High Energy Prices Hard on Low Income Families

While central Ohioans welcome April and its promise of warmer temperatures, many families still face bills left from trying to heat their homes last winter. More families are turning to two programs designed to help meet energy costs, but the success of these programs is mixed in the face of rapidly rising energy prices.

Dave Rinebolt of Ohio Partners for Affordable Energy, OPAY, says everyone is getting squeezed by higher energy prices, but it’s harder on the poor. OPAY is a trade group of non-profits involved with helping low income families pay their energy bills and weatherize their homes. He says the demand for OPAY services has been increasing since 1999, and this year was no exception.

Most homeowners and many renters noticed the past winter’s nine percent increase in natural gas prices, but Rinebolt says, the poor spend a far higher percentage of their income on energy. The poor spend 15 percent of the income on natural gas and electricity bills while higher income families spend about five percent.

Francine Sevel, a consumer policy analyst, says some families of four have a household income of $10,000 per year, and they’re facing $300.00 energy bills. Combined with the rising cost of gasoline, underemployment or unemployment, the higher energy costs are a real problem.

HEAP – the Home Energy Assistance Program – is perhaps the best-known source of help with energy costs. But the help is minimal. Sevel mentioned $300.00 per month heating bills, and $300.00 is more than the typical Ohio family receives for the entire winter through the federally-funded HEAP.

HEAP money does not have to be repaid, while another statewide program in Ohio does. PIPP – Percentage Income Payment Plan – is an extended payment arrangement . Eligible families agree to pay 10 percent of their income every month to the natural gas company and five percent of their income every month to the electric company. Rinebolt says, PIPP – because it has to be repaid – is not very popular.

The National Energy Assistance Directors Association recently surveyed HEAP recipients, and in Ohio, one-third said they failed to make a full rent or mortgage payment to pay their energy bills. One-fourth went without food for at least one day. The consequences of not paying an energy bill can be severe. Four percent were evicted from their home or apartment. High energy bills forced another nine percent to move in with family or friends, go to a shelter or become homeless.

Rinebolt says homelessness resulting from failure to pay energy bills is less common in Ohio than in other states because of PIPP and other programs such as weatherization efforts – adding insulation, for example – which can save low income families as much as 30 percent on their energy bills. Francine Sevel says, even for families making such efforts, the return may be minimal because it’s no possible to put enough plastic over windows to make a difference when the home or apartment needs a new furnace.

Sevel is Senior Consumer Affairs Policy Analyst for the National Regulatory Research Institute, located at Ohio State. Dave Rinebolt is Executive Director and Counsel for Ohio Partners for Affordable Energy in Findlay.

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