Overview of Low-Income Restructuring
Legislation and Implementation
Texas
December 2007
Texas' restructuring legislation authorized a system benefits charge (SBC), a nonbypassable fee of up to 65 cents per megawatt hour, to fund, among other things, low-income rate assistance and energy efficiency.
As a result, a low-income electric discount program called LITE-UP Texas began in January 2002, providing eligible households with a 10 percent electric bill discount that was increased to 17 percent in May – a discount that lasted less than three years, only to be reinstated for the summer of 2007 and the next two summers.
Despite enrolling nearly 800,000 households at its peak and being considered a national model for its automatic enrollment system, the discount faced trouble early on.
After only a year and a half, the Texas legislature began raiding the SBC to shore up the state general fund. The first raid, in the spring of 2003, took $183 million in SBC funds. That meant less funding for the discount and it went back down to 10 percent. The funding reduction, along with stricter eligibility rules effective in April of 2004, resulted in enrollment plummeting to about 350,000. The legislature also changed the language of the original 1999 deregulation law to allow it to transfer the SBC funds into general revenue funds.
The final blow came when the 2005 legislature shifted all SBC funds – about $427 million for the biennium – to the state general fund. As a result, nearly 400,000 low-income Texans lost their discount as of August 31, 2005 .
In June 2007, the Texas legislature appropriated $30 million from the SBC for a summer discount (July through October) of about 12 percent, and $170 million for a summer discount for the next two years.
(For more information on the initial LITE-UP program, see the LIHEAP Networker, issues # 42 and # 50 .)
Noting that Texas electricity rates are now among the highest in the nation, several legislators had unsuccessfully – until 2007 – attempted to reinstate the discount. Since deregulation took effect in 2002, the four power companies that control 70 percent of the Texas residential electricity market have increased their rates an average of 83.7 percent.
Some utilities provided energy assistance aid in an attempt to make up for the discount. For example, TXU Energy, which serves the Dallas area, provided eligible customers a 10 percent discount on their 2006 electricity bills, and continued that discount after the above-mentioned 2007 summer discount was implemented. In October 2007, after TXU completed its merger agreement with Texas Energy Future Holdings Limited Partnership, it announced it would spend $25 million per year for five years to continue the 10 percent discount. About 91,000 households received it during 2007.
CenterPoint Energy Houston Electric LLC has committed to spend $10 million per year on low-income bill payment assistance, including $7.2 million for a discount of $6 per month and $2.8 million for crisis assistance.
Energy Efficiency
The rate discount was not the only casualty of the legislature; low-income energy efficiency programs also took a hit. The restructuring law stipulated that SBC funding would be used to continue weatherization programs that had previously been funded through utility rates and for customer education about electric deregulation.
SBC weatherization monies, about $8.9 million during FY 2003, were "piggybacked" with federal WAP funds to reach more low-income households and provide additional weatherization services such as new and/or insulated roofs, heating/cooling system replacement, and upgrading or repairs of windows and interior walls. The SBC allowed the state to address many homes that normally wouldn't have been weatherized.
However, as a result of the above-mentioned legislative raid, SBC funding for weatherization was eliminated and some $21 million that had been designated for that purpose was shifted to the state general fund in late 2003.
The 2005 legislature attempted to restore some funding for weatherization by passing SB 712, which required that SBC funds for low-income weatherization that were zeroed out in 2003 be restored by individual utilities as part of their energy efficiency plans.
As of August 2006, as part of a stipulation with the Texas PUC and advocates, utilities have committed to spending $5 million annually (including 2006) on weatherization expenditures that will be coordinated with the Texas Department of Housing and Community Affairs (TDHCA), the federal weatherization grantee, under a program referred to as the TDHCA targeted low-income weatherization program.
Utilities will also spend another $5.2 million on existing standard offer weatherization programs, known as the Hard-to-Reach Programs, available to households with incomes up to 200 percent of federal poverty guidelines. Administered by the utilities and implemented by private contractors who receive incentives for measures installed, the programs offer free, low-cost weatherization and energy-efficiency improvements. Utilities have been offering these programs since 2002, as mandated by the 1999 restructuring legislation. The largest of them, about $3 million annually, offered to TXU customers, is called the Low-Income Weatherization Program, not to be confused with the federal WAP or the targeted low-income weatherization program, administered by TDHCA.
For more information:
See the Texas PUC's template for the Hard-to-Reach Standard Offer Program .
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Page Last Updated: December 10, 2007
