Leveraged Resources Exceed $2 Billion
for the First Time

State and tribal LIHEAP grantees will share over $20 million in FY 2006 leveraging incentive awards. Thirty-six states, 28 tribes and one territory reported over $2 billion in leveraging activities during FY 2005.

Even though the number of states and tribes that reported leveraging decreased slightly in FY 2005, the amount of leveraged resources continues to increase each year with FY 2005's total exceeding FY 2004 by more than $150 million, about eight percent. 

The increase in reported leveraging funds continues to come primarily from utility- and ratepayer-funded resources, which totaled over $1.7 billion, or 84 percent of all leveraged resources. These include several states’ system benefit charges, also known as public benefit or universal service charges that were acquired through utility restructuring legislation to fund rate assistance and weatherization programs. 

Rate discounts and credits of $1.4 billion, mostly mandated by state legislatures or utility commissions, accounted for 80 percent of utility resources. Weatherization resources at $181 million, deposit and fee waivers at $106 million, and $51 million in arrearage forgiveness made up the rest of utility-funded resources.

Among other leveraged resources, nine percent came from state and local government resources, five percent from church, community and fuel fund donations, and two percent from miscellaneous resources such as landlord contributions to weatherization, supplier discounts and bulk fuel discounts.

For the last several years, California, Ohio and Pennsylvania have reported the largest amounts of leveraged resources. For FY 2005, California reported over $578 million, an increase of almost 16 percent over its FY 2004 total of $500 million. 

California ’s largest resource is its utility-funded California Alternate Rates for Energy (CARE). The amount leveraged for CARE, $529 million, continues to increase each year and accounted for 91 percent of California ’s total reported resources. CARE provides a 20 percent state-mandated electric and gas rate discount to eligible customers. The estimated CARE enrollment has been increasing each year and is over 70 percent of those eligible. As of December 2005, about 3.4 million households received the discount, compared to 3.1 million at the end of 2004.

Among the other large states, Pennsylvania reported over $277 million, the second largest amount, and Ohio had the third largest amount of leveraged resources this year, $217 million, followed by New Jersey and New York with $213 million and $111 million respectively.

In Pennsylvania , the gas and electric utility Customer Assistance Programs, under which low-income customers pay their bill based on a percentage of income, accounted for about 65 percent of Pennsylvania 's leveraged resources.

Ohio's Percentage of Income Payment Plan, which was mandated by the PUC in 1983 and has been funded by a universal service rider on electric utilities since 1999, again accounted for 96 percent of the state’s leveraged resources.

New Jersey's Universal Service Fund, a fixed credit percentage of income payment plan under which participants are required to pay no more than six percent of their annual income toward electric and gas bills, accounted for over half of the state’s leveraged resources.

The majority of New York 's leveraged resources are derived from state funds that provide energy allowances to public assistance residents.

California, Pennsylvania and New Jersey each received over $2 million in leveraging awards. Other top awards included Ohio at nearly $2 million and Nevada and New York at almost $1 million. Seven more states received over half a million each in leveraging awards.

The total amount leveraged by the tribes and the Northern Mariana Islands was over $3.2 million, a 15 percent increase over FY 2004 leveraged amount.

The Rosebud Sioux of South Dakota again reported the highest tribal leveraging, $388,248, followed by South Dakota's Cheyenne River Sioux at $221,198 and the Choctaw Nation of Oklahoma at $200,000.

The Choctaw Nation received the largest incentive award of $183,249; the Yankton Sioux of South Dakota and the Intertribal Council of Michigan received the second and third largest awards, $158,619 and $151,910, respectively.

As an example of how well tribes do under the leveraging program, seven tribes and the Northern Mariana Islands reported leveraging amounts that were larger than their regular LIHEAP allotments.

Visit the LIHEAP Clearinghouse website for additional information on state leveraging and awards and for tribal information.

Return to Contents

Tribes Increase Resources to Help
Members Control Energy Costs

In response to increasing energy costs, many tribes have increased the amount of resources they contribute to their members for energy assistance.

The majority of leveraged resources reported by tribes are tribal government funds, many from tribal gaming enterprises. Tribes such as the Muscogee (Creek) Nation of Oklahoma have found unique ways to leverage tribal funds.

This is the fourth year that the Muscogee (Creek) Nation has used tribal funds to buy blankets directly from a manufacturer at a discount. The savings are counted as a leveraged resource. The polar fleece blankets come in a variety of designs and colors ranging from traditional Indian patterns to contemporary kid-pleasing designs and are distributed to every member of an eligible household. According to Christie Baldridge, tribal social services supervisor, the children look forward to the blankets each year.

Other leveraged resources for the tribe include oscillating fan heaters, given to eligible households in the winter, and air conditioners provided in the summer to households with seniors and members with medical problems. Other eligible households can receive two box fans. Energy education materials are provided to households as well.

Baldridge reported that some households in the tribe spend half of their income on utility bills. When LIHEAP funds are exhausted, tribal funds help with winter utility bill assistance.

The Rosebud Sioux of South Dakota leveraged $388,248 for 2005, the largest amount among the tribes. LIHEAP Coordinator Eileen Shot said the leveraged funds come from casino revenue. She added that the tribe has exhausted its LIHEAP funds and she is using the leveraging award to help tribal members pay summer cooling bills.

Next year Shot plans to expand the leveraging program by adding discounted propane as another resource.

The South Dakota Cheyenne River Sioux reported over $265,000 in leveraged resources. The main resources are tribal funds used for bill payment after LIHEAP funds are exhausted and a tribal program that provides loans to help working families offset heating bills. The tribe also locks in propane prices at a discount.

According to Pauline Eagle Chasing, LIHEAP Coordinator for the Cheyenne River Sioux, South Dakota had unusually high temperatures at the beginning of July and she is using the tribe’s leveraging award to buy air conditioners and fans. Households with seniors, disabled or children under six years of age are given priority.

The Choctaw Nation of Oklahoma doubled its contributions in 2005 in response to increasing calls from tribal members concerned with high gasoline and winter heating costs, according to Charlene Grunstad, LIHEAP coordinator. The tribal council responded with an extra $100,000 for heating assistance. The tribe had exhausted LIHEAP funds by mid-January and tribal funds from casino revenue allowed it to continue its heating assistance program.

Teresa Wall-McDonald from the Confederated Salish & Kootenai Tribes in Montana said the tribe provided more funds in 2005 in response to the dire need for energy assistance. The tribe’s reported resources increased from $72,000 in 2004 to $139,003 in 2005. Tribal funds are used for utility bill payments, deposits, reconnects and furnace repair and replacement. The tribe also has a wood project through which surplus wood from timber harvests is provided to tribal members.

Two leveraged resources benefit the tribe’s elderly population. One program that is entirely funded with tribal funds helps with bill assistance and weatherization services that promote energy savings. The electric co-op provides a service charge waiver for the elderly.

Wall-McDonald said the leveraging awards will be used to supplement heating assistance payments next winter.

Visit the LIHEAP Clearinghouse website for additional information on tribal leveraging.

Return to Contents

Venezuela Discount Oil Program Reaches Eight States

Eight northeastern states and four tribes in Maine received discounted fuel oil this past heating season from Venezuela.

While officials in several states complained because the discount deal originated from a leftist government that is hostile to the United States, more than 16 million gallons of heating oil discounted at 40 percent or more helped about 181,000 low-income households pay their heating bills.

According to the U.S. Department of Energy, the average price of a gallon of heating oil was $2.44 this past heating season, an increase of 23 percent over the average price of $1.99 per gallon during the 2004-05 heating season. This prompted U.S. Senator Jack Reed of Rhode Island to write a letter to nine major oil companies last October asking them to consider donating a portion of their record-high profits to help low-income families pay their heating bills. The only company that responded to his request was CITGO Petroleum Corp., a subsidiary of Venezuela’s state-run oil company.

CITGO sent letters to state governors proposing the discounted oil program and only the governor of Maine responded. Venezuelan Embassy officials met separately in December with the governor of Maine and with representatives of four tribes: the Aroostook Micmacs, the Houlton Band of Maliseet Indians, the Passamaquoddy Tribe at Pleasant Point and the Penobscot Indian Nation. The state received heating oil discounted at 40 percent, including 900,000 gallons for the tribes.

In other states, mayors, and state senators and representatives joined with community action agencies to acquire the discounted oil. In late November, programs were launched in the Boston area and in the Bronx in New York City . Three non-profit organizations in the Bronx received 5 million gallons of heating oil to distribute to 8,000 households at a 45 percent discount.

In Massachusetts, Citizens Energy Corporation, a Boston nonprofit founded by Joe Kennedy that has operated a discount oil heating program for a number of years, worked with CITGO, community action agencies and fuel oil dealers to provide oil at a 40 percent discount. Each eligible household was allowed a one-time delivery per heating season of up to 200 gallons of oil.

Other states soon followed with programs using discounted oil from Venezuela – Rhode Island, Delaware, Vermont, Connecticut, and the Philadelphia area in Pennsylvania. In several states including Vermont, Maine and Delaware, homeless shelters also received free oil through the program. Michigan is the latest state to sign up for Venezuela’s oil program and will distribute discounted oil for the 2006-07 heating season.

The way the program generally works is that CITGO sells the discounted oil to Citizens Energy, which then sells the oil at market prices to generate money to reimburse oil dealers for the discount.

In most of the states that received the discounted oil, LIHEAP was used as the vehicle for distribution with community action agencies coordinating the delivery of oil to low-income clients.

Although the program has been widely accepted by community organizations, it hasn’t been smooth sailing in some states. Although Vermont accepted the discounted heating fuel, only about 10 percent of eligible households participated in part because the program got off to a late start with about half of the fuel dealers participating. A mild winter and difficulty implementing a large program were other factors that kept participation low.

Hugo Chavez, Venezuela’s leftist president, says he plans to double the amount of discounted oil for the 2006-2007 heating season, from 40 million gallons to 80 million, and to add 10 states to the program.

Return to Contents

New Jersey Evaluation Shows Significant Impacts;
More Outreach to Vulnerable Households Needed

The first evaluation of the New Jersey Universal Service Fund (USF) is complete and is available on the website of APPRISE.

The program has been acclaimed as one the best-designed in the country because it allows low-income participants to pay no more than six percent of their incomes on energy bills. During FY 2005, the program spent $73.7 million on credits to bring participants’ bills down to the designed levels and $21.6 million to retire participants’ arrearages. About 177,000 households have received USF benefits since the program began October 2003; 139,000 households received electric benefits and 100,000 received gas benefits. On average, USF participants received $626 per year in USF credits.

Among positive aspects of the program, APPRISE found the following:

• The impact of the USF is significant for those who receive it – it covers about 40 percent of the total energy bill for eligible clients.
• The program’s standard of energy affordability, i.e., six percent of income, is one of the most aggressive in the country. Similar programs in Ohio and Pennsylvania require low-income households to pay up to 17 percent of their income on energy bills.
• About 41 percent of participants had incomes at or below $10,000, and 37 percent of households had an elderly member.
• The majority of USF customers, 67 percent, were able to pay 100 percent of their annual utility bills.
• The USF program eliminated about 90 percent of preprogram arrears for USF customers.
• Compared to LIHEAP recipients in other Northeastern states, USF participants had a lower rate of utility shutoffs.

Although the program targets the lowest-income households, it does not necessarily reach the most vulnerable groups such as the young, the elderly, groups with language barriers, or those households with the highest energy burdens, the evaluation found.

The evaluation provides recommendations for improving client outreach to overcome identified barriers and to better reach vulnerable populations; it also contains programmatic recommendations to increase client bill payment.

Completed in April by Applied Public Policy Research Institute for Study and Evaluation (APPRISE), the evaluation has been reviewed by USF staff at the New Jersey Board of Public Utilities (BPU) who have issued their own recommendations for program changes. (These recommendations are included with the APPRISE evaluation.) A stakeholder process is currently underway where stakeholders are reviewing the evaluation and the staff recommendations. After the stakeholders issue comments to the BPU, it will issue final recommendations for the 2007-08 program year.

For more information about the New Jersey USF, see the BPU website’s FAQs.

Return to Contents

Rhode Island Approves New Program for FY 2008

On June 29, Rhode Island Governor Donald L. Carcieri signed a comprehensive energy bill that will provide energy bill relief to help low-income households starting in FY 2008.

The legislation establishes a statewide commitment to and funding for “affordable energy plans” for low-income households, which will include rate discounts, arrearage forgiveness, and energy efficiency and weatherization programs. Supporters said the time needed to set up administration of the program makes it impossible to have it in place for this coming winter.

The funding for the programs will come from a one percent tax on gross receipts for both electric and gas utilities, as well as a two percent gross receipts tax imposed on unregulated fuels, such as propane and heating oil. Additional consumer protections are required for low-income households relating to disconnection and reconnection of service following disconnection for nonpayment. 

The bill is the culmination of several years of effort by advocacy groups to get a low-income energy assistance program. In fact, legislation nearly passed last year, but failed because a funding source couldn’t be found that satisfied all stakeholders.

Return to Contents

Nevada Program Overcomes Start-up Problems

The third evaluation of Nevada's state-funded energy assistance and weatherization program has been made available on the program’s website.

Titled State Fiscal Year 2005 Evaluation of the NRS 702 Energy Assistance Program & Weatherization Assistance Program, it is the third of mandatory annual evaluations.

The program coordinates funds from a universal energy charge (UEC) that is assessed on most gas and electric utility customers with federal and other funds to create a statewide affordability and energy efficiency program. Program participants pay no more than the state median household energy burden, three percent, for their energy bill. The UEC generates about $10 million annually with about 75 percent distributed to the Nevada State Welfare Division, the LIHEAP grantee, and the remainder to the state weatherization grantee, the Nevada Housing Division.

During SFY 2005, the program spent $13 million serving 17,557 households with average payments of $743. It also spent $2.2 million paying arrearages for 5,447 participants with an average payment of $403.

Completed in May by H. Gil Peach & Associates LLC., the evaluation summarizes program progress up to what the evaluation team sees as the mid-point in a five-year program implementation period. It noted that start-up problems with computers and outreach resulted in funds being under spent during the first and second program years. These problems were largely resolved by the third program year, the evaluation notes.

Among the program's strengths cited in the evaluation: it covers both electricity and gas costs, it uses the Nevada median household energy burden, which is calibrated yearly in determining benefits, and it is year-round, taking into account cooling as well as heating bills.

Return to Contents

More State Governments Supplement LIHEAP

As the last two issues of the LIHEAP Networker have reported, state government contributions this fiscal year to supplement LIHEAP have been unprecedented. Although Congress allocated an additional $1 billion to LIHEAP at the end of March, and states are spending those funds, a few have continued to allocate state resources.

Illinois
Governor Rod Blagojevich on May 29 signed Senate Bill 2030, which provides $5.2 million in state general funds to the Supplemental Low-Income Energy Assistance Fund (SLEAF).

The funding source is unique in that it comes from gas revenue taxes paid by all residential customers, including the low income. The $5.2 million is estimated to be half of the amount of gas revenue taxes paid by LIHEAP recipients. SB 2030 also allows the SLEAF to receive moneys from voluntary donations from individuals, foundations, corporations, and other sources.

The money will be distributed through the LIHEAP grantee, the Department of Healthcare and Family Services. Supplemental payments ranging from $50 to $100, depending on a household’s income and size, will be applied automatically to primary utility accounts that have remained active since households received LIHEAP payments earlier in the winter.

The SLEAF receives state funds to supplement the federal LIHEAP; the chief funding source is the approximately $76 million that is raised annually through a meters charge on gas and electric utility accounts.

Maine
On April 25, the Maine Public Utilities Commission (MPUC) voted to increase funding of the Statewide Low-Income Assistance Plan (LIAP) by 20 percent to help Maine families keep pace with rising electricity rates.

The LIAP is designed to make electric bills more affordable for qualified low-income consumers. Those consumers who qualify for participation in Maine’s LIHEAP program also qualify for participation in the LIAP. A central fund, managed by the MPUC and funded by the electric utilities through their rates, finances the LIAP and apportions the fund to these same electric utilities based on the percentage of LIHEAP eligible households in each utility’s service territory.

The increase will take program funding from $5.8 million to nearly $7 million beginning on October 1, 2006. During the 2004-05 program year, 23,161 electric utility customers participated in the program.

Maryland
Amidst a storm of controversy over major electric rate increases following the expiration of price caps in place since 1999 due to electric deregulation, the state government has stepped in.

During the regular legislative session last spring, the legislature provided an additional $25.1 million in general funds for the Maryland Energy Assistance Program (MEAP) and the Electric Universal Service Program (EUSP), which the LIHEAP office has four years to spend.  Then, in a special session in June brought on by the rate increase controversy, the legislature added another $9 million to the EUSP for FY 2007, with $3 million of that as permanent funding from commercial and industrial ratepayers and $6 million as a one-time allocation from taxes on corporations.  The budget for the EUSP for SFY 2007 will be $42 million compared to about $33 million annually since the program’s inception in 2001.  

The special session also increased income eligibility for the MEAP and the EUSP from 150 percent of FPG to 175 percent.  The $25.1 million will be spent to serve households up to 200 percent of FPG. 

Kansas
In May the Kansas legislature finalized its FY 2007 budget and, for the first time ever, approved $1 million to supplement LIHEAP. It also provided $2 million for low-income weatherization and $2 million for a revolving loan fund to finance energy efficiency improvements for low and moderate income families.

Return to Contents

Georgia, Montana REACH Evaluations Available

Evaluations of REACH projects in Georgia and Montana have been completed and are available online at the LIHEAP Clearinghouse website.

Georgia received a REACH grant in 2002 for “Project Energize.” The evaluation was completed in March 2006 by Roger Colton of Fisher, Sheehan and Colton.

Project Energize, operating in DeKalb County, Georgia, was designed to address systemic barriers to energy self-sufficiency and to help single-parent, female-headed families identify areas in which knowledge and behavioral changes would influence long-term energy burden and bill payments.

Project Energize provided an array of services to 300 participating household including: energy efficiency education both in individualized one-on-one settings and in group workshops, mediation with energy providers to reduce arrearages and establish reasonable payment plans, energy efficiency improvements such as air sealing and compact fluorescent lighting, and some major appliance replacement; counseling in financial literacy and budgeting, and referrals to community resources and other services that could increase disposable income.

Not all participants received all services; rather, the project was designed to identify household-specific barriers to self-sufficiency and to provide services to overcome specific barriers.

The project was unique in that it measured program outcomes through the Home Energy Insecurity Scale, which Colton developed for the federal LIHEAP office in 2003 as a tool for LIHEAP grantees to measure program outcomes. Georgia REACH participants improved their performance on the Home Energy Insecurity Scale more frequently, and to a greater extent, than did the Georgia REACH control group participants, the evaluation showed.

Among other evaluation findings:

• The combination of energy education, appliance replacement, and air sealing resulted in measurable reductions of both natural electricity and natural gas consumption; i.e., an average net reduction in electricity consumption of 835 kWh or 5.7 percent of the average pre-participation normalized annual consumption and a net savings of 122 therms, or 12.6 percent of the average pre-participation normalized annual consumption.
  
  
• In addition to the above reductions, replacement of incandescent light bulbs with compact fluorescent bulbs resulted in significant bill reductions for program participants.
  
  
• Utility bill payment patterns were measured in terms of the completeness, timeliness and regularity of utility bill payments. Substantive improvement occurred within the participating population for all three parameters.

As part of the project’s holistic approach to helping clients address their home energy affordability problems, REACH family advocates performed a risk assessment for each participant. Interventions were tailored not only to the specific energy needs of the households, but to the specific social and economic consequences manifesting themselves as a result of the unaffordability of home energy. Ongoing case management allowed project staff to assess not only the family needs at the entry of each participant into REACH, but throughout the participant’s continuing involvement with REACH

Montana Project Helps Propane Users

The Montana REACH project’s goal was to go beyond normal weatherization program procedures to perform health and safety measures and cost-effective energy conservation-related home repairs. Montana received a $1.1 million grant in 2000.

Each participating home received a needs assessment that included diagnostic testing and inspection of combustion heating devices, a heating system retrofit analysis, and identification of necessary energy-related health and safety measures and minor home repairs.

The project operated in 31 counties in the eastern part of the state where weatherization program managers estimated that over half of the LIHEAP homes were at risk for health and safety problems because of an ill maintained, aging or inadequate heating system. Additionally, the project targeted high energy burden households using electric, propane, oil, and other more costly sources of fuel. Fifteen percent of the eligible households in the project area used propane heat and because most of them did not own their own fuel tanks, they couldn’t choose a vendor, and, as a result, couldn’t shop for lower prices. The project purchased propane tanks for 239 households.

Approximately 325 of the 600 participating households were switched to a more cost effective heating system and/or heating fuel source. The heating systems of all other participant households were tested, inspected and repaired, if necessary. Carbon monoxide and smoke detectors and programmable thermostats were provided as needed, as well as household-specific energy efficiency education.

In at least half of all rentals, landlords were required to contribute 25 percent of the cost of heating system retrofits. Vendors were also asked to contribute or provide discounts and fee waivers equal to 25 percent of all costs associated with their customers’ retrofits.

The program evaluation was prepared by Montana State University Extension Service Housing Program.

Return to Contents