The "Heating and Cooling Relief Act" aims to substantially strengthen the Home Energy Assistance Program, formerly LIHEAP, to alleviate the significant energy burdens on low-income households and enhance climate resilience. It reauthorizes funding to "such sums as may be necessary" to assist all eligible households and significantly increases the emergency contingency fund to $2 billion for fiscal year 2026 and beyond, specifically addressing major disasters, including periods of extreme heat and cold. Additionally, the bill authorizes $1 billion annually for new "Just Transition Grants" to support states and local governments in reducing energy burdens while transitioning away from fossil fuels.

The legislation expands eligibility to households with incomes up to 250 percent of the poverty level or 80 percent of the State median income, and prohibits exclusion based on citizenship. It mandates that states work towards an energy burden limit, ensuring no eligible household spends more than 3 percent of their income on energy, prioritizing the lowest-income households. To streamline access, the bill requires states to use data sharing for eligibility verification, implement simplified re-enrollment procedures, and allow self-attestation for applicants when other methods are not applicable.

Key consumer protections include prohibiting home energy suppliers from charging late fees for six months before and after receiving program payments, and from shutting off service for two years after a household receives assistance. States are required to operate the program year-round, offer online application submissions, and develop action plans for extreme heat to ensure adequate cooling assistance. The bill also mandates a review of eligibility criteria to identify and include additional vulnerable populations, such as pregnant women and individuals with medical conditions exacerbated by extreme heat.

To promote energy efficiency and decarbonization, the maximum amount states can use for weatherization is increased from 15 percent to 25 percent of their allotment. A significant portion of these funds must be used for energy-related home repairs that reduce fossil fuel dependence, facilitate community solar access, and prioritize replacing fossil fuel appliances with electric heating and cooling technology. The new "Just Transition Grants" program further supports interagency plans to reduce energy burdens for high-use households, emphasizing climate protection and workforce development partnerships.

Finally, the Act requires the development of a standardized template for states and suppliers to track home energy payment arrears, including late fees and disconnections. It provides guidance on best practices for states to pay these arrearages and explicitly prohibits home energy suppliers from recovering these assistance costs through rate increases or other charges that disproportionately impact low-income households.