State PBF/USF History, Legislation, Implementation
Last updated: September 2014
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Illinois' receives ratepayer funds for a statewide Percentage of Income Payment Plan (PIPP) that began in fiscal year 2012. Illinois is a pioneer PIPP state, having initially operated such a program from 1985 to 1991.
Under the PIPP, participants usually pay no more than six percent of their income for gas and electric service; receive a monthly benefit towards their utility bill; and get 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. 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. Any amount over the maximum benefit must be covered by the client; thus, some participants may pay more than six percent of their income.
The program is funded through the state's Supplemental Low-Income Energy Assistance Fund (SLEAF), comprised of a meters charge assessed on ratepayers of the above-mentioned utilities (see "History" section below). For FY 2013 the charge generated about $90.6 million, with $41 million spent for PIPP benefits on behalf of 54,668 households; another $32 million was spent on rate assistance for non-PIPP households; and the remainder was allocated to the state's Weatherization Assistance Program and for administrative costs. For FY 2014, the meters charge is expected to generate $98 million, and PIPP enrollment is expected to peak at around 60,000 households. Because clients can be dropped from the program if they miss two PIPP payments, the enrollment level can fluctuate throughout the year.
The Illinois Department of Commerce and Economic Opportunity (DCEO), the LIHEAP and weatherization grantee, administers the PIPP and coordinates it with LIHEAP. Both programs have the same income eligibility — up to 150 percent of federal poverty guidelines. Intake workers at 35 community action agencies across the state explain to clients that they have the option of signing up for the 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 the client's vendor (or vendors) collecting the meters charge — if the vendor doesn't collect the charge, the client can't receive benefits from that funding source. Clients must also have an active account with their vendor — they cannot be disconnected — and they must recertify their household composition and income annually.
The PIPP has an arrearage reduction component, under which 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 gas bills and the same amount for electric bills.
The SLEAF came about 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 $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; and $300 per month on nonresidential accounts that had 10 megawatts or greater of peak demand during the previous calendar year.
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.
Prior to the PIPP, 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 did not assess the charge, so their LIHEAP customers couldn't benefit from SLEAF funds, although they could receive LIHEAP.
Almost from the inception of the SLEAF, various entities had sought changes in Illinois' energy assistance program. Several times advocacy groups introduced legislation to create a PIPP-type program. The state community action association, energy policy advisors, researchers, and community leaders called the Illinois Affordable Energy Campaign (IEAC), 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 IEAC 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 cents to $0.48 cents 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 $98 million for FY 2014. 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 Edison 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.
The restructuring legislation allowed 10 percent of the meters charge funds to be spent on low-income weatherization, and this continued under the 2009 and 2013 legislation related to the funds. In 2013, the Illinois WAP received about $9 million in ratepayer funds. This supplemented the services the WAP already provides such as furnace repair and replacement, with an average benefit of $1,981; energy audits, air sealing, insulation and minor repairs, refrigerator replacement, and health and safety equipment replacement.
PIPP clients with high energy usage are automatically referred to the state WAP.
For more information
Energy Assistance Act details PIPP and LIHEAP operations and authorizes