State and tribal LIHEAP grantees will share over $18.9 million in FY 2002 leveraging incentive awards. Forty-one states, 26 tribes and one territory reported over $1.3 billion in leveraging activities during FY 2002, topping last year's amount by 14 percent.

This is the largest amount leveraged by states since the Leveraging Incentive Program began in FY 1991. The increase in reported leveraging funds continues to come from utility-funded resources, which totaled $800 million, or 58 percent of all leveraged resources. Rate discounts and credits of $602 million, mostly mandated by state legislatures or utility commissions, accounted for 78 percent of utility resources. Weatherization resources at $107 million, deposit and fee waivers at $44 million, and $19 million in arrearage forgiveness made up the rest of utility-funded resources.

The remaining resources included 33 percent from state and local resources, six percent from church, community and fuel fund donations, and three percent from miscellaneous resources.

As with last year, California reported the largest amount of leveraged resources, $321 million; Ohio was second with $186 million, and Pennsylvania third, reporting $149 million in resources. California and Ohio share the top awards with each receiving almost $2.5 million.

The amount leveraged for California’s utility-funded California Alternate Rates for Energy (CARE) was a third more than the amount reported in FY 2001. In May 2001, legislation passed in California provided one-time funding to four major utilities for expanded outreach for CARE. Two utilities reported that participation increased by 12 - 22 percent and was largely due to distributing information in multiple languages. Also, in June 2001, the California Public Service Commission raised the amount of the CARE discount from 15 percent to 20 percent and increased income eligibility levels from 150 percent of federal poverty guidelines to 175 percent.

Ohio's leveraged resources increased by almost $30 million for FY 2002. An increase in Percentage of Income Payment Plan (PIPP) amounts, which are funded by a universal service rider on electric utilities, accounted for over half of the increase.

Pennsylvania had the third highest reported leveraged funds, with just over $149 million. The gas and electric utility Customer Assistance Program (CAP), under which low-income customers pay their bill based on a percentage of income, continues to account for most of Pennsylvania's resources.

New Jersey, New York and Illinois were among the states reporting the most leveraged funds, and all received awards of over $1 million.

The Rosebud Sioux of South Dakota again reported the highest tribal leveraging, $295,000, followed by South Dakota's Cheyenne River Sioux at $255,203 and the Intertribal Council of Michigan at $222,278. The Cheyenne River Sioux received the largest incentive award of $190,915; the Choctaw Nation of Oklahoma and the Rosebud Sioux received the second and third largest awards, $137,298 and $136,652, respectively.

As an example of how well tribes do under the leveraging program, two tribes reported leveraging amounts that were larger than their regular LIHEAP funding, and nine tribes received awards that were equal to their regular LIHEAP allotments. Most of the reported resources are tribal government funds, many from tribal gaming enterprises. The total leveraged amount of $2,311,057 by the tribes and the Northern Mariana Islands was the largest since the Leveraging Incentive Program began in FY 1991.

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States Lose Supplemental Energy
Funds Due to Budget Deficits

In the world of low-income energy funding, it might be said that states give and they take away. Following are recent examples of funding losses among the states:

Texas: The state is losing a portion of its low-income electric-bill discount and $21.4 million in state weatherization funds over the next two years because of a legislative raid on the state’s system benefit fund (SBF), created when electric utility deregulation went into effect in January 2002.

The LITE-UP TEXAS program provided a 17 percent electric-bill discount to households with incomes less than 125 percent of the federal poverty level. The SBF also provided continued funding for weatherization programs that had previously been funded through utility rates and for customer education about electric deregulation. SBF weatherization monies were "piggybacked" with federal Weatherization Assistance Program funds to reach more low-income households and provide weatherization services such as new and/or insulated roofs, heating/cooling system replacement, and upgrading or repairs of windows and interior walls.

The SBF "allowed us to address a lot of homes that normally wouldn’t have been weatherized," said Joseph Guerrero, program manager for state weatherization programs in the Texas Department of Housing and Community Affairs.

Early in the 2003 Texas legislative session, the House Appropriations Committee recommended that the SBF be used to raise the discount to 20 percent and to fully fund the state weatherization program. However, the proposal was rewritten by the Senate Finance Committee. That committee’s recommendation eliminated the electric discount altogether, along with weatherization and consumer education, according to Carol Biedrzycki of the Texas Ratepayers Organization to Save Energy. She said that after lobbying by low-income advocates, the Finance Committee decided to keep the discount but lower it from 17 to 10 percent, still leaving weatherization and customer education with nothing. In the Budget Conference Committee, attempts to restore the weatherization funding failed, although customer education recovered $750,000 a year (compared with $12 million in FY 2002).

The Conference Committee recommendation was approved by the Legislature, along with another provision that changed the language of the original 1999 deregulation law to allow it to transfer the SBF funds into general revenue funds. The changes become effective on September 1.

Biedrzycki said that low-income advocates plan to ask the Texas Public Utility Commission to reinstate the lost weatherization programs.

Ohio

Ohio has lost state funding for a program that provided low-income elderly and disabled residents an additional payment toward their energy bills.

In effect since 1978, the state-funded Energy Credit Program (ECP) allowed income-eligible residents 65 years or older, or permanently and totally disabled, to obtain an energy credit or direct cash payment through general revenue funds. In 2002, an average benefit of $71 was granted to 95,789 households. For the past decade, annual funding had ranged from $4.5 to $7.5 million.

As part of Ohio's restructuring legislation, the ECP, which had been administered by the Ohio Department of Taxation, was turned over to the Ohio Department of Development (ODOD), the LIHEAP grantee. In FY 2001, ODOD began administering the ECP, incorporating it into its LIHEAP program so that an eligible household would receive both a LIHEAP payment and the ECP credit.

The ECP was a victim of the state's poor economy and its resultant state budget deficit. It was cut from the state's budget effective July 1, although a proposal had been introduced to finance it through another ratepayer rider.

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A Heat Response System for Low-Income
Households In California’s Deserts

Since California’s energy crisis sent blackouts rolling across the state, a partnership of community action agencies, utilities, tribes, businesses and other entities in Riverside County has been working to protect low-income and other vulnerable households from extreme heat.

Lois Carson, executive director of the Community Action Partnership-Riverside County, explained the unique aspects of this heat response program at the 2003 National Low-Income Energy Consortium Conference.

Southern California’s Riverside County is the state’s fourth largest county, encompassing both mountainous areas and agricultural valleys in its western section and extensive deserts to the east.

The move toward a heat-response system began in 2001, when several community action agencies from Riverside and neighboring San Bernardino County approached Southern California Edison (SCE) about the possibility of a network of Cool Centers – local air-conditioned sites where people without air conditioning can escape extreme heat for a few hours.

The utility asked the Public Service Commission for permission to use some of its ratepayer-funded Low-Income Energy Efficiency (LIEE) monies for the project. The PSC agreed to allow a one-time alternative use of some of the LIEE funds, and SCE distributed $1.12 million to pay for rent, utilities and, in some cases, air conditioners for 29 Cool Centers across the two counties.

As the summer of 2002 approached, SCE was uncertain whether it would be granted another exception for use of the LIEE funds. In the face of this uncertainty, the Community Action Partnership-Riverside County stepped in to make sure that Cool Centers would be available in the county that summer. According to Lois Carson, the Partnership was able to convince a number of the agencies and businesses that had allowed their buildings to be used as Cool Centers to provide that service without charging rent. SCE eventually received permission to use $250,000 of the LIEE funds for Cool Centers, and this money was used to focus service in the hotter desert communities.

For the summer of 2003, the Community Action Partnership was able to secure funds for the heat response program – now called Operation Survival – from discretionary Community Service Block Grant funds, along with monetary, goods and services, and in-kind donations from local utilities, community-based and faith-based organizations, city, county and tribal agencies, and local businesses.

Operation Survival now has 1) a heat advisory system, 2) Cool Centers for use during episodes of extreme heat (105 degrees and above), 3) a program to distribute generators, fans and/or evaporative coolers, and 4) training for low-income people from desert communities to serve as community leaders during weather emergencies and other crisis situations.

Heat Advisory System. When temperatures reach 105, print and electronic media, along with interested agencies and organizations, distribute a Declaration of Hot Weather Emergency. The advisories include a hotline number for people who want additional information. The Office on Aging has been asked to call homebound people to check on their health and comfort.

Cool Centers. The Cool Centers in Riverside County consist of six to eight air-conditioned sites in desert communities where people can go to escape the heat for a few hours. The centers open their doors to the general public when the temperature reaches 105. They include several senior centers, a parks and recreation building, and an apartment complex that opens its large meeting room during high-heat episodes. Each center can serve an estimated 500 people for up to six hours a day, and staff provide snacks and water, books and games, and information about utility assistance and energy efficiency measures. The centers close when the temperature falls below 100 degrees.

Another cooling option is provided by Sun Bus Lines, a transportation company that serves southern California desert communities, which allows people to get on its air-conditioned buses and rest there for a couple of hours during heat emergencies, free of charge.

Distribution Program. The Community Action Partnership provides generators for households with frail elderly and/or medically vulnerable members when these households are in danger of shut-off because of unpaid utility bills or possible blackouts. The Partnership also distributed electric fans to farm workers until this year, when it switched to evaporative coolers because they are much more effective in the dry desert environment, according to Carson.

The Community Action Partnership also helps pay the utility bills of low-income elderly who are reluctant to use their air conditioning for fear of high electric bills.

This year the Partnership is also distributing battery-operated, solar-powered radio/flashlights at the Cool Centers and to 50 working-poor families. In addition, several low-income households will be given solar-powered motion sensor security lights to provide nighttime security. Business supporters such as Costco and Lowe’s donated many of these items.

Grassroots Leadership and Community Emergency Response Team (CERT) Training. This initiative stems from the conviction that when crises hit, poor people are on their own, Carson explained, citing the 1994 Northridge earthquake, when low-income neighborhoods were the last to receive assistance. Participants are being recruited from low-income communities, particularly in the desert, to receive 22 hours of training that includes CPR/first aid, telephone response techniques, air quality and emergency health information, and alternative energy sources. The 20 participants are part of the Welfare for Work program, which requires them to enroll in a community service program.

After the summer season, these leaders will receive advanced training under the Homeland Security Initiative. The purpose of both types of training, according to Carson, is to give low-income communities a cohort of leaders who know how to respond to emergencies ranging from heat to earthquakes to the threat of terrorism.

For more information, contact Carson at: (909) 955-4900.

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CAL LIHEAP Serves Nearly 150,000;
Stresses Electricity Reduction Measures

In April 2001, in response to California's energy crisis, Governor Gray Davis signed legislation (SB5X) appropriating $120 million to the California Department of Community Services and Development (CSD), the LIHEAP grantee, to supplement LIHEAP and implement a California Low Income Home Energy Assistance Program (CAL LIHEAP).

Due to state budget cuts later in 2001, CAL LIHEAP's funding was reduced, and as of December 2002, the program wrapped up, having allocated some $92.7 million to its network of local service providers to carry out the program goals, which were to increase energy conservation, reduce the demand for energy services in low-income households and assure that the most vulnerable households could cope with high energy costs.

The state funds effectively doubled the amount available for low-income energy assistance and CAL LIHEAP was also allowed to serve households with incomes of up to 250 percent of the Federal Poverty Guideline (FPG), compared with 60 percent of the state median income (or 200 percent of the FPG) under the federal program.

Program components included weatherization services to improve the energy efficiency of homes, electric, gas and other vendor bill payment assistance, and energy bill payments and furnace repair and replacement on behalf of households in an energy crisis. CSD initially distributed $30 million to its network of LIHEAP service providers for provision of services during the summer of 2001, a period of peak energy demand. This initial work focused on electric baseload reduction measures such as refrigerator, electric water heater replacement or repair, microwave replacement, and installation of fluorescent lighting.

The CAL LIHEAP program represents the first effort by California to augment the federal LIHEAP program with its own funds. This act not only enabled the state to provide more flexible energy assistance services to more low-income people, it also resulted in unexpected long term benefits in energy conservation for the whole state. This was accomplished through the implementation of energy measures that focused on immediate savings and measurable results.

Following is a summary of program accomplishments as of February 2003.

• A total of 149,833 low-income households have been assisted.

• 31,506 dwellings have been weatherized.

• More than 244,500 weatherization measures have been installed, including, but not limited to the replacement of inefficient refrigerators, and the installation of compact fluorescent lamps and electric water heaters.

• More than 13 million kilowatt-hours have been saved, enough electricity to supply 2,672 homes with power for one year.

• 42,112 households in a crisis situation (e.g. utility shut-off notice) have received Energy Crisis Intervention Services.

• 76,215 households experiencing difficulty in paying their utility bill have received Cash Assistance Program payments.

• Over 184,251 vulnerable population individuals have been served; including the elderly, disabled, limited-English speaking, very young children and migrant and seasonal farmworkers.

This latter accomplishment was because SB 5X had identified as vulnerable those households with elderly, disabled, and limited-English-speaking persons, migrant and seasonal farmworkers, and households with very young children, and had required the program to conduct special outreach to these populations.

An additional $2 million in CSBG and oil overcharge funds went to a farmworker group, La Cooperativa Campesina De California, to work more closely with utility low-income programs and to conduct refrigerator and fluorescent lighting programs. La Cooperativa was successful in leveraging almost $4 million in contracts with local utilities.

In May 2002, $2 million in oil overcharge funds was awarded to local service providers exclusively for the elderly vulnerable population. Providers targeted households in which an elderly person was responsible for paying more than half of the costs of maintaining the household, and, as a result, they served an additional 2,540 low-income elderly households.

Despite its achievements, the program's final report ends on a sobering note - it was only able to serve less than 3 percent of those eligible. The estimated number of low-income households still underserved at or below 250 percent of FPG is nearly 5 million, the report says, or 97.10 percent of those eligible.

For more information about CAL LIHEAP and the results visit the CSD website.

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Washington Leveraging Doubles in 2002

Fallout from California’s deregulation and an intense drought began to hit Washington State hard in late 2000, resulting in significant electricity rate increases in 2001 and 2002.

For Washington’s LIHEAP households, this meant that more were eligible for low-income utility discounts, especially customers of the municipal utility Seattle City Light.

The amount of utility discounts that Washington claimed in its FY 2002 leveraging report more than doubled from $7.5 million in FY 2001 to nearly $16 million in FY 2002. During the same time period, the number of households receiving discounts from Seattle City Light soared from 9,297 to over 155,000. For many years, the city has had low-income and senior/handicapped discount rates, as well as a low-income emergency program.

In early 2001, in response to rising wholesale energy costs, the city council increased eligibility guidelines for its special rate for non-senior and non-disabled low-income customers to 200 percent of FPG from 125 percent. The utility also stepped up its program outreach. In neighboring Snohomish County, the public utility district increased its low-income discount funding from $2.8 million to $4.4 million.

At the same time California’s deregulation caused Western electricity prices to soar, the Northwest was experiencing a drought, and the Seattle City Light could not rely on its own dams for power. As a result, it purchased electricity on the spot market and incurred extraordinary debt, which led to a series of rate increases during 2000 and 2001 that totaled 58 percent.

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Oregon Attains Gas Utility Resources

Oregon’s low-income programs have begun to benefit from gas companies that have voluntarily decided to assess a meter charge for bill payment assistance.

Legislation passed in 2001 allows, but does not require, natural gas companies to collect funds through a meter charge – similar to the mandated meter charge that the two major electric companies collect for low-income and other public purpose programs.

Northwest Natural Gas, the state’s largest gas utility, began collecting the funds in late 2002. About $1 million per year will go to the company’s Low Income Gas Assistance program, which follows the same model as the electric assistance programs - that is, payments are designed to prevent disconnection, and they have the same income guidelines and program year as the Oregon LIHEAP.

Avista, the other gas utility, began operating its Low Income Rate Assistance Program in early 2002 with $400,000 per year from the meter charge.

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Georgia’s Low-Income Gas Provider Faces Hurdles

Georgia’s designated regulated provider – designed to help low-income households with their gas bills – hasn’t worked out as planned.

Not only has it not provided natural gas service to low-income customers at reasonable rates, but enrollment has been lower than projected, which has turned to be an advantage for the low income.

As a result, Georgia Public Service Commission (PSC) has approved a one-time $50 credit for most low-income customers of Scana – the state’s designated regulated provider – after the company’s gas prices jumped to $1.30 per therm, the highest in the state. The PSC designed the regulator provider program to provide natural gas service to low-income customers at reasonable rates without high deposit requirements and chose Scana as the regulated provider for the low income in 2002, after deregulation in 1997 was followed by four years of wildly fluctuating prices and widespread marketer abuses.

When the program started in September 2002, the company was offering rates 10 to 14 cents per therm less than other residential rates; seniors were to receive rates of 12 to 16 cents less per therm.

However, the company did not procure enough gas through long-term contracts to honor those prices. Its regulated-provider contract with the PSC allows the company to adjust prices in June to reflect the winter’s high wholesale prices. Because that adjustment was so severe – forcing the company’s 24,000 low-income enrollees to pay the highest prices in the state – the PSC tapped the state’s Universal Service Fund (USF) for $750,000 to help soften the blow by giving the regulated-provider enrollees a $50 bill credit. Customers transferred to Scana because of credit problems will not receive the bill credit.

The situation was not as serious as it could have been because many low-income households have not signed up with Scana. (Between 30,000 to 50,000 were estimated to be eligible.) Joyce Hull, Georgia’s LIHEAP director at the Department of Human Resources (DHR), noted that many low-income senior households, for example, did not switch because of the price hikes and the forecast of continued rising prices this winter.

She said that community action agencies around the state are working to educate themselves and their clients about the utility market and that low-income households can "make wise choices, both in the selection of a provider and on finding ways to reduce energy consumption."

This is the second PSC response to the high gas prices this year – in February the Commission approved the disbursal of $5 million from the USF to the DHR to provide gas bill payment assistance to low- income or low-income senior households.

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Iowa Will Hire Leveraging Specialist

The LIHEAP statute allows states to spend a portion of their grant to develop leveraged resources – a pot of money that Iowa plans to put to use this year.

The state will hire a "leveraging specialist" for two years to come up with ideas for increasing funds to supplement LIHEAP. Specifically, the statute allows a state to expend part of its LIHEAP allocation – 0.08 percent, or $35,000 each fiscal year, whichever is greater, to identify, develop, and demonstrate leveraging programs. These activities can include educating state legislatures and utility commissions about the need for more funding for low-income energy programs.

In Iowa’s case, the idea for a leveraging project sprang from a preliminary proposal by low-income advocate Roger Colton, who suggested that a statewide fuel fund could be initiated for as little $70,000.

The state decided to adopt a slightly different proposal: The leveraging specialist will work through the Iowa Community Action Association (ICAA), which is contributing $20,000 as part of an effort to market existing utility consumer contribution funds.

Iowa requires utilities to have customer contribution funds (also known as fuel funds) and to publicize them to their customers at least twice a year. These funds raise a total of between $500,000 and $700,000 annually in Iowa, according to Jerry McKim, chief of the state’s Bureau of Energy Assistance, and that money is distributed to community action agencies in each utility’s area to augment LIHEAP or for use in crisis situations.

The leveraging specialist’s two-year task will include three projects: 1) working with all utilities, including municipals and cooperatives, to create a more effective marketing plan for customer-contribution funds; 2) initiating a separate, statewide fund, operated by the ICAC and funded through banks and insurance companies, which are big business in Iowa; McKim explained that money for the statewide fund might come from new approaches such as a check-off on monthly mortgage bills; and 3) conduct research and analysis as the basis for reports on the impact of energy costs on the state’s low-income households.

These reports could then be used for future lobbying efforts by ICAC at the legislature and in proceedings before the Iowa Utilities Board.

For more information, contact Jerry McKim at (515) 281-0859, jerry.mckim@dhr.state.ia.us.

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