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. (C) 2002 Elsevier Science Ltd. All rights reserved.