State PBF/USF History, Legislation, Implementation
Last updated: August 2013
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Illinois receives ratepayer funds for a statewide Percentage of Income Payment Plan (PIPP) that is now entering its third year.
Under the PIPP, participants pay no more than six percent of their income for gas and electric service. They also receive a monthly benefit towards their utility bill and a reduction in overdue payments for every on-time payment they make by the bill due date. Clients who are customers of Ameren Illinois, ComEd, Nicor Gas, and Peoples Gas/North Shore Gas are eligible for the PIPP. The maximum PIPP benefit is $1,800 per year, with a maximum of $100 per month for the participant's natural gas bill and $50 for the electric bill.
The Illinois Department of Commerce and Economic Opportunity (DCEO), the LIHEAP and weatherization grantee, administers the program and coordinates it with LIHEAP. Both programs have the same income eligibility - up to 150 percent of federal poverty guidelines. Intake workers explain to clients that they have the option of signing up for PIPP or receiving a regular one-time direct vendor payment, either through LIHEAP funds or the ratepayer (meters charge) funds. Eligibility is also based on whether the client's vendor (or vendors) collects the meters charge - if the vendor doesn't collect the charge, the client can't receive benefits from that funding source.
For FY 2012, the program enrolled over 37,000 households and spent $21.6 million for PIPP benefits and another $37.3 million for direct vendor payments to PIPP households.
Under the arrearage reduction component, participants who make their monthly PIPP payments on time receive a monthly credit amounting to 1/12th of their past due bills, up to $1,000 per year for both gas and electric bills. The PIPP includes client education to inform customers about the PIPP and about their rights and responsibilities under the program. If clients miss their payments, the local agencies attempt to contact them and help them stay on the program.
Program funding is through an existing meters charge that has funded low-income energy assistance and energy efficiency since 1998 (see "History" section below).
Illinois is a pioneer PIPP state, having operated a program from 1985 to 1991. Since 1998, Illinois has administered the Supplemental Low-Income Energy Assistance Fund (SLEAF), created through restructuring legislation that was enacted in November of 1997. Paid for by the above-mentioned meters charge on electricity and natural gas bills, the legislation earmarked 80 percent of the fund for low-income bill payment assistance, along with 10 percent for low-income energy efficiency and 10 percent for administration.
The surcharge was set at the following rates:
- $0.40 per month on each residential electric service account and the same amount on each residential gas service account
- $4 per month on non-residential gas and electric accounts with less than 10 megawatts of peak demand the prior year
- $300 per month on non-residential accounts that had 10 megawatts or greater of peak demand during the previous calendar year
The state LIHEAP office made payments from the SLEAF directly to utilities on behalf of their eligible low-income customers. The total amount for bill assistance averaged $65 million per year. SLEAF funds could be used only for assistance to low-income customers of the regulated gas and electric utilities that assessed the meters charge. This restriction continues under the PIPP. Most of the state's municipal and rural cooperative utilities do not assess the charge, so their customers receiving LIHEAP cannot benefit from SLEAF funds.
The fund has been, and continues to be, administered by the LIHEAP office through the state LIHEAP and weatherization network of community agencies and in coordination with LIHEAP. This is also the case with the new PIPP. In August 2007, the Illinois legislature extended the SLEAF, otherwise scheduled to sunset at the end of 2007, through December 2013. The 2013 legislature once again extended it, this time through December 2018.
Almost from the inception of the SLEAF, various entities have sought changes in Illinois' energy assistance program. Several times advocacy groups introduced legislation to create a PIPP-type program. The state's largest gas utility, People's Gas, serving Chicago and the surrounding area, presented a white paper in March 2004 titled "Improving Energy Assistance in Illinois." The state community action association, part of a working group of advocates, energy policy advisors, researchers, and community leaders called the Illinois Affordable Energy Campaign (IAEC), also advocated program changes at the legislative level.
The IAEC published a paper outlining an Affordable Energy Plan in September 2004. The paper called for a PIPP with a 10 percent maximum payment, along with other components such as arrearage reduction and client education. Negotiations continued among IAEC representatives, the utilities, and the state LIHEAP office, culminating in SB 1918, which created a PIPP and was signed into law July 10, 2009.
The legislation increased the meters charge by about 20 percent, from $0.40 to $0.48 for residential customers and a comparable increase for commercial/industrial customers. As a result, annual meters charge collections went from an average of $78 million to about $92 million. Utilities also made a one-time $22 million contribution toward PIPP program costs, along with $9 million in redirected funds from an electric rate relief settlement in 2007. Initially the state had planned to use LIHEAP funds for the PIPP, but thus far has not done so, in part due to problems with data transmission and sharing through its information technology system.
After an electric rate relief package was approved in Illinois in the fall of 2007, utilities, advocates, and the LIHEAP office agreed to move forward with a three-year PIPP pilot using Ameren rate relief funds to help bring down participants' bills to 10 percent of their income and to help pay their pre-program arrears. The pilot operated from July through September 2008, but, due to implementation and logistical problems, it was discontinued in May 2009. It was evaluated with the aim of using the results and lessons learned in implementing the statewide PIPP.
The evaluation found that the PIPP pilot was effective in lowering the energy burden for most participants and substantially improved the energy security of most clients. However, some clients improved their payment patterns under the PIPP, while others did not. The evaluation recommended that the regular PIPP provide incentives to clients to make regular utility bill payments, including arrearage reduction, and that administering agencies contact clients who have missed their monthly payment.
Additionally, under the 2007 rate relief settlement, each of the major electric utilities, ComEd, and Ameren, agreed to fund rate relief programs that included low-income initiatives at least through 2010. Ameren was to provide over $30 million for several low-income assistance programs, including the PIPP pilot; ComEd planned to spend at least $15 million on several income-based initiatives. As mentioned above, some $9 million of rate relief funds was redirected to the new PIPP.
In 2012, as part of smart grid legislation, ComEd committed $50 million - $10 million a year for five years - for its Residential Special Hardship program that provides grants for eligible residential customers. The grants are a credit on the customer's bill. Ameren will provide $10 million through various assistance programs over the next ten years for low-income customers, senior citizens, active members of the armed services and reserved forces, and disabled veterans.
The PIPP began in the fall of 2011. During that year, the program experienced start-up problems which resulted in clients having difficulty getting appointments and facing long lines at intake agencies. At year end, $25.3M had been obligated on behalf of 37,322 PIPP clients; the average PIPP payment was $930. At the end of FY 2013, at least $35 million had been obligated on behalf of about 52,000 participants.
The restructuring legislation allowed 10 percent of the SLEAF funds to be spent on low-income weatherization and 10 percent on program administration. Funding to supplement the state's Weatherization Assistance Program averaged about $7 million for many years; in 2012 the program received about $13.7million. The SLEAF money allows the program to serve around 1,110 households each year, with a limit of up to $7,500 per household. These are households that normally couldn't be served under the federal weatherization program because their dwellings need roof replacements or other major repairs
For More Information
PIPP Brochure, Community and Economic Development Association of Cook County
Energy Assistance Act details PIPP and LIHEAP operations and authorizes