State PBF/USF History, Legislation, Implementation
Last Updated: May 2013
Nevada provides rate assistance through what it calls the Energy Assistance Program (EAP), assisting eligible Nevadans in paying their utility costs and providing emergency assistance for households in crisis.
The EAP has two funding sources: the state's LIHEAP grant, and the Nevada Fund for Energy Assistance and Conservation (FEAC), which is funded by a universal energy charge (UEC) assessed on all retail customers of Nevada's regulated electric and gas utilities, with some exceptions. The UEC was projected to generate $11.6 million for state fiscal year (SFY) 2012.
The EAP is administered by the Nevada Division of Welfare and Supportive Services, the LIHEAP grantee. Since July 2002, the Division has been using both federal LIHEAP and FEAC funds to operate an energy assistance program that requires participants to pay no more than a small percentage of their income for energy. According to a recent study, low-income households in the territories of the regulated utilities have an average energy burden of 14 percent compared to 4 percent for non-low-income households in the same territories.
The energy assistance benefit, referred to as a Fixed Annual Credit (FAC), is calculated for each eligible household and is the amount sufficient to reduce the percentage of the applying household's income spent on natural gas and electricity to the state median percentage of household income spent on these services. Both the state median household income and median household energy burden are updated annually. Nevada's SFY 2012 median household income is $71,230 and the statewide median household energy burden for natural gas and electricity is 2.03 percent.
UEC-eligible households may also receive help with their past due bills under the Arrearage Payment Program. The household must have paid an amount equal to at least 2.03 percent of its income toward the arrearage during the 12 months in which the arrearage occurred in order to receive a one-time benefit for heating or cooling. The only exceptions are households with chronic, long-term medical conditions that create a financial hardship and/or increase the energy consumption of the household. The Division has the flexibility to restrict the Arrearage Payment Program to special households (child under 6, elderly, or disabled) or suspend the program entirely when program funding is limited. The program was suspended during SFY 12.
For SFY 2012, due to a projected 75 percent decrease in federal LIHEAP funds, several program changes were instituted to ensure that limited funds were directed to households most in need:
- Income eligibility was reduced from 150 percent to 110 percent
- Arrearage assistance component was suspended
- Average payment was reduced approximately 43 percent from SFY 2011
Mid-year, LIHEAP funds were received at a higher level than originally planned, and the Division made appropriate benefit and eligibility changes. The EAP spent about $8 million in UEC funds for rate assistance in SFY 2012. Combined with LIHEAP funds, the program provided an average benefit of $558 to 22,981 households. This compares to $8.2 million in UEC funds spent for rate assistance the previous year, which saw an average benefit of $893 to 33,050 households.
The following is an excerpt from the state's 2012 plan explaining how the FAC benefit is calculated:
- Identify eligible household's gross annual income and apply 2.03 percent to determine the amount the household is expected to pay for its energy burden.
- Identify eligible household's annual energy usage in dollars (to include all energy sources).
- Compare the 2.03 percent figure to the eligible household's annual energy burden (usage in dollars).
- If the household energy burden is greater than 2.03 percent of the household's annual income, the difference is the Fixed Annual Credit (FAC) amount for that household. The FAC is the benefit amount the household receives not to exceed UEC annual usage or the program benefit cap.
Since SFY 2009, the FAC benefit has been capped in order to maximize the number of households served. The benefit cap is based on income, household size, fuel type and poverty level. Any household with an elderly or disabled member or a child under age six receives an additional $50. Households using heating oil or propane as their energy source have a separate benefit cap from all other energy source users in consideration of the higher cost per British Thermal Unit (BTU) of heating oil and propane.
For example, the SFY 2012 maximum benefit for an oil- or propane-heated household of four earning less than 75 percent of FPG is $725; for the same sized household earning between 75 and 110 percent of FPG it is $620. For those heating with electricity, natural gas or other fuels, the FAC for a household of four earning less than 75 percent of FPG is $525; for the highest income level, the FAC is $420.
If the eligible household's energy burden is less than 2.03 percent of the household's annual income, the household may receive a payment of $180 paid with non-UEC monies.
Eligible households having a FAC up to, and including $179, may receive a payment of $180. The FAC portion is paid with UEC funds and the remainder of the $180 is paid with non-UEC monies, which include LIHEAP, state and private funds.
Only those households that are charged a UEC on their natural gas and/or electricity bill may receive a FAC benefit paid from the FEAC. Eligible households can receive both LIHEAP and FEAC funds, but FEAC funds can only be distributed to a participating UEC vendor. The two funding sources are separate and are disbursed and tracked separately.
In cases where eligible households have only non-UEC vendors (electric cooperatives and bulk fuel dealers), the FAC benefit is paid with LIHEAP or other non-UEC funds, up to the maximum amount. Any remaining FAC benefit due will be paid with revenue from other sources, such as state general funding.
A portion of the UEC funds goes to the Nevada Housing Division (NHD) to be spent in coordination with federal funds from the U.S. Department of Energy Weatherization Assistance Program (WAP). All households receiving a FAC are referred by the Welfare Division, via the agency's computer system, to the NHD for energy efficiency services.
Under the weatherization portion of the UEC, the NHD received about $2.6 million for SFY 2012 and weatherized a total of 576 units, compared to 700 homes during SFY 2011. Most of the households had vulnerable populations: elderly (42.7 percent), disabled (43.4 percent), and young children (19.3 percent). The most common health and safety measures installed in homes included heating and cooling system repairs and replacement and carbon monoxide monitors. Other measures included air sealing, insulation, lighting, refrigerator replacement and solar screens in southern Nevada.
Weatherization funds have also been available from the major utilities (Sierra Pacific Resource subsidiaries Nevada Power and Sierra Pacific Power Company, also referred to collectively as NV Energy) and Southwest Gas Corporation as part of their demand side management (DSM) programs. Using DSM funds, Nevada Power and Sierra Pacific have worked with the NHD to complement and enhance the weatherization programs operated with UEC and DOE funds. These funds targeted customers with incomes between 150 percent of FPG and 60 percent of the county median income who are not eligible for the weatherization programs delivered by the NHD. For SFY 2011, these utilities had a low-income DSM budget of about $3.1 million. For FY 2012, the Sierra Pacific Resource companies had no DSM funds due to concerns over the cost effectiveness of their programs. However, NHD expected that SFY 2013 funding would be restored at about $2 million.
Southwest Gas spent about $675,000 of its DSM funds during the period of November 1, 2009 through June 30, 2012, providing weatherization services to households with incomes less than 200 percent of FPG. On September 21, 2011, Southwest Gas received approval to continue the program through December 31, 2012, with a budget of $125,000.
In July 2001 Nevada created a funding source to supplement existing low-income energy programs. AB 661, the enabling legislation, created the FEAC through a mill tax assessment, or UEC, paid by residential, commercial and industrial customers of the state's regulated gas and electric utilities. The UEC is 3.30 mills per therm of natural gas and 0.39 mills per kWh of electricity purchased by these customers. Nevada's Energy Assistance Code clarifies what the UEC pays for as well as the duties of the Welfare Division and Housing Division in administering and implementing the law.
The Public Utility Commission of Nevada (PUCN) has been collecting the UEC since August 2001 and takes up to 3 percent of the UEC for its administrative costs. The remainder is placed in an interest-bearing account of the state Division of Welfare and Supportive Services, the LIHEAP grantee.
The Division distributes up to 75 percent of this amount to the Welfare Division for its EAP, and up to 25 percent to the Nevada Housing Division's WAP. Any accumulated interest is distributed to the EAP and WAP programs. Funds are drawn down periodically as needed by each program thus enabling interest to accrue on the balance.
The monthly charge averages about 47 cents on the typical residential electric bill and 16 cents on the typical residential gas bill. For state fiscal year (SFY) 2011, starting July 1, 2010, the FEAC revenue distributed between EAP and WAP was about $11.8 million, a 27 percent decline compared to funds available in SFY 2009. In 2011, there was an effort in the Nevada Legislature to increase the UEC but the proposed legislation, even though unopposed, failed to reach a final vote.
Evaluations have been completed for the first nine years of the UEC-funded energy assistance and weatherization programs (SFY 2003 through SFY 2012); SFYs 2007 - 2012 are available on the Division's website.
Initially, the evaluations noted that the Division was still ramping up the energy assistance program and spent less than a quarter of its FEAC during the first two years due to problems with outreach, computer technology and administration. These problems had largely been resolved by the end of the fourth year.
In SFY 2010, due to the economic recession, applications for assistance increased and staff were struggling to keep up with the influx. Several changes were made that increased the efficiency of processing applications and the SFY 2011 evaluation reported that most applications are now processed well under 30 days and many are processed within 12 business days.
To address the problem of inadequate funding, the evaluators have recommended the utilities and PUCN work towards the development of low-income rate designs that would lessen the effect of reduced federal funding and increase the number of households that can be served.
During SFY 2012, staff adjusted to uncertainties in LIHEAP funding and a reduced LIHEAP allocation from SFY 2011 levels. As mentioned above, this resulted in lowering EAP eligibility levels, reducing benefits and suspending the arrearage forgiveness program.
The weatherization program faced challenges in that funding from the American Recovery and Reinvestment Act and the Sustainable Energy Resources for Consumers residential renewable energy projects, funded through formula grants awarded by the DOE, represented the primary effort for most of the program year. These programs closed out June 30, 2012 (with an extension from the end of March to September) and required priority processing over UEC weatherization projects because no federal funds could be carried forward. Consequently, NHD's subgrantees were unable to prioritize UEC projects until the latter part of SFY 2012. Subgrantees with unspent UEC funds were allowed to carry over remaining FEAC funds into SFY 2013.
In 2009, the PUCN opened Docket 09-06029 to begin an investigation of energy use by low-income customers of regulated utilities. The utilities commissioned a study to compare low-income and non-low-income households' energy use, housing and appliance stock and demographics. The study also reviewed existing low-income energy programs in the utilities' territories and across the country.
The study, released in March 2012, and comments are available on the PUCN website, search for Docket 09-06029.