Record number of Iowa residents overdue on utility bills

By James Nykvist
12 March 2011

The Iowa Bureau of Energy Assistance recently reported that a record 267,710 Iowa households—representing over 20 percent of the state’s population—are overdue on their utility bills. This figure is a 10 percent increase from the previous year. The amount owed on those past-due accounts totals $35 million.

According to the Quad Cities newspaper the Gazette, Iowa’s state agencies that oversee the Low Income Home Energy Assistance Program (LIHEAP) are afraid of what will happen as spring arrives. Iowa law states that utilities cannot turn off power for those who qualify for heating assistance programs from LIHEAP during the winter months, even if the customers are delinquent. Officials expect an upsurge in shutoffs as the year wears on.

At the same time, federal funding for families unable to pay their utility bills is slated to decline dramatically. President Obama has proposed drastic cuts to LIHEAP. Funding for the program’s budget will be reduced from $5 billion in 2010 to $2.5 billion this year, the same level allocated under the Clinton administration more than a decade ago.

Nationwide applications for heating assistance have reached record levels. The National Energy Assistance Director’s Association (NEADA) reports that the number of households served by LIHEAP increased from approximately 5.8 million in FY 2008 to 8.3 million in FY 2010. NEADA expects the numbers to rise to 8.9 million in FY 2011.

Jerry McKim, the Chief of the Iowa Bureau of Energy Assistance, spoke to the World Socialist Web Site about the impact of these cuts and the lack of sufficient funding for LIHEAP in Iowa.

“Last federal year, we had a record number of people sign up for low-income heating assistance, roughly 102,000 households. The average benefit was around $600 per household. We can safely say that our numbers for this year will also see near-record numbers applying for heating assistance.”

Asked about the impact of Obama’s cuts, he noted: “Ultimately, Obama wants to go back to the 2008 budget. In 2008, we had 85,000 households sign up for energy assistance. And their average benefit was around $390 per family. Iowa had approximately $37 million in our regular formula grant appropriated. Now, let’s compare to 2010. It’s very similar to the year we are in, although I cannot provide final numbers for 2011. In 2010, we had 101,401 households and $74.5 million set aside for our funds.”

Taking into account a recent report by the Center on Budget and Policy Priorities (CBPP), McKim pointed out the absurdity of President Obama’s logic in cutting the budget for the most vulnerable and poor at this time. The CBPP report concluded that Obama’s proposal of “establishing the 2008 funding level as the baseline for LIHEAP in 2012 will leave a higher percentage of the eligible population unserved or underserved than in 2008 or prior years.”

But even in 2008, energy prices were not affordable, McKim added. “With the fact that people have been losing jobs and with recession conditions, we are still dealing with unaffordable energy prices. Our guidelines for funding aren’t based on federal dollars alone. Our response is based on the demand for heating assistance increasing. This is indicative of more people struggling with energy costs and a lot of people have fallen on hard times and need help. The poverty rate in Iowa has also increased.”

Congress has yet to pass the regular appropriations bill for LIHEAP, and this means that Iowa’s budget has not been finalized with exact figures from the federal level. Yet McKim notes that he “expects the benefits for people to drop from $600 per household to as low as $450; that would be a cut of 25%.” Even if that is not the exact figure, he expects it to be much less than $600 per person.

Even those who currently receive LIHEAP assistance are facing difficulties paying heating bills as energy prices continue to rise. Of the 98,000 current LIHEAP accounts, 35,000 accounts are past due. Of the total $35 million owed to the energy companies, approximately $9 million is owed by LIHEAP recipient households, a 34 percent higher increase over a year ago.

Asked about what would happen when spring arrives in Iowa, McKim said, “Come April 1, the energy companies can start shutting people off if they are overdue. Historically, we know come April 1, and for three months following, we usually see quite a few folks being disconnected. One could certainly speculate that we could be looking at record numbers of households facing disconnection starting in April. The potential for house fires every year at that time increases.”

With the economic deterioration of Iowa’s population and the social needs of its most vulnerable increasing, McKim added, “Energy is a basic necessity of life that people need in order to survive. Unfortunately, it has become unaffordable for a large section of people in Iowa. Even back in 2008, the consequences of unaffordable energy were dire and they were experienced by far too many of our most vulnerable citizens. What was and still is an energy affordability issue now has become a serious public health matter.”