State Funds Wrap-Up

In our last issue, we reported that state government contributions this fiscal year to supplement LIHEAP totaled over $530 million.

Since then, state legislative activity has slowed, and contributions now total over $468 million from 31 states and the District of Columbia. The addition of $1 billion in federal funds in late March was probably a factor in the slowdown. In addition, New York and Montana either did not spend or gave back state funds because provisions in their respective legislatures required this with increased federal funding. However, four states, Delaware, Idaho, Iowa and Wyoming contributed money after the federal money was allotted, Delaware for the second time.

Legislatures allocated the funds in 30 states and regulatory commissions allocated them in eight states. In six states, Georgia, Indiana, Iowa, Montana, New Hampshire and Pennsylvania, new funding came from both legislative and regulatory decisions. At least another six states have considered state funding, but to date have not acted. In total, the majority of states, at least 39, have either acted or considered acting to supplement LIHEAP.

For more information, see the Clearinghouse summaries and table.

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California Low-Income Spending Continues to Grow

The amount of money spent by California’s utilities for low-income rate discounts and energy efficiency services continues to grow, according to year-end reports filed by the four largest utilities (San Diego Gas & Electric, Pacific Gas and Electric, Southern California Edison, and Southern California Gas Company).

At the beginning of 2001, these utilities’ spending levels for the low-income bill discount called CARE (California Alternative Rates for Energy) stood at about $126 million; by the end of 2005 spending totaled $563.7 million, with nearly 3.4 million customers receiving gas and electric bill discounts. This total is discount spending only; it does not include administrative, outreach and other utility expenses.

Part of the increase is likely due to an emergency order by the California Public Utilities Commission (CPUC) in October 2005 that expanded CARE income eligibility levels from 175 percent of federal poverty guidelines (FPG) to 200 percent.

The CPUC ordered the same increase in income eligibility for the Low Income Energy Efficiency Program (LIEE). Previously, customers with income between 175 and 200 percent of FPG were eligible if they were elderly or disabled.

Likewise, LIEE spending levels have increased since 2001. The four largest utilities spent $99 million during 2005, compared to $56 million in 1996. This total is for efficiency measures only and does not include administrative and indirect costs, or costs of inspections and oversight. Measures include repair and replacement of gas and electric heating and water heating systems, air conditioners and evaporative coolers, refrigerator and lighting upgrades, weatherization and energy efficiency education. Over 180,000 low-income households received one or more of these measures during 2005.

Other utilities, whether investor-owned or publicly-owned, must spend at least 2.85 percent of their 1994 revenues on public goods programs which must include: "services provided for low-income electricity customers, including but not limited to, targeted energy efficiency service and rate discounts." Total low-income energy expenditures for the other utilities are estimated at around $40 million yearly.

In an order issued December 25, 2005, the CPUC approved CARE and LIEE funding levels for 2006 and 2007 which were similar to 2005 spending levels. However, these proposals had been submitted prior to the CPUC’s emergency order in October; as a result, the Commission noted that utilities may have to seek more funding if program enrollments continue to accelerate.

Finally, SB 580, passed by the legislature and signed by the governor in September 2005 could, if implemented, significantly impact the number of CARE households by requiring automatic enrollmment into CARE for households that participate in certain public assistance programs.

The bill ordered the California Health and Human Services Agency (HHSA) to evaluate, on or before April 1, 2006, how the use of certain state programs and databases can be optimized to facilitate the automatic enrollment of eligible customers into CARE. This issue dates back to at least July 2002, when a CPUC decision authorized automatic enrollment.

At that time, the CPUC estimated that around one million households were eligible for CARE but not receiving it, and it proposed a partnership with state agencies, (primarily HHSA) that administer medical, food, and cash assistance programs whereby many of these households would be automatically enrolled into CARE through matches between utility and state agency databases.

However, this type of automatic enrollment has so far only been instituted by the Department of Community Services and Development, the LIHEAP agency. The HHSA has resisted automatic enrollment, claiming that sharing its client databases would violate client privacy. A spokesman from the office of State Senator Martha Escutia, sponsor of SB 580, said in late April that the HHSA had not fulfilled the legislative directive by April 1, but had begun to hold meetings.

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Pennsylvania Examines Low-Income Program Funding, Design

As with California (see article), Pennsylvania has increased the amount of money it requires utilities to spend on their low-income energy programs.

Called universal service programs, they include rate assistance, known as Customer Assistance Programs (CAPs), and low income energy efficiency, known as Low Income Utility Reduction Programs.

Pennsylvania’s electric and gas utilities spent nearly $240 million on these programs during 2004; the majority, $214 million, was for CAPs, which enrolled nearly 300,000 households. While universal service funding has steadily increased since 1996, the Pennsylvania Public Utilities Commission (PUC) questions whether the programs are adequately funded and who should pay for them.

In order to answer those questions, the PUC issued an order in November 2005 requesting comments on these and other issues concerning universal service and energy conservation programs. The PUC is required by law to ensure universal service and energy conservation programs are appropriately funded and available in each utility service territory and it must establish non-bypassable cost recovery mechanisms that will allow utilities to fully recover program costs.

The PUC noted in its order that it has no standards or criteria for evaluating whether universal service programs are appropriately funded, nor has it determined what type of cost recovery allows for full recovery of program costs. Instead, it has decided funding issues on a case-by-case basis, a method it now says may be inappropriate due to recent escalations in natural gas prices and concerns over the impact of new utility bill collection methods authorized by Act 201 of 2004 (see LIHEAP Networker # 55.)

The PUC also noted that there are wide disparities in CAP funding and cost recovery methods among the utilities.

Among a list of questions in its order, the PUC asked whether costs should be allocated among all customer classes, and if so, how. Currently, most CAP costs are recovered from residential customers only and average $26.76 yearly for electric customers and $47.18 for natural gas customers.

The PUC also asked whether CAP design should be standardized and whether arrearage forgiveness programs are a legitimate CAP cost.

To view the PUC order and comments received, visit the PUC website’s document search page and search docket M-00051923.

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Maine Institutes Margin-Over-Rack Oil Buying

The Maine State Housing Authority, the LIHEAP grantee, on April 25, approved a new plan for increasing the purchasing power of the LIHEAP benefit for low-income households that heat with oil.

Starting next fiscal year, a margin-over-rack (MOR) plan will replace the current cash price discount system. The MOR will pay dealers a set margin over the floating wholesale price of heating fuel. The margin takes into account each oil company's operating costs and overhead, cost of delivery and other factors, including a profit margin.

The Maine Oil Dealers Association has opposed the change. However, neighboring states Massachusetts and Connecticut have used MOR programs for their LIHEAP clientele for over a decade and have shown significant savings most years. New York instituted a pilot MOR program in 2004 and plans to have it statewide by 2008.

For a number of years, the state has worked with its vendors to obtain the cash price rather than the credit price for heating oil and kerosene for LIHEAP recipients, providing them an average savings of 10 to 25 cents per gallon. State officials, who have been researching ways to stretch their LIHEAP dollars’ purchasing power for about two years, hope the MOR will provide greater savings. Around 70 percent of the state’s households use heating oil or other bulk fuels and, as a result, the majority of LIHEAP funds, about $24 million in FY 2005, went to these fuel vendors.

For more information on heating oil and other bulk fuels discount programs for the low income, see the LIHEAP Clearinghouse paper titled “LIHEAP Negotiations With Non-Regulated Fuel Vendors: Fixed Margin Programs, Discounts, Summer Fill, Fuel Cooperatives,” August 2005.

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NLIEC Has a New Executive Director

The National Low Income Energy Consortium (NLIEC) has hired David Fox as its new executive director. Fox worked for the Campaign for Home Energy Assistance for eight years, four years as its executive director, where he was a highly visible advocate in the media for LIHEAP.

NLIEC has adopted a long-range plan that includes improving communication and management and making NLIEC more visible. It also has made the job of executive director a full-time position.

Fox’s primary goal in his new position is to make NLIEC a premier organization that brings people together to support, find reliable information about and address solutions to low-income needs.

While low-income needs are ever greater, says Fox, resources haven’t kept pace and there is a need to work more efficiently, effectively, and visibly to get the word out.

One thing NLIEC already does well is bring people together, says Fox. Lots of other groups are involved in low-income issues, but NLIEC is one organization that gives everybody a place at the table and facilitates the exchange of ideas and creative thinking. NLIEC is a starting place for changes and Fox wants to see more change.

As Fox points out, NLIEC is best known for its conference, but the organization does a lot more through commissioned studies and support across the country to address low-income issues. “We want to make NLIEC more visible, to increase awareness of who we are and what we do,” he adds.

To attain that goal, Fox plans on working with other organizations across the country, holding workshops throughout the year, organizing media visits, and helping local organizations tell their stories to the media.

Some short-term goals for NLIEC have already been achieved, Fox notes. A monthly newsletter to member organizations and other interested parties has been instituted to improve communication. The NLIEC website has a new look and improved navigation. Fox plans on adding photos and news for a more dynamic website.

Fox succeeds Sue Present, who was NLIEC’s first executive director and had served since 1993.

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Washington DC Hosts the 2006 Joint Low-Income
Energy Conference June 11-15

“Monumental Needs / Capital Solutions” is the theme of this year’s joint low-income energy conference at the Omni Shoreham in Washington, DC, June 11-15.

The National Fuel Funds Network’s (NFFN) conference and the National Energy Assistance Directors’ Association (NEADA) annual meeting both convene on Sunday and Monday June 11-12, followed by the National Low Income Energy Consortium (NLIEC) conference.

NFFN’s 22 nd annual conference presents twelve workshops and a series of roundtables that address the hottest topics in the charitable energy assistance world: fundraising successes, low-income utility programs, and breakthroughs in organizing support for both fuel funds and LIHEAP.

Featured NFFN conference speaker is Jason DeParle, New York Times reporter and author of American Dream, called the definitive book on welfare reform. The closing general session will feature a panel of state utility consumer advocates.

NLIEC is celebrating its 20th anniversary and opens with a reception Monday evening for all joint conference attendees followed by two- and one-half days of workshops and general sessions.

A highlight of the NLIEC conference is a forum titled, “Differing Perspectives on Poverty and Policy in the United States,” on Wednesday June 14. Eldar Shafir, Ph.D., a professor of psychology and public affairs at Princeton University, and Bonnie McEwen, executive vice president of Douglas Gould & Co., a firm specializing in nonprofit marketing, brand management and advocacy, will identify thoughtful, practical and achievable policies to improve the lives of working people.

A primary focus of both presentations will be on policies that consider the perceptions, attitudes, and decisions of those living in poverty.

Nelda Barnett, member of the AARP Board of Directors and AARP Foundation Board of Trustees, will deliver the keynote address at Tuesday’s luncheon. Barnett will talk about how AARP is helping low-income seniors with the daily challenge of spreading limited funds across rent, electricity, groceries, health services and other needs.

Tuesday night's reception promises to be a wild night at the zoo. NLIEC conference attendees are invited to meet with friends and wildlife volunteers at the Cheetah Conservation Station at the National Zoo for an evening of socializing and watching wildlife and movies. The conference hotel is a short distance from the Zoo.

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LIHEAP’s Role in Protecting Public Health and Safety to be Examined

Reflecting an increased interest among advocates and policy makers in the role of LIHEAP in protecting public health, the National Low Income Energy Consortium will present a session exploring the integration of public health and safety and energy assistance concerns.

Titled “Putting a Public Health and Safety Focus on Energy Assistance,” this session will document policies and strategies that integrate public health and safety and energy assistance concerns in order to help vulnerable households to keep warm in the winter and cool in the summer.

Speakers will present information on the following related topics: 1) Iowa’s legislative proposal to have the State’s Health Department’s control utility shutoffs for households with young children and senior citizens; 2) REACH grants that work with public health clinics to sign up people with health problems for energy assistance; 3) Britain’s efforts in tackling the issue of fuel poverty from a public health perspective; and, 4) establishment of a National Working Group on Energy Affordability and Public Health to generate polices and strategies for using energy assistance to more effectively prevent loss of life from extreme temperatures; and to assess the feasibility of establishing long-term health and safety outcome measures for LIHEAP.

Speakers will be Leon Litow, HHS Division of Energy Assistance; Jerry McKim, Iowa LIHEAP director, Mark Wolfe, NEADA executive director; and Jonathan Temple, senior energy advisory at the British Embassy. The session will be Wednesday, June 14 at 3:15 pm.

On a related topic, under Energy Policy Act of 2005, HHS is charged with presenting Congress with a report on how LIHEAP can be used more effectively to prevent loss of life from extreme temperatures. HHS must consult with appropriate officials in all 50 states and the District of Columbia. Toward that end HHS is seeking recommendations and examples of successful programs from state LIHEAP officials and others.

For more information, see HHS Action Transmittal No. LIHEAP-At-2006-2, dated 3/28/06.

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Peoples Settlement Benefits Weatherization in Chicago

An agreement between Illinois' largest gas utility and state agencies and consumer groups will result in about $5 million annually for low-income weatherization programs in Chicago.

In March, the Illinois Commerce Commission approved an amended settlement agreement between Peoples Gas and North Shore Gas with the Attorney General, the City of Chicago and the Citizens Utility Board. The agreement resolves cases related to the utilities' gas charges for years 2000 to 2004. Residential customers of Peoples Gas will receive a refund of $100, and residential customers of North Shore Gas will receive a refund of about $21.

Peoples will also forgive about $207 million in bad debt for customers, many of whom were low-income, who were shut-off during the periods between April 1999 and April 2005.

It will also contribute up to $5 million annually for the next six years toward conservation programs to help customers reduce their energy usage. The City of Chicago and the Illinois Attorney General's office will oversee these programs. Finally, Peoples will reconnect customers who have been disconnected from their heating services due to an inability to pay the high gas prices.

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Indiana Low-Income to be Exempt from Energy Sales Tax

The Indiana legislature passed a bill that will exempt low-income households’ purchases of “home energy” with federal LIHEAP funds from the state gross retail tax, which is 6 percent. Home energy is defined as electricity, oil, gas, coal, propane, or any other fuel used as the principal source of heating or cooling in residences.

The measure was sought by the Indiana Community Action Association in order to increase the purchasing power of the LIHEAP benefit. It will be in effect for purchases after June 30, 2006 and before July 1, 2007.

The state’s Revenue Department is implementing rules for the legislation and each recipient will benefit either through the sales tax exemption or the tax will be collected and redistributed as additional LIHEAP program funding.

Indiana joins a handful of other states that exempt LIHEAP households’ energy purchases from state sales taxes, and thus, leverage additional dollars for their programs. For example, Arkansas exempts from sales tax the first 500 kWh of electricity purchased each month, and it reported savings of $1.1 million for FY 2004. Virginia exempts the sales tax on deliverable fuels and reports savings between $200,000 to $340,000 yearly.

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Massachusetts REACH Evaluation Available

Massachusetts has completed an evaluation of its REACH project, titled LASER or “Leveraging Assets for Self-Sufficiency through Energy Resources.”

The project utilized case-managed “one stop” services that provided intervention and advocacy in order to reduce client debt and resolve utility arrearages. It also expanded clients’ access to benefits and resources, and taught financial literacy and asset development. Participants increased their payment of energy bills (31 percent more clients were able to pay full gas bills; 46 percent, electricity bills), reduced their utility arrearages (electricity arrearages dropped 22 percent), and increased self-sufficiency.

See the Massachusetts evaluation and other REACH evaluations and program materials on the LIHEAP Clearinghouse website.

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