More Americans had trouble paying for their utilities last winter despite heating costs dropping to pre-pandemic levels, potentially pointing to a hot and deadly summer for millions of consumers, said the nonprofit National Energy Assistance Directors Association.
The average cost of home heating last winter was $836, down from $978 in the prior year and $849 in 2020, said NEADA, which represents state directors of the Low Income Home Energy Assistance Program (LIHEAP). Yet, the Household Pulse Survey showed that in March, 19.2% of all families couldn’t pay at least one home energy bill in the last 12 months, up from 16.5% in the prior-year period.
The loss of pandemic-era programs, including the enhanced child tax credit (CTC), boosted the number of people struggling to pay even smaller bills and it could get worse this summer, said Mark Wolfe, NEADA executive director. The enhanced CTC increased the maximum credit to $3,000 per qualifying child between ages 6 and 17, and $3,600 per qualifying child under age 6. It also allowed eligible families to receive part of the credit in 2021, through advance payments of up to $250 per month for each qualifying child age 6 to 17 at the end of 2021.
“Unlike the price of winter heating, the cost of summer cooling is going up due to the unprecedented rising of summer temperatures,” he said.
Struggles will likely worsen
More than one out of six households (16%, or 21.12 million households) are already behind on their energy bills, NEADA said. The national average balance rose to a record $20.3 billion in December from $17.7 billion at the start of 2023.
In March, the percentage of families with children who struggled to pay their energy bills also jumped, to 25.6% from 20.4% a year ago, suggesting “the end of the enhanced child tax credits as well as other pandemic income support programs are having a direct impact on their ability to pay basic expenses,” Wolfe said.
Summer will be even more unaffordable. The National Oceanic and Atmospheric Administration forecasts above-normal temperatures for most of the U.S. this summer.
“While the cost of winter heating is falling back to pre-pandemic levels, the cost of cooling continues to increase as rising summer temperatures continue to break national records,” Wolfe said.
Also, the price of oil, which can influence the price of electricity, recently cracked $85 per barrel, reaching the highest level since October amid Mideast tensions. JP Morgan analysts expect oil to hover near $90 by May but acknowledged there’s a risk that prices will head near $100 by September.
Extreme heat causes more deaths each year than any other weather event, including floods, hurricanes and tornadoes, according to the National Weather Service.
What can help families?
Congress needs to provide additional funding to LIHEAP, which helps eligible low-income households pay for home energy services, Wolfe said.
Congress has only allocated fiscal year 2024 funding of $4.1 billion, or $2 billion less than the prior year.
“With the reduction in funds (states) will have to scale back not only average grants, crisis assistance and weatherization, but they will also have to scale back or eliminate entirely their cooling programs,” Wolfe said. He estimates up to 1.5 million families could get cut from the program.
But if the Senate can approve the new child tax credit (CTC) encased in the tax bill the House of Representatives passed in January, people may be able to get more money in their pockets, possibly this summer, to help pay their bills.
Steps you can take: 14 ways to save on your electric bill
The new child tax credit isn’t as lucrative as the pandemic-era enhanced CTC, but it increases the refundable portion, retroactive to 2023 and through 2025. Low-income families who don’t pay income taxes could get up to $1,800 refunded of the $2,000 per-child credit instead of the current $1,600. The amount would rise to $1,900 in 2024 and $2,000 in 2025.
The Senate doesn’t return to work until Monday and the tax season ends on April 15, so lawmakers would have to act quickly to approve it. Then, the IRS would begin processing refunds to those who qualified for the new CTC in 2023.
Americans probably shouldn’t hold their breath though. “While there are several Republicans who might vote for the bill, it seems that getting 60 votes in the Senate will be difficult,” said Brian Gardner, Stifel chief Washington policy strategist.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
This article originally appeared on USA TODAY: Even if heating and cooling bills dip, many still can’t pay. Why?
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