Anticipating the needs of the victims of Hurricanes Katrina and Rita, a major natural gas distribution group has called on Congress to allocate an additional $1.3 billion on top of the $2.2 billion already set aside for energy assistance to low-income customers this winter.
The total appropriation for the upcoming winter would be approximately 43%, or $1.5 billion, more than the estimated $2 billion in funds that lawmakers provided to the Low-Income Home Energy Assistance Program (LIHEAP) during the 2004-2005 winter heating season, said Daphne Magnuson, a spokeswoman for the American Gas Association (AGA), which represents local distribution companies. AGA has asked lawmakers to make the supplemental $1.3 billion appropriation available in “any additional relief packages” for the hurricane victims.
AGA President David Parker also urged Capitol Hill to include the maximum authorization of $5.1 billion for the program in its fiscal year 2006 Labor, Health and Human Services and Education appropriations bill. With the full $5.1 billion, LIHEAP could assist up to 30% of those eligible for home heating assistance, compared to the current level of 13%, according to AGA.
“The tight natural gas market and the devastating impact of the recent hurricanes have resulted in unusually high fuel price forecasts for the foreseeable future,” deepening the need for increased funding for LIHEAP this winter and next, Parker wrote in a letter to Rep. Ralph Regula (R-OH), chairman of the Labor, Health and Human Services and Education subcommittee of the House Appropriations Committee.
Based on estimates from the Energy Information Administration (EIA), heating costs for the average family using natural gas could reach $1,568 over the upcoming winter period, representing an increase of $611 from last winter’s bills and $643 more than 2003-2004. AGA estimates that 51% of low-income homes heat with natural gas.
“The expected rise in home energy costs hits low- and fixed-income individuals particularly hard,” Parker said. Citing a recent survey conducted by the National Energy Assistance Director’s Association, he noted that “32% of families in the survey sacrificed medical care; 24% failed to make a rent or mortgage payment; 20% went without food for at least a day; and 44% said that they skipped paying or paid less than their home energy bill in the past year.”
The number of households receiving LIHEAP assistance is expected to rise from about 4.2 million in fiscal year 2002 to more than 5 million this year, the highest level in a decade, but the funding for the program from Congress has not kept pace, Parker said. LIHEAP currently serves less than 15% of those eligible, he noted.
The back-to-back hurricanes in the Gulf have been the “triggering point” for the run-up in natural gas prices and the expansion of the need for LIHEAP assistance, according to AGA’s Magnuson.
AGA’s request for $1.3 billion in supplemental LIHEAP funds this year “will not be enough” to meet the current demand, “but it will help,” she told NGI. The hurricanes along the Gulf Coast, which opened the eyes of many to the poverty in the United States, “cast growing light on the need that’s out there” for energy assistance, particularly during the winter months. AGA is hopeful that Congress will grant its request for the supplemental LIHEAP monies this winter, she said.
States that had the biggest need for LIHEAP assistance in 2004 were New York ($244 million), Pennsylvania ($130 million), Michigan ($106 million), Illinois ($104 million), Ohio ($98 million), California ($83 million) and New Jersey ($75 million). The Department of Health and Human Services awards LIHEAP funds by formula to all 50 states and the District of Columbia, federally or state-recognized Indian tribes and tribal organizations, which then disburse energy assistance payments to low-income households.
As for the natural gas supply situation this winter, Magnuson said gas utilities “[are] confident they will have adequate supplies to meet their demand at contracted levels,” but she conceded that interruptible supplies could face disruptions.
All in all, “we’re actually in a pretty good position as far as natural gas in storage…It’s going to cost more [this winter], but it’s going to be here.”
Magnuson doubts that utilities will be forced to allocate/ration supplies during the months ahead due to the lost production in the Gulf. “Even with production shut-ins [in the Gulf], it’s still only impacting less than 1% of annual supply,” she said.
“I suppose if we had more hurricanes and there were more factors out there that we’re not aware of,” then allocation of natural gas supplies might be required this winter, Magnuson noted. Even absent mandated allocation, she said gas utilities already have in place systems to ensure supply of gas to high-priority customers, such as residential consumers, hospitals, public health facilities and water treatment plants.
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