A Minnesota winter is coming. So are higher heating costs.

Minnesotans will spend more on heating bills this winter, experts and government officials say, but there is also more funding available to help low-income households cover costs. 

A rise in global natural gas prices combined with market hangovers from a deep-freeze in Texas earlier this year means that most Minnesotans will pay more to stay warm this winter, according to Annie Levenson-Falk, executive director of the nonprofit consumer advocacy group, Citizens Utility Board. 

While costs are expected to rise, there is more money than ever for a federal program that provides energy assistance and weatherization funds to low-income families. Minnesota received an additional $167 million for energy assistance from the American Rescue stimulus plan. And the income limit on who qualifies for benefits has been raised, according to the Minnesota Department of Commerce. (More information here)

Now the challenge is getting people to sign up for energy assistance, which routinely serves far fewer people than it could, if all who are eligible applied. 

“We want to get that to Minnesotans,” Commerce Commissioner Grace Arnold told Sahan Journal. 

Disproportionate impact 

New eligibility levels for energy assistance raised the income threshold to 60 percent of the state median income. That means a family of four earning up to $68,000 a year is able to access benefits. 

Today, about one fourth of households are eligible for energy assistance, according to Pam Marshall, executive director of the Energy CENTS Coalition, a nonprofit group that advocates to make energy affordable to low-income Minnesotans. But historically, only about 27 percent of those eligible households receive benefits due to lack of funding and people not signing up for the service. 

Minnesotans of color are more likely to be energy burdened—which means paying more than 5 percent of household income on utility bills.

Low-income Minnesotans are disproportionately people of color. About 10 percent of Minnesotans live in poverty, according to the Minnesota Department of Health. But those figures are higher for communities of color: 28 percent of Black and Native American residents live in poverty, as do 19 percent of Minnesotans identifying as Hispanic and nearly 12 percent of Asians. 

Those figures are reflected in participation rates for energy assistance in Minnesota. Last winter, 116,271 households received a total of more than $93 million in assistance, with an average benefit of $803, according to the Minnesota Department of Commerce. Black and Indigenous households registered for the program at disproportionately high rates. Black households accounted for 16.5 percent of energy assistance recipients, despite being about 7 percent of the state’s population, according to the 2020 U.S. Census. Indigenous households made up 5 percent of program participants despite being just 1 percent of the state’s total population. 

Higher costs 

Worldwide, natural gas prices are at their highest level in seven years, according to a report by the U.S. Department of Energy. The federal government is anticipating a 30 percent rise in heating bills for natural gas customers. About 90 percent of Minnesotans and half of all Americans heat their homes using natural gas. 

But there is more than just market volatility at play. When a deep freeze combined with an under-regulated natural gas market in Texas in February, U.S. natural gas buying went haywire. Utility providers, including major firms serving Minnesota like Xcel Energy and CenterPoint Energy, consequently had to buy natural gas at drastically inflated prices.

The Minnesota Public Utilities Commission, a governor-appointed board that regulates energy providers, found that utility companies failed to prove they acted prudently before and during the crisis to prevent price spikes for ratepayers. Nonetheless, in a ruling, the board said utilities could begin recovering the high costs paid during the crisis over 27 months, beginning in September. Those costs must be listed as a separate line item on bills and are expected to be between $5 to $10 per month. 

Critically, the commission exempted households on federal energy assistance from paying those additional charges. Compared to less-regulated states, where customers saw massive bills immediately after the storm, Minnesota did well, experts say. 

“I think the [Public Utilities Commission] has done the best they can with a bad situation,” Levenson-Falk said.

Reaching out to qualified Minnesotans

Energy assistance is administered at the local level by Community Action Partnership (CAP) agencies.

The assistance program is essentially a grant program that directly pays utility providers to cover bills, service reconnections, and furnace repairs. Residents can receive grants between $600 and $2,000. Both homeowners and renters are eligible to receive funds.  

People can begin applying for energy assistance in September. The Hennepin County CAP has already received more than 8,000 applications, according to Director of Energy Assistance Tammy Stauffer. Last year, Hennepin County connected 18,000 households to energy assistance and weatherization programs. 

Stauffer is new to Hennepin County, but did energy assistance work for years at the Community Action Partnership serving Scott, Carver, and Dakota counties. Most ratepayers are reactive, she said, and sign up after receiving their first large heating bill of the winter in December or January. Because prices are expected to be higher this winter, that first major heating bill could come as quite a shock this season, she said. 

Most people hear about energy assistance from friends and family, but Hennepin County is attempting to do targeted outreach on social media, and through in-person events like a Halloween outing at the Brooklyn Park Zanewood Recreation Center, scheduled for October 30 between 2 and 5 p.m. The agency sends out its messages in multiple languages, including Hmong, Spanish, Somali, and Vietnamese, and has staff members who can speak those languages, Stauffer said. 

Families who qualify should apply as early as possible, she said. About 80,000 households in Hennepin County live in poverty, so Stauffer knows the agency could be serving many more residents with energy assistance. “We’re hoping to get closer to that,” she said.

Making assistance available to immigrants

Energy assistance is a federal program that requires a social security number or visa documentation to qualify. Community Action Partnership agencies will work with households led by undocumented adults, Stauffer said. Coordinators can typically ensure a family will qualify by using the social security number of a citizen family member.

The agencies don’t report undocumented people to immigration services, though Stauffer understands that many are hesitant to sign up. 

That’s due to a fear-hangover from the Trump administration, according to Emilia Gonzalez Avalos, executive director of Unidos MN, a nonprofit that advocates for immigrants and economic justice. 

Unidos set up a help hotline during the heart of the COVID-19 pandemic to connect people to various services. Today, the line gets calls from many people seeking rental assistance and help paying utility bills, Gonzalez Avalos said. Unidos tries to assure mixed-documentation-status families—say, a family where one parent is undocumented but the children are citizens—that they qualify for the program and won’t be reported to immigration enforcement. 

“We have to make sure people feel safe sharing their data,” she said.  

Better outcomes

Energy assistance is linked to the federal program that provides money for weatherization upgrades. These renovations can help households save money and lower emissions by patching up drafts and creating more efficient homes. The same  application, which can be downloaded online in multiple languages,  is used for both programs and applying for energy assistance opens the door to weatherization upgrades. 

The influx of cash from the American Rescue Plan means there is more money than ever for weatherization and the state is trying to get those funds out the door. 

“We’d rather have people use less energy in the long run,” Commerce Commissioner Arnold said, noting it’s better for family budgets and the environment. 

This winter’s price increases also highlight the risk of being dependent on volatile fossil fuel markets for energy, she said. Natural gas isn’t the only fuel with a higher price this winter. Propane, which many Minnesotans use for heat, is also expected to be more expensive. 

The alternative is advancing more electricity-powered heating, such as air source heat pumps. Electricity is coming from increasingly cleaner sources in the U.S. and is more predictable cost-wise, according to Levenson-Falk with Citizens Utility Board. 

“That’s going to help stabilize household costs,” Levenson-Falk said.