Policy Paper

Energy Policy 31 (2003) 1441–1458

LIHEAP reconsidered

Mark J. Kaiser*, Allan G. Pulsipher

Center for Energy Studies, Louisiana State University, One East Fraternity Circle, Baton Rouge, LA 70803-0301, USA

Abstract

The Low-Income Home Energy Assistance Program (LIHEAP) is a federal block grant program established in 1981 to help low-

income households meet a portion of their home energy costs. The manner in which LIHEAP funds are allocated to states, however,

has been a contentious issue since the inception of the program. In 1984, the Health and Human Services developed a new formula

to increase equity among the states by incorporating state cooling requirements in an equal weighting scheme with state heating

requirements. In addition to the new distribution formula, various provisions were also included in the LIHEAP re-authorization

amendment that specified when and how the 1984 formula could be employed. These provisions have turned out to be so

constraining, however, that they have effectively disabled the 1984 formula. The purpose of this paper is to introduce realistic policy

alternatives to the current LIHEAP allocation mechanism and to examine the impact of each alternative. Three options are

discussed ranging from the complete elimination of the hold-harmless (HH) provisions to a proposal that maintains the primary HH

provision but reduces the trigger level when it is enabled. A simple allotment block distribution based on mixing the two competing

funding formulas is also considered. The models presented in this paper represent the first time that policy alternatives to the

LIHEAP allocation mechanism has been examined within an analytic framework.

r 2002 Elsevier Science Ltd. All rights reserved.

1. Introduction

The Low-Income Home Energy Assistance Program
(LIHEAP) was authorized by Congress through Title
XXVI of the Omnibus Budget Reconciliation Act of
1981, and currently authorized through the end of FY
2004 by the Coats Human Services Re-authorization
Act of 1998, P.L.105-285, enacted on October 27, 1998,
www.acf.dhhs.gov.

The Low-Income Home Energy Assistance Act of
1981 established the Low-Income Home Energy Assis-
tance block grant program to help eligible households
meet home energy costs. States can provide assistance to
low-income households through various program com-
ponents, including home heating and cooling assistance,
energy crisis assistance, and home weatherization
(General Accounting Office, US Congress, 1986):

* Home energy assistance consists of helping low-
income households pay heating and cooling costs.
Grantees provide assistance in the form of cash,
vouchers, coupons, and two-party checks to eligible
households, and may make payments to landlords or

home energy suppliers on behalf of eligible house-
holds.

* Energy crisis assistance includes funding for weather-
related, supply shortages, and other household
energy-related emergencies. States provide cash,
shelter, emergency supplies, or supplemental heating
sources to households without heat or in imminent
danger of having their fuel supplies terminated.

* Weatherization assistance includes funding for low-
cost residential weatherization or other energy-
related home repair.

LIHEAP is limited to households that include recipients
of aid to families with dependent children, supplemen-
tary security income, food stamps, or certain veteran’s
benefits. Households with incomes less than 150% of the
poverty level, or less than 60% of the state’s median
income, whichever is greater, also qualify under the
statute.

The LIHEAP is a block grant program, meaning that
the state can—within the statutory requirements—
choose their method of administration, eligibility
criteria, benefit levels, and funding levels for program
activities. A number of legislative amendments over the
years have placed some restrictions on state program
discretion; for example, no more than 25% of LIHEAP

ARTICLE IN PRESS

*Corresponding author. Tel.: +1-225-578-4554; fax: +1-225-578-

4541.

E-mail address: [email protected] (M.J. Kaiser).

0301-4215/03/$ – see front matter r 2002 Elsevier Science Ltd. All rights reserved.

PII: S 0 3 0 1 – 4 2 1 5 ( 0 2 ) 0 0 2 0 0 – 8

funds can be used for weatherization and no more than
10% can be spent on state administration costs. States
can transfer a maximum of 10% of their funds to other
block grants and cannot carry more than 15% of their
allotment to the succeeding fiscal year.

The General Accounting Office by legislative mandate
is required to evaluate LIHEAP, and as requested by
various government units, have produced a number of
reports on the program, e.g., General Accounting
Office, US Congress (1986, 1987, 1990). A handful of
academic papers on federal energy assistance programs
are scattered throughout the literature (Colton, 1990;
Higgins and Lutzenhiser, 1995; Kennedy, 1987; Kings-
ley, 1992; Landsberg and Dukert, 1981), including a few
Congressional Research Service reports (Abbey, 2001;
Gish, 2000; Stoltzfus, 2002) and numerous LIHEAP
reports to Congress (Low Income Home Energy
Assistance Programs, 1983, 1985, 1994, 2000).

The federal government distributes funds to states for
LIHEAP using a legislated formula. The LIHEAP
formula was originally legislated in 1981 and then
revised in 1984 in large measure due to political pressure
from many warm-weather states that maintained that
the 1981 formula over-allocated funds to cold-weather
states. Pursuant to the re-authorization amendment for
LIHEAP in 1984, the Health and Human Services
developed a new formula to increase the overall equity
among the states. The LIHEAP formula was revised to
incorporate state cooling requirements in an equal
weighting scheme with state heating requirements, but
various additional conditions were also included in the
amendment that specified when and how the 1984
formula could be employed. To ‘‘turn-on’’ the 1984
formula for instance, LIHEAP’s regular appropriation
is required to exceed a minimum threshold level of
$1.975 billion, but because program commitment to
LIHEAP has fallen over the years, the revised allocation
mechanism has only rarely been applied—specifically,
twice over the past 17 years, and last during FY 1986.

The primary intent of the 1984 legislation to increase
the overall equity of the distribution of LIHEAP funds
has thus failed miserably, and so there is a need to
examine alternative allotment methods to bring the 1984
formula ‘‘back into’’ the allocation mechanism as
intended by the legislation. The primary purpose of this
paper is to suggest viable policy alternatives to the
current legislative framework and to develop an analytic
model to quantify the impact of each alternative. The
present work represents the first time that alternative
allocation mechanisms to LIHEAP have been modeled
and presented publicly. This model not only provides
legislators insight on competing policy proposals, but
also hopefully, provides a forum and stimulus for future
debate.

The outline of the paper is as follows. The current
LIHEAP statute is discussed in Section 2, followed by a

summary of LIHEAP funding levels in Section 3 and a
general description in Section 4 of three realistic policy
alternatives. In Sections 5–7 the policy alternatives are
examined. In Section 5, a comparison of the 1981 and
1984 formula allocation formulas are discussed by state
and region, and in Section 6, the effect of a trigger-level
reduction on state allotments and system measures are
outlined. In Section 7 a block allotment procedure is
described which combines the 1981 and 1984 formula.
In Section 8 conclusions complete the paper. To
maintain focus on the policy proposals, the theoretical
foundation of the allocation mechanisms are maintained
in separate appendices.

2. The LIHEAP statute

The LIHEAP statute currently assigns each state and
the District of Columbia an allotment percentage based
on the value of the regular appropriation $D for the
fiscal year. One of three cases can occur depending on
the value of D:

Case I : Dp$1:975B
Case II : $1:975BoDo$2:25B
Case III : DX$2:25B

Case I: Dp$1:975B: When the regular appropriation
in a fiscal year is less than or equal to $1.975B, the 1981
formula is employed to determine state allocation
percentages. In other words, the 1981 formula repre-
sents a default condition if regular appropriation does
not exceed the trigger F ¼ $1:975B: The 1981 allocation
percentages shown in Table 1 are now over 20-years old
and the arbitrary basis of their ‘‘derivation’’ forgotten
by the legislative community. Further, and more
importantly, since regular appropriations have fallen
below the trigger level every year for the past 15 years
(and counting), the high frequency of usage of the 1981
formula has helped to create a sense of ‘‘acceptance’’
and ‘‘validity’’ for its application, which is anything but
satisfactory.

Three main ‘‘problems’’ exist with the 1981 formula:

(1) The 1981 formula represented the outcome of a
political process as opposed to being based on good
science.

(2) The 1981 formula was poorly designed, extremely
complex, and arbitrarily ‘‘derived’’ in a manner that
strongly favored cold-weather climates.

(3) The 1981 formula is a ‘‘static’’ formula that fixed
the allocation percentages of states based on pre-
1980 data for state climate, fuel price, demographic,
and expenditure patterns.

The 1981 formula is unusually easy to criticize and
very difficult to defend. It is important to recognize

ARTICLE IN PRESS
M.J. Kaiser, A.G. Pulsipher / Energy Policy 31 (2003) 1441–14581442

that the 1981 formula was designed in response
to conditions specific to the times that emphasized
the rapidly increasing fuel oil prices in the Northeast
during the late 1970s. The formula allocation caused
great consternation on the part of many warm-weather

states
1

and the continued application of the 1981
formula remains one of the better-kept ‘‘secrets’’ in
Washington.

The primary shortcomings of the 1981 formula are
easy to recognize: The 1981 formula does not nor cannot
reflect the current low-income demographic, consump-
tion, and fuel price mix in the country (since the data on
which the formula is based is over 20-years old), and
further, the formula itself cannot be ‘‘updated’’ to reflect
more recent data (since the allocation mechanism is a
static design). The most egregious aspect of the 1981
formula is that the allocation mechanism does not
distribute funds based on the need for home energy
assistance. Instead, the 1981 formula defines need in a
mysterious and complicated fashion primarily in terms
of the home heating needs of cold-climate states.

A complex and convoluted formula is not necessarily
a ‘‘bad’’ formula, but unfortunately—and more to the
point—it is not clear what the 1981 state allocation
percentages mean or if they identify the need for home
energy assistance. Four separate formulas are entangled
with the 1981 formula allotment—two House of
Representatives formula alternatives, the FY 1980 state
allotment, and the Windfall Profit Tax Act formula—
commingled with pro-rata reductions, weak hold-harm-
less (HH) provisions, and arbitrary formula compar-
isons. And as each one of the four formulas is biased
toward cold-climate states, no matter what procedural
elements are invoked, a biased

2
cold-climate formula

remains a biased cold-climate formula.
Pursuant to the re-authorization amendment for

LIHEAP in 1984, the 1981 formula was completely
revised in the ‘‘1984 formula’’, but for the 1984 formula
to be ‘‘turned-on’’ the regular appropriation must
exceed $1.975B.

Case II: $1:975BoDo$2:25B: When the regular
appropriation exceeds $1.975B in a fiscal year, then an
allocation mechanism based on the 1984 formula
coupled with two HH provisions is adopted. The first
HH condition, or primary HH provision, is enabled
when D > $1:975B: When DX$2:25B a second HH
provision kicks in.

The 1984 formula, or ‘‘new formula’’, was established
to provide a mechanism to distribute LIHEAP funds
based solely on the home energy needs of low-income

ARTICLE IN PRESS

Table 1

LIHEAP allocation percentages according to the 1981 and 1984

formula

State 1981 Formula

(%)

1984 Formula

(%)

Statutory

floor ($M)

Alabama 0.86 1.68 16.99

Alaska 0.55 0.36 10.84

Arizona 0.42 1.25 8.21

Arkansas 0.66 1.21 12.96

California 4.61 6.00 91.12

Colorado 1.61 1.15 31.77

Connecticut 2.10 1.40 41.45

Delaware 0.28 0.37 5.50

D.C. 0.33 0.27 6.44

Florida 1.36 4.16 26.88

Georgia 1.08 2.68 21.25

Hawaii 0.11 0.12 2.14

Idaho 0.63 0.28 12.39

Illinois 5.81 5.30 114.72

Indiana 2.63 2.21 51.94

Iowa 1.86 1.22 36.81

Kansas 0.86 1.07 16.91

Kentucky 1.37 1.73 27.03

Louisiana 0.88 1.79 17.37

Maine 1.36 0.55 26.85

Maryland 1.61 2.26 31.74

Massachusetts 4.20 2.91 82.91

Michigan 5.51 4.82 108.92

Minnesota 3.97 1.68 78.47

Mississippi 0.74 1.87 14.56

Missouri 2.32 2.41 45.82

Montana 0.74 0.35 14.54

Nebraska 0.92 0.55 18.21

Nevada 0.20 0.51 3.86

New Hampshire 0.79 0.45 15.69

New Jersey 3.90 3.28 76.97

New Mexico 0.52 0.54 10.28

New York 12.72 8.68 251.34

North Carolina 1.90 3.14 37.45

North Dakota 0.80 0.21 15.79

Ohio 5.14 4.86 101.49

Oklahoma 0.79 1.31 15.61

Oregon 1.25 0.95 24.62

Pennsylvania 6.84 5.15 134.99

Rhode Island 0.69 0.47 13.65

South Carolina 0.68 1.44 13.49

South Dakota 0.65 0.29 12.83

Tennessee 1.39 2.08 27.38

Texas 2.26 6.60 44.71

Utah 0.75 0.54 14.76

Vermont 0.60 0.23 11.76

Virginia 1.96 3.05 38.66

Washington 2.05 1.50 40.50

West Virginia 0.91 0.96 17.89

Wisconsin 3.58 1.93 70.63

Wyoming 0.30 0.18 5.91
1
‘‘It has only been through the making of legislative history with

regard to this and previous appropriations bills for this program that

the prejudice favoring cold-weather energy bill assistance and opposing

hot-weather energy bill assistance has developedy it is counter to the

American tradition of fair play. I would urge the Congress to re-

examine its conscience and design a fairer solution’’. Additional view

of Bill Alexander, Low Income Energy Assistance, House of

Representatives Report No. 96-1244, August 21, 1980.
2
Granted, the home heating needs of cold-climate states were

particularly severe in the early 1980s but the incorporation of these

same factors today is not defendable.

M.J. Kaiser, A.G. Pulsipher / Energy Policy 31 (2003) 1441–1458 1443

households—where ‘‘home energy’’ was interpreted to
mean the heating and cooling requirements of house-
holds. According to Section 2604(a)(2) of P.L. 97-35 as
amended by P.L.98-558,

‘‘y For fiscal year 1985 and thereafter, a state’s
allotment percentage is the percentage which expen-
ditures for home energy by low-income households in
that state bears to such expenditures in all statesy’’

The 1984 formula was a significant improvement over
the 1981 formula in terms of its transparency and equity
and in many regards can be considered the ‘‘ideal’’
mechanism to distribute LIHEAP funds:

(1) The 1984 formula determines state allocation
percentages according to a simple, easy-to-under-
stand, and science-based mechanism using estimates
of state expenditures for the Btu requirements of
low-income households for each fuel source con-
tributing to home heating and cooling needs.

(2) The 1984 formula is extremely well designed and
easy-to-defend and is based on the ‘‘best-available’’
statistical data.

(3) The 1984 formula is a dynamic allocation that is
updated annually to normalize for changes in
weather patterns (heating and cooling degree-days)
and fuel prices (coal, electricity, fuel oil, liquid
petroleum gases, and natural gas) at the state level.

The 1984 formula allocations are shown in Table 1
alongside the 1981 allotments, but unlike the 1981
percentage allocation values, the 1984 formula values do
not represent the final state allotment percentages. The
final allotment percentages can only be calculated after
the regular appropriation D is known for the fiscal year
and the impact of the HH and give-back (GB)
provisions are incorporated within the allocation
mechanism.

The HH condition establishes a statutory floor for
each state determined by the 1981 formula allocation
and the appropriation level F ¼ $1:975B as shown in
Table 1. If a state does not achieve its statutory floor
under the appropriation D and 1984 formula allotment,
then it is held ‘‘harmless’’ at its floor. The funds
necessary to maintain states at their floor is mandated
by a GB provision which specifies that all states above
their floor will have their allotments reduced propor-
tionally until the funds required to make-up the deficit is
achieved. Since the funds necessary to make-up the
deficit come from states that benefit under the new
allocation mechanism, these states effective allotment
percentages are reduced from their 1984 allotment.

Case III: DX$2:25B: When the regular appropriation
for a given fiscal year is equal to or exceeds $2.25B, then
another HH and GB condition is triggered, referred to
as the secondary HH-GB provision or the LTOP (less
than 1%) provision. The LTOP provision stipulates that

any state that receives less than 1% of the total
allotment funding at the appropriation level D cannot
have a smaller allotment percentage than its allotment
percentage at $2.14B. The impact of the secondary HH-
GB provision acts to maintain a set of states at their
allotment percentage achieved at $2.14B. Since a set of
states are maintained at an allotment percentage that is
higher than dictated by the primary HH-GB provision,
the complementary set of states which are not affected
by the LTOP provision provide the funds required to
satisfy this condition.

The inclusion of the secondary HH-GB provision is
interesting because it indicates the ‘‘mind-set’’ of the
legislators at the time the LIHEAP statute was revised.
It was expected, or at least anticipated, that regular
appropriations for LIHEAP would increase in the years
ahead and might conceivably even exceed $2.25B! As it
turns out, however, due to factors such as the oil price
crash of 1986 and the Emergency Deficit Control Act,
funding levels for LIHEAP in the years following the
1984 re-authorization plummeted.

3. LIHEAP funding levels

The LIHEAP statute provides for two types of
program funds: regular block grant and emergency.
Regular funds are authorized under Section 2602(b) of
the LIHEAP statute and are currently allocated
according to the mechanism described in Section 2.
Emergency funds are authorized under 2602(e) of the
LIHEAP statute and are authorized and distributed at

ARTICLE IN PRESS

Table 2

LIHEAP funding history, 1981–2002

FY Regular appropriation ($B) Emergency ($M)

1981 1.850

1982 1.875

1983 1.975

1984 2.075

1985 2.100

1986 2.010

1987 1.825

1988 1.532

1989 1.383

1990 1.393 50

1991 1.415 195

1992 1.500

1993 1.346

1994 1.439 298

1995 1.319 100

1996 0.900 180

1997 1.000 215

1998 1.000 160

1999 1.100 180

2000 1.100 744

2001 1.400 456

2002 1.700

M.J. Kaiser, A.G. Pulsipher / Energy Policy 31 (2003) 1441–14581444

the discretion of the President and Secretary of the
Health and Human Services at any point in time in the
fiscal year. The funding history of LIHEAP is shown in
Table 2. The average value of LIHEAP regular
appropriation from 1981–2002 is EðDÞ ¼ $1:51B with
a standard deviation of sðDÞ ¼ $0:37B: Observe that
since the LIHEAP program was reauthorized in 1984,
funding levels have exceeded the trigger level $1.975B
only during FY 1985 and FY 1986.

4. Policy proposals

The principal condition that has prevented the
application of the 1984 formula is immediately clear.
The level of the regular funding appropriated for
LIHEAP over the years has not achieved the legislated
trigger, and so by default, the 1981 formula—despite its
obvious shortcomings—has become the effective alloca-
tion mechanism for federal funding.

To address the failure of the 1984 legislation, three
suggestions follow:

* Eliminate the trigger level,
* Reduce the trigger level or
* Devise an alternative allocation mechanism.

These suggestions are formalized as the following
options:

Option A: Eliminate the HH-GB provisions and apply
the 1984 formula allocation at a zero trigger level.

Option B: Reduce the trigger level of the HH-GB
provision and eliminate the LTOP provision.

Option C: Apply an allocation mechanism based on a
linear combination of the 1981 and 1984 formula values.

A brief description of each option is now provided
followed in Sections 5–7 by models that explore the
impact of each alternative.

Option A: This is the most dramatic approach, the
simplest, and arguably the most equitable. Unfortu-
nately, Option A is also unlikely to garner the political
support necessary to achieve passage.

The purpose of LIHEAP is to assist low-income
households meet the costs of home energy. This purpose
is clear and unambiguous and a very good allocation
mechanism already exists in the 1984 formula to satisfy
this objective—and in fact it is doubtful that a ‘‘better’’
formula can be developed unless the legislative mandate
of LIHEAP radically changes—but for the past 15 years
the 1984 formula could not be employed since the
trigger level to turn it ‘‘on’’ has never been attained.
Hence, by eliminating the HH provisions and setting the
trigger point to zero, the 1984 formula will serve as the
new default formula.

The basic premise of Option A is that any use of the
1981 formula perpetrates a distribution of funds that is
inequitable since the allocation is not based on the home

energy needs of low-income households. The manner in
which LIHEAP funds should be distributed to states
should mimic the state’s home energy expenditures

3
paid

by low-income households. Interestingly, this also
appears to be the Bush Administration position.

4

Although Option A is believed to be the fairest,
simplest and best way to revise LIHEAP, it may not be
politically viable or develop a strong enough coalition of
support, especially in the Senate since a majority of
states realize a smaller allotment percentage under the
1984 formula. The fight in Congress over Option A will
be especially difficult since Senators are not likely to
vote their state a lower allotment percentage to ‘‘right
the wrongs’’ of an archaic and cryptic formula. Be that
as it may, if legislators can be convinced to move on
LIHEAP—perhaps for the sake of good government,
good conscience, or daresay, a good formula—viability
may hinge on maintaining some form of the HH
condition as opposed to the complete elimination of
the statutory floor. One simple means to accomplish this
task is to simply re-set the trigger level of F downward
as proposed in Option B.

Option B: Any revision to LIHEAP should be realistic
and based on a politically viable strategy.

The value of the trigger point F currently represents a
level that has not, nor likely will, be surpassed in the
future, and hence its adjustment downward is necessary
to ensure that a more equitable allocation mechanism be
applied to future LIHEAP funding. The value of the
trigger point was set by legislative mandate and over
time has lost its relation to D: At one time (15-years ago)
the values of D and F were roughly comparable, while
today F appears as an upper bound that is unlikely to be
exceeded.

There is also some precedence for trigger re-adjust-
ment. When the HH-GB provision was initially devised
in 1984, F was set at the FY 1984 appropriation level of
$2.075B. In 1986, when the regular appropriation fell
below the required trigger, the value of F was reduced to
the FY 1983 level of $1.975 to bring the 1984 formula
back ‘‘in’’ the allocation mechanism.

5
Unfortunately,

FY 1986 represented the last year in which program
appropriations exceeded $1.975B, and subsequent to
this time no further action has been taken to address this
issue and/or re-adjust F:

ARTICLE IN PRESS

3
Home energy expenditures paid by low-income households is also

relatively easy to estimate, and so there is no technical difficulties

associated with the computation.
4
‘‘y The legislatively established formula currently used to

distribute LIHEAP block grant funds to states is based on 20-year

old population and winter heating cost data. The Administration is

interested in options that would make block grant allocations more

equitable by basing the formula on current home energy expenditures

paid by low-income households’’. Bush Administration LIHEAP

Budget for Fiscal Year 2003.
5
Apparently LIHEAP re-authorization legislation was still fresh in

legislators minds.

M.J. Kaiser, A.G. Pulsipher / Energy Policy 31 (2003) 1441–1458 1445

The ideal equitable allocation mechanism would be
based on the 1984 formula with no provisions attached
(Option A), but because of the historical precedence to
couple the 1984 formula with HH and GB provisions,
and the need to satisfy a majority of votes in the Senate,
Option B is likely to be viewed as compromise
legislation.

Option C: An alternative approach to maintain the
application of the 1981 formula that does not rely
explicitly on re-adjusting the trigger level F is to
set-aside a certain percentage ðrÞ of the regular appro-
priation to be used with the 1981 formula, rD; and then
to apply the 1984 formula to the remaining funds,
ð1 � rÞD: This has an advantage over Option B since
regardless of the appropriation level the 1984 formula
would always be applied to the same portion of the
regular appropriation.

6
Option C ensures application of

the 1984 formula with no ‘‘downside risk’’ as in Option
B, but it also foregoes the ‘‘upside potential’’ when D >
F: On methodological grounds a formula mix is not
especially appealing, but as will be demonstrated in
Section 7, a linear combination of the 1981 and 1984
formula is equivalent to Option B under a suitable
correspondence.

A summary of the three options is depicted in Table 3
along with a brief description of their advantages and
disadvantages.

5. A comparison of the 1981 and 1984 formula allotments

The 1981 formula is for all practical purposes a
‘‘perpetual’’ formula since the funding levels required
to ‘‘turn-on’’ the new allocation mechanism has only
rarely been achieved in the past and is unlikely to be
attained in the future. The HH and GB provisions
associated with the allocation mechanism are therefore
relaxed and the trigger level required to turn-on the 1984
formula is set equal to zero. A direct comparison is
performed between the old and new formula allotment
percentages by state and region.

5.1. Comparison by state

If the vectors f and g denote the 1981 and 1984 state
allotment percentages:

f ¼ ðf1; y; f51Þ; 0ofio1;
X

fi ¼ 1;

g ¼ ðg1; y; g51Þ; 0ogio1;
X

gi ¼ 1;

then the set of states that would benefit from a formula
change is denoted

fBg ¼ fi j fiogig;

while the set of states that would be harmed is denoted

fCg ¼ fi j fi > gig:

The sets fBg and fCg partition the 50 states and District
of Columbia (D.C.) according to states that ‘‘benefit’’
and are ‘‘harmed’’ by the formula change. If a state’s
1984 formula allotment percentage is greater than its

ARTICLE IN PRESS

Table 3

A comparison of three policy options

Policy Description Advantages Disadvantages

Option A Eliminate the primary and Simple Senate fight

secondary HH-GB provisions Fair Large percentage change in state allotment

and nullify the trigger level Rational

mechanism

Satisfies original intent of LIHEAP

Bush Administration position

House passage likely

Option B Maintain the primary HH-GB Maintains form of Maintains convoluted formula

provision but reduce the statute Not a rational mechanism for distribution

trigger level when it is enabled Enables 1984 Level of fairness not guaranteed

formula

Compromise formula

Senate support more likely

Option C Apply an allotment based Simple Formula mix

on a linear combination Easy to understand Not a rational mechanism for distribution

of the 1981 and 1984 No downside risk Foregoes upside potential

formula values Correspondence with

Option B

6
Under Option B, if F is re-set at a value that is ‘‘too high’’ (say

$1.5B) and D again drifts downward away from F; then the same
inequity will return to the distribution.

M.J. Kaiser, A.G. Pulsipher / Energy Policy 31 (2003) 1441–14581446

1981 allotment percentage, fiogi; then state i is said to
benefit from the new policy.

In Table 4, 23 states are shown to benefit under
Option A while 28 states would be harmed. States that
benefit realize a percentage change in their allotment
ranging from 4% (New Mexico, Missouri) to 200%

(Arizona, Florida) while states that are harmed range
from �6% …