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State PBF/USF History, Legislation, ImplementationMaryland Maryland’s Electric Universal Service Program entered its eleventh year on July 1, 2010. The program is a result of Maryland’s 1999 restructuring law, SB 300, which provided $34 million for a universal service program that is continuing and non-lapsing, to be administered by the Department of Human Resources (DHR) through the Maryland Office of Home Energy Programs (OHEP), the LIHEAP grantee. The Electric Universal Service Program or EUSP, has three components: 1) bill payment assistance to help participants pay current electric bills; 2) arrearage retirement payments to help them pay some past due electric bills; and 3) weatherization to provide electric energy efficiency measures to reduce future electric bills. Effective July 1, 2005, (SFY 2006), the weatherization component was transferred from OHEP to the Department of Housing and Community Development, the state’s weatherization grantee. The Department may receive $1 million yearly from EUSP funds for weatherization, and while the $1 million transfer occurred for FY 2006 through 2009; it was not made in FY 2010 or FY 2011. In FY 2009, a new funding source was allocated to the EUSP from the Regional Greenhouse Gas Initiative (RGGI). This is a coalition of ten Northeast and Mid-Atlantic working to limit carbon dioxide pollution through a cap and trade system, whereby the participating states limit the amount of CO2 that can be emitted by their power plants. In September 2008, the participating states began conducting RGGI quarterly auctions where they sold the region’s annual emissions “budget” of approximately 188 million allowances. Maryland was among the states that allocated a portion of auction proceeds to low-income energy assistance. Initially, the amount was 17 percent of the proceeds, which amounted to $3.6 million for the EUSP in 2009. The 2009 legislature changed the amount to up to 50 percent of auction proceeds collected. The 2011 Legislature continued the 50 percent allocation through FY 2014. For FY 2010, OHEP proposed the EUSP budget at $90.6 million, of which $37 million was collected from ratepayers and available for bill payment and arrearage-retirement assistance. The remainder of the FY 2010 budget was an expected $53.6 million in RGGI funds. However, the actual FY 2010 RGGI contribution was $41.9 million, bringing the 2010 budget to $78.9 million. While the EUSP has received state general funds in the past, including $21.7 million in FY 2009, (see History section) no state funds were received in 2010 or 2011, nor were any expected for 2012. FY 2010 saw a 12 percent increase in applications with approximately 152,100 households seeking assistance, compared to 135,822 households in 2009. Of those applications, approximately 131,500 households were given benefits, including 129,670 bill assistance grants averaging $612, and 30,078 households that received arrearage assistance averaging $1,074. FY 2011 and FY 2012 Programs The FY 2011 budget for EUSP was set at $81.2million, of which $76.7 million was to be available for bill payment and arrearage-retirement assistance. The budget included $37 million in funding from ratepayers and $44.2 million from RGGI. Applications for EUSP continued at a record pace during FY 2011, although at a slower rate than in FY 2010. Much of the increase was from July and August, as applications came in early in the program year. Based on trends through the third quarter, there were approximately 161,200 applications with 138,000 benefits provided, a 6 percent increase in applications and a 5 percent increase in benefits. The EUSP bill-assistance component served 113,064 households with an average grant of $444. During the same period, the arrearage-retirement component of the program provided 18,729 households with grants that averaged $926. Initially, the budget called for $20 million to be allocated for arrearage payment. However, because of the declining RGGI revenues, OHEP suspended arrearage retirement assistance beginning with applications received on or after February 14, 2011. Arrearage-benefit applications began again with the start of FY 2012 on July 1, 2011. In FY 2011 OHEP reduced the discretionary funding for special outreach projects to $50,000 to be used upon request by local administering agencies. OHEP continued outreach efforts, recognizing that the economic downturn was resulting in households applying for benefits for the first time. As shown in the table below, EUSP bill payment assistance participation has increased substantially since the program’s inception. OHEP has reported that the increases are due to more families in need of assistance and more persons becoming aware of the program through OHEP’s expanded outreach.
* EUSP expenditures from 2007 on include other funding sources (state, RGGI, federal) SB 300, Maryland's 1999 restructuring law, defined a universal service program as one that "helps low-income customers maintain electric service," and includes "customer bill assistance and payment programs, termination of service protection, and policies and services that help low-income customers to reduce or manage energy consumption in a cost-effective manner." Collection of the universal service funds from customers started in July 2000, and OHEP then began operating the newly created Electric Universal Service Program with the three components: bill payment assistance, arrearage retirement payments, and weatherization. The restructuring law said that for the first three years of the program, at least half of the fund should be spent on bill payment assistance, and the remainder on energy efficiency and retirement of arrearages incurred by low-income households prior to the initial implementation date of the program (July 1, 2000). The law's provision for arrearage retirement stemmed from studies showing that the inability of low-income households to pay utility bills was partly due to their having accrued significant arrearages. The restructuring law authorized the EUSP for three years. On June 30, 2003, Maryland allowed the EUSP to waive income eligibility guidelines to provide bill payment assistance as it finished the initial three years. In April 2003, the EUSP was given an extension, and its funding of $34 million per year was continued, subject to annual review and approval by the Maryland Public Service Commission (PSC) and the legislature. SB 504, the bill to extend the program, was signed into law on April 22, 2003. SB 504 continued the original program structure, except that it capped arrearage-retirement funding at $1.5 million per year and limited payments to those customers who hadn’t previously received arrearage-retirement assistance. That funding cap was removed through subsequent legislation, and the Maryland PSC now sets the amount for arrearage retirement, allowing funding increases each year. Legislation also revised the once in a lifetime restriction on receiving arrearage benefits to once every seven years. The lion's share of the EUSP funding comes from industrial and commercial customers. The rest comes from residential customers, who pay about 40 cents per month. In response to escalating energy costs during the winter of 2005-06 and to the controversy that accompanied the electric rate cap expiration, the state legislature took the following actions:
Because EUSP is administered by OHEP, clients can apply at local LIHEAP agencies for both programs year round, as well as for the Maryland Weatherization Assistance Program, operated by another department. EUSP has the same income eligibility level as MEAP. In designing the SFY 2006 program, OHEP proposed and attained PSC approval for changes in its benefit determination methodology for the bill assistance component with a goal of better targeting assistance to the most needy. These changes have remained in effect. OHEP now calculates electric bill payments based on income and household size, actual household electricity consumption, and electricity price. Previously, OHEP’s calculation took into account average or approximate consumption and income. The EUSP benefit is integrated with the state’s LIHEAP benefit, which, as of FY 2006, also utilizes a more targeted benefit matrix. OHEP explained in its program proposal that its previous benefit calculations had resulted in some households with low consumption receiving a credit on their utility bills. Beginning in SFY 2006, OHEP reconfigured its poverty criteria for determining benefit levels by utilizing income groupings of 0-75 percent of federal poverty guidelines (FPG), 76-110 percent FPG and 111-150 percent FPG in order to provide better targeting of benefits. For the 2007 program year and beyond, it added another grouping: 151-175 percent FPG. For FY 2010, the income group at 0-75 percent of poverty was to receive an electric bill benefit that is equal to 65 percent of the estimated annual bill; at 76-110 percent, it was 50 percent. The group from 111-150 percent was slated to receive a benefit equal to 40 percent of the estimated annual electric cost; while those from 151-175 percent of poverty were to receive 20 percent. The benefit for those households living in subsidized housing was also planned at 20 percent of the annual bill. Beginning in FY 2011, OHEP continued to use a consumption and income-based formula for determining bill-assistance benefit amounts. Since the formula relies on an average price for electricity and there are price differences regionally, the benefit is adjusted to reflect the prices in each utility service territory. EUSP benefits in FY 2011 ranged from $48 to $1,440. Under the arrearage-management component, OHEP added a requirement that applicants must have a minimum of $100 in past due bills (this was changed to $300 for FY 2008 and thereafter) and the maximum benefit amount is capped at $2,000. In early EUSP documents, both the OHEP and the PSC noted that implementation of the weatherization program lagged behind the other two components. Because of start-up issues and delays in issuing an invitation to bid for program operation, the EUSP weatherization funds were under spent most years. The transfer of the weatherization component to the state weatherization office in 2006 was expected to result in a more efficient program because it will be coordinated with the federal weatherization program. Evaluation In May 2007, PA Consulting group completed an evaluation of the EUSP, presenting the results of process and impact evaluations of the program conducted from July 1, 2004 to June 30, 2006. Among the conclusions of the evaluation:
Among recommendations for improvements, the evaluation said OHEP should: explore ways to increase program retention of eligible households from year to year; investigate the trade-off between greater program standardization to deliver services consistently throughout the state and inefficiencies that may result from greater standardization; strengthen program processes that will improve the equitable distribution of EUSP benefits across the state; convene the EUSP working group to discuss ways to increase the effectiveness of EUSP administration, in particular, review changes needed in administrative funding limitations in order to address improvements in application processing, local agency training and the OHEP information system; and explore ways to better coordinate EUSP with other assistance programs. For more information on Maryland's EUSP, check the following:
Page last updated: April 12, 2012 |
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