on the table.
That is a decision no one should ever be forced to make.
Unfortunately, heating costs will only increase as we enter into
the winter months.
Oil is trading at nearly one hundred dollars per barrel.
And the prices of other heating sources, such as natural gas,
propane and electricity have all increased by record number, according
to the Energy Information Administration.
These increased costs make it extremely difficult for low income
families to heat their homes, placing their families and loved one in
harms way.
That is why the Federal government created the Low Income Home
Energy Assistance Program or LIHEAP.
This great program has been helping low income families heat their
homes since 1981.
Currently, over five million households receive LIHEAP assistance.
Just last week, the House passed language in the Labor--HHS
Appropriations bill to provide 2.4 billion dollars for the LIHEAP
program.
Unfortunately, President Bush vetoed this vital legislation just
today, placing the health and well being of millions of families at
risk this winter.
Studies have shown that the energy burden of low income families is
much higher than wealthier families.
According to the American Gas Association and the Department of
Health and Human Services, low income families spend nearly twenty
percent of their income on heating and cooling costs, compared to seven
percent for standard households.
It is clear our nation's low income families spend a much greater
portion of their income on heating and cooling costs, and they deserve
and need assistance from the Federal government.
There are things that can be done to reduce the monthly energy
bills at home.
I make sure to unplug my appliances at my home in New York before I
travel to Washington each week.
I also check to make sure I have not left lights on that are not
being used, and turn my heat off when I am not at home.
There are many things that can be done to reduce home heating
costs, and this Subcommittee is committed to improving the LIHEAP
program.
But we must also work to development clean, renewable and cost
efficient fuel to put an end to the energy crunch in this nation.
We will hear from a panel of experts today who will offer their
views of the LIHEAP program, and provide this Subcommittee with ideas
and suggestions to improve the delivery of this proven program.
______
Mr. Platts. We are playing musical chairs over here, Madam
Chair.
Thank you. I am delighted to join with you and our
witnesses here today and will tell you, as a parent of a third-
grader and fifth-grader, we parents are still out there trying
to get our kids to turn those lights out as they leave the
rooms and go to another part of the house or go out to play.
Good afternoon. I am delighted to be here. I apologize for
my late arrival coming right from my district, but I am
delighted to be part of this hearing.
And, Madam Chair, I want to thank you for hosting this very
important hearing on a topic that is critically important to,
as you stated, millions of our citizens and their families
across this country.
I appreciate everyone's interest in this topic, and coming
from a northeastern state, Pennsylvania, the winter months
approaching certainly are trying times for a lot of our
citizens. Hundreds of thousands of Pennsylvanians this year,
along with the more than 5 million you referenced across this
country, will look to LIHEAP for assistance as we go into the
winter months.
And I can tell you in my district, as a Congressman and
previously as a state representative, the LIHEAP program is one
that I certainly have been very aware of and often engaged in
with citizens on trying to make sure that they knew of this
important program and were able to acquire assistance from it.
While I am certainly grateful for all of our witnesses and
want to thank each and every one of you for being here, I, as a
Pennsylvanian, am especially looking forward to, Mr. Swanson,
your testimony and your work back in Pennsylvania, my home
state.
The rising costs of energy, as was referenced by the Chair,
especially with the price of oil where it is today, is more and
more challenging for so many families across the country, and
while I believe it is vitally important that we rein in energy
costs and decrease our consumption of foreign energy, we must
not forget these citizens who are oftentimes having to choose
between heating--or in summer in the southern states, cooling--
their homes and putting food on the table or meeting other
necessary expenses.
And I think that is why this hearing is so important, and
as great a nation, a wealthy nation, as we are, we should not
have citizens having to make those very difficult decisions for
themselves or their families.
With the LIHEAP program up for reauthorization this year, I
certainly stand ready to work with you, Madam Chair, and with
our colleagues on both sides of the aisle to improve this
critically important program, and the testimonies we are going
to hear today I know will help further educate us and further
this effort and this cause of making sure we do right by all of
our fellow citizens.
So, with that, I yield back, and I look forward to our
testimonies.
Thank you, Madam Chair.
[The statement of Mr. Platts follows:]
Prepared Statement of Hon. Todd Russell Platts, Ranking Member,
Subcommittee on Healthy Families and Communities
Good afternoon. Welcome to this hearing on the Low-Income Home
Energy Assistance Program (LIHEAP). I appreciate and share the
Chairwoman's interest in this important issue. With the winter months
approaching, this hearing is especially timely.
Hundreds of thousands of low-income Pennsylvanians are able to take
advantage of LIHEAP assistance during the winter months. I hear
regularly from constituents regarding the important role which this
program plays in their lives. I look forward to hearing from Mr.
Swanson regarding his personal experience working with the LIHEAP
program in Pennsylvania.
The rising cost of energy has become increasingly burdensome to
individuals and businesses alike. While I believe that it is vitally
important that we reign in energy costs and decrease our consumption of
foreign energy, we must not forgot those citizens who must choose
between heating or cooling their homes during times of severe
temperatures or buying groceries for their families.
The LIHEAP program is up for reauthorization this year. I stand
ready to work with Chairwoman McCarthy to improve this important
program. The testimonies of the distinguished panel before us today
will greatly enhance our understanding of the issues surrounding the
program and help us to focus our efforts where they are most needed.
Thank you to all of the panelists for joining us today. With that,
I yield back to the Chairwoman.
______
Chairwoman McCarthy. Thank you. Thank you, Mr. Platts.
I know that there are only a few of us here. For the
Democrats, we have a caucus off the Hill, so a lot of our
colleagues are not here, and a lot of people are traveling from
the West Coast. We do not have votes until 6:30, so a lot of
people do not get here until much later in the afternoon.
Without objection, all members will have 14 days to submit
additional materials or questions for the hearing record.
Today, we will hear from a panel of witnesses, and I do
appreciate you all being here. Your testimonies will proceed in
the order of your introduction.
Our first witness is Hon. Guy Caruso, the administrator for
the U.S. Department of Energy Information Administration, known
as EIA. The EIA is the energy within the DOE, the Department of
Energy, which will provide policy independent data, forecasts
and analysis regarding energy. Mr. Caruso has more than 30
years experience in the economic study of energy, with
particular emphasis on topics related to energy markets, policy
and security. Today, Mr. Caruso will share with us the EIA's
short-term energy forecast and why oil prices are so high.
We look forward to your presentation and interpretations.
Next, we will hear from Mark Wolfe, the executive director
of the National Energy Assistance Directors' Association. This
association represents the state directors of LIHEAP programs.
Prior to his current position, Mr. Wolfe has served at the U.S.
Treasury as well as at our own Congressional Research Service.
Today, Mr. Wolfe will present an overview of the LIHEAP program
and discuss the current state of affairs, given the energy
forecast that Mr. Caruso will share with us. We will look
forward to hearing what states are doing to prepare for the
winter and following summer in regard to the LIHEAP program.
Our next witness will focus on the running of a LIHEAP
program and give us some more on-the-ground perspective. Ms.
Linda Barlow is the vice president of community-based
alternatives of the Education & Assistance Corporation. The EAC
oversees the LIHEAP program in Nassau County of Long Island in
my district, and I was just down in their offices about 2 weeks
ago. In addition to supervising the LIHEAP program, Ms. Barlow
is a published author and serves as a consultant and trainer
for various organizations. I look forward to hearing about the
challenges and successes of administering LIHEAP at home.
Our next witness is Mr. Lawrence Swanson. He is the
director of ACTION-Housing, Inc., of Pittsburgh, Pennsylvania.
ACTION-Housing empowers people to build more secure and self-
sufficient lives through the visions of decent and affordable
housing, essential support services and asset building programs
and education and employment opportunities. Mr. Swanson has
been at ACTION-Housing since 1979.
Our final witness today is Mr. David Manning. Mr. Manning
is the executive vice president of U.S. external affairs for
National Grid and Key Span, a utility company which is part of
the American Gas Association. Mr. Manning will testify on the
AGA's recent report, the increased burden of energy costs on
low-income consumers, and the role that utilities can play in
helping our nation's low-income individuals and families
through this winter and summer to follow.
Given the energy cost forecast, I want to thank each and
every one of you for coming. Each one of us on this committee
is passionate about these issues. This comes through our
jurisdiction, and I have to say that other hearings that we
have had, we have had great results on trying to push through
reauthorization on issues because of people like yourselves,
you know, traveling and coming in and talking to us.
So, first, we are not appropriating LIHEAP at its maximum
authorized levels, and only 14 percent of those eligible
receive assistance. As funds are consumed this winter, it is
unclear how LIHEAP can continue to be of assistance to those in
need in the summer months. I look forward to your testimonies
and the work ahead of us.
For those of you who have not testified before in front of
us, in front of you, you have a lighting system. It will turn
on green as you start talking. When it is the yellow light, you
have 1 minute to finish up, and then red, we really ask you to
wind up. We are not going to cut you off as soon as it turns
red, but we appreciate it if you could follow through with
that.
And if you could do a favor, when you are speaking, turn on
your microphone so that everybody here in the audience can also
hear you.
We will now hear from our first witness, the honorable Guy
Caruso.
Mr. Caruso?
STATEMENT OF GUY CARUSO, ADMINISTRATOR, ENERGY INFORMATION
ADMINISTRATION, U.S. DEPARTMENT OF ENERGY
Mr. Caruso. Thank you, Madam Chairwoman and members of the
committee. Thank you for this opportunity to discuss recent
events in energy markets and the Energy Information
Administration's latest short-term outlook as well as our
heating fuel price outlook.
EIA produces objective, timely and relevant data,
projections, and analyses that are meant to assist policymakers
and to help markets function efficiently and inform the public.
Our views and outlooks should be attributed to EIA only and not
to the Department of Energy or the administration.
My testimony draws from our November Short-Term Energy
Outlook, which was released last Tuesday, and this outlook
gives projections for world oil markets and U.S. energy markets
through the end of 2008, including the price projections,
consumption, and expenditures for heating fuels as they are
projected. These projections reflect weather forecasts from the
National Oceanographic and Atmospheric Administration and
household heating characteristics from EIA's Residential Energy
Consumption Survey.
As I review our outlook for prices and expenditures, I must
stress that the heating bills for individual households are
highly dependent on local weather, the market size, size and
efficiency of the house and the behavioral characteristics, as
you mentioned in your opening statement, and such things as the
equipment being used in the individual homes.
On average, households heating primarily with natural gas
are expected to spend about $87, or 11 percent, more this
winter in fuel expenditures than last winter. However,
households heating primarily with heating oil are expected to
pay an average of $375, or 26 percent, more. Households heating
primarily with propane are expected to pay an average of $273
more, or 20 percent more. Finally, households heating primarily
with electricity are expected to pay an average of $22, or 3
percent, more.
There are some significant regional differences in the use
of various heating fuels, and the written testimony contains
much more detail with respect to the regional costs throughout
our country. Nationwide, about 58 percent of all households use
natural gas as their primary heating fuel, and these average
expenditures are expected to be up 11 percent due to higher
prices and also expected higher temperatures this year compared
with last.
In the Midwest, nearly 80 percent of all households rely on
natural gas, and they are expected to have a 12 percent
increase in average expenditures. Regionally, the increase in
expenditures for households relies primarily on heating oil
ranges from 24 percent in the West to 30 percent in the South.
However, only 7 percent of householders nationally rely on
heating oil. In the Northeast, 32 percent of households do, and
there, the expected increase in expenditures will be 25
percent.
Of course, these projections are highly dependent on the
actual weather that occurs. Colder or warmer weather than
predicted by NOAA in key regions of the country would have a
significant impact on prices and consumption of heating fuels.
Uncertainty in world oil markets could also be a major factor
in the price of heating oil with the most impact on the
northeastern region of the nation.
Turning to energy markets in general, as we all know, oil
prices have risen sharply this year and are likely to remain
high through 2008. We are expecting the price of the West Texas
Intermediate Crude, which is traded on the New York Mercantile
Exchange, to increase from an average annual price of $66 in
2006 to $71 per barrel in 2007 to nearly $80 in 2008. A number
of factors are driving these prices, including strong economic
growth worldwide, production decisions by members of OPEC,
moderate supply growth in non-OPEC nations, low spare
productive capacity in OPEC, tight inventories, refinery
bottlenecks, and ongoing geopolitical concerns.
On the other hand, natural gas markets have softened. U.S.
inventories reached an all-time high on November 2 of this
year. In addition, key regions using natural gas for heating
had warmer-than-normal weather to begin the fourth quarter of
this year. Natural gas production continues to increase,
particularly in the lower 48. On-shore region and L&G imports
are expected to exceed last year's level by about 40 percent.
The Henry Hub spot price of natural gas is expected to rise
from the October average of nearly $7 per thousand cubic feet
to about $8 for the full year 2008.
Madam Chairwoman, this completes by oral testimony. I would
be glad to answer any questions that you or any other members
of the committee may have as we proceed.
Thank you very much.
[The statement of Mr. Caruso follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
------
Chairwoman McCarthy. Thank you, Mr. Caruso.
Mr. Wolfe?
STATEMENT OF MARK WOLFE, EXECUTIVE DIRECTOR, NATIONAL ENERGY
ASSISTANCE DIRECTOR'S ASSOCIATION
Mr. Wolfe. Okay. Good afternoon. I appreciate the
opportunity to testify on behalf of the National Energy
Assistance Directors' Association, or NEADA, on the importance
of the Low Income Home Energy Assistance Program meeting the
heating and cooling needs of some of the nation's poorest
families.
NEADA represents the state LIHEAP directors. Members of
NEADA would first like to take this opportunity to thank the
members of the subcommittee for its continued program support
in working to increase funding for LIHEAP.
By way of background, there are four components of the
LIHEAP program: the block grant providing formula grants to
states to help low-income families pay their heating and
cooling bills and also allows states to transfer up to 15
percent to pay for the companion program, weatherization, which
helps families reduce their energy costs through conservation;
emergency contingency funds that can be released by the
administration for a number of reasons, including natural
disasters, rapid increases in home energy prices, high
unemployment rates and other economic conditions; the
Residential Energy Assistance Challenge grant providing
competitive discretionary grants to states to develop new
strategies to assist households in reducing their home energy
burden; and, lastly, the leveraging grants which provides
states with additional incentives to raise nonfederal funds for
energy assistance.
In addition, the law authorizes the appropriation of
advance funds 1 year before the start of the program year in
order to allow states to plan for the design of their program.
This is especially important in years when the appropriation
for the federal fiscal year is delayed, as is likely in this
year, and states in cold weather states have to start their
programs without knowing the final appropriation level.
The LIHEAP appropriation level for FY 2007 was $2.1 billion
of which $1.98 billion was for the block grant and $181 million
was allocated for emergency contingency funding. Of this
amount, $27.3 million of the block grant was set-aside for the
REACH and leveraging programs. No advance funding was
appropriated.
For FY 2008, the appropriation level as provided in the FY
2008 Labor, Health and Human Services Appropriations Act, as
passed by the Congress, would provide the same level for the
block grant but increase the emergency contingency funding by
$250 million from $181.5 million to $431 million. As in FY
2007, again, no advance funding was appropriated.
The President's budget would have reduced the LIHEAP basic
grant to $1.5 billion and provided $282 million in emergency
contingency funds. This, in fact, would have been devastating
impact on the program. At a minimum, we would have had to
eliminate at least a million families in the President's
budget.
The authorized level for LIHEAP was increased from $2
billion to $5.1 billion by the Energy Policy Act. The Act also
continued the authorization level for emergency funds at $600
million. And I included a table in my testimony showing the
allocation of $5.1 billion.
Who receives LIHEAP? More than 70 percent of families
receiving LIHEAP have incomes of less than 100 percent of the
federal poverty, which is $20,650 for a family of four, and 44
percent have incomes of less than 75 percent of the poverty
level, which is $15,500 for a family of four. Families
receiving energy assistance carry a higher energy burden than
most Americans, spending about 15 percent on home energy bills,
compared to about 3.4 percent for all Americans.
A major concern of state energy officers this year is the
declining purchasing power of the program. This is largely
because federal funding has just not kept up with the rise in
energy prices. Unfortunately, energy prices are soaring. Home
heating prices projected by the Energy Information
Administration could reach almost $1,000 this year for a
typical family, an increase of almost 80 percent of the cost of
home heating during the winter of 2001-2002 and 47 percent more
than the year 2002-2003.
And just by fuel type--this is what really concerns us--in
2003, it cost $951 to heat your home with heating oil. This
coming year, according to the Energy Information
Administration, it is $1,841. We think it will go even higher
because global prices are approaching $100 a barrel. We think
it is going to $2,200, which would be just plain devastating
for low-income families in the Northeast.
Natural gas has gone from $600 to $900 in this period.
Propane from $926 to $622. And, again, propane tends to track
oil prices. Electricity has gone from $697 to $845. And it is
just not an issue of home heating. Electricity is used for
cooling, and across the South, we are looking at rising
electricity prices. We are very, very concerned about the
impact of these prices on cooling, especially in that part of
the country.
We have been tracking and trying to put this in perspective
in terms of rising energy prices showing how the purchasing
power is declining, and, for example, 4 years ago, heating oil
would buy about 36.7 percent of the average cost. I am sorry.
The grant would buy about 36.7 percent of the cost of home
heating with heating oil. Now it is about 20 percent. Natural
gas would pay more than 50 percent of the cost of home heating.
Now we are down to 37 percent; propane, 37 down to 22; and so
on. What it is showing is that the grant is not keeping up with
the increase in prices.
The other thing that is of concern is from 2003 to 2007,
the number of households receiving energy assistance increased
by 26 percent from $4.6 million to about $5.8 million in 2007,
or about 15.6 percent of the eligible population. During the
same period, the federal appropriation increased by only 10
percent, with the resulting average grant declining from $349
to $305. This would not be a problem if energy prices were
decreasing proportionally or remaining stable.
So what does this mean for 2008? We started surveying
states about a week ago and saying, ``Well, what do you plan to
do? You know, if grants stay about the same level--if the
appropriation stays about the same level or it goes up by 10
percent--how will you set your grants?'' And what I thought
they were going to do was say, ``Look, we are going to follow
the same pattern as previous years. We will decrease the grants
in order to adjust to increasing applications.''
Instead what they have decided is that the grant has
reached the point where it cannot be decreased any further, and
so what they are planning to do in the absence of additional
funding--this includes the $250 million that is in the budget
passed by Congress--they are projecting decreases of 10 percent
to 20 percent on the number of families that can be served. So
we are expecting to go from about 5.8 million in 2007 to about
4.9 million families. It would increase the average grant from
about $305 to $400 on average. This would really be tragic in
several ways because with rising energy prices, we are
expecting more families to come into the program.
I think--one more thing I would just like to mention--we
have a strong partnership with utilities, and part of those
programs, especially around the areas of arrearage management,
are not working as well, as families have fewer dollars to
match the kinds of matching programs we have to make up for
overdue payments, and so what we are seeing is a very, very
stretched program.
Additional funding for LIHEAP can help to address rising
arrearages and shutoffs, allow the states to reach out to
vulnerable households and avert the type of hardships we know
happen with families who do not have sufficient funds to pay
their home energy bills. Adequate funding for LIHEAP can help
families avert the need to choose between paying their heating
and cooling bills and other vital household necessities, like
food, medicine, and other essentials.
The authorized level of $5.1 billion to provide sufficient
funds to increase grant levels to adjust for inflation and
energy prices and allow states to reach out to eligible
households who are not currently receiving assistance.
Thank for you this opportunity to testify today. I welcome
any questions or requests for additional information.
[The statement of Mr. Wolfe follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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Chairwoman McCarthy. Thank you, Mr. Wolfe.
Ms. Barlow?
STATEMENT OF LINDA BARLOW, VICE PRESIDENT, COMMUNITY
ALTERNATIVE PROGRAMS, EDUCATION AND ASSISTANCE CORP.
Ms. Barlow. Okay. Good afternoon. I would like to thank the
committee for giving me the opportunity to testify today on
this very important topic.
I am here representing the Education & Assistance
Corporation, also known as EAC. Established in 1969, EAC
administers over 70 programs across Long Island and the five
boroughs of New York City, assisting more than 45,000 people
annually. Our unique programs provide services for people with
substance abuse addictions, students experiencing learning
difficulties, child victims of abuse or caught in the foster
care system, frail elderly individuals needing support and
guidance, and public assistance recipients seeking work.
EAC assists people with basic living support, such as those
who need help with utility payments. Due to the rising costs of
energy, growing population of the elderly on fixed incomes, and
the cold winters, these numbers are increasing daily.
EAC has been administering the HEAP program since 1991. In
the 2006-2007 heating season, we assisted 5,051 applicants. The
program provides eligible households with benefits to assist
with their heating and utility costs. EAC is under contract
with the Nassau County Department of Social Services to process
HEAP applications.
Eligible HEAP applicants may also apply for additional
services in our office. HEAP staff process applications for
Verizon's LIFELINE Program, which offers discounted telephone
services for eligible clients. Clients who have exhausted their
HEAP benefits may also apply for Project Warmth, which help
clients who are in immediate need of oil or who have been
scheduled termination. Project Warmth benefits are provided by
the United Way and LIPA.
In addition to HEAP, EAC also implements the Weatherization
Referral and Packaging Program to assist low-income families in
meeting home energy and safety needs. WRAP helps to identify
energy-related structural problems in homes and makes
arrangements for the correction of these problems.
Almost two decades of administering HEAP gives our agency a
breadth and depth of experience with the program. It is our
contention that with rising heating costs coupled with the high
cost of living on Long Island, many residents would be cold,
hungry and possibly homeless without HEAP.
Applicants line up at our door starting at 7:00 a.m. when
the HEAP season starts. They are anxious and afraid of what the
winter will bring. Many are vulnerable senior citizens who fear
having to make a choice between getting their prescribed
medications or staying warm.
I just want to share with you a brief vignette to
demonstrate how essential HEAP is. Mr. Jones applied for HEAP
assistance on a cold February morning. He was interviewed by a
worker and submitted all of the required documents to process
his application. The application was approved for an oil
benefit of $400. He thanked the worker and left the office.
About an hour later, we noticed Mr. Jones still sitting in
the reception area. Once again, we informed him that his
application was approved and that he would receive the oil
within 72 hours. This very tall frail 80-year-old man looked
the worker in the eyes and said, ``Yes, Ma'am. Thank you. I was
just sitting here a while to warm up before I started walking
home.'' Home was eight miles away.
It turns out that he had run out of oil during the night,
had no money and did not have an oil contract with a company.
EAC staff immediately went into turbo mode, and while he
waited, we were able to get him a new winter coat, blankets and
paid for a taxi to take him home.
Despite an increasing number of applicants, our agency's
funding has remained set for the last 13 years. We currently
receive $190,900 to operate HEAP and $30,916 for WRAP. With
inflation and all other costs related to the program
escalating, this has made it almost impossible to continue the
program. Staff is severely undercompensated and, each year,
they have to be laid off earlier in the season. As efficient as
we are, waiting time for new applicants is now longer,
averaging two and a half hours, as we do not have adequate
staff. Despite our best efforts, we are losing ground.
Heating costs for an average family using heating oil are
projected to soar this year. Low-income Americans can least
afford price increases. In 2007, the average American household
will spend nearly $5,000 for residential energy services and
gasoline. The 61 million households with annual incomes of
$50,000 or less, the majority of American households, will
spend 18 percent of their after-tax income on energy. In 1997,
energy consumed just 10 percent of the after-tax income of
these working families.
HEAP has been a Godsend to the vulnerable population in
Nassau County. The program needs to be reauthorized. However,
reauthorization at the current level will not solve the
problem. Agencies that implement HEAP need to receive enough
money to properly serve their constituents in their time of
need.
Thank you very much.
[The statement of Ms. Barlow follows:]
Prepared Statement of Linda Barlow, Vice-President of Community
Alternative Programs, EAC, Inc.
Overview
Established in 1969, EAC administers over 70 programs across Long
Island and the 5 boroughs of New York City, assisting more than 45,000
people annually. Our unique programs provide services for people with
substance abuse addictions, students experiencing learning
difficulties, child victims of physical or sexual abuse or caught in
the foster care system, frail elderly individuals needing support and
guidance, and welfare recipients seeking work.
EAC assists people with basic living support, such as those who
need help with utility payments. Due to the rising costs of energy,
growing population of the elderly on fixed incomes, and the cold
winters, these numbers are increasing daily. Our home energy programs
assist these low income families in meeting the cost of energy and
utility expenses, safety needs and also identify energy-related
structural problems in homes, making arrangements for correction of
these problems.
The Education and Assistance Corporation (EAC) has been
administering the HEAP program since 1991. In the 2006/2007 heating
season, we served 5,051 applicants. The program provides eligible
households with benefits to assist with their heating and utility
costs. EAC is under contract with the Nassau County Department of
Social Services to process HEAP applications. Gross income includes but
is not limited to salary, pension/retirement benefits, social security,
unemployment benefits and worker's compensation. All applicants are
interviewed by a worker to evaluate their application and determine
eligibility.
Eligible HEAP applicants may also apply for additional programs in
our office. HEAP staff process applications for Verizon's LIFELINE
Program, which offers discounted phone service for eligible clients.
Clients who have exhausted their HEAP benefits may apply for PROJECT
WARMTH benefits, which helps clients who are in immediate need of oil
or who have scheduled termination notice for LIPA. Project Warmth
benefits are provided through United Way and LIPA. Voter registration
applications are also available for clients. Additional referrals are
given for Food Stamps, Public Assistance and Emergency Assistance.
Funding: Funding for EAC's HEAP program is provided by Nassau
County Department of Social Services.
In addition to HEAP, EAC also implements the Weatherization
Referral and Packaging Program to assist low income families in meeting
home energy and safety needs. Working in combination with the Home
Energy Assistance Program, WRAP helps to identify energy-related
structural problems in homes and makes arrangements for correction of
identified problems.
Weatherization is an essential part of assisting families in need
of home energy assistance. In order to ascertain a household's needs,
WRAP staff may conduct a home assessment to identity any apparent
energy-related structural deficiencies. The WRAP Coordinator identifies
any immediate needs necessary and assesses any other issues related to
social, health or safety problems. If repairs are needed, WRAP staff
serve as a liaison with the Weatherization Assistance Provider, helping
to guide clients through the service process and working with the
Weatherization Provider to ensure delivery of services. Recommendations
may include insulation and caulking of windows and doors, repair of
broken windows, replacement of doors, repairs on the heating system or
wrapping of pipes and water heaters.
Clients receive a directory outlining other agencies offering
assistance with housing, home repairs, financial information,
emergencies, weatherization, food pantries and crisis intervention.
Funding: Funding for HEAP is provided by Nassau County Department
of Social Services.
Successes
Almost two decades of administering HEAP gives our agency a breadth
and depth of experience with the program. It is our contention that
with rising heating costs coupled with the high cost of living on Long
Island, many Long Islanders would be cold, hungry and possibly homeless
without the HEAP program. County residents line up at our door starting
at 7:00 a.m. when the HEAP season starts. They are anxious and afraid
of what the winter will bring. Many are vulnerable senior citizens and
their issues are complex. They depend on HEAP to get them through the
long winter months.
I just wanted to share with you a brief vignette to show you how
essential HEAP is. Mr Jones applied for HEAP assistance on a cold
February morning. He was interviewed by a worker and submitted all of
the required documents to process his application. The application was
approved for a Regular Oil benefit for $400.00. He thanked the worker
and left the office. About an hour later we noticed Mr. Jones sitting
in the reception area and called him into the office. Once again we
informed him that his application was approved and he would receive the
oil within 72 hours. This very tall frail eighty year old man looked
the worker in the eyes and said, ``yes Ma'am thank you, I was just
sitting here for a while to warm up before I start walking back home.''
Home was 8 miles away, on this very cold and snowy day.
It turns out he ran out of oil during the night and had no money
for oil and did not have an oil contract with a company. He never
mentioned this or the fact that his oil burner was completely off and
needed a prime to start up again. He said that if he informed us that
he needed a prime he would receive less oil and preferred to prime the
burner himself. EAC staff immediately went into turbo mode, while he
waited, we were able to get him a new winter coat, blankets and called
and paid for a cab to take him home.
Challenges
Despite an increasing number of applicants over the years, our
agency's funding has remained stagnant for the last thirteen years. We
currently receive $190,900 to operate HEAP and $30,916 to operate WRAP.
With inflation and all other costs related to the program escalating,
this has made it almost impossible to operate the program. Staff are
severely under compensated and each year we have to lay them off
earlier in the season. As efficient as we are, waiting time for new
application's is longer (now averaging 2.5 hours) as we do not have the
staff for adequate assistance. Despite our best efforts, we continue to
feel like we are losing ground.
Conclusion
Heating costs for an average family using heating oil are projected
to soar this winter. Lower income Americans can least afford price
increases. In 2007, the average American household will spend nearly
$5,000 for residential energy services and gasoline--The 61 million
households with annual incomes of $50,000 or less-the majority of
American households--will spend 18% of their after-tax income on
energy. In 1997, energy consumed just 10% of the after-tax income of
these working families. HEAP and WRAP have been a God send to the
vulnerable population in Nassau County. The program needs to be
reauthorized . However, reauthorization without additional financial
support will not solve the problem. Agencies and programs that
implement HEAP need to receive enough money to properly serve their
constituents in their time of need.
______
Chairwoman McCarthy. Thank you, Ms. Barlow.
Mr. Swanson?
STATEMENT OF LARRY SWANSON, EXECUTIVE DIRECTOR, ACTION HOUSING
Mr. Swanson. Chairwoman McCarthy, Ranking Member Platts of
Pennsylvania and other members of the committee--and I would
like to mention that we serve under--the weatherization program
I am going to talk about--part of Jason Altmire's district who,
I believe, is also a member of the committee. So I am one of
his constituents in that matter.
I want to thank the committee for giving me the opportunity
to testify about something that is very important to us at
ACTION-Housing. My remarks today represent both ACTION-Housing,
which is a regional nonprofit housing provider and the single
largest provider of weatherization services in the State of
Pennsylvania as a nonprofit and the weatherization task force.
The weatherization task force is the 42 nonprofit and public
agencies in Pennsylvania who deliver energy conservation
services in crisis, emergency and no heat services every year
in Pennsylvania.
This is a huge, really important program for us. My
organization has been doing weatherization for 25 years. We
have done about $50 million worth of weatherization
improvements in the City of Pittsburgh, Allegheny County and
Washington and Green Counties, which we also serve.
Why is a nonprofit in housing so heavily engaged in energy
conservation? The answer is simple: Our mission is to help
people create safe, secure, affordable housing. Other than the
cost of rent or for a mortgage, the single largest component is
the utility cost that they face, including heating and cooling.
So we have long been engaged in this.
I have come here to support the continuation of the option
for using LIHEAP funds for weatherization and encourage, as
well, the expansion of the program. In Pennsylvania, we use
LIHEAP funds both to do the traditional conservation measures,
but also to implement a crisis no heat situation throughout the
state. Last year, $27 million was used in LIHEAP in
Pennsylvania for the energy conservation program. The energy
conservation program is essentially a program that is involved
in technical evaluation of air infiltration, the heat, the air
that we either heat or cool in our environments, and that is
the principle measure.
The emergency no heat situation is a program where
individuals who apply for LIHEAP cash assistance are given an
opportunity to declare a no heat situation, and if they have
one, they are immediately referred directly to the state
weatherization services who, within 48 hours, have to intervene
to determine whether it is a valid situation and intervene.
Last year, 5,353 customers received that assistance in
Pennsylvania.
The weatherization work that we do based on the task
force's own analysis of our own performance achieves
conservation savings of 15 to 35 percent. That amounts to $323
to $763 per household in our state, and it exceeds the one-time
benefit of cash assistance.
Why is there so much variation in what is saved? Well,
Pennsylvania has a largely older housing stock. Our ability to
intervene and provide the air infiltration measures varies
tremendously depending upon the housing stock that we start
with. Another factor is the quality of the heating equipment
that we are dealing with.
In other parts of the country, it is a combination of
heating and cooling, and in the southern parts of our country,
it is the cooling that is the primary factor.
Much of our heating equipment in housing that is more than
15 years old was designed for 50 percent and 60 percent
efficiencies and operates well below 50 percent. The equipment
that we are installing operates at 85 percent and 90 percent
efficiencies, and in Pennsylvania, we go back and do an annual
service for a couple of years afterward, and some of our
customers stay with us for long term.
Why is it important to Pennsylvania? Last year was an
exceptional year, but most years, $15 million to $18 million,
the full 15 percent allotted, is used for the conservation and
the crisis intervention program. We serve 4,000 to 5,000
customers a year out of the LIHEAP portion and then combine it
with funds provided by the Department of Energy to make the
difference. Many of these services that are provided on an
emergency basis are minor in nature, but allow the restoration
of heat. The program, this year, began on November 5. In our
first week of operation, we had 118 referrals at my agency
alone to intervene in situations with no heat.
In my remaining time, I want to talk about the importance
of LIHEAP funds to our system. We are able to build a larger
scale operation than our 42 agencies and respond in a cost-
effective manner. In 2004, my agency joined with Allegheny
County in its efforts to restore heat to 650 households that
were without service due to the impact of Hurricane Ida. It
occurred in late September. In a 45-day period, based on the
capacity that we had in place because we had the crisis funds
to continue to do work, we were able to restore heat in 650
households in Allegheny County by the middle of December.
This year, we had a small but significant for those
affected flood situation where 100 families in Congressman
Altmire's North Hills District were essentially without heat.
Today, we are working with Allegheny County to provide heat for
those households without heat below 150 percent of poverty,
again using foundation and charitable support for those above
that to get people back in their homes.
Thank you very much.
[The statement of Mr. Swanson follows:]
Prepared Statement of Lawrence A. Swanson, Executive Director, ACTION-
Housing Inc.
Madam Chairwoman and Committee Members: I am pleased to testify
today in support of the utilization of LIHEAP funds for weatherization
and emergency CRISIS based upon the experiences of my agency and the 42
other provider agencies in Pennsylvania. We are a diverse group of
agencies across the Commonwealth that deliver this important program.
We represent non profit housing organizations, community action
agencies and local public housing agencies. We use both private
subcontractors and work crew models and mixes of those models to
accomplish our work. We work in a State that is \1/3\ urban; \1/3\
small communities and \1/3\ rural. Pennsylvanian's use natural gas,
electricity, heating oil, propane, coal and wood to heat their homes.
And the State has developed a comprehensive program that responds to
all these variables.
Pennsylvania has seen strong leadership on a bi-partisan basis for
some time. The Pennsylvania Department of Community and Economic
Development (DCED) operates this comprehensive program and engages the
operating agencies to design effective delivery systems. DCED also
operates a training center for weatherization technicians, supports
ongoing pilot programs and engages outside evaluators to help monitor
the quality of the measures performs. This September the Governor and
Legislature conducted a special session of the Legislature to examine a
program for Energy Independence for Pennsylvania and is now considering
a wide range of ventures that will assist our State. A centerpiece of
this initiative is conservation of energy. It's the single biggest
payback that we have today for the investment we make. Residential and
commercial energy conservation have proven paybacks for investments and
they can be implemented in the short term.
My organization, ACTION-Housing, is a non profit housing
organization that operates a diverse set of programs designed to help
people achieve secure and self-sufficient lives. Founded in 1957 we
have worked to develop affordable housing, deliver important programs
that make homes safer and economically viable and a range or programs
that help families and individuals become more self-sufficient once
they have a stable housing environment. We operate in the City of
Pittsburgh, Allegheny County and work extensively in the surrounding
counties in various programs. ACTION-Housing is the largest single
Weatherization provider in Pennsylvania and provides services for the
City of Pittsburgh, \2/3\ of Allegheny County and the Counties of
Washington and Greene.
This includes the portions of the districts of Congressmen Altmire,
Murphy, Doyle and Murtha. We have operated this program at scale for
some 25 years and estimate that we have weatherized 22,000 homes and
repaired or replaced 15,000 heating units in that time. The combination
of LIHEAP weatherization and DOE weatherization has led to an
investment of $ 55,000,000 in conservation during that period of time.
All of these programs funded by 15% of the annual LIHEAP allocation
in tandem with DOE funds have helped create a strong, vital network of
agencies that provide high technology intervention in homes, respond to
high priority needs and do so in a cost effective manner. This amounts
to some $ 15-18,000,000 in each program year which is typically split
between the regular weatherization programs and CRISIS interface
efforts.
Each of these provides critical work that makes a significant
difference in the lives of Pennsylvania families and children. ACTION-
Housing and the Weatherization Task Force of Pennsylvania representing
all 42 providers strongly support the retention of the option for
States to allocate 15% of funds for weatherization and pledge their
ongoing support for the effective implementation of the program.
The 2006-2007 Program Year
The 2006-07 program year was an exceptional one in Pennsylvania.
Though annual allocations from LIHEAP average $ 16,000,000 there were
additional funds that were released from contingencies. As a result the
allocation reached some $ 27,000,000 last year. Funds were utilized for
two distinct components for the program. The basic energy conservation
program which used some 64% of the LIHEAP transfer ($17,000,000) and
the CRISIS interface that works with LIHEAP cash assistance customer
who have a no heat situation used 36% of the funding available
($10,000,000). Each of these programs is described below.
Energy Conservation With LIHEAP F nds
The basic energy conservation program enables low income families
to permanently reduce high energy usage. Weatherization aims to reduce
the energy costs for low--income families, primarily the elderly and
families with children, by making energy efficient improvements to the
home. According to research conducted by the Pa Weatherization Task
Force ``At current Pa energy costs, the investment in energy
conservation saves more in one heating than the average cash assistance
grant in Pa.
With Energy Conservation the Savings Continue Year After Year
In Pennsylvania Weatherization providers embrace the concept of
``whole house weatherization''. Under this concept the house is treated
as a single energy consuming-system rather than a loose collection of
unrelated measures. Using this approach weatherization providers
provide the best combination of measures for reducing total energy
consumption.
Our standard weatherization treatments include assessment,
selection of measures, installation, and quality verification. Trained
technicians use advanced computer software and diagnostic equipment to
identify energy saving measures that are cost effective and safe.
Common measures include the installation of insulation, ventilation,
heating and cooling tune-ups, replacement of units of energy efficiency
and/or safety, air sealing and installation of energy efficient
lighting and appliances.
Some 9200 households were weatherized in the program year with
savings ranging from 15-35%. The use of LIHEAP funds enabled providers
around the state to increase overall production in the energy
conservation about 40% from the base of funds provided through the DOE
funds. In many cases these funds not only served many people in need
but also provided the scale of work necessary for an operating agency
to function effectively and maintain its workforce. The key to capacity
over the long term is a qualified and trained staff so that agencies
can achieve effective savings in the work performed.
CRISIS Interface With LIHEAP Funds
This program is provided in every County in Pennsylvania and links
those families who receive cash assistance but have no operable heat
source with weatherization providers. During the winter heating season
(November through March) local cash assistance agencies refer customers
eligible for LIHEAP but without safe and operable heating systems to
the network of weatherization providers. These repairs and replacements
are performed on a 48 hour emergency basis and include emergency repair
or replacement of heating systems, fuel line replacement, and hot water
systems in low income households. In the 2006-07 year some 5,353
families were assisted with emergency repairs of primary heating
systems.
Key Facts Provided by the Weatherization Task Force Reports
The Weatherization Task Force provides annual updates based upon
who has been served across the Commonwealth as well as estimates of
future energy costs. A few of those key findings are repeated below
from recent reports:
Weatherization results in average savings of 15-35% in
energy consumption among those served. Homes that receive both air
infiltration treatments and heat plant repairs provide the greatest
savings.
Low income families (those at 150% of poverty and below )
will spend about 26.7% of their income in the total energy burden in
the coming year. This compares to all households who spend about 4% of
their budgets for energy.
Conservation is the lowest cost--proven source of energy
and providing it to those with the economic means has the benefit of
achieving conservation that would not otherwise occur.
The savings associated with weatherization at the 15-35%
level equate to savings of $ 323 to $ 763 per year and exceed the
annual payments for LIHEAP cash assistance in Pennsylvania and have
annual benefits going forward.
The projected increases in electric, heating oil and gas
prices in Pennsylvania for the 07-08 season will only increase the
importance of the LIHEAP energy conservation program for the future.
Final Thoughts
The retention of the 15% State Option for LIHEAP funds is critical
to the operation of an effective program in Pennsylvania. The diversity
of the state and its needs have been best met by a well diversified
program operated in tandem with LIHEAP cash assistance so that low
income customers can receive help with paying their energy bill, reduce
future expenses and live in a safe environment is the key to providing
secure environments for our families and children. The use of these
funds in Pennsylvania has meant that the state based program can reach
through conservation 40% more families each year, provided a linked
emergency heat program and given operating agencies the scale necessary
to be effective over time. On behalf of the Weatherization Task Force
and all 42 operating agencies we thank the committee for its support.
______
Chairwoman McCarthy. Thank you, Mr. Swanson.
Mr. Manning?
STATEMENT OF DAVID MANNING, EXECUTIVE VICE PRESIDENT, U.S.
EXTERNAL AFFAIRS, NATIONAL GRID, ON BEHALF OF THE AMERICAN GAS
ASSOCIATION
Mr. Manning. Thank you very much, Madam Chairwoman, and I
want to thank you and the members of the subcommittee.
My name is David Manning, and I am an executive vice
president with Key Span, now National Grid. We serve over 3
million gas customers--and more electric customers--largely in
urban areas, such as New York, but also in some of the very
challenged areas in upstate New York, Worcester, Massachusetts,
some portions of Long Island where the economy is struggling.
I am pleased to have this opportunity as well to testify on
behalf of the American Gas Association in strong support of
additional federal funding for the life-saving Low Income Home
Energy Assistance Program, which we are discussing, known as
LIHEAP. AGA represents over 200 energy utility companies that
deliver natural gas to more than 172 million Americans. For the
purpose of home heating, approximately--all of you heard Mr.
Caruso indicate--nationally 58 percent of homes depend on
natural gas for their heat. In our particular territory, which
is a larger oil heat region, that number, in fact, is lower,
but it is still a major component of our energy needs.
First, I would like to thank, Madam Chair, Ranking Member
Platts, other members of the subcommittee that I know, for
setting the stage for the fiscal year 2008 appropriation of
$2.4 billion for LIHEAP. We appreciate this demonstration of
support, and we encourage you strongly to continue to set the
highest possible authorization level that you can. For 2009, we
request that the subcommittee establish a LIHEAP authorization
funding level of at least $5.1 billion.
Again, I am the last speaker. I think it is almost self-
evident, but I will continue. We believe it is absolutely
essential to increase our nation's home energy commitment to
America's most vulnerable citizens. AGA shares the concerns of
many prominent organizations, but actual LIHEAP appropriations
remain substantially below the current $5.1 billion authorized
in fiscal year 2007. Interestingly, LIHEAP's last appropriation
was just 17 percent higher than the original funding amount
that Congress approved at the program's inception more than a
quarter century ago, and yet during that period, the cost of
the Consumer Price Index has gone up 133 percent.
Without question, more and more households need help paying
their energy bills. The number of households eligible for
LIHEAP funding has increased by 78 percent since the program
began. Because funding has not kept pace with the growing need,
an increasing percentage of eligible families simply cannot get
help.
In fact, despite the billion-dollar increase in the program
in the fiscal year 2006, fewer homes got LIHEAP assistance than
when the program started a quarter century ago. In 1981, the
needs of more than 12 million eligible households were unmet.
By 2006, the unmet need grew to 30 million.
Higher heating and cooling bills hit low-income households
the hardest. The energy burden on LIHEAP households was more
than six times that for non-low-income households. LIHEAP
recipients spend 20 cents out of every dollar on energy. Their
burden is also increasing, leaving them with less for food,
shelter and health care, and often making very difficult
choices.
I want to stress that the private-sector assistance is
substantial, but these efforts cannot substitute for the
decreased purchasing power of federal funds.
Virtually all local gas utilities have programs and
policies that enable low-income customers to manage their gas
bills, such as deferred budget payment plans, payment
counseling, weatherization programs, voluntary fuel funds,
subsidized rates, matching grants for improved buildings, and
appliance efficiencies. In 2006, utility programs generated
$1.8 billion in low-income customer assistance. These were
often paid for through very modest surcharges for consumers.
AGA surveyed its membership additionally, however, on
programs to assist low-income customers. Fifty percent provide
shareholder contributions to low-income customers, 45 percent
offer rate discounts, 38 percent support fuel funds, 35 percent
forgive part or all of past arrears.
It is evident that while states, local governments and the
private sector have demonstrated their capacity to develop
creative and effective programs to address energy assistance
needs, collectively, these programs can only modestly
supplement the essential federal support for LIHEAP and
weatherization programs.
In the future--and this is important--it is expected that
the U.S. will adopt legislation to address climate change.
Whether utilities will have to purchase credits to purchase
emission allocations, whether they will have to pay additional
taxes or fees, the legislature will likely impose additional
costs in fossil fuel. I strongly recommend that this committee
authorize an ongoing study of the potential cost impact of
climate change legislation on the LIHEAP program and its
recipients. Every increase in energy cost reduces the ability
of this program to serve its mission.
As the nation girds for winter, it is clear that LIHEAP
must retain its $5.1 billion authorization amount and be
infused with additional resources to receive an appropriate
appropriation of at least $3.2 billion.
Thank you very much. I will welcome your questions.
[The statement of Mr. Manning follows:]
Prepared Statement of David Manning, Executive Vice President, U.S.
External Affairs, National Grid, on Behalf of the American Gas
Association
Executive Summary
The Increasing Burden of Energy Costs on Low-Income Customers
reports that:
The number of households eligible for LIHEAP has increased by 78
percent since 1981, when the program was created.
Since the creation of LIHEAP in 1981, the consumer price index has
increased by 133 percent, however funding for the program has increased
by only 17 percent. Current funding should be $4.2 billion just to keep
pace with inflation--and without taking into account the increased
number of low-income families.
Low-income households typically spend one-fifth of their annual
income on home energy bills--more than six times the level that other
income groups are spending. The proportion of income going towards home
energy costs is growing despite notable conservation efforts on the
part of low-income households.
A survey of gas utilities showed that the total amount of natural
gas customer uncollectible accounts rose 39 percent between 2003 and
2006, indicating that customers face increased difficulty in paying
their home energy bills.
In 2005, utilities provided $1.8 billion in program assistance to
help needy families manage their energy bills. Despite this significant
level of support, the need continues to be far greater than utility
programs are able to fulfill, despite our best combined efforts.
Good afternoon, I am pleased to have an opportunity to testify, on
behalf of the American Gas Association, in strong support of additional
federal funding for the life-saving Low-Income Home Energy Assistance
Program (LIHEAP).
The American Gas Association, founded in 1918, represents 200 local
energy utility companies that deliver natural gas to more than 64
million homes and businesses throughout the United States. A total of
69 million residential, commercial and industrial customers receive
natural gas in the US, and AGA's members' deliver 92 percent of all
natural gas provided by the nation's natural gas utilities. AGA
represents 189 local natural gas utilities that deliver gas to almost
60 million homes and businesses in all 50 states. For the purpose of
home heating, approximately 52 percent of LIHEAP households use natural
gas; 21 percent, electricity; 10 percent, fuel oil; and 11 percent
propane (2005 data).
National Grid is an international energy delivery company. In the
U.S., National Grid (www.nationalgridus.com) is the largest distributor
of natural gas in the northeastern U.S., serving approximately 3.4
million customers in New York, Massachusetts, New Hampshire and Rhode
Island. It also delivers electricity to approximately 3.3 million
customers in Massachusetts, New Hampshire, New York and Rhode Island,
and manages the electricity network on Long Island under an agreement
with the Long Island Power Authority. National Grid is the largest
power producer in New York State, owning 6,650 megawatts of electricity
generation that provides power to over one million LIPA customers and
supplies roughly a quarter of New York City's electricity needs.
First, I would like to thank Chairwoman McCarthy, Ranking Member
Platts, and members of this Subcommittee for setting the stage for a
Fiscal Year (FY) 2008 appropriation of $1.98 billion for LIHEAP, with
an additional $431 million for emergency assistance. We appreciate this
demonstration of support for LIHEAP, and encourage you to continue to
set the highest possible authorization amount you can. If you do, you
will afford your appropriations colleagues the essential maneuvering
room they need to further improve funding for both LIHEAP and the
Weatherization Assistance Program.
For FY2009, we request that the Subcommittee establish a LIHEAP
authorization funding level of at least $5.1 billion, and we join with
the bipartisan appeal of 35 of our nation's governors, who earlier this
year urged the congressional leadership in establishing at least a $3.2
billion appropriation for the program.\1\ Notably, we also stand with
the Governors on the matter of further supplementing funds in the near-
term, should that opportunity present itself.\2\ Additionally, we also
recognize that many states exhaust their available grant dollars early
in the fiscal year, and it is for this reason that AGA continues to
also support the National Energy Assistance Directors Association
(NEADA) recommendation that LIHEAP appropriations be forward-funded.
---------------------------------------------------------------------------
\1\ http://www.neada.org/comm/correspondence/070215.pdf
\2\ Ibid.
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We believe it is absolutely essential to increase our nation's home
energy commitment to America's most vulnerable citizens who qualify for
LIHEAP. It's worth remembering that virtually all LIHEAP-eligible
households live below, at, or just above our nation's official poverty
level, and further--that they shelter some combination of the elderly,
the disabled, or the very young.
The Need for Increased Funding
The FY07 LIHEAP program was authorized at a level of $5.1 billion a
year. Under the current Omnibus funding arrangement, this is also the
present threshold. However, AGA shares the concerns of many prominent
organizations that actual LIHEAP appropriations remain substantially
below that authorization amount. LIHEAP appropriations briefly improved
in FY 06, when $3.2 billion was committed to help low-income households
with their home energy needs. Unfortunately, LIHEAP funding then fell
to $2.2 billion in FY 07. Interestingly, that FY 07 funding level was
just 17 percent higher than the original funding amount Congress
approved at the program's inception more than a quarter-century ago. By
way of comparison, over the same time period, the consumer price index
rose 133 percent. Had LIHEAP kept pace with inflation, annual
appropriations would now be $4.2 billion.
More and more households need help paying their energy bills. The
number of households that are eligible for LIHEAP funds has increased
15 percent over the past five years and 78 percent since the program
began. Since funding has diverged from the growing need for energy
assistance, an increasing percentage of people that are clearly
eligible for it, simply cannot get the help they need. In fact, fewer
homes got LIHEAP assistance in FY 06 than when the program started a
quarter-century ago. In 1981, almost 20 million were eligible for
LIHEAP assistance, and the needs of more than 12 million (64 percent)
households went unmet. By 2006, 35 million households were eligible,
and the needs of almost 30 million (84 percent) went unmet.
The Department of Energy reports that consumers' heating bills will
be higher across the board. Overall, consumers could face an average
increase of 11 percent in their heating bills, and some must gird for a
whopping 26 percent increase this winter. These percentages are
premised upon weather forecasts that are close to normal. If the
temperatures drop below normal, the increases in heating bills will be
even higher.
Higher heating and cooling bills hit low-income household hardest.
The term ``energy burden'' refers to the portion of a household's
income that is spent on home energy costs. An average American family
spends about six to seven percent of its total income on household
energy. Non-low income households (with incomes above the LIHEAP
federal maximum income standard) have energy burdens of only three
percent or less. The energy burden on LIHEAP households is more than
six times that of a non-low income household. Not only must LIHEAP
recipients' spend 20 cents out of every dollar on energy, their burden
is also increasing, leaving them with less for food, shelter and health
care.
Because of rising costs, many customers cannot meet all their
obligations, and many are falling behind on their energy bills.
Customers that have difficulty paying their energy bills are an
increasing problem for utilities.
NEADA estimates that 1.2 million households were disconnected and
lost utility services in the spring of 2007 due to non-payment
problems.
A National Regulatory Research Institute report shows that the
percentage of gas utility accounts that are past due rose from 16.5
percent in 2001 to 21.0 percent in 2006.
The average amount past due for a gas account rose 27 percent--from
$263 in 2001 to $334 in 2006. Furthermore, this trend appears to be
increasing. Another study suggests uncollectible natural gas utility
expenses increased 39 percent between 2003 and 2006.
Low-Income Households Are Reducing Their Energy Needs
Many low-income households have made great strides in reducing
their energy consumption. The amount of energy used for space
conditioning by these families declined 26 percent since 1981, in part
due to conservation efforts funded independently or through LIHEAP and
utility conservation programs. Low-income households reduced their
space heating energy use by 36 percent since 1981.
Despite these conservation efforts, the rising cost of energy over
that time period has nonetheless caused home energy bills to rise,
particularly heating bills. From 1981 through 2005, overall energy
expenditures for space heating and cooling for LIHEAP-eligible
households increased 37 percent.
Private Sector Assistance Is Substantial, but Cannot Substitute for
Federal Funds
Over the years, many private sector and utility-initiated energy
assistance programs have been launched to supplement the basic LIHEAP
program. For example, virtually all local gas utilities have programs
and policies that enable low-income customers to manage their gas
bills--such as deferred and budget payment plans, payment counseling,
weatherization programs, voluntary fuel funds, subsidized rates, and
matching grants for improved building and/or appliance efficiencies
LIHEAP has also received strong support from a variety of community-
based social service organizations such as Catholic Charities, the
Salvation Army, the National Fuel Funds Network and churches and
synagogues.
Utilities
Many utilities administer, sponsor, and promote programs to augment
LIHEAP, and in 2006 utility programs generated $1.8 billion in low-
income customer assistance. Typically, state and local policymakers
collaborate to initiate and/or approve these programs. The costs for
these programs are often recovered through a very modest surcharge.
Further, and oftentimes, utility stockholders cover at least a portion
of these costs. These programs do not include past-due customer debts
that a utility must eventually write off as uncollectible.
During the spring of 2006, AGA surveyed its membership on their
programs to assist low-income customers. Of the 107 respondents with
low-income customer programs:
45% offer rate discounts
35% forgive part or all of past arrearages
38% support fuel funds
50% provide shareholder contributions to assist low-income
customers
10% offer a discount on the reconnection fee to low-income
customers that had been disconnected due to inability to pay
35% have other programs
The ``other'' categories include weatherization programs, universal
service funds, special budget billings, and matching of customer
donations. Nearly three-quarters of respondents (71%) had more than one
program in place to assist low-income customers.
State & Local Governments
In addition to regulating utility assistance programs, state and
local governments also provide direct funding and/or provide tax
incentives to assist households in paying or reducing their home energy
bills. In 2006, state and local governments provided $739 million for
this kind of assistance. The governments fund these programs through
general or special taxes as well as other sources.
Fuel Funds
These charitable programs are typically a partnership between fuel
funds, community-based organizations (churches, synagogues, charities,
etc.), local government agencies, and utilities. Fuel funds are
dedicated to raising and distributing money for energy bill-payment
assistance. Religious and other community programs assist households
with utility bills as part of their charitable work. These programs are
funded primarily by donations. In many instances, the utility will
solicit contributions (e.g., by way of bill inserts), while government
and community organizations will identify the qualified households that
can benefit, and the community organizations will distribute the
assistance. In 2006, fuel funds and other charitable organizations
provided more than $103 million for energy assistance.
Other
Other parties that provide energy assistance to low-income
households include faith-based/community groups, landlords
(weatherization improvements) and fuel suppliers (bulk fuel discounts
and needs-based discounts). These parties provided a total of $60
million in energy assistance in 2006.
Despite All These Good Works--the Federal Role in LIHEAP Remains
Absolutely Essential
It is evident that while states, local governments, and the private
sector have demonstrated their capacity to develop creative and
effective programs to address energy assistance needs, collectively
these programs can only modestly supplement the essential federal
support for the LIHEAP and Weatherization programs.
C-SNAP: Without LIHEAP--Children Suffer Gravely
Just last month, the Children's Sentinel Assessment Program (C-
SNAP) linked rising fuel prices to the health and well being of poor
children. Dr. Deborah A. Frank, a principal investigator of the report,
explained ``we know there is a medicine that is partially effective in
protecting children during the current epidemic of the 'heat or eat'
dilemma.'' She pegged LIHEAP as an effective medicine to improve the
well-being of poor children, and revealed that children in income-
eligible families who do not get LIHEAP compared to similar children in
income-eligible families who do, were more likely to grow poorly, and
to have to be hospitalized. But, like a scarce vaccine, LIHEAP reaches
only a fraction of the children at risk. Babies and toddlers in energy
insecure households are most likely to suffer poor health, require
hospitalization, have developmental problems, and lack adequate food.
When families do not have access to sufficient energy, they often
resort to unsafe heating methods and cannot refrigerate or prepare
food. It is for reasons like these that we should all be troubled that
in 2006, only 16.1% of LIHEAP-eligible households were helped. Today's
hearing is an opportunity to spotlight this crisis, and to begin to
remedy it.
Efforts to Reduce Greenhouse Gas Emissions Will Increase Energy Prices
Even Further
Congress is demonstrating substantial interest in materially
addressing the challenge of global climate change. Several legislative
proposals have been introduced, and are moving through the legislative
process. Strategies proposed so far are widely anticipated to result in
increased energy costs for all consumers, regardless of income. The
need for LIHEAP assistance will grow even more once these measures are
put in place. AGA believes that climate change legislation will
absolutely necessitate increased LIHEAP funding.
Support for LIHEAP is strong and widespread
The American public supports federal energy assistance for low-
income households. A national poll conducted in September 2006 found
that by a 74 percent of all Americans support the Low Income Home
Energy Assistance Program. Moreover, 72 percent of all Americans
responding to the survey believe that Congress should increase funding
for LIHEAP.
Conclusion
The need for LIHEAP assistance is much greater than the coverage
currently provided by current federal appropriations for this purpose.
AGA is aware that the number of at-risk households across our nation is
rising. As our nation girds for winter, and also prepares to deal
forthrightly with the added challenge of global climate change, it is
clear that LIHEAP must retain its $5.1 billion authorization amount,
and be infused with additional resources to achieve an appropriation of
at least $3.2 billion. To paraphrase C-SNAP's Dr. Frank, LIHEAP is a
precious, life-saving vaccine, and on behalf of the members of the
American Gas Association, I respectfully urge you to aggressively
dispense it to at-risk Americans struggling to heat and cool their
homes.
______
[Additional submission from Mr. Manning follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
Chairwoman McCarthy. Thank you, Mr. Manning.
Listening to your testimony and reading your testimony, one
of the things that became perfectly clear to me is that the
association between heating for those homes and--by the way,
the majority of homes that you assist with are hardworking
families. Most of them have two or three part-time jobs, but
they are working. Then, obviously, we are looking at those that
are disabled, which are low-income jobs when they go out into
the workforce, then, obviously, those that are senior citizens
who can possibly not work. Again, speaking as a nurse, I am
looking at the overall picture.
I know in your testimony, Mr. Manning, you went into it a
little bit deeper on those that cannot heat their homes most
likely do not have enough money for food or even their
medicines. So they are making choices on what they are going to
be doing. The organizations that are out there, you know, that
are helping, I also heard that they are cutting back because
they do not have enough money to help those that need it the
most.
So it is very frustrating for certainly a number of us that
want to make sure that those that--and I do believe the federal
government has a role to take care of those that cannot take
care of themselves. I believe in that with all my heart and
soul since I have been here, and the majority of people that we
have seen being helped through the district office, again, are
the working poor. They are not looking for a handout. They want
to work.
And yet when we look at the children, we are sending them
into the same cycle. We know that if you have a warm home, food
on the table, are healthy, those children thrive, and yet we
see those that do not have those ingredients do not thrive. We
in the end, the community--the state, end up paying more money.
So I believe that we need to strengthen our public-private
partnerships and help states to find ways to work with
companies to increase the reach of LIHEAP without lowering the
benefits of LIHEAP. All of you talked about, you know, how we
need the extra money. You know, hopefully, we will be able to
override some the vetoes and be able to give the services that
I believe that should go out to our citizens at this particular
time.
So, with that, I would like to ask all of you, we all know
you need more money, we all know that. Are there better ways of
trying to get the services out? And I am glad that Mr. Swanson
brought up, you know, it is not just heating. It is doing the
energy part of the home because the elderly homes--I know in my
neighborhood, I have five or six neighbors that were there when
I was a very little girl, and I know those homes have not been
touched over the years. So I could see the heat probably going
out the windows just about.
So what else can we do? We will fight for the money. I
mean, we always will. But is there any other way to reach out
to those that need the help most, and how do you turn people
away? I mean, that has to be the hard job for all of you.
With the statistics Mr. Caruso had mentioned, one of the
other things that I am concerned about is, you know, I am
seeing in my state and especially on Long Island people are not
spending, so the local taxes are not being collected, and
programs that Nassau County runs might have to be cut back,
too, and I am sure that is going to be happening all over the
country. So I am looking to each and every one of you on
helping us with maybe some solutions that we can also look at.
Mr. Wolfe. Well, one thing that we have noticed is that
there are new areas of concern. Medicaid has these new programs
to keep people out of nursing homes, and what we are finding is
that some of the elderly people are getting into shutoff
situations. So I think that we need to almost rethink the
LIHEAP program.
When it was first started, it was a very focused program.
There were very few elderly living at home. If you were frail
elderly, you were in a nursing home. So we have new
populations. There are new populations of families with young
birth-weight babies. Thirty years ago, often, these babies did
not survive, and, often, they are low income. So we have a
growing population of vulnerable households, and so we need to
revisit the shutoff rules for those families. We need to
revisit how we target funds to help them.
And then I think we also need to really think through as a
grant, rather than an entitlement--it is currently designed to
only reach about 17 percent of the population. So I think we
need to think, you know, how can you use energy assistance to
help both working families who work, still to go to work and
take care of the home, and I think this is really an important
niche piece, and we have not really addressed it in terms of
2007.
It is really a program design for the early 1980s, and so I
guess if I was going to make a recommendation, it is maybe time
for all the different partners, both the utility partners, the
way we fuel, the states and everyone to sit down and say,
``With much higher prices than we had before, what do we want
the Energy Assistance Program to look like?''
And then the last piece is how does it tie into and affect
with the weatherization? You know, the Energy Information
Administration does this wonderful survey every couple of
years, and the last one showed that low-income families used
about 22 percent or 27 percent, I think, more energy per square
foot than non-low-income people because they have older
appliances, they have older furnaces, and there is a lot of
potential there for energy savings if we start thinking about
low-income people not just as needing assistance, but as being
able to contribute towards climate change legislation for
efficiency.
Chairwoman McCarthy. Thank you.
Ms. Barlow?
Ms. Barlow. You had mentioned getting the private sector
more involved, and I think that is something we really need to
do. Our agency has been very aggressive over the years in
seeking funding from foundations and getting private grants,
and yet even within our own agency, HEAP is not considered one
of the sexier topics and sometimes falls to the bottom. I think
we need to market this program in terms of how it affects
families and that it is an extremely worthwhile program and get
the private sector more involved.
At one point, we had approached Key Span for private
funding. We continue to do that type of thing. Unfortunately, I
do not think we can continue to rely on government funding, but
somehow make it an area of concern that affects all Americans
and market it in such a way that the private sector thinks this
is something that they want to put their money towards.
Mr. Swanson. I would like to add that, first of all, I am
embarrassed that Mr. Manning asked for expansion of LIHEAPs,
and I did not do that. So I am personally embarrassed, but I
will get over it.
I attended a meeting last week in this town when Jonathan
Fanton spoke, who is the president of the MacArthur Foundation,
one of the large private charitable foundations in the country,
and he talked--in the other part of my business, housing,
affordable housing preservation--about the need to be bold, the
need to see new opportunities and reach beyond where we are,
and I think that is what the Chair is suggesting here. We need
to think bigger about this.
I think a dramatic expansion of the federal funding
combined with state initiatives--in our state, as I am sure
Congressman Platts knows, we had a special session of the
legislature in which we talked about a major investment of
state funds, I think it was about $800 million, on a whole
range of conservation measures.
Conserving energy will help. We still have the issue of how
those after that can afford the utilities, and I think the
utilities and the nonprofits and government working together on
the state level can make a lot of impact. But I think it is
time to be bold because I do not think the energy prices are
going down, and I do not think that we can continue to do what
we have been doing in the past.
Mr. Manning. Madam Chair, if I could just go forward, we
have recently received a grant request from the EAC which is
going to be accepted, and, again, wisely they are looking to
the private sector for resources to manage their programs and
develop programs so that the money goes purely to those in
need, and I think that is an important piece, that they are not
looking to the LIHEAP funding for their needs. They are going
to look to people like us for that, and that is appropriate,
and we need to be there, and we will be there.
We also need to raise the awareness because with bill
inserts, we have been raising about $200,000 plus per year from
our customers on Long Island, just Long Island alone. That is
from bill inserts, just talking about this concern. I do not
read the bill inserts, and I write them.
So I think there is an opportunity there to raise awareness
among the community, but, at the same time, the community must
know that, in fact, we need to help those who are most in need,
and it has to be spread across the population. So I do think
that the funds that we have requested must be there.
Also, I want to tip my hat to those doing weatherization.
Clearly, we are very focused ourselves in better programs to
provide facilitation and incentives to weatherize, to reduce
energy consumption. You pointed out yourself that there is a
lot of education there. Mayor Bloomberg just recently pointed
out that he was unplugging his cell phone charger because he
did not realize that it was still running when he was not home
and his phone was with him. So I think there is an education
function.
I think there is an additional funding function. I think it
hits those in the cities. I think it hits those in the rural
areas. I think that this is really a national crisis, and I
think it is driven, in fact, by the fact that I do not think
any of us, those of us in this business--Mr. Caruso and I have
been having conversations about energy prices for 20 years, and
maybe he anticipated this. I did not.
So I think what has happened now is that we really do have
a tremendous issue before us, and I think it is our
responsibility to try and provide additional education in terms
of how to manage these issues, provide additional incentives
and facilitation for those who are least able to do so to use
less energy and, of course, provide more funding and provide
more partnership dollars just as we are doing with EAC.
Chairwoman McCarthy. Thank you.
Mr. Platts?
Mr. Platts. Thank you, Madam Chair.
Mr. Wolfe, in your testimony, you talked about the
realities of where we are today, and perhaps as many as 10 to
20 percent of eligible families will likely not get assistance
this year because instead of reducing down the grant, we are
going to reduce the number. You know, the way the bill passed
out of conference and we passed it in the House, it is about a
$2.4 billion block grant and contingency. What do you think
that number would be if we were to not have that 10 to 20
percent cut, but no increasing grant amount? What do you think
the number would have to be?
Mr. Wolfe. There is no one answer to that, but, basically,
in 2006, when we had the extra billion dollars and funding was
at $3.1 billion, that was adequate to meet the needs for about
5.8 million households. States were able to increase their
grants to adjust to rising prices. In 2007, this last year,
some states carried money forward from that $3.1 billion, and
that sort of helped keep the balance.
Going to 2008 where the extra $250 million is certainly
welcome, the thing also is we do not know when it will be
released. You know, every year, it is a fight with the
administration to get these dollars out there, and so you
cannot count on them. But what the states are saying is that
the appropriation has not kept up with the increased energy
prices. That is the real problem.
And when you look at the Northeast especially with heating
oil or the Midwest or states like Texas that use propane, we
are very worried about those places because what should happen
this year is you should have enough money because especially
elderly families, people who grew up during the depression, do
not like to ask for help. The prices are so high that we expect
people to be coming in that we did not see last year.
So, when I initially put my testimony together, I assumed
we would be going to about 6.2 million, 6.3 million households,
and then as I was talking to the states this last week, they
were all saying the same thing, ``We have to cut the program
back in order to provide a meaningful benefit.''
And now there is another piece to add to that, too, and I
think this is where it is getting very troubling. Energy
assistance is becoming a checkerboard across the country. Some
states are providing significant supplemental assistance. So
combined LIHEAP will get through. Other states for different
kinds of reasons provide much less assistance or none. So, in
those states, if you are low income, you are much worse off.
So we are looking at a situation developing across the
country where some parts of the country, there could be an
adequate package of services to help people both in the winter
as well as the summer. Other states, it is much less. And I do
not think that is a good situation for the country.
I think we have to have a core basic appropriation level,
and, again, you know, this is not an entitlement. There is no
magic number--$5.1 billion would be much, much better, but $3.1
billion was enough that you could see in states the ability to
work out new partnerships with utilities. It seemed much
better. It seemed like we were bringing enough money to the
table that you could sit down with the utility companies that
are delivering services and say, ``Well, let us work out a
better program this year,'' and there was much more
willingness. So that to me seemed like the minimum level to
keep the program going.
Mr. Platts. Is there a state that you would point to as
being a leader in the state assistance complementing----
Mr. Wolfe. Well, a number of different models, but I think
states where you can see, you know, good examples--New York for
sure, Massachusetts has strong programs, California,
Wisconsin--where you see states do a combination of things. For
example, like in Pennsylvania, where you have strong shutoff
protection rules during the winter heating season. You have a
combination of shutoff protections, arrearage management
programs, as well as discounts on electric and gas, as well as
supplements for delivered fuels. When you put them together,
you come up with an ability to pay at least half the bill, and
that seems to be important in order to keep people connected.
The other thing that we are very worried about is the
arrearage management programs that we have developed over the
years with utilities where, in a sense, a family runs out of
money, cannot pay the bills during the shutoff moratorium, in
the shutoff moratorium, that the matching part offered to help
them pay the difference--we are finding more and more families
just do not have any money. They really do not have anything to
contribute, and so that is also alarming us and points to the
fact that the $2.1 billion or $2.4 billion is not enough now to
meet the needs.
Mr. Platts. Mr. Caruso, you touched on the different
areas--oil, natural gas, propane--and this is related but not
to the LIHEAP program. It is related because it impacts the
cost and how far the funding goes. When you talked about
electricity, you talked about a 3 percent projected increase.
Is that mainly because electricity is heavily coal-fired plants
and so there is less volatility?
Mr. Caruso. Yes, it is. Fifty percent is coal generated,
and the coal price stays relatively low, and 20 percent is
nuclear. So both of those base load electricity-generating
fuels have been at about 2 cents per kilowatt hour, so that has
been pretty steady.
Mr. Platts. So it is fair to say, as we look at issues like
LIHEAP, there are a lot of bigger issues, too, the broader
energy policy and if we are able to advance more clean coal or
if we return to development of nuclear. I was in, let us see,
10th grade, I guess, when Three Mile Island happened. We were
10 miles from the plant. That scared everyone off for 30 years
now. But if we were able to make progress in those long term,
that gets to issues that impact programs such as LIHEAP because
it does have an impact on energy costs.
Mr. Caruso. That is absolutely correct. There are a lot of
issues with respect to things like carbon restraints, which
would change that picture, and renewable portfolio standards,
which are being debated as we sit here. So I think everyone has
indicated they believe we are in for long-term higher prices,
and I think part of it is this changing fuel mix picture as
well.
Mr. Platts. Yes, I am the lead Republican with Congressman
Markey from Massachusetts on the CAFE standards where, you
know, one change could diminish our importation of foreign oil
by 10 percent by raising CAFE standards for automobiles to 35
miles per gallon, which certainly is a good starting point in
my opinion, you know, to impact, again, the big picture which
then drives these issues.
I have other questions, but I know I have to wait for a
second round if we have a chance to come around.
Thank you, Madam Chair.
Chairwoman McCarthy. Thank you, Mr. Platts.
Mr. Sarbanes from Maryland?
Mr. Sarbanes. Thank you, Madam Chair, for holding the
hearing.
I want to get a little more information about whether there
is a train wreck coming this winter, and it sounds to me like
there is, and it sounds to me like people will freeze to death
this winter because they are not getting heat, and that $3.1
million in 2006, while it may have represented kind of the
minimum you could get away with under the cost of energy at
that time would not be enough today if it were at that level
given the cost of energy.
But, of course, we are talking today about levels that are
much lower than that, and the president of the United States of
America this morning vetoed the Labor HHS Education
appropriations bill, which contained more money for LIHEAP than
he had proposed, but even then not nearly enough to address the
need that you have described.
So I would just like you to get on the record so that in
January and February and March when the local 11 o'clock news
is running stories about how people are freezing to death in
their apartments or their homes because this assistance was not
available, we can look back on this hearing and understand why.
So, if you could speak to that, I do not know if numbers are
kept about what happens to people as a result of not getting
this assistance from the prior year, but I would be interested
in that perspective, and then in any predictions you have, as
specific as you can get, about what is coming this winter if we
do not have the kind of resources in place that we need to
provide people with this assistance.
Mr. Wolfe, maybe you can start.
Mr. Manning. Mr. Wolfe, perhaps I can just make one quick
correction to the record which would be helpful in response.
Then I will yield the time.
The number of eligible families or individuals who can
qualify, who can actually receive this funding, is 16 percent.
So it is not that we are serving all but, say, 20 percent. Only
16 percent of those who are eligible under the guidelines to
receive LIHEAP funding actually receive it. So there is your
first scary number, and now I would like to----
Mr. Wolfe. Okay. We received funding from the
Appropriations Committee 2 of the last 4 years to conduct
surveys of families receiving energy assistance, and we asked
them that question, ``What happens when you do not have enough
money?'' I do not think it is as black and white in a sense as
freezing to death or not freezing to death.
What happens is that people say that they do not buy as
much food, they do not buy medicine, they cut back on other
essentials--clothing, for example, for their children. The
elderly--they turn the heat down to unsafe levels. We know from
public health data that if it is too cold in the apartment and
you are elderly, some medicines do not work that well. We know
that people do not use their air conditioning in the summer.
They are afraid to turn it on. And if it is hot in the summer
and you are in a very hot apartment, the incident of stroke
increases.
So if the kinds of public health things that this program
helps prevent will not--what will happen? And those are the
kinds of things we are concerned about. Also at the edge, you
do see an increase in fires. We know what happens when people
have their power turned off or cannot afford to buy heating
oil. They do unsafe things, they use candles. In D.C. about a
year ago, there was a tragic fire in a part of the city where a
young boy died because they were using a candle for a light at
night, and it, unfortunately, got knocked over.
Those do not happen as much. I think they used to happen a
lot more 25 years ago, before there was a LIHEAP program.
Mr. Sarbanes. What does it mean for a senior to reduce the
temperature in their home to unsafe levels?
Mr. Wolfe. If you reduce it below 65 at night, the evidence
is quite strong that if an elderly person gets up at night, in
the middle of the night to, say, go to the bathroom or
something, and it is very cold, they can get disoriented and
slip. There is ample evidence of that.
We know that medicine that helps prevent heart attacks or
high blood pressure medicine does not work as well in a very
cold apartment. So those are the kinds of things that we are
concerned about. We also know from evidence from surveys that
elderly people will not buy as much medicine to pay their
energy bill.
It is sort of quiet suffering, I guess you could say, and
without adequate energy assistance, you will see an increase in
that.
Mr. Sarbanes. Would you venture a prediction of how this
winter is going to compare with the last 10 winters in terms of
the incidence of need and then crisis based on where prices are
going and the amount of assistance that is available?
Mr. Wolfe. What I think is going to happen this winter are
a couple of things. One, states will impose much tougher
moratoriums than in the past, and shutoff moratoriums will
continue on through May, and that has happened when in previous
times there has not been enough energy assistance money. States
will shift money from regular utilities to pay for heating oil
and propane because those are immediate bills that have to be
paid.
We will also find we will not be doing the outreach that we
should be doing. There are elderly people who we know are
eligible but struggle and do not like to ask for assistance,
but if the price of heating oil hits $2,000 this winter, they
will have to ask for assistance and we will have to turn them
away because we do not have enough money to help them.
Those are the kinds of things that I think will happen this
winter, and they are preventable.
And I think the other point to add is that energy
assistance is not like Medicaid where you have, you know, tough
issues like cancer, curing cancer or curing illnesses. This is
a program that comes down to a bill. It is not a complicated
program, and we have a network in place of well over 1,000
community action agencies, for example, that reach people, that
provide services, so funding can be spent quickly. This is not
a program when additional funding is provided that it just sits
there.
So the way I always think about energy assistance is that
even though we have a fairly complex law, it is a very, very
straightforward program. It is a program that comes down to a
bill, and it is really for the absence of having adequate
funding, and the thing is over the years we know what happens
when you do not have enough funding. We know the kinds of
tragedies that happen, and they are totally preventable.
Mr. Sarbanes. Thank you.
Chairwoman McCarthy. Ms. Clarke from New York?
Ms. Clarke. Thank you very much, Madam Chair and Ranking
Member, to our panelists.
Today is a very important issue. I think it has really been
driven home by your testimony, and I thank you for taking the
time.
I do not think there is anything more disturbing or more
distressing than hearing of the death of an elderly person who
has frozen to death or death by fire because of faulty wiring
of an electrical appliance, or similarly the converse, for
seniors and children who suffer in extreme heat conditions in
the summer or in those areas where the climate is always very
warm.
This question is for you, Mr. Wolfe. Our weather patterns
have become less and less predictable and increasingly more
dramatic. We have seen summer temperatures extend well into
fall and storms increase in ferocity. Working-class, low-income
families are being adversely affected by these extreme changes.
Here is my question. In your testimony, you discuss the
complex formula that determines LIHEAP appropriations in regard
to the amount of heating and cooling days per year. Does this
formula take into consideration the unpredictable weather
patterns that we have seen in recent times, and, if so, what
does this formula look like?
Mr. Wolfe. Well, the formula right now is that the funds
are allocated on the basis of a hold harmless provision that, I
think, goes back to 1981. When you go past $1.975 billion, the
new formula kicks in, or the formula that was passed back in
1986 kicks in, and that takes into account heating and cooling
days over time. So changes in weather would be taken into
account.
For example, in the Midwest, in states like Nebraska,
people have told me they now have days in the summer that they
would like to be able to provide cooling assistance, and that
is fairly new. In the cold weather states, it is still cold. It
might not be quite as cold, but it is still cold.
What we are finding is that in the past, back in 1981,
there was not much known about the need for cooling in the
summer. People just thought, ``Well, you know, it gets hot. You
know, just open the window.'' Now we know when it gets hot, the
rate of stroke for the elderly goes up. We know that cooling is
extremely important where, I think, when the programs passed,
there was less knowledge. We also know a lot more about the
impact of being in a cold apartment than we did.
So the public health concern for LIHEAP and the knowledge
behind there, I think, is much stronger than it was then.
And we also know that, as I was saying earlier, there are
more and more people in frail health living at home that need
adequate energy assistance. It really should be part of their
program to keep them in the house, and, unfortunately, it is
not. It is often thought of as an aside, like, ``Oh, right.
There is an energy bill there.'' Well, it is an extremely
important part of the package of helping people stay healthy in
their homes.
Ms. Clarke. I have heard in your testimony the discussion
around weatherization and how critical that is, but, you know,
I think that that is a preventative measure. For many homes in
New York City, in Brooklyn where I am from, there is a cost
involved, and, you know, I wanted to ask both you, Mr. Wolfe,
and Ms. Barlow. In your testimony, you state that
weatherization is a central part of assisting families in need
of home energy assistance. Mr. Wolfe, you stated that if a home
is weatherized, it can use up to 30 percent less energy than a
comparable home.
What can we do to help educate more families on the
importance of weatherization and energy efficient living, given
the fact that there is an upfront cost to those families?
Oftentimes, people defer it because, you know, their income to
do something like that is not there. It is just as bad. It is
like being between a rock and a hard place because your energy
is going up, yet you cannot do the things that are required
because of the finances involved.
Can you both give us a sense of that?
Mr. Wolfe. That is a very good point. Unfortunately, the
core program of the weatherization assistance program does not
receive sufficient funding. It is only enough funding to serve
about 100,000 families a year. States supplement that with
their own funds. So there is enough funding to weatherize about
200,000 homes a year nationally. That is in contrast to the
close than 6 million families that get energy assistance. So
really the federal focus is really on bill payment, but the
data are clear there is a lot of potential to save energy in
low-income homes, which would result in a lower energy bill.
Ms. Clarke. Ms. Barlow and Mr. Swanson, if you would give
us your impressions as well.
Ms. Barlow. As I indicated earlier, we only receive
annually $30,000 a year for the WRAP program, and with that
money, we do a home assessment to identify any apparent energy-
related structural deficiencies. We make recommendations that
might include insulation, caulking of windows and doors, repair
of broken windows, replacement of doors, repairs on the heating
system, or possibly wrapping the pipes and water heaters. So it
is a tremendous savings.
Again, maybe some sort of public service announcements--we
need to get the word out there that this is available, but,
again, funding is really a critical issue to reach all the
people, and it would be a tremendous cost savings.
Mr. Swanson. I think that in addition to what I have said
in my comments about Pennsylvania, my organization provides
both direct services and quality control for major utilities.
We have been able to get them significantly engaged in the
conservation programs as well. I think the scale is there to do
a lot more and get a lot of involvement.
Mr. Manning mentioned that in Pennsylvania we have private
contributions by other rate payers, and we are beginning to see
a mix of loan programs provided by our state agencies for those
who are not quite in this extreme need, but who have some of
ability to pay but need these measures.
If there is one thing I have seen over a long period of
time, it is a progression of people who more and more have
problems with their bills. So, at the same time that we are
responding, as Congressman Clarke said, to those people in
need, we also want to build a protection system for those who
are close to that margin, and given the likely increases in
energy costs over time, that is going to be a continuing issue.
Pennsylvania is a state that has benefited in many ways--85
percent of its electricity is coal generated. It is the
original coal and steel state, okay.
But those protections have helped us a bit. But we have to
build a program that starts with people with the greatest need
and responds to everybody.
Mr. Manning. Congresswoman Clarke, just very quickly, we
are working also at the state level as a company to ramp up and
to introduce additional and new incentive programs for energy
efficiency, and allocation will be set for those who are least
able to help themselves. So there will be a committed amount
out of those additional funds, and we are working through that
at the state level, but it is not nearly enough to get us where
we need to be.
Ms. Clarke. Thank you very much, Madam Chair.
And it is great to see you, Mr. Manning.
Chairwoman McCarthy. Thank you.
If it is all right with the panel, we have extra questions
that some members would like to do. So I do not know what your
time restraints are, if you could spend a little bit more time
with us?
Mr. Platts?
Mr. Platts. Thank you, Madam Chair.
I guess first maybe, Mr. Swanson, with your work in
weatherization and the conservation side, I think one of the
challenges of how to reach out to individuals to understand the
benefits, and even with their own funds, not waiting for
public, you know, assistance or private assistance, but
depending on the type of unit in which they live that it would
be in their own best interests to invest, and so, you know, do
you have suggestions on how we can better outreach to the
public to say, you know, ``here--you know, in the fall,
investing in this weatherization with your own dollars, in the
end going to reduce''--rather than waiting to get to that
crisis?
And then related to that, is one of the challenges--and I
do not have numbers to back this up, but my assessment is that
with low-income families, more of them are living in rental
properties. And so where there is any kind of investment that
is infrastructure involved, they are not really the ones to be
making that investment--the landlord is, and if the landlord is
not paying the utility bill, the renter is paying it directly.
The landlord does not really care to make the investment
because it is not going to save him or her money. It is going
to save the renter money in that direct payment. Do you have
any feel for that?
Mr. Swanson. Yes. The first issue is how do we encourage
people in general, particularly those of modest means, to
invest in energy, and one of our benefits is we have been doing
this for 25 years. We actually started doing a lot of low-tech
energy items for people, and public agencies did it. Utilities
have done it. The time has come to go back to a serious
investment in resources from private utilities and from
weatherization agencies to convince people they have got to
look at their consumption of energy, how to reduce it.
You know, the other side of this is behavioral changes
within acceptable limits. I am always concerned about pushing
turning the thermostat down too low because, as Mr. Wolfe has
testified, particularly with our senior citizens, they get
carried away with it and create dangerous situations. But the
behavioral changes along with the other modifications, to go
back to more serious investigations, reduce energy, and this is
not just for people with modest incomes. You know, it has
tremendous other positive benefits. So I think we need to go
back to that, and we need to go back to it in a way that is
more comprehensive and that reaches out to those that I
generally refer to as those that are hard to serve.
The hardest work we do at ACTION-Housing is providing
service to people for the first time. These are people, seniors
or not, who are tremendously resistant to taking advantage of
any resource. I see Congressman Clarke. She knows what I am
talking about. These are people who keep saying, as poor as
they are, as needy as they are, ``This is not for me,'' right?
``I do not need help. I need to go on my way.''
We have to find ways working with those who understand
communication a lot better than we do to connect with those
people and make a difference, okay? So we need to do that, and,
in many ways, we need to do it for all our households, to make
a difference not only in terms of affordability of energy, but
also conservation, as you mentioned.
What we could do in autos, what we could do in homes and, I
believe, residentially--there are experts here. Residential and
commercial is like 40 to 50 percent of our energy consumption.
It some significant number.
Mr. Caruso. Thirty.
Mr. Swanson. Thirty percent. Well, it is a huge consumption
of energy in our society, and we have mostly ignored it, okay.
So I think that is the answer there, is go back to that, and
most of our utilities provide high-quality audits. We do. And
we can do them very affordably, and that is really a message
there.
I have now forgotten your second question. [Laughter.]
Mr. Platts. I believe I have as well. [Laughter.]
Mr. Platts. And I am going to run out of time here.
Actually, I am going to jump to Mr. Manning for a different
question.
And it sounds like from Mr. Swanson's testimony or
statement in the last response that utility companies are
trying to partner with customers investing in improvements,
conservation efforts, weatherization and providing some funding
for that, for their customers.
Mr. Manning. Absolutely, and there are various different
pots. I mean, to be candid, there is a regulatory opportunity
here at the state level where it can be spread across the rate
payers. So those are some of the incentive programs which
exist.
In addition to that, companies such as ours are putting in
shareholder dollars. So the most traumatic was we had a very
cold winter 2 or 3 years ago. LIHEAP completely ran out. It was
the first of March. It was still severely cold. And we had an
opportunity and we just redirected $3 million from what was
going to go into a bonus program right into making up those
dollars. So that would be the extreme case where you just write
a check from the shareholder.
We also have a foundation which participates every year. We
also work very closely with all of the various organizations
that are doing this. So there is a shareholder opportunity.
There is a rate-payer opportunity where they all participate,
and there is an outreach to the consumer as well, and I do not
think we have done enough there because, as I indicated, we
have had some pretty good response with minimal outreach.
So I think those are sort of your opportunities, and,
again, knowing that--I mean, Mr. Swanson has been very
articulate on this need for weatherization, and the unfortunate
thing is we are so concerned about just the health of our
people this winter that we would like to do more on the
weatherization, the long term, the prevention. We would love to
do more on that.
Obviously, we are being held back a bit because we are
keeping concerned about those who are eligible for LIHEAP, and
as the chairwoman pointed out, many of these are working
families. These are the struggling, working, poor families in
the rural areas where the economy is not strong, in the inner
city. We have many of both, and we see it.
So, yes, we absolutely believe it is an opportunity to
partner, but let us be perfectly clear. The opportunity to bear
this with the entire population of the nation is not only
opportune, but it is necessary because that is the scale of the
problem.
Mr. Platts. A final kind of broader picture question for
you, Mr. Manning, and it relates earlier when I asked Mr.
Caruso about coal and you talked about coal and nuclear. I am
one that believes that to address this and related issues that
have any connection to energy, we need a truly comprehensive
plan, so I am one who is Republican, who is the lead Republican
on the CAFE standards, on renewable energy standards, promoting
alternative renewable fuels.
But I am also on the other side as far as production that
we better access our resources that we have, especially to make
the transition to new technology, and in the natural gas area,
there is a lot of documentation of our huge reserves in the
outer continental shelf area and, you know, getting access to
the area that most other nations are already accessing in their
regions, but we are not.
Mr. Caruso mentioned the number 11 percent as the projected
increase this winter for those who use natural gas. Any
projection of, if we were better accessing those resources that
we currently are not, how big a difference it would make in
that 11 percent? Would it be half of that if we had that, you
know, reserve available, or does it give any kind of
projection?
Mr. Manning. My friends behind me will be smiling because,
of course, this is an opportunity I have been waiting for for
some time, and----
[Laughter.]
Mr. Platts. And no one told me that, but it is part of my
approach.
Mr. Manning. Well, I actually am a chosen American. I got
my citizenship this year, and I could take you just a few hours
north of here to Eastern Canada where, of course, we have been
drilling successfully very well and very safely, and there is a
tremendous resource. You are absolutely right.
And the AGA has been very committed because we have the
relationship with the consumer. We are the ones that serve. We
are the ones that talk to the consumers. We are the ones that
are taking care of those who need the resource. My background
is in the upstream, and so I, in fact, worked on the rigs when
I was 18. So, if you ever want to have this conversation, I am
available.
But, yes, I cannot give you hard numbers. I think probably
my friend on the end can do more, but we need it all, and to
increase your availability of natural gas does not say that you
are not going to do wind. We absolutely need it all, and we
need an energy strategy that captures all of those resources
because we cannot get there from here without them.
So we are absolutely enthusiastic about renewables, and we
are doing everything we can, and our company has done a lot of
work to make sure we facilitate that. We installed the first
fuel cells in Staten Island in 1972. So we are also the first
ones to tap methane coming off a landfill in New York City. So
that is another conversation for another day perhaps, but----
Mr. Platts. Thank you and, again, my thanks to all of our
witnesses, both the big picture and then on the front lines--if
I remember, Mr. Jones who came to your program--in truly
serving those in need. I commend you.
Thank you, Madam Chair.
Chairwoman McCarthy. Actually, I am listening to the
conversation. I said, ``This could be the energy committee'' as
we are listening to everything, but it is true because one fits
into the other. I know that on the island I do read those
little flyers that you put in there, and I am going to be very
honest with you as, maybe, just as a little bit of criticism.
As you point out the different areas that need insulation
and everything else, it probably would be good just for the
average citizen to have some idea what it is going to cost--you
know, how much does it cost to put a wrap around your hot water
heater--because if we are talking about the clients that we are
trying to help the most, they are going to get a flyer like
that, and they are going to say, ``I cannot afford it,'' even
though, you know, the different companies are helping them to
get to that point.
But I am talking also about the average citizen. You have
no idea what it is going to cost to insulate this. I did not
know. I thought I had good insulation. I saw one of your
flyers. If I can see the wood beams on the floor, I do not have
enough insulation. Well, I do not have enough insulation. So I
think that might be a good idea just for the regular consumer.
So, hopefully, you will make more money so you can help those
that we need to help.
But, Mr. Caruso, I had the pleasure of going to India and
China and, obviously, the growth there is unbelievable, and so
I am looking at the energy crisis as very long term because, as
we see undeveloped countries from when I was a young person to
being developing countries now, more and more resources are
going to be used.
And so I do believe that this nation--and I did live
through the 1970s when we had the crisis and the long lines and
the complaining when I think the gas went up to, what, 75
cents, if you could find gas, and here we are going through a
crisis again, and then--you know, maybe the government or most
people do not feel that way, but, you know, when you are
spending $50 a week to fill up your tank versus what you used
to spend, that is going to pull back, you know, whether someone
is not going to go shopping or Christmas is going to be a
little bit tighter this year because people are nervous out
there. The average person is nervous because they do not
understand everything.
So I think if there is anything that happens long term, it
is going to affect, again, the clients that we are looking to
help, whether it is heating them, feeding them and certainly
making sure that children can grow up to be productive citizens
to keep our whole economy going. I mean, that is what we should
be looking at, the future for our young people.
So if you could kind of give us a little outlay on what you
see for the future in your crystal ball, you know, and what
this country is going to face, I think the country is strong
enough to understand that we need to do a lot more, and I think
everybody realizes it nowadays, but somehow we have to push it
a little bit more.
Mr. Caruso. Yes. Our long-term projections are for higher
real energy prices, particularly oil and natural gas, and a lot
of that upward pressure on price is the result of strong growth
in places like China and India. I mean, they are really going
to lead the energy future markets as we project out 20, 30
years.
Now, clearly, that is good news because it means there is a
growing global economy. On the other hand, as Mr. Manning has
pointed out and Mr. Platts' question implied, we need to look
at all sources of energy, including efficiency. That is a
source of energy by reducing waste.
And, therefore, as you point out, this sounds like an
energy committee, but, indeed, the issues you are dealing with
here are directly related to that, and I think we need to think
of it in terms of the broad picture and specifically with
regard to access to--and I know it is controversial--East and
West Coast resources, oil and natural gas, whatever that number
is. I agree with Mr. Manning it is hard to say, but whatever
the number is that is not being developed in our own country,
that will have to be imported.
So, if you do not find and develop new natural gas--let us
say it used to be close to the United States--for every
thousand cubic feet, we will be importing most likely liquefied
natural gas and most likely from the Middle East or perhaps,
you know, Nigeria or Russia. So, in terms of security of supply
and the economics of it, I think we need to think of this in
the broadest way, including how energy relates to the issues of
your own committee.
So I absolutely agree with you, Madam Chairwoman, that
there is a complete linkage between what we are doing, in my
case the Energy Information Administration, and what the other
panelists here are doing in serving their clients.
Chairwoman McCarthy. Let me just go with a follow up, and,
Mr. Manning, you can jump in on it.
I had the pleasure of going to a large corporation on the
island that had been using fuel cells, and, obviously, they are
very expensive to, number one, put the program together, but,
you know, at this point now, they are actually going to be
getting new fuel cells because the price has dropped down
dramatically. So, with that, I happen to look forward to
hopefully research and development where there is clean coal,
hopefully that this nation can be independent down the road--I
know it is not going to be in my generation, but down the
road--so that we can do a better job.
But even with Mr. Manning on helping certainly constituents
on Long Island, upstate New York and in the Northeast--and,
again, it is not our committee because I happen to be one of
those people that do believe that if we do not look at
everything, we are not going to survive down the road, and so,
with that--and, again, this is not our committee, but it does
have to do with helping our constituents that need the most
help.
Even having a tax credit--even though you were doing well
and you are helping our constituents and I appreciate that,
would it be more conducive to even have some sort of credit
because you are reaching out, and would that raise money to be
able to help the constituents that we have, whether it is
weatherization, which would fit in perfectly----
Mr. Manning. Yes, it would. If you look to the quiver of
the federal government, that would certainly be one of the
opportunities that you can have access to, and it certainly
would, obviously, encourage the utilities. We are looking at a
number of opportunities to drive energy efficiency, including
decoupling.
There are ways to break that relationship between the
volume of energy that you sell and the way you compensate the
company. Those are all opportunities. But, certainly, taxation
has proven to be a very effective carrot as well and
particularly when it is focused. So I would encourage that
review.
Mr. Swanson. If I might add, I think it is an excellent
concept. The housing nonprofits in this country have had the
benefit of working with a federal low-income housing tax
credit, which today produces 120,000 units a year. It is, in
fact, the driving force behind affordable housing, the business
that I am in. It took time to develop it, but, you know, the
investments come from banks, from major corporations, from
investing in credits.
About 75 percent of the cost of the housing is actually
paid for by the credit investment. The rest of it is in public
resources and private loans. I think a similar bold concept
related to energy and even cash assistance is very workable,
and there is a whole industry out there that is now built and
thriving around a tax credit in housing.
Ms. Barlow. I think tax credits are an excellent, but, once
again, we really have to publicize and make people aware of it.
The earned income tax credit that would benefit so many people
is left on the table by many, many individuals. So, again, if
we had something like that, we would have to get the word out
and make sure people know how it would benefit them, but I
think it is certainly something worthwhile to pursue.
Mr. Wolfe. I think that--I mean, I agree with everyone--the
LIHEAP really works well the way it is. Only 10 percent goes
for admin. The low-income housing tax credit--there are quite a
few middle men that take, you know, 10 to 20 percent right off
the top in terms of trying to move it from the credit to banks
to investors.
LIHEAP is really designed to get money out to people right
way. In a sense, it is more complementary to, say, food stamps,
and I think we need to think about that as an income support
program. Yes, it pays for energy, but it also helps support
income, and I think the related piece to that is going to be
how it ties to the earned income tax credit, is there is no
federal program to help with gasoline, and millions of working
families this winter are not just going to see higher energy
bills to heat their home, but to drive to work.
So we are really looking at almost a second shoe that is
going to fall, and I think, as I have sort of listened to
everyone talk, I think that is the real problem that poor
people are facing this winter, higher costs to go to work as
well as higher costs to heat their home, and that is, I think,
what we are worried about. And the only program we have to help
people with their energy bill is LIHEAP, and I think if that is
strengthened, that could help mitigate some of the problems
with gasoline.
Chairwoman McCarthy. With that, Mr. Wolfe--and I am not
going to go into another subject because that is a
transportation problem. I know on Long Island, for my working
poor, there is no way to go north and south. It is by buses. So
that is even another subject. We probably could sit here all
day and, you know, maybe by the end of the session, we could
actually have some answers.
Ms. Clarke?
Ms. Clarke. Thank you very much, Madam Chair.
AS a practical matter, behavior modification is costly when
it comes to homes and families. According to the company Energy
Star, if every American were to replace one regular light bulb
with a fluorescent bulb, we would save enough energy to light
more than 3 million homes a year. The initial cost of
fluorescent bulbs may be more expensive than your average bulb,
though the payoff would be greater in terms of the energy
efficiency savings.
I want to ask what can this committee do to alleviate the
initial economic strain on energy efficient living for working-
class and low-income families, and I want to just sort of touch
on the topic that Madam Chair just raised and combine that with
something that Mr. Platts talked about, and that is the issue
of renters, and I want to add to that the factor of aged
housing stock and absentee landlords.
Do you believe that a weatherization incentive in the form
of a tax abatement could target those particular home
environments? That is for everybody.
Mr. Manning. I think we are on to something, Madam Chair,
and I think the opportunity, Congresswoman Clarke, is to look
at some of the existing programs which are functioning now,
such as the one that my friend lives and breathes with, and see
if we cannot take that model and that structure and turn our
attention to that kind of weatherization and those kind of
enhancements. Your comment with respect to the upfront cost and
the opportunity for light bulbs, that is an excellent example,
particularly as just, you know, the compact fluorescents have
come down dramatically in price in the last 5 years.
There are more opportunities for what we call compact or
distributed generation, micro-combined heat and power, some of
these technologies where right now they are just now affordable
for those who can afford it. Ultimately, they will come down in
price, and they will start to become part of the solution, if,
in fact, you can adjust the system.
So there may be an opportunity for us to collaborate and
have a look at some of those structural models and try and
address the specific questions you have asked.
Mr. Swanson. Thank you for reminding me what Congressman
Platts' second question was, what do you do about rental
situations, and we already do conservation in rental
situations. It is easier to structure when, in fact, the
landlord is paying the energy bill. The landlord is, therefore,
motivated to conserve, and it can have the benefit of keeping
rents down. It is more complex when--I said it the other way
around--the tenants pay, but it is easier to set a benefit
there.
When the landlord, in fact, has the opportunity to absorb
that benefit, then we actually ask them to make the
investments. As you know, my main line business is working with
affordable housing. We work with a lot of private landlords,
and, you know, many of them are motivated because when they
look at the trends and future projections of energy costs, they
probably assume scenarios far worse than Mr. Caruso would
paint.
They tend to look at 1-year increments and then multiply
them by 10 years and assume that their energy bill is going to
be 250 percent larger in a short period of time, and so they
more than anything understand that there is a limit to what
their tenants can afford, all right. It does not do any good to
charge tenants for rents that you cannot collect, okay. And
that is what we are talking about here.
So I think you see a mix of different benefits there. We
already do that in a modest way, and, again, with the right
investments, you can structure it so it makes some sense.
Thank you.
Ms. Barlow. I think what is difficult for people who are
cash poor is to understand the concept that spend more now, and
you will be able to save later, and that really relates to what
Mr. Wolfe said, and that is the problem with the tax
abatements, very, very difficult to get that concept across,
even though it would benefit them. So it is kind of a negative
answer. I do not have an alternative answer, but that is my
reaction.
Mr. Wolfe. One thing to add is 40 percent of all low-income
families own their own home. You know, nationally I think it is
about 65 percent, and we have a program with the Ford
Foundation. We have pilot sites in 12 cities. We actually had
one on Long Island, with CDC on Long Island, where you looked
at using weatherization as the base, not just energy efficiency
and helping save bills, but you can also see it as a program
that can help strengthen low-income home ownership.
We brought together HUD programs with weatherization with
state funds, and what we saw was that many families had a set
of common problems--many families that own homes--high energy
bills, homes that were in need of repair, and high interest
rate mortgages, and it all comes together. You know, in some
ways, you can think of subprime lending as an issue over there
and HUD programs as an issue over there and weatherization over
here and energy assistance, but when you put them together, you
can really make a terrific difference in a family's life.
And that is what we saw in our pilot programs, that, yes,
these programs are underfunded. There is no question there is
not enough money, but they really can work and do terrific
things to help families, and we saw that in each of our pilot
sites, and I think what we are trying to get at is: Is there a
way to use federal and state monies to strengthen low-income
home ownership? And I think the answer is ``yes,'' that if you
think of weatherization and energy assistance as a key piece of
that solution, then I think all else follows.
And you see that, yes, of course, this program should be
funded better and, of course, I think it helps to strengthen
those families because they are all struggling to retain home
ownership. These are families who live paycheck to paycheck.
How they got their first house is a miracle sort of thing. It
is the only asset they have. It is how they grow assets over
their life. And we can use weatherization as a way to give them
a helping hand to kind of strengthen their ability to keep and
maintain their home.
Chairwoman McCarthy. I want to thank all of you for coming
here and testifying today. I think we have learned an awful
lot. We have covered an awful lot of subjects. But, again, it
is how are we going to do a better job on taking care of our
constituents to make sure that they have heat?
You have heard me mention before my background is a nurse,
so I believe holistically, and, unfortunately, Ms. Barlow, you
hit it right on the head because Congress does not see
sometimes that by spending a little money, we can save a lot of
money in the end, and that could be for health care, that could
be for education, that could be almost every single subject
that you want to, you know, cover there.
So I thank you for your insight, but, again, it is
unacceptable that over a million households lost use of
critical utilities last year. We must work together to make
sure this program gets the funds it needs. We want local
program administrators like you, Ms. Barlow, to retain the
dedicated staff such as the people you talked about. We need to
strengthen public-private partnerships and help states to find
ways to work with companies to increase the reach of LIHEAP
without lowering the benefits of LIHEAP.
I want to again thank each and every one of you. I would
love to have a committee hearing with Charlie Rangel for the
tax area, Financial Services, Mr. Swanson, because we are
actually doing a lot on housing, and we want to look at how we
are rebuilding or renovating the apartments that so many of our
low-income families are in.
I live in an apartment building right here, and you have to
open the windows in the winter even though I do not have the
heat on. I never put the heat on in my apartment, but, last
year, they decided to put in brand-new windows. At least now
during the summer, I do not have to raise the air conditioning
all the way up because it actually stays cool. So there is
money to be saved.
As previously ordered, members will have 14 days to submit
additional materials for the hearing record. Any member who
wishes to submit follow-up questions in writing to the
witnesses should coordinate with the majority staff within the
requested time.
[Additional submission from Chairwoman McCarthy follows:]
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------
Without objection, this meeting is adjourned. Thank you
very much.
[Whereupon, at 4:52 p.m., the subcommittee was adjourned.]