The Energy Assistance Landscape: Programs to Reduce Utility Cost Pressures

KEY TAKEAWAYS

• Two long-standing federal programs — the Low Income Home Energy Assistance Program and the Weatherization Assistance Program — are linked to fewer utility disconnections, improved energy security and cost savings for participating households.
• Utility companies in Eighth District states offer various types of bill payment assistance to low-income households. The most prevalent is a lifeline discount — a fixed-percentage discount for eligible households.
• Why it matters: Understanding the reach, effectiveness and limitations of these programs is important for assessing the wider effect of energy cost assistance on household budgets.

This is the second blog post in a two-part series on utility cost pressures and energy insecurity.

Previously, I showed that U.S. households — particularly those with low and moderate incomes — have experienced a rise in utility cost burden and energy insecurity, resulting in more households who kept their homes at unhealthy temperatures, reduced or forwent necessities and received utility disconnect notices. This blog post describes programs intended to alleviate this cost burden and examines their utilization and impact.

At the federal level, two long-standing programs address the impact of energy costs for low-income households: the Low Income Home Energy Assistance Program and the Weatherization Assistance Program. At the local level, utility companies offer various forms of assistance. These programs’ reach, effectiveness and limitations provide context for understanding energy cost assistance and its broader effect on household budgets.

Low Income Home Energy Assistance Program

The Low Income Home Energy Assistance Program (LIHEAP) is a federal block-grant program established in 1981. The U.S. Department of Health and Human Services administers the program in coordination with states and nonprofits like community action agencies. LIHEAP helps eligible households pay heating and cooling bills, cover crisis assistance and fund weatherization projects. Eligibility generally requires household income to be at or below 150% of the federal poverty level (FPL) or 60% of state median income, whichever option a state chooses.

Over the past five years, LIHEAP has received approximately $4 billion in annual federal funding, though supplemental funding increased the program’s appropriation to $6 billion in fiscal 2023. The program assists 5.5 million to 6.0 million households each year, or about 15% to 18% of eligible households per year.See Ryan Anthony and Michelle Graff’s December 2025 article, “Administering Energy Aid: State Approaches to Low Income Home Energy Assistance Program Implementation,” in The Electricity Journal. Its limited reach stems from a combination of funding level, administrative complexity and low program awareness.See Michelle Graff’s February 2024 Heliyon article, “Addressing Energy Insecurity: Policy Considerations for Enhancing Energy Assistance Programs.”

In the states that comprise the Eighth Federal Reserve District — Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee — LIHEAP reached 803,676 households in 2025, or 17% of the 4.6 million who were eligible. As shown in the figure below, since 2020, Kentucky has consistently had the highest share of eligible households — 21.2% in 2025 — receiving LIHEAP. Meanwhile, Mississippi has consistently had the lowest participation rate among eligible households — 12.8% in 2025. Like with the U.S. as a whole, most Eighth District states experienced a substantial decline in the share of eligible households that the program served in 2025.

Research has shown that LIHEAP participation is associated with:

• Fewer disconnections — According to one survey, 59% of recipients said their utility service would have been disconnected if LIHEAP had not been available.See the 2018 National Energy Assistance Survey Final Report (PDF), prepared by nonprofit research institute APPRISE for the National Energy Assistance Directors’ Association.
• Greater household energy security — A simulation study estimated that eliminating LIHEAP would reduce the share of energy-secure households by 17%.See Anthony Murray and Bradford Mills’ October 2014 article, “The Impact of Low-Income Home Energy Assistance Program Participation on Household Energy Insecurity,” in Contemporary Economic Policy.
• Modest increases in household energy consumption — This has been interpreted as recipients’ being able to afford using more energy rather than rationing it, though consumption changes could reflect multiple factors.See Jaih Hunter-Hill, Destenie Nock and Häly Laasme’s September 2025 iScience article, “Heterogenous Impact of Low-Income Home Energy Assistance Program on Energy Consumption Behavior.”

Weatherization Assistance Program

Established in 1976, the U.S. Department of Energy’s Weatherization Assistance Program (WAP) provides formula grants to states and to local administrators to help low-income households reduce energy costs and improve health and safety. The program offers free weatherization services, including insulation, air sealing, and HVAC and appliance upgrades. To date, WAP has served over 7 million households nationally, weatherizing approximately 32,000 homes annually.Program utilization statistics are from the U.S. Department of Energy. The following table reports fiscal 2025 allocations to Eighth District states.

Findings on the program’s return on investment are mixed. The DOE notes that weatherization upgrades generate $1.72 in household energy benefits and $2.78 in household nonenergy benefits for every dollar invested in the program. The DOE further notes that program participants experience average annual energy savings of $372 (2022 dollars).See this 2023 U.S. Department of Energy Weatherization Assistance Program fact sheet (PDF). However, a widely cited randomized study found that up-front costs were approximately double the actual energy savings achieved.See Meredith Fowlie, Michael Greenstone and Catherine Wolfram’s August 2018 Quarterly Journal of Economics article, “Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program.”

Utility-Based Assistance Programs

Utility companies also provide weatherization and bill assistance to low-income households, typically funded through ratepayer fees, utility company resources and/or private donations. Weatherization assistance typically involves free or subsidized repairs, similar to those offered through WAP. Bill assistance is typically offered through one of three models:

• Lifeline discount — A fixed-percentage discount applied to all eligible households
• Tiered discount — A varied amount based on household income level (i.e., the lower the household income, the greater the discount)
• Percentage-of-income payment plan — An established monthly utility bill as a predetermined percentage of household income

Utility Bill Assistance in the Eighth District

Illinois has one of the more comprehensive sets of programs among Eighth District states, with multiple utilities offering tiered discount programs for electricity, natural gas and water customers. Many of these are new, having launched since 2024. An example is Ameren Illinois’ discount program for its low-income natural gas customers. The tiered discount program began in October 2024 and offers a discount ranging from 5% to 84%, depending on household income. Those making 50% or less of the federal poverty level qualify for an 84% discount, while those making between 200% and 300% of FPL qualify for a 5% discount. LIHEAP customers are automatically enrolled in the discount program.

Utilities in other states that are part of the Fed’s Eighth District primarily offer lifeline discount programs administered through community action agencies and other nonprofits as a way to provide emergency bill payment help to low-income, elderly or disabled households. Common features include automatic enrollment for LIHEAP recipients and partnerships with community organizations for administration. For example, Duke Energy — which operates across several states, including Kentucky and Indiana — offers qualifying households up to $300 in bill payment assistance. Its program is administered by community action agencies. The table in the appendix lists utility company-based bill assistance programs in Eighth District states.

Conclusion

Federal programs have been associated with reduced utility disconnections and improved energy security for participating households. However, program reach remains limited relative to the scale of energy insecurity in the U.S. and in the Eighth District. Funding constraints, administrative complexity and gaps in program awareness continue to leave a substantial share of eligible households without assistance — even as utility cost burden and energy insecurity have risen in recent years.

At the same time, states and utilities within the Eighth District have taken varied approaches to bridge this gap, from Illinois’ expanded tiered discount programs to the lifeline discounts administered through community partnerships in other states. Understanding the reach and effectiveness of these programs will remain important for assessing utility cost pressures going forward.

Notes

1. See Ryan Anthony and Michelle Graff’s December 2025 article, “Administering Energy Aid: State Approaches to Low Income Home Energy Assistance Program Implementation,” in The Electricity Journal.
2. See Michelle Graff’s February 2024 Heliyon article, “Addressing Energy Insecurity: Policy Considerations for Enhancing Energy Assistance Programs.”
3. See the 2018 National Energy Assistance Survey Final Report (PDF), prepared by nonprofit research institute APPRISE for the National Energy Assistance Directors’ Association.
4. See Anthony Murray and Bradford Mills’ October 2014 article, “The Impact of Low-Income Home Energy Assistance Program Participation on Household Energy Insecurity,” in Contemporary Economic Policy.
5. See Jaih Hunter-Hill, Destenie Nock and Häly Laasme’s September 2025 iScience article, “Heterogenous Impact of Low-Income Home Energy Assistance Program on Energy Consumption Behavior.”
6. Program utilization statistics are from the U.S. Department of Energy.
7. See this 2023 U.S. Department of Energy Weatherization Assistance Program fact sheet (PDF).
8. See Meredith Fowlie, Michael Greenstone and Catherine Wolfram’s August 2018 Quarterly Journal of Economics article, “Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program.”

The following table is a nonexhaustive list of bill payment financial assistance programs at utility companies that serve Eighth District states.