Families with lower incomes are more vulnerable to the economic burden of high energy costs than families with higher incomes because energy represents a larger portion of their household budgets. A recent study found that on average, low-income households pay 7.2 percent of household income on utilities – more than three times the amount that higher income households pay (2.3 percent). Economists consider 6% of income to be an “affordable” energy bill, but many low-income families often pay 20% or more. In 2015, the Home Energy Affordability Gap for those near or below the federal poverty line was calculated to be $40 billion.
There are two principal federal programs that address the energy burden faced by low-income Americans: the Department of Health and Human Services’ Low Income Home Energy Assistance Program (LIHEAP) and the Department of Energy’s Weatherization Assistance Program (WAP). LIHEAP provides direct assistance to help households cover their energy costs and keep their utilities running. LIHEAP has historically received between $2.5 and $4.5 billion in congressional appropriations and provides roughly 6.7 million households with heating or cooling assistance in a typical year. The WAP focuses on installing energy conservation and energy efficiency measures in low income households, such as blower door directed air sealing, exterior wall insulation, attic insulation, furnace repair or replacement, duct sealing, and refrigerator replacements. These services can save a low-income family between $250 and $450 annually in energy costs for up to 30 years.
LIHEAP and WAP work hand in hand to help low income families combat the financial burden associated with high energy bills and are often programs run by and offered by the same agency. In an extreme winter or brutal heatwave, LIHEAP is a critical, if not lifesaving, resource in keeping utility services up and running when financial circumstances could result in a shut off. Weatherization, under the same conditions, is a long term solution to fix the underlying efficiency problems that continually strain a family’s utility costs and contribute to the high energy bills. This is why current regulations allow states to spend up to 15% of their LIHEAP allocation on weatherization. As opportunities arise, some states will utilize up to 25% of their allocation towards weatherization through the use of LIHEAP’s Good Cause Waiver.
The partnership between LIHEAP and WAP allows for a greater impact on the home energy affordability gap than either program would make on its own. For example, local service providers and Community Action Agencies, provide energy services to over 4.4 million low-income individuals through a combination of WAP, LIHEAP, and other energy programs in a single year. This combination helps make low-income individuals’ homes more affordable, healthier, safer, and more energy-efficient in the moment of need and for years to come.
As August marks both LIHEAP Action Month and the 40th Anniversary of the WAP, it’s more critical than ever to recognize these two programs as partners working to ensure energy security and affordability for low income families. LIHEAP and WAP are two sides of the same coin –as homes are weatherized for long-term cost efficiency, the immediate needs for critical LIHEAP assistance reduces over time.
Let’s take some time to celebrate both programs and the important services they provide!