Heating Assistance Program Improvements
Trade associations secure higher margin-over-rack payments for fuel dealers
The continued economic fallout of the COVID-19 pandemic put the federal Low Income Home Energy Assistance Program (LIHEAP) in the spotlight this past heating season. In 2021, Congress allocated a record $8.5 billion in LIHEAP funding to states for fiscal year 2022. This move would prove fortuitous as an international energy crisis drove heating fuel prices to historic highs this past March.
Months earlier, NEFI had met with White House officials regarding long-standing issues with margin-over-rack (MOR) payments that participating fuel dealers receive under their states’ assistance programs (see “Record Levels of Financial Assistance…” Jan./Feb. 2022, page 6). NEFI explained that companies in some states have said MOR payments do not cover overhead costs. The Biden administration offered to help the industry address this issue, and NEFI launched an online Heating Assistance Resources Center at nefi.com/heating-assistance.
In March, after months of repeated requests by state heating fuel associations and continuing pressure from NEFI at the federal level, at least two states agreed to make needed adjustments to their MOR payments.
On March 10, the Connecticut Energy Marketers Association (CEMA) reported that state officials had granted the association’s request to increase MOR payments from 35 cents per gallon (cpg) to 45 cpg. “This is the first time in the program’s history that [the state] has made an adjustment to the MOR,” CEMA said, “and while we understand that it does not come close to covering all your costs, it provides some relief.”
According to the Massachusetts Energy Marketers Association (MEMA), on March 29, state officials announced that the MOR would be temporarily increased from 50 cpg to $1 per gallon, and that fuel assistance customers would receive an additional $450 in benefits. MEMA said that the 50 cpg payment “[had] not been increased for many years.”
Meanwhile, the Vermont Fuel Dealers Association (VFDA) reported on March 25 that the state would make an additional $350 available specifically for fuel assistance customer purchases of heating oil and kerosene. “Fuel dealers will also get extra time to deliver the extra benefit,” VFDA said. “The delivery deadline has been extended until May 15 for all seasonal fuel assistance funds.”