Utility Bill Relief: Potential Government Aid for Heating & Cooling Costs

Struggling Americans may be getting some much-needed aid.

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Key points

• Rising energy costs are a burden for many households.
• A new bill could put more families in line for help with their utility bills by increasing funding for a critical program.

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When you rent a home, your landlord may or may not cover the cost of your utilities. When you own a home, those utility costs are on you alone.

That's proving particularly problematic these days with energy costs rising. Of course, it's not just utility costs that are increasing. Inflation has made the general cost of living increase exponentially over the past several months. That's left many households struggling to keep up with their bills -- especially those living paycheck to paycheck without any money in a savings account to use in a pinch.

Thankfully, there's a new initiative in the works that could provide relief to those who are struggling to keep up with utility bills. And it could be coming at just the right time.

An uptick in aid

There's already a program in place designed to help low- and moderate-income households get assistance with their utility bills. It's called LIHEAP, or the Low Income Home Energy Assistance Program. Due to limited funding, the program, as of now, can only help about 16% to 18% of families who would otherwise be eligible for assistance. Lawmakers are trying to change that.

On Jan. 20, Senator Ed Markey and Rep. Jamaal Bowman introduced the Heating and Cooling Relief Act. The purpose of the bill is to increase funding for LIHEAP so more eligible households can get the help they need in covering their heating and cooling bills.

This legislation is coming at an important time. Last year, Americans saw a round of $1,400 stimulus checks hit their bank accounts following the passage of the American Rescue Plan in March. That bill also boosted the Child Tax Credit and allowed for half of it to be paid in the form of monthly installments that ran from July through December.

But at this point, there are no plans to make another widespread round of stimulus checks available to the general public. And while lawmakers had been fighting to keep the boosted Child Tax Credit around for another year, right now, that legislation is awaiting a Senate vote -- and is getting nowhere.

In fact, President Biden's Build Back Better plan, which allows for a one-year extension of the boosted Child Tax Credit, is unlikely to pass in its current form, so there's a good chance the enhanced credit won't actually stick around for another year. In the absence of meaningful stimulus aid, added funding for LIHEAP could be a lifeline for families that are falling behind on their utility costs.

Huge changes could be in the works

If the Heating and Cooling Relief Act passes, it could increase annual funding for LIHEAP from under $4 billion to $40 billion. The bill would also ensure no eligible family of four would spend more than 3% of its income on utility bills. Right now, low-income households typically spend about 8.6% of their income on utilities, compared to 3% for higher-income families.

The Heating and Cooling Relief Act would also expand the program so more moderate earners could qualify for aid. While it can't take the place of another stimulus check or a boosted Child Tax Credit, it can certainly help fill those gaps and make one unavoidable expense more manageable.