[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE FUTURE OF LIHEAP FUNDING: WILL FAMILIES GET THE COLD SHOULDER THIS
WINTER?
=======================================================================
HEARING
before the
SELECT COMMITTEE ON
ENERGY INDEPENDENCE
AND GLOBAL WARMING
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 25, 2008
__________
Serial No. 110-50
Printed for the use of the Select Committee on
Energy Independence and Global Warming
globalwarming.house.gov
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SELECT COMMITTEE ON ENERGY INDEPENDENCE
AND GLOBAL WARMING
EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon F. JAMES SENSENBRENNER, Jr.,
JAY INSLEE, Washington Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California GREG WALDEN, Oregon
STEPHANIE HERSETH SANDLIN, CANDICE S. MILLER, Michigan
South Dakota JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California
------
Professional Staff
Gerard J. Waldron Staff Director
Aliya Brodsky, Chief Clerk
Thomas Weimer, Minority Staff Director
C O N T E N T S
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Page
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 1
Prepared statement........................................... 3
Hon. F. James Sensenbrenner, Jr. a Representative in Congress
from the State of Wisconsin, prepared statement................ 6
Hon. Emanuel Cleaver II, a Representative in Congress from the
State of Missouri, prepared statement.......................... 8
Witnesses
Hon. Deval Patrick, Governor, Commonwealth of Massachusetts...... 9
Prepared statement........................................... 12
Answers to submitted questions............................... 69
Mark Wolfe, Executive Director, National Energy Assistance
Directors' Association......................................... 28
Prepared statement........................................... 33
John Drew, Executive Vice President, Action for Boston Community
Development, Inc............................................... 39
Prepared statement........................................... 42
Howard Gruenspecht, Acting Administrator, Energy Information
Administration................................................. 50
Prepared statement........................................... 52
Answers to submitted questions............................... 72
Submitted Materials
Hon. John Shadegg, a Representative in Congress from the state of
Arizona, a letter from Governor of Arizona, Janet Napolitano,
to the honorable Michael O. Leavitt, Secretary of Health and
Human Services................................................. 22
THE FUTURE OF LIHEAP FUNDING: WILL FAMILIES GET THE COLD SHOULDER THIS
WINTER?
----------
THURSDAY, SEPTEMBER 25, 2008
House of Representatives,
Select Committee on Energy Independence
and Global Warming,
Washington, DC.
The committee met, pursuant to call, at 2:04 p.m., in room
1324, Longworth House Office Building, Hon. Edward J. Markey
(chairman of the committee) presiding.
Present: Representatives Markey, Inslee, Solis, Herseth
Sandlin, Cleaver, Hall, Sensenbrenner, and Shadegg.
Staff Present: Morgan Gray.
The Chairman. This hearing is called to order of the Select
Committee on Energy Independence and Global Warming.
While the debate in Congress over high gas prices has been
red-hot this summer, families in the Northeast and Midwest have
also been thinking about how they will cope with the cold
weather this winter. The prices of home heating fuels have been
skyrocketing and millions of families will face tough choices
during the upcoming months between the purchasing of fuel or
purchasing of food.
The Department of Energy's projections for home heating
prices this winter are grim. DOE forecasts that families in the
Northeast who use heating oil will spend 30 percent more this
winter than last year, an increase of more than $600. Families
using natural gas will spend nearly 20 percent more this year.
And regardless of the region of the country or the home heating
fuel, the Department of Energy is forecasting that families
will experience a substantial increase in their heating costs
this winter.
We will be hearing from the Department of Energy later on
this afternoon.
American consumers, who have already been getting tipped
upside down when they pull up to the gas pump, will now also
face high energy prices when they return home. Incredibly, this
year many low-income families will spend even more to heat
their homes than they have already spent on record gasoline
prices. Low-income families on average spend roughly 15 percent
of their income on home energy bills.
For nearly 30 years, the LIHEAP program, the Low Income
Home Energy Assistance Program, has helped low-income families
pay their home energy bills. This program has been a vital
safety net for millions of Americans.
However, under the Bush administration, this program has
been woefully underfunded. In his budget request this year,
President Bush proposed cutting total LIHEAP funding by 22
percent, reducing it from $2.57 billion to $2 billion. Indeed,
in recent years, LIHEAP has generally been funded at less than
half of its authorized level of $5.1 billion. As a result, last
year LIHEAP was only able to provide assistance to about 15
percent of eligible families nationwide.
At a time of record oil prices, the President can't
continue to freeze funding for this important heating
assistance program. Earlier this week, nearly 100 Members
signed a letter requesting that LIHEAP receive full funding in
any continuing resolution that passes the Congress. And
yesterday, under the leadership of Speaker Pelosi, the House
passed a continuing resolution that would massively increase
LIHEAP funding, providing a total of $5.1 billion for the
program. That is full funding at the authorized level.
This additional funding could not come at a more important
time to ensure that families will not be left out in the cold
this winter. Indeed, the increase in LIHEAP funding over last
year's level that is included in the CR would be greater than
the total funding level for the program in 25 out of the 27
years that the program has existed.
The House-passed continuing resolution would also expand
the number of people eligible for LIHEAP assistance, in order
to help additional families already struggling under the
increased costs of everything from gas to groceries.
Governor Patrick, who is our first witness, has given
outstanding leadership to this program.
[Prepared statement of Chairman Markey follows:]
Many members of this committee are also on the Financial
Services Committee and other committees with jurisdiction over
this financial bailout that we are going to be deliberating
upon later on today and tomorrow. And so that is just an
unfortunate set of circumstances that have developed--that, as
the afternoon goes by, I think we will be visited by those
members as well.
[The prepared statements of Mr. Sensenbrenner and Mr.
Cleaver follow:]
But I don't think it should interfere with hearing from
Governor Patrick at this time, so that he can be recognized to
make his statement to the committee.
We welcome you, sir. We thank you for your great leadership
on this issue. Whenever you are ready, please begin.
STATEMENT OF HON. DEVAL PATRICK, GOVERNOR, COMMONWEALTH OF
MASSACHUSETTS
Governor Patrick. Mr. Chairman, thank you. And thanks to
you and the members of the committee for the opportunity to
appear today and testify.
I know, as you mentioned, that the turmoil in the financial
markets is dominating your own and the general public's
attention today, as well it should. It is certainly on my mind
and, I am sure, on the mind of every other Governor in the
country. Especially under those circumstances, I thank you for
turning some of your attention today to the subject of this
hearing, a crisis in the making that has the potential to
become a public health threat in Massachusetts, in New England,
and in many other parts of the country. I am talking about the
crisis of home heating costs that cold-weather States expect
this winter. Without help, many of our most vulnerable citizens
will find themselves facing heating bills they cannot pay.
And the challenge is right around the corner. Nighttime
temperatures are already dropping into the 40s and 30s this
week in New England. Unless we prepare, including by fully
funding the LIHEAP fuel assistance program, my State and others
will face what some call a slow-motion Katrina.
Let me try to dimensionalize the challenge for you. Home
heating oil is used by nearly 40 percent or 963,000
Massachusetts households. According to our Department of Energy
Resources' regular statewide survey of prices, the average
price of home heating oil in Massachusetts hit a record high of
$4.71 a gallon after steadily rising week after week for over a
year.
Now, even after the recent moderating of those prices,
prices of heating fuels have settled in at roughly $4 a gallon,
which is 50 percent higher than just last year, when the
average price was $2.70 a gallon. Should the price remain at $4
a gallon through the coming heating season, it will take more
than $3,200 to heat an average Massachusetts household with oil
this winter, up from $1,800 just two winters ago. Many consider
that estimated average to be conservative. If a family uses the
more commonplace 1,100 gallons next winter, which is not
unusual as I say, it will cost them over $4,000 to heat their
home. Again, that compares to $1,800 just two winters ago.
The Massachusetts LIHEAP program is expected to serve
almost 144,000 households this winter. With rising energy costs
and level funding, our benefits would barely cover half the
roughly $1,130 it costs to fill a tank of heating oil. At that
rate, the benefit would run out by the end of this calendar
year.
So I want to thank the House for substantially increasing
the Federal Funding for the LIHEAP program through the
continuing resolution passed last night, and for doing so on a
broad bipartisan basis.
The prospect of significantly higher home heating cost this
coming winter was sufficiently alarming to me and to my
colleagues in the legislature that we formed a Winter Energy
Costs Task Force. In five public hearings across the State, the
task force heard compelling testimony about the impact that
high heating costs would have our most vulnerable citizens,
including low-income families with children, people with
disabilities, and seniors as well.
I just want to give you a couple of the stories that we
learned with. One about a senior citizen from Gloucester, not
unusual, who was living on $790 a month to pay for his housing
and medical expenses, and who, beyond that, could not afford
the oil needed to heat his home. Without an increase in funding
for fuel assistance, he would be eligible for only so much as
to buy two-thirds of one tank, which might not even get him to
January. He is considering a reverse mortgage in order to get
by this winter.
Another example, a director of a community action program
in Lynn told the story of a woman with three school-aged kids
who just lost her job. She is collecting $157 each week in
unemployment. She doesn't even have enough to cover her rent of
$800 a month. Without additional LIHEAP funding, fuel
assistance won't be enough to fill her oil tank even once.
This CAP director who told us that story said that, in 29
years of his own service, he has never seen so many folks
asking for fuel assistance for the first time.
Now, I do want you to know that Massachusetts is doing
everything we can to avoid disaster this winter. Our Department
of Public Utilities has recently ordered an increase in the
discount given to low-income customers on their electric and
natural gas bills, which will save them between $75 and $300
over the coming winter. We have also expanded programs to help
low-income customers pay past-due bills.
We have appropriated $10 million in State funds in
unusually tight fiscal times to supplement Federal fuel
assistance funding this winter as well. And we are working to
expand energy-efficiency services provided by utilities this
fall to help their customers tighten and insulate their homes
as well as upgrade their heating systems with the help of
rebates and low-interest loans.
These latter measures, by the way, are consistent with the
accelerated implementation of what we call the Green
Communities Act, a comprehensive energy reform legislation,
which I know you know about, Mr. Chairman, that I signed into
law earlier this year.
In addition, we are going to use the proceeds of the very
first auction of greenhouse gas emission allowances under the
Regional Greenhouse Gas Initiative, which took place this
morning, to support energy-efficiency efforts. The specific
targets of those investments will depend on the recommendations
of that Winter Energy Costs Task Force I mentioned a moment
ago. We will have their report shortly on measures we can take
to help our fellow citizens stay warm and safe this winter.
But the fact is that we still need you. I very much
understand and respect the demand for resources that compete
for your attention; I really do. Nevertheless, what is at stake
is the real possibility that many citizens in the colder
regions of this country will be at risk of freezing to death
without Federal help.
So I thank you again for the House action yesterday. And I
urgently ask the full Congress to fully fund the Low Income
Home Energy Assistance Program at the $5.1 billion level now
under consideration as part of the continuing resolution. This
funding would almost double this winter's expected LIHEAP
benefit in Massachusetts, providing enormous help to families
across the Commonwealth and, indeed, to families in all of the
affected regions.
I lastly just want to acknowledge that, though essential,
this funding is a stopgap measure. High energy costs in the
Northeast are a foreseeable and continuing reality. A dedicated
Federal plan that includes support for State LIHEAP programs
and also for efficiency strategies and renewable energy
generation and delivery is the big task remaining. And we look
forward to working with you on that, as well.
Thank you very much.
[The statement of Governor Patrick follows:]
The Chairman. Thank you, Governor, very much.
Let me now turn and recognize the gentleman from Arizona,
Mr. Shadegg.
Mr. Shadegg. Governor, I want to thank you for your
appearance here. This is an important topic, and I share many
of the concerns you expressed.
As I listened to you--I am not going to ask questions--but
as I listened to you, I couldn't help but think of T. Boone
Pickens and his argument to us that natural gas is more
plentiful in this country and that it is a cleaner fuel.
I guess that leads me to wondering--and I listened to you
describe the program you have to encourage people to put in
more efficient fuel heating systems in their homes. Obviously,
gaining as much savings as we can in energy in this country
through efficiency gains, through better insulation, and
through the cleaner fuels, for example, natural gas, are all a
part of this problem. LIHEAP has played a key role.
I am going to suggest or request that a letter from one of
your colleagues, my Governor, Janet Napolitano, be inserted in
the record. It is a letter she wrote in September to former
Governor Mike Leavitt about the inequity.
I do not know that heat kills as many Americans as cold or
is as vast a problem, but it is a real problem. We do have
people in Arizona who die as a result of not having heat in
their homes, and that is as big a tragedy as somebody dying in
your home State of the lack of heat. Arizona is, in some ways,
blessed by having both problems. We have parts of Arizona which
are, quite frankly, as cold as Massachusetts. So this program
is important.
I guess I would hope for the day when we need this program
less because we have taken on American energy and brought down
the price of energy by forging on into the future, as my
colleague from Massachusetts has pushed us to do for so long.
So I would request unanimous consent to put that letter in
the record.
The Chairman. Without objection, so ordered.
[The information follows:]
Mr. Shadegg. I commend you for your work and initiative in
this area, and I appreciate your testimony.
With that, I will yield back.
The Chairman. Thank you.
Any comment, Governor?
Governor Patrick. Well, I would just say, Congressman,
first of all, on the point about natural gas, I couldn't agree
with you more. In terms of its impact on the environment, it is
a lot cleaner than the burning of oil or coal for that matter.
It is a challenge for us, because we are at the end of the
pipeline. And so we have been working on strategies, some with
Canada and some with other suppliers, on how safely to deliver
liquefied natural gas into the pipeline that affects us in New
England. We don't have a solution for that, but we have been
working on it.
And I take your point also about the concerns that are
different but no less significant in their impact on human
beings of extreme heat just as extreme cold and not being able
to necessarily deal with that or respond to it.
I understand that the LIHEAP program will be up for
reauthorization soon, and I suspect that, tough as those issues
are, they will get worked out there. And we look forward to
being part of that conversation.
Mr. Shadegg. Well, as hot as it is in Arizona and in parts
of the area, it presents a very real challenge. And,
fortunately, I think we are going to look at this program and
find a little bit greater equity in it. But I appreciate your
efforts. Thank you.
Governor Patrick. Thank you.
The Chairman. The gentleman's time has expired.
Governor, do you work with other Governors in the region in
putting together a strategy to deal with this issue?
Governor Patrick. Well, we have worked with Governors in
the region on two fronts. First of all, we had all of the
Governors in New England together to discuss common ways or
just, really, to trade best practices around efficiencies and
to help prepare for the coming winter. We did that in July.
And it was following that that we wrote to the President
and to the congressional leadership, asking for the full
funding of LIHEAP and the Weatherization Program, precisely the
action that you took in the continuing resolution. So, again,
thank you for that.
The outcome of the Winter Energy Costs Task Force that I
mentioned earlier, the recommendations that will come from that
from Massachusetts we will share with our colleagues around the
region. And we have been taking some of their counsel, as well.
And, finally, I would mention that, just 2 weeks ago, maybe
last week--I am losing track of time--the New England Governors
met with the eastern Canadian Premiers, which we do
periodically, but particularly to talk about how we can begin
to economically get renewable energy generated in Canada down
into our region.
The Chairman. That would really be a huge breakthrough if
we could accomplish that goal.
And you put together a joint task force this past summer in
anticipation of the higher energy prices.
Governor Patrick. That is right.
The Chairman. Could you talk a little bit about that and
the lessons that other States might learn from that?
Governor Patrick. Well, we will have those recommendations
in the next week or so, Mr. Chairman. They are due at the end
of this month to myself, the Speaker and the Senate President.
They took testimony from around the Commonwealth so that we
were getting practical and not theoretical insights.
LIHEAP was a part of that discussion, but not the sole part
by any means. A lot of interest in how we support efficiency
initiatives, including weatherization, including changing out
or updating inefficient heating systems, that sort of thing,
and what resources there are for that.
Some of this is paid for already by an added charge on
utility bills. And I have used my own, sort of, bully pulpit to
encourage residents to get those energy audits now before the
weather gets too cold, so that they can begin to prepare.
The Chairman. Thank you, Governor.
The Chair recognizes the ranking member of the committee,
the gentleman from Wisconsin, Mr. Sensenbrenner.
Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
First of all, I am sorry I am late, but I was getting my
picture took with the Judiciary Committee, since I have my
bright red tie on. That ended up being more important. Sorry,
Governor.
Governor Patrick. No worries.
Mr. Sensenbrenner. Secondly, I have an opening statement
that I would ask unanimous consent to be included in the
record.
The Chairman. Without objection, it will be included.
Mr. Sensenbrenner. Thirdly, let me say that, while I think
the LIHEAP program is important, you know, I expressed my
concern about how the formula operates. You know, the chairman
and I both represent cold-weather States. Having assistance to
low-income people is much more important in cold-weather States
than it is in places that your constituents, Governor, and mine
flee to, like Arizona, which get hot upon occasion but doesn't
get cold very much.
And, you know, the LIHEAP program, in my opinion, was
designed to help people stay warm when it was cold, not to help
people cool down when it was warm. And I guess I can say that I
am not surprised but I am a little disappointed in seeing the
letter that is up here from the Governor of Arizona saying that
she isn't getting her fair share, when nobody is going to
freeze in Arizona or in most places in Arizona.
So having put that marker in and raising the blood pressure
of the gentleman to my left, I will yield back the balance of
my time.
Mr. Shadegg. Will the gentleman yield?
Mr. Sensenbrenner. Of course I will.
Mr. Shadegg. You missed my remarks. Heat kills people. It
actually, all kidding aside, heat does kill people. And I am
not saying that it is as expansive a problem as it is for cold
States, nor fortunately does it last as long, but it does kill
people.
And I also pointed out in your absence that there are parts
of Arizona where cold kills people, where, for example, our
Native Americans on the Navajo reservation confront the same
cold problems that you do.
Mr. Sensenbrenner. Reclaiming my time, let me say to my
colleague from Arizona that I thought I had him on our side on
the whole debate on global warming. And I am afraid you are
falling off the wagon.
And now I will yield back.
The Chairman. We haven't seen that, by the way, in 2 years.
This is a high point in our final hearing.
The Chair recognizes the gentlelady from California, Ms.
Solis.
Ms. Solis. Thank you, Mr. Chairman.
And I welcome our guest for being here.
Governor Patrick. Thank you.
Ms. Solis. I would also like to submit my statement for the
record, if I could do that, Mr. Chairman.
Anyway, I just want to welcome you, Governor, here. I am
excited about some of the things you are doing in your State
and want to know how----
The Chairman. Without objection, so ordered.
Ms. Solis. Thank you.
Ms. Solis. And I would like to know how the Federal
Government might help expand some of your State efforts for
weatherization in the LIHEAP program. We are very concerned in
the State of California, in my district, creating
opportunities, job opportunities also in weatherization and
also other technologies in the form of green-collar
technologies.
So, any thoughts on that?
Governor Patrick. A couple.
We have been working in this area of efficiency and
alternatives for some while now. We have some new legislation,
a package of legislation that includes something called the
Green Communities Act, an oceans bill, green jobs initiative,
biofuels initiative, which are all a part of a comprehensive
approach where we are trying both to get ahead of the issue on
efficiencies and renewables and also create new manufacturing
jobs, in particular. And we are making some progress.
I do think that the Weatherization Program, whose funding
was also substantially increased in the continuing resolution,
I alluded to it briefly before you came in, but this is
enormously important. And this is one of those examples of
teaching someone to fish rather than just giving them a fish,
so that we can leverage those investments at the Federal level
with State money, as we are trying to do, and some of the
subsidies that are already built into utility bills, to enable
and to show people what strategies are available to them,
practically help them to move into more efficient insulation,
updating heating and cooling systems, that sort of thing.
Ms. Solis. We had an initiative here in the Congress, the
President actually signed a bill, the energy bill, that
included about--proposed $125 million to create green-collar
jobs. Our thoughts were to try to see how we can get that back
through the Department of Labor and Energy and through the
Workforce Investment Act that could go to States like yours.
Would that be helpful, and how do you see that?
Governor Patrick. Absolutely. Absolutely. We have two
areas, really three, but two I will mention, where our economy
is showing particularly sharp growth. One is the life sciences,
and the other is so-called green tech.
And the biggest concern, among many, but the biggest
concern about the long-term future is the availability of a
well-trained workforce. So we have tried to target more of our
limited State dollars in that direction, and we welcome any
Federal assistance we can get.
Ms. Solis. Great. Okay, thank you.
I yield back.
The Chairman. The gentlelady's time has expired.
The Chair recognizes the gentlelady from South Dakota, Ms.
Herseth Sandlin.
Ms. Herseth Sandlin. Thank you, Mr. Chairman. I don't have
any questions for Governor Patrick.
I thank you for being here and for your testimony and for
the leadership you are undertaking in the State initiatives
that are so important in serving our constituents, but also
recognizing the importance of the Federal resources to help
leverage those funds and serve more people.
So thank you, again, for your time.
Governor Patrick. Thank you.
Ms. Herseth Sandlin. Thank you, Mr. Chairman.
The Chairman. The Chair recognizes the gentleman from
Washington State, Mr. Inslee.
Mr. Inslee. Thank you.
Governor, thanks for your leadership on this issue.
I wanted to ask you about the relationship between
efficiency measures, weatherization, and cash reimbursement. I
suspect that almost probably 90 percent at least of houses, you
know, a $1,000 expenditure to weatherize the home is going to
save the resident, over 10 years, more than a $1,000
reimbursement for their heating costs.
Governor Patrick. That is right.
Mr. Inslee. In almost every home, including mine, there are
still a lot of efficiency improvements to make that are cost-
effective.
With that in mind, if you agree with that, what is the best
distribution between upfront capital to help reduce those
inefficiencies and cash reimbursement? Ideally, how would we
allocate that fund?
Governor Patrick. Well, if I can respond to your question,
Congressman, and also come back to the ranking member's
comments without wading into the debate between you and your
colleague there, there is a--we appreciate very much the
substantial increase in both LIHEAP and weatherization funding
in the continuing resolution. But it is a stopgap. And there is
a broader strategy, which we would look forward to working with
all of you on, around how we move toward a more comprehensive
efficiency alternative framework for the country.
Until we do some of that homework, I couldn't tell you what
the tradeoffs exactly would be. But I can tell you that, right
now, in Massachusetts, where we have a generally older housing
stock, efficiency tends to pay back at the rate of about 20
percent a year. That is a pretty--so you don't even have to
look out 10 years; you can look out just 4 or 5 on that $1,000
and have it paid for.
Now, we also have some compounding challenges, which kind
of comes back to the ranking member's point, differences in
cold-weather States than in warm-weather States, I think, and
also differences in the cost of heating oil, in particular, and
other heating sources in the Northeast because we are at the
end of the pipeline. So the rate of payback is going to be
different because the price of the commodities is different.
But you can imagine, and you have, that the return in the
long run in moving toward efficiency is greater than having to
come back every year and spend--it is not that we may get away
from that entirely, at least in the short run, but having to
come back every year and reappropriate for more straight cash
assistance. I hope one day we will be able to wean ourselves of
that.
Mr. Inslee. Well, some of us think it is better to try to
do the weatherization and insulation and maybe reduce the rate
of global warming, rather than just wait for your climate to
change so that you become a problem of heating rather than
cooling.
Governor Patrick. That is not what I am advocating.
Mr. Inslee. Okay, I just wanted to make sure that is the
situation.
Thank you, Governor.
Governor Patrick. Thank you.
The Chairman. The gentleman's time has expired.
Actually, Governor, in last year's budget, there was $228
million for weatherization. In the continuing resolution
yesterday, it was increased to $478 million.
Governor Patrick. And we very much appreciate it.
The Chairman. More than a doubling. And hopefully more
innovative programs will flow out of Massachusetts and
Wisconsin and other States that can help to chart a new course,
and Arizona and southern California and----
[Laughter.]
Mr. Shadegg. Mr. Chairman, we need to insulate in Arizona
as well.
The Chairman. I hadn't finished my question. It was a run-
on sentence with no period that had yet arrived.
Some of my happiest memories are at Fort Huachuca, Arizona,
in the summer of 1969. It didn't go under 110 any day, and I am
willing to stipulate the conditions that existed there.
So we thank you, Governor, very much for being here. Any
closing statement you would like to make?
Governor Patrick. Just again, you know, I think probably
you don't hear from us with thanks as often as you are entitled
to or you should. And we thank you very much for the support
through the continuing resolution. And we urge the Senate to
act similarly and the President to sign the bill.
The Chairman. On that subject, we are in total permanent
concurrence, hoping the Senate will do the right thing. You
know, that is something that is the overarching reality of our
lives.
Wonderful to see you again, Governor. Thank you for your
great testimony.
Governor Patrick. Thank you.
The Chairman. Appreciate it.
Our second panel, we would invite them up to the witness
panel.
On our second panel, we have Mark Wolfe, who is the
executive director of the National Energy Assistance Directors'
Association, representing the State directors of the Low Income
Home Energy Assistance Program.
We welcome you, sir. Whenever you are ready, please begin.
STATEMENTS OF MARK WOLFE, EXECUTIVE DIRECTOR, NATIONAL ENERGY
ASSISTANCE DIRECTORS' ASSOCIATION; JOHN DREW, EXECUTIVE VICE
PRESIDENT, ACTION FOR BOSTON COMMUNITY DEVELOPMENT, INC.;
HOWARD GRUENSPECHT, ACTING ADMINISTRATOR, ENERGY INFORMATION
ADMINISTRATION
STATEMENT OF MARK WOLFE
Mr. Wolfe. Thank you.
First, on behalf of the members of NEADA, I would like to
first take the opportunity to thank the members of the select
committee for holding today's hearing on the importance of
higher funding for LIHEAP to help low-income families pay their
home energy bills this winter.
LIHEAP is the only Federal program that helps families pay
their home energy bills. There is no comparable program for
gasoline, for example.
The discretionary grant program in fiscal year 2008 only
had sufficient funding to meet the energy needs of about 16
percent of the Nation's poorest households. Rising energy
prices are placing millions of low-income families at risk of
losing access to home energy.
We are witnessing record arrearages across the country, as
families struggle to pay high energy bills and utilities, as
well as families struggling to pay delivery fuel bills for
heating oil and propane. This is followed by high rates of
shutoffs, as families lose their ability and access to utility
service.
The good news, actually, the excellent news, of course, is
the House already nearly doubled funding for LIHEAP to $5.1
billion and added $250 million for weatherization. Hopefully,
this will lead to a policy discussion in the next Congress as
to the appropriate level of funding for LIHEAP and its place in
the social service system in the future, as we continue to cope
with high and volatile pricing for all forms of home energy.
And I think, just to give a sense of what this $5.1 billion
means: In Arizona, it would take us from $9 million last year
to $29 million; California, $103 million last year to $225
million; Massachusetts would go from $126 million to $163
million; Wisconsin, from $91 million to $130 million; South
Dakota, $17 million to $30 million; and Washington State, $45
million to $75 million.
What this really means at the end of the day, at $2.5
billion, which was the amount of money we had last year, it was
really only enough money to provide a minimally adequate
program in the cold-weather States and, at best, an emergency
program in the rest of the country. That is what $2.5 billion
bought us. But $5.1 billion really transforms the program,
creating a truly national basis for providing home energy
assistance across the country for both heating and cooling.
One of the issues that came up a lot in the last couple of
months was why were we asking for $5.1 billion. First, winter
home heating costs have been increasing rapidly since the end
of the last economic recession in 2002.
One of the tables we prepared, since the last recession
ended in 2002, home energy prices have gone up dramatically.
Heating oil went from $912, the cost to heat a home during the
winter of 2002-2003, to an estimated $2,500 during the coming
winter heating season, or an increase of about 176 percent. In
the coming winter season, prices are expected to go up about 30
percent. Natural gas increased by 69 percent, propane by 105
percent, electricity by 34 percent, during this period since
2002.
What is really worrisome to us about this is that energy
went from a period of being basically affordable, back in 2002
to 2003, to an awful lot of Americans. There were many low-
income families that could afford to pay the average of $681.
But with an average cost starting to press $1,200, we are
finding more and more families that just can't pay these bills.
More families are falling behind on the utility and the natural
gas and electric bills, and more and more arrearages and
shutoffs.
The other issue, of course, is purchasing power of LIHEAP.
Without the $5.1 billion, we would have seen a dramatic
decrease in the purchasing power this winter. In 2006, when
LIHEAP funding peaked at $3.2 billion, we were able to cover
close to half the cost, on average, of home heating. It wasn't
terrific; it didn't meet all the needs. But it allowed us to
negotiate with utilities, allowed us to deal with arrearages,
and allowed us to cover significant costs of the cost of
delivered fuels.
With the continuing rise in energy costs, last year we were
only able to cover about 36 percent of the cost of home
heating. It was definitely not enough. And the kinds of things
that happened last year that we hope won't happen this year is
we will see fewer people basically suffering. We saw people
basically being shut off from power. We have had reports in
some utility districts of up to 10 percent of the households
being shut off. In some cases, it amounts to a small city
within a State losing access to electricity and natural gas.
If you look at the next table, one of the things that
concerns us--yes, heating oil costs are coming down, and that
is terrific. In the middle of July, we were looking at upwards
of $5 a gallon for home heating oil. Now we are in a range of
$4. So, in a sense, that sounds terrific. But that is still a
dollar more a gallon than what it was last year at this time.
And what that really means, to fill up a 275-gallon tank,
typical tank of heating oil in the Northeast, it is close to
$1,000 now. For many people, especially elderly, that is more
than their entire monthly income. The average single person who
gets Social Security gets $1,027 a month. That is about the
cost of one tank of oil.
Another indicator of the rising need for energy assistance
is the increase in arrearages and shutoffs. The National
Regulatory Research Institute, for example, in a recent report,
found that past-due gas utility accounts rose from 16.5 percent
in 2001 to 21 percent in 2006. Last spring, in a survey we
conducted, States reported that 1.2 million households were cut
off from natural gas and electric service due to nonpayment of
electric bills.
What I would like to do briefly is give for you a couple of
numbers that we have collected in the last 2 months that I
think give a sense of just how serious this affordability
problem is and how we think the $5.1 billion will really make a
big difference in addressing the need.
For example, across the country--and, again, we don't have
national statistics on shutoffs, arrearages, how many people
are behind in their home heating bills. But the numbers we are
getting are very, very scary. In Arizona, the Public Service
Commission reported that disconnections are up 40 percent over
last year. Southern California Edison, for example, has shut
off nearly 165,000 of its 4.8 million customers in the past 6
months. Xcel Energy in Colorado expects to shut of 72,000
Colorado customers this year because of delinquent bills, a 33
percent increase from 2007. In Massachusetts, for example, at
the end of May, Natural Grid reported that 115,000 out of 1.2
million electric customers were at least 3 months behind on
their bills. And the numbers continue.
What I would like to do is just briefly review a survey
that we conducted in June. We wanted to find out how families
were coping across all income ranges. And we asked how they
were coping with high gasoline and home energy bills. Because I
believe that some of the reason for the increase in arrears and
shutoffs is not just that home energy bills are going high, it
is that families don't have enough money to pay for gasoline.
The average family uses about 800 gallons of gasoline a year.
So if gasoline is running about a dollar a gallon higher, that
is about $70 more a month than they were paying last year at
this time.
We surveyed 500 families across the country in all income
groups, and what we found was--we weren't surprised to see that
poor families, those with incomes of under 150 percent of
poverty, were responding that they were having trouble of
paying their energy bills. What we were worried about and
surprised was that somewhere between 151 and 250 percent of
poverty, basically working families, were finding that they
were also reporting difficulties in paying these bills.
We asked the question about whether energy costs had a
large impact in a household, and, again, families under 150
percent of poverty, those making about $35,000 a year, said
yes. About 38 percent reported difficulties paying it, but also
about 19 percent of the next group up also said the same thing.
Basically, families between about $35,000 and $50,000 a year
were saying they were also struggling with these bills.
But, of course, the thing that was most worrisome was the
next one, where we said, well, okay, because of high energy and
gas costs, did it change your purchasing plans? And we always
knew that poor families had this problem. In all the previous
surveys, very poor families always said they had to choose
between heating and eating. But what we found this time, which
is what really alarmed us, was families between 150 and 250
percent of poverty mainly were saying the same things.
And these are families that normally we don't cover in
energy assistance programs because we don't have enough money.
And one of the advantages of going to $5.1 billion is the law,
in the House bill at least, allows us to go to 75 percent of
State median income. So for families in this next group,
between 150 and 250, who are saying they are having trouble
buying food, medicine, basic necessities, they can also be
helped in this program this year.
The next chart, of course, is a sign of poverty, but,
again, it is the next group up, also, that is reporting it. We
asked them questions, did you close off parts of your home? Did
you keep your home at an unsafe temperature? Did you leave the
home part of the day because it was too cold or too hot? And,
again, we are seeing families that earn between 150 and 250
percent saying the same thing some of the very poorest families
in the country are saying.
And, of course, the next chart is the one that causes most
concern. We asked about skipping bill payments and also
shutoffs. And 29 percent of very poor families said they
skipped paying their electric bill or utility bill, but 8
percent said they were shut off. But also families between 150
and 250 percent of poverty reported some of the same exact
numbers.
So what seems to be going on, I think, is a compression
across incomes, that it is no longer just the families earning
less than $35,000 a year, I think it is becoming families
earning less than $45,000 to $50,000 a year who are basically
struggling to make ends meet.
What I would like to do is talk just briefly, at this
point--you were asking some questions about weatherization.
And, essentially, we don't think it is an either/or. We don't
think it is either weatherization or home energy assistance.
Under the LIHEAP program, States are allowed to transfer up to
15 percent of their LIHEAP appropriation to weatherization.
And, on average, about 10 percent of that is transferred. So if
the future is as in the past, then about $500 million of the
$5.1 billion will also transfer into weatherization programs.
These are extremely successful programs, but they are not
well-funded. Last year, only about 150,000 homes across the
country received weatherization assistance. Weatherization
returns about $2.72 cents in energy and nonenergy benefits of
the life of a weatherized home. It is a terrific investment. It
also supports about 20,000 jobs that come through the program.
These are the green jobs that we are concerned about.
And when thinking about green jobs or green-collar jobs,
the potential in the low-income community is significant for
weatherization. You know, about 25 percent of the families in
the United States are low-income, and about 40 percent come
under the 250 percent of poverty category. Many of these
families can benefit from weatherization, and a lot of the jobs
are not that highly skilled. So it is a great, sort of, entry
point into a career for a lot of people right out of high
school.
Another point I would like to mention to, sort of, wrap up
my testimony, we have been looking a lot at other strategies to
weatherize homes. We have been working with the Ford Foundation
to develop an energy-efficiency mortgage program that would
help families integrate weatherization and energy efficiency as
part of their mortgage. And this is a real opportunity, as we
look at all these subprime mortgages that are in trouble now
that need to be refinanced, to also make their homes more
energy efficient at the same time.
For families that make less than $50,000 to $60,000 a year,
reducing their energy bill by 30 percent makes a very
significant difference to their discretionary income. It not
just reduces their energy bill, it strengthens their ability to
maintain their home. I think there is a great opportunity this
coming year, as we look at how do we help low-income families
move to a more stable mortgage, look at making the home energy
efficient at the same time. It will accomplish two very related
goals.
Thank you.
[The statement of Mr. Wolfe follows:]
The Chairman. Thank you, Mr. Wolfe, very much.
Our next witness is Mr. John Drew, who is the executive
vice president of Action for Boston Community Development, the
largest nonprofit agency in New England. He has been a very
prominent figure in this whole area of LIHEAP throughout his
career, a real national expert on the subject.
Whenever you are ready, Mr. Drew, please begin.
STATEMENT OF JOHN DREW
Mr. Drew. Thank you, Mr. Chairman. Thank you for letting me
come before you today.
First of all, I want to thank you because you are my
congressman, and I want to thank you for everything you have
done over the years.
Action for Boston Community Development is a community
action agency, one of 900 across the country. What we do is we
are undergirded by a community service block grant, which we
are so much grateful to this Congress for continuing that
program, because it allows us to do a variety of programs,
including Head Start, weatherization, our heating assistance
program. We also do programs for--we run a college, we run high
schools. We will do anything that we need to do to help people
who are poor.
Mr. Chairman, I just want to make a note that you are my
Congressman, and I very much appreciate the hard work you have
done over many, many years.
The Chairman. I thank you.
Mr. Drew. Really. You have been a true champion.
The Chairman. Thank you.
Mr. Drew. And I also want to note that I am so grateful for
the Governor of Massachusetts coming here today. I won't cast
anything other than to say this is the first Governor in my
time who has come before you on LIHEAP, and he has done a heck
of a job in Massachusetts.
I mentioned the community service block grant and I
mentioned community action because they go together. I go back
36 years. I know I don't look it. I go back 36 years, back to
the OPEC time, when we had that spike with that OPEC where the
lines were long. And we have had over 36 years of trying to
keep this program going through the ups and downs, through the
period of time when we had enough money, we didn't have enough
money. We put together weatherization programs. We put together
programs that provided for new boilers. We have matured to the
point where we are actually doing windows and refrigerators and
appliances, working with utilities. But I must say from the
bottom line is that we are dealing with people who do not have
enough income to live on.
I left my office today to take an airplane. Lined up in the
corridors in our buildings were people who got there early this
morning, had been getting there for quite a while, clutching in
their hands shutoff notices, payments they can't make, looking
very, very scared, bleak, and wondering how they are going to
get through the winter.
My experience over the years is that, if we do not
intervene, we will see experiences of hypothermia. We have seen
that. We have a woman, 94 years old, who went to bed one night,
decided that she couldn't afford the heat, couldn't pay the
bills, put as many blankets on as she could, and unfortunately
in the morning she didn't get up. We have children who leave
their house to go to school and they are not able to think
because they have been cold all night.
We have a large Head Start program in the city of Boston.
And thank you again, Congress, for keeping that and
reauthorizing the Head Start program. But we have 2,600
children in Boston in preschool, and for many, many of those
children, the only heat or the major part of the heat, warmth
they have that day is when they come to the center. Their major
caloric intake will be at that center.
So I was, with great fear and trepidation, going into this
summer, with $5 a gallon. All I could think of was the Arctic
air is coming. It is going to be icy, it is going to be cold,
we are going to have ground freezing, we are going to have
snow. And what is going to happen to all these folks? This is
my Katrina. This is my Northeast.
These people are going to be standing out there with no
ability to save themselves. They don't have incomes to be able
to buy the product that is necessary. They are also trying to
struggle to buy milk that are increased and to buy products
that have increased. Their incomes have not gone up at all;
they really have been compressed.
So I am here basically to bear testimony on the part of so
many people who need this program, whose families--and, as Mark
Wolfe has said, more and more people are falling into the trap
of stagnated wages and not being able to take care of their
families. And it is an income issue.
And over the years I have struggled when people have come
up with a debate, which is we should do more weatherization and
less of the fuel assistance. And I say fine, fine, let's get
the cost of energy down to the point where people can afford
it. You cannot take out payments before you can get the energy
efficiency and we can bring down the oil price from overseas.
So I think that we not only need both, we have to keep up
with the income. We, in fact, in our program, we pay the
dealers directly. We work with the dealers. We work with the
companies. We have great relationships and, as a result, have
been able to run a LIHEAP program. Every LIHEAP household who
is eligible also is eligible for conservation, for boiler
repair, boiler replacement. They get discounts from utilities
up to 20 percent off their bills. So we are leveraging an awful
lot through this LIHEAP program.
The downside is that we are getting more and more people in
our homeless shelters. And in Massachusetts, in fact, there are
500 or 600 families in hotels as a result of not being able to
maintain a household. My concern, going into this winter, is we
are going to see an epidemic of homelessness.
So I was coming down here with bags of cement on my back,
saying, how are we going to do this? We are going to run out of
assistance before Christmas. We are going to be trying to
figure out how we can keep these families and elders alive. And
when I got the call that said $5.1 billion has been passed by
this House, I just said, ``Oh, my God, this is great.'' And the
Senate has to pass it, the President has to sign it.
And, with that, we will be able in Massachusetts to be able
to provide heating assistance right through the end of
February. Think about that. We have so many people who are
sitting there right now, saying, how am I going to make it?
Everybody has their following story, but it is true. In my
building today was Mr. Warren. He comes in, he is 78, and he is
looking for assistance. And he is working at an elderly
program, our foster grandparent program.
I said, ``How are you doing today?'' And he said, ``Well,
my wife and I, it is a little tough, but, you know, we are
getting by. It is going to be a tough winter.'' I said, yeah.
He said, ``Where are you going?'' I said, ``I am going down to
testify before a committee in Washington about heating
assistance.'' He said, ``What is that all about?'' I said,
``Well, you know, trying to get you some more money so you can
get through the winter.'' His wife has these huge bills for her
disabilities, her medicines.
He said, ``Would you tell those folks something? I am
really concerned. I don't understand how they can understand
they can find trillions of dollars for bankers and stuff and
they can't help me get through the winter.'' I said, ``I will
pass the story along,'' which is true. And I can appreciate
that this committee understands that feeling of helplessness,
that nobody is really going to be there for you.
So the $5.1 billion, let's hope that goes through. Let's
hope we have it at the end, let's hope we have it at the
beginning of the season, so we can assure people that they will
have hope through the winter, that they will be able to buy
their food, that they will be able to buy their medicines, they
will be able to live life normally, they will get through the
winter.
Because, right now, what we have, Mr. Chairman, in
Massachusetts is 100,000 households way behind in their utility
bills. We have 20,000 households already shut off.
The Chairman. Mr. Drew, thank you. Thank you for your
passionate presentation today. We really appreciate it. Thank
you.
Mr. Drew. Thank you.
[The statement of Mr. Drew follows:]
The Chairman. Now we will move to our final witness. Then
we will go to questions from our committee members.
And our final witness is Mr. Howard Gruenspecht. He is the
acting administrator of the Energy Information Administration
at the Department of Energy. Prior to joining EIA, he was a
resident scholar at Resources for the Future and served as its
director of economics.
We welcome you, sir. Whenever you are ready, please begin.
STATEMENT OF HOWARD GRUENSPECHT
Mr. Gruenspecht. Mr. Chairman, members of the committee, I
appreciate the opportunity to appear before you today to
discuss the short-term energy outlook for the United States,
particularly for the upcoming winter.
The Energy Information Administration is the independent
statistical and analytical agency within the Department of
Energy that produces objective, timely and relevant projections
and analyses to assist policymakers, help markets function
efficiently and inform the public. And I notice that Mark Wolfe
mentioned many of our products. We don't promote, formulate or
take positions on policy issues. And our views should not be
construed as representing those of the Department or the
administration.
Our most recent short-term energy outlook, released on
September 9th before Hurricane Ike hit the Gulf Coast,
forecasts that residential upcoming heating oil prices during
the upcoming heating season of October through March will
average 4.13 per gallon, an increase of about 25 percent over
the previous season. Residential and natural gas prices over
the same period are projected to average nearly $15 per
thousand cubic feet, an increase of about 17 percent over the
previous heating season. Price increases for propane and
electricity are projected to be about 11 percent and 8 percent
respectively.
Natural gas is used as the primary heating fuel by a
majority of U.S. households, while oil is the primary heating
fuel for about 7 percent of U.S. households. But, as the other
two witnesses have noted, heating oil use is heavily
concentrated in the Northeast, where it is used by nearly one-
third of households.
Fuel expenditures for individual households are highly
dependent on weather conditions, the size and efficiency of
individual homes and their heating equipment, and thermostat
settings. So while cross-fuel comparisons of average heating
expenditures can be misleading because of differences in the
extent to which each fuel is used in colder and milder areas of
the country, the change in projected expenditures relative to
the prior winter for each heating fuel provides a broad gauge
as to expected movements in heating costs.
Although all of the major heating fuels are expected to
register sizable increases in total expenditures, heating oil
customers are likely to be particularly hard hit, with heating
fuel expenditures for the average household using oil as the
primary heating fuel expected to rise by $585 over last winter.
The corresponding increases for households heated with natural
gas and propane are $162 and $217 respectively, while they are
$86 for households using electricity.
Heating oil prices are expected to be significantly higher
than last winter, primarily because crude oil prices are much
higher. Higher crude oil prices account for about 68 cents per
gallon of the projected increase of 85 cents per gallon over
the upcoming heating season relative to the comparable year ago
period.
Increases in heating oil prices above those due to higher
crude oil costs largely reflect tighter markets for diesel fuel
worldwide. Diesel fuel and heating oil are connected, as both
products are very similar, except for the fact that diesel fuel
contains less sulphur than heating oil.
World diesel fuel demand growth is coming both from
increasing transportation use and increasing use of distillate
as a fuel for electricity generation, particularly in
developing countries. And there are also a number of special
circumstances this year.
Turning to natural gas markets, the factors contributing to
higher prices include higher oil prices, low imports of
liquefied natural gas, and some strength in the spot prices of
natural gas in the first half of the year that will be
reflected in the cost of gas that has been stored to be used
this upcoming winter.
Colder than normal temperatures during the first 4 months
of the year contributed to a substantial year-over-year decline
in inventories of gas.
The good news is that, taken together, robust domestic
production of natural gas and limited consumption growth in
electric power this summer due to relatively mild summer
temperatures allowed for rebuilding of natural gas storage
inventories. And, by the end of August, we actually were ahead
of the 5-year average for the first time since February.
We will be updating these forecasts for the October edition
of the ``Short-Term Energy Outlook,'' which will also include
an expanded discussion of the upcoming heating season.
That concludes my statement, Mr. Chairman, and I would be
happy to answer any questions that you or the other members may
have.
[The statement of Mr. Gruenspecht follows:]
The Chairman. I thank you very much.
And now we will turn and have the members of our committee
ask questions.
I recognize the gentlelady from California, Ms. Solis.
Ms. Solis. Thank you, Mr. Chairman.
All of you have given us some interesting insight,
including the Governor.
But I wanted to just ask our last witness who spoke if you
could shed some light on the recent effect that we saw in some
Midwestern States with respect to Ike, Hurricane Ike, where we
saw some shortages in Tennessee and, you know we saw a
tremendous spike up in demand there. Obviously, we may see more
of that happen as we see more hurricanes hitting our areas
where our major producers of crude and the refineries are
found.
Can you shed any light on that?
Mr. Gruenspecht. I can shed a little bit of light on it.
Clearly, the two hurricanes that hit the gulf, one
Louisiana, the other Texas, which are both big areas for
importing crude oil and big areas for refinery production, had
an impact. Although refinery capacity is really returning,
really--in today's report, for the first time, the amount of
refinery capacity out is under a million barrels a day of
capacity. It had been up above, well above 3 billion barrels a
day out at the peak. So there has been progress in bringing
things back.
But the areas that are served either from crude oil that
comes through the gulf, because some of the crude oil that is
used in the Midwest comes through the gulf and is shipped up to
the Midwest by pipeline, or by products that are produced in
the gulf--and that has affected most of the south Atlantic
States; Tennessee, North Carolina, Georgia has had some
issues--those are the areas that have seen the most severe
impacts. We have seen prices in those areas falling in recent
days.
Just yesterday, we put out a report on inventories that,
sort of, looks at the last week. The last week was a tough
week, in that production was severely impacted by Hurricane
Ike. We do see the situation improving. There may be some spot
outages, mostly of gasoline. Fortunately the distillate market
has done better. The diesel fuel and heating market has not
seen those outages. But gasoline is a little tight.
Ms. Solis. I guess, for me, I really have some concerns
when we have discussions and debate about increasing more
drilling along the southern part of our country here, and how
rapid that infrastructure will go up, and how many times in
each season will we find ourselves in a similar situation, that
natural recourses like hurricanes and others are still going
dampen our ability to be able to get those products to market
into that part of the country.
And shouldn't we be thinking about other alternative types
of fuels? And some of you have mentioned that; I know the
Governor did in his presentation. But it just hits home again
that somehow we continue to be so reliant on the old way of
doing things, and we are not really looking at projecting what
is currently happening with the current state of our country.
And I want to thank Mr. Drew for coming all the way up from
Boston, Massachusetts, because the program you talk about is
very similar to one in my district that provides services
actually through Veterans. And they have veterans who are
employed who come back that are either disabled, that get these
jobs in the LIHEAP program, do weatherization in California.
Our temperatures are a lot different, but we also have very
needy families as well. We always find that there is a backlog
of families that need to have this assistance and not enough
money. And the Community Development Block Grant Program has
suffered tremendously under this administration, And we need to
find other ways of infusing dollars.
And I am wondering if maybe programs like, for example,
HUD, Department of Energy, and even EPA could somehow better
collaborate with the Community Development Block Grant Programs
when we look at weatherization or trying to help restructure
our old buildings, even for landlords in some of our public
housing. Because I am very concerned that, when we talk about,
for example, even removing lead paint in old buildings, at the
same time these same housing structures are maybe built in the
1930s or 1920s and could use some other forms of assistance.
But we are not talking to each other, so it may not be
another 10 years before the department of HUD or someone else
go out there, and that we are piecemealing, we are just putting
a little Band-Aid on a much far greater program. I mean,
disease that we see in housing and with our poor stock of
housing in areas like southern California.
What are your thoughts on that?
Mr. Drew. I have spent a lot of time over these years
trying to take the silos and put them together as best we can.
And we do a certain amount of work, we have done work with the
Department of Energy. And the things we run into, for example,
are asbestos removal.
Ms. Solis. Or lead.
Mr. Drew. And you get in, and all of a sudden you have
regulations and other things you have to deal with.
So any time we are dealing with trying to get something
done in a household, we have to be well aware of all of the
other rules and regulations. So we do, as best we can, try to
pull together resources, working with city hall, CDBG black
grant. We try to put something together with DOE. But I would
not want to say to you that we feel comfortable that we are
maximizing our resources and target them as directly as we can.
Ms. Solis. Thank you. Thank you very much.
The Chairman. The gentlelady's time has expired.
The Chair recognizes the gentlelady from South Dakota.
Ms. Herseth Sandlin. Thank you, Mr. Chairman.
I represent the State of South Dakota. I also have the
honor of representing nine sovereign Sioux tribes within their
reservation boundaries, primarily within the State of South
Dakota.
You know, our temperatures--we have drastic ranges of
temperatures. And even without a wind chill, we can be many
degree below zero. And then when you add the wind chill, we
have had record temperatures anywhere from negative-40 to
negative-70 below zero.
So a couple of years ago--and, actually, even, I think,
last year--we had reports from one of the tribes that I
represent that people in very rural outlying areas were burning
clothing in order to stay alive and warm, because we are
dealing with severe poverty in many of these areas, as well.
And I guess my first question would go to you, Mr. Wolfe. I
have had some discussions with the Rosebud Sioux Tribe about
how they didn't get leveraging incentives last year because
there was language omitted in the fiscal year 2008 budget. And
so if you could talk a little bit more about the LIHEAP
leveraging incentive and, as well, the Residential Energy
Assistance Challenge option. Because, again, I am wondering if
other States or communities are experiencing the same problem
because of that omitted language.
And then, in general, could you just discuss whether you
think tribes face particular challenges with regard to energy
assistance for their members, especially in more rural areas?
Mr. Wolfe. Yes, I would be glad to.
There was an omission in the fiscal year 2008 appropriation
for LIHEAP, so leveraging wasn't funded, nor were reach grants.
For some States, this created a problem, because leveraging
funds are the funds they use often to fund their discretionary
activities, to provide supplemental energy assistance.
Leveraging is also targeted, weighted toward small-
population States. So where large States receive about 1
percent--I mean, it doesn't pay a lot. Leveraging, on average,
pays only about 1 or 2 percent of the total amount of money
that is raised outside of LIHEAP. But for small-population
States, it can go to 3 percent, which can be quite significant.
It can be $100,000, $200,000. So we heard from a number of
States that really was a problem and they had to cutback
services.
REACH is really the demonstration grant part of LIHEAP. We
don't really have a dedicated research budget in LIHEAP other
than the REACH grants. And this was the first year since it was
started that we didn't have funding. Again, it seemed to be an
omission in the law.
And HHS decided--they had to go ahead and reallocate those
funds, I think it was in June. Because we thought maybe they
could wait, but they said they couldn't wait for a fix in the
law.
So the seven or eight demonstration grants that would have
been given out weren't given out. And they are multiyear and
they do make a difference to the local agencies that use them,
because they are really designed to create new approaches to
funding energy assistance.
And then lastly, your question on tribes. It is different
in each State. In some States the tribes act as basically
sovereign nations, so they receive funds directly from HHS. In
other States, they receive funds through the States. The State
acts as the grantee.
I have looked at the numbers, and, frankly, the allocation
for tribes, in many cases, they are just very, very small,
especially in light of the poverty on some of the reservations.
Ms. Herseth Sandlin. Does it differ? And when you
describe--what have you seen in the disparities of what tribes
get if they are getting the direct allocation versus what they
end up getting if they have to go in terms of the block grant
through the States? Is there a discrepancy you have seen in
that analysis?
Mr. Wolfe. Some States have told me that, if they go under
the block grant, the tribe will receive more money.
Ms. Herseth Sandlin. Some States have told you that. Have
you verified that?
Mr. Wolfe. I haven't done any research on it. But they have
said they have offered--they have talked to the tribes about
going as part of the block grant and then give them a higher
allocation. But they said that many tribes would prefer to stay
as sovereign nations for the purposes of dealing with HHS.
I think that, because tribes overall don't receive that
much money from the program, this is something worth looking
at.
Ms. Herseth Sandlin. Thank you.
Before my time expires, just one other quick question for
Mr. Gruenspecht.
The Chairman. Our problem is this. There are 12 minutes
left to go on the House floor, and the gentlelady only has 30
seconds left.
Ms. Herseth Sandlin. Yes.
The Chairman. So I would like to be able to recognize the
other two----
Ms. Herseth Sandlin. Just a question on propane, because
many people I represent rely on propane, the recipients of
propane for heating fuel.
Mr. Gruenspecht, could you just discuss the price trends
for propane in recent months and years, and what families who
rely on propane can expect this winter?
Mr. Gruenspecht. Yeah. Let me quickly try to flip to that.
I think propane is not as tough a situation as heating oil;
probably is the second toughest situation. So for propane,
nationally we would expect a 13 percent increase in
expenditures. And I am trying to think whether you are in the
West or the Midwest.
Ms. Herseth Sandlin. Both.
Mr. Gruenspecht. Probably both. You are a big State. In the
Midwest, 11.4 percent increase in expenditures for propane.
The Chairman. The gentlelady's time has expired.
The Chair recognizes--we will divide it into 3 minutes
apiece-- the gentleman from New York, Mr. Hall.
Mr. Hall. Thank you.
I will submit my statement for the record and just ask two
questions, if you could answer me, starting with Mr. Drew. Even
with the $5.1 billion appropriation, is it possible or even
likely that more contingency funds will be needed this year?
Mr. Drew. I hope not. I hope not. Just quickly, we could
use----
Mr. Hall. That is fine. That is quick enough. Thank you.
Mr. Gruenspecht.
Mr. Gruenspecht. That would be a policy question, so I
would pass that to Mr. Wolfe.
Mr. Hall. Mr. Wolfe?
Mr. Wolfe. Well, using EIA's data, no, $5.1 billion won't
be enough. If you look at the Northeast, low-income families
paid $14 billion for heating oil last year. This year it is
going to be in the range of $17 billion. If the additional
money was just part of the heating oil, they would use it all
up. So it is quite likely that we will need more money.
But, again, you know, in a practical sense, $5.1 billion is
an enormous increase. So it is sort of half a dozen of one, six
of another.
Mr. Hall. Okay, thank you.
The second thing is the administration, in their bill,
tried to kill the weatherization assistance program, and we
restored that today in the House bill.
Do you have a suggestion as to how we can better coordinate
LIHEAP, low-income heating assistance, with weatherization
expenditures in order to maximize effectiveness?
Mr. Wolfe. I think we have a terrific partnership now in
most States. State agencies work very closely together, in many
States in the same office. The problem is there is just not
enough money in weatherization. That is the real bottom-line
problem.
Mr. Hall. Do the other gentlemen concur? I guess you
concur.
Mr. Drew. In Massachusetts we have a deregulation, so we
are doing more weatherization through utility companies. That
doubled our weatherization.
Mr. Hall. That is good. Thank you.
I yield back.
The Chairman. The gentleman from Missouri, Mr. Cleaver, is
recognized.
Mr. Cleaver. Thank you, Mr. Chairman.
Let me apologize, first of all, for not being here. I am on
what is essentially the Banking Committee, and we have been at
it all day yesterday and today. I apologize. But I came over
even though that committee is still going, because I--but I
think Mr. Hall asked the primary question that I was going to
ask.
I will throw a softball; anybody can hit it. I would
imagine Mr. Drew has already swung at it before.
But we are going to have to do a rescue program. We are
going to have to do it--have to. Do you think that the current
level of funding for LIHEAP will allow those who are struggling
to have any level of appreciation for a rescue program of Wall
Street?
Mr. Drew. I don't know if they will have an appreciation.
They are trying to live by themselves. I did mention that there
was a person who said, ``I don't understand how they can spend
trillions of dollars and not help me get through the winter.''
They are making a direct connection between the two.
Mr. Wolfe. No, I don't think so. When you look at incomes
for families making less than $50,000 a year, they are living
paycheck to paycheck. Across the board, the last 5 years,
between higher health-care costs and now higher energy costs
and higher rental costs, they just don't have any resources. So
when you talk about a $700 billion bailout, the number is so
enormous. The average family only saves $300 a year now.
I think that LIHEAP helps, I mean, certainly helps take
some of the edge off of this. But the magnitude of the bailout
versus--you know, LIHEAP is what? Less than 1 percent of the
total bailout amount. It is hard to get your hands around the
bailout numbers, I think.
Mr. Cleaver. It is less than that?
Mr. Wolfe. Yes, it is less than 1 percent.
Mr. Cleaver. Thank you, Mr. Chair.
The Chairman. The gentleman's time has expired.
We are going to give each one of you 30 seconds to tell us,
in summary, what you want us to remember. There are four roll-
calls on the House floor. You have 30 seconds to have something
ring through our brains for the rest of this session and
winter, in terms of this program.
We will start with you, Mr. Wolfe.
Mr. Wolfe. I would say a fully funded LIHEAP and
weatherization program working together will make the
difference between families not being able to afford access to
electricity, natural gas and heating oil and being able to
afford it.
The Chairman. Mr. Gruenspecht.
Mr. Gruenspecht. We need to work with the States throughout
the winter. And we have a State heating oil and propane
program. We will be tracking the prices on a weekly basis.
I think there are other improvements we need to make. In
particular, this year we have had a lot of exports of
distillate fuel. It took us a while to catch up with that. That
is something that I think a better data program would be
helpful, in tracking movements of products.
The Chairman. And you have the final word, Mr. Drew.
Mr. Drew. Well, I, first of all, thank you. And what we are
talking about is money that is filling a hole in the face of
poverty. I am glad that it is happening, but I think I want to
think about an overall anti-poverty effort, I hope, in the new
administration.
I would like to just end today, because I know you are
busy, but we know that to end the cycle of crisis that drags
the hardworking families and retirees into a path of economic
insecurity, your climate and protection act, H.R. 6186, is the
best proposal. We have considered devoting significant
investments to making low-income communities and housing
sustainable and affordable. It is fair, does not waste
resources or give away to polluters or energy vendors. It is
consistent with the fair climate change principle. The
community action has developed, with the National Community
Action Foundation, Friends of the Earth, Public Citizen, the
National Consumer Law Center. And, with your permission, I
would like to submit these as part of my testimony.
And I wish very much to thank you very much.
The Chairman. I thank you, Mr. Drew. And I gave you an
extra 30 seconds because of the obvious wisdom that you were
bringing to the committee. [Laughter.]
I have a group of questions which I did not get a chance to
ask on this round, and we are going to submit it to you in
writing. And we would appreciate the answers in writing from
you in a timely fashion.
We thank you each for coming here today.
With that, this hearing is adjourned. Thank you.
[Whereupon, at 3:18 p.m., the committee was adjourned.]