meeting affordable energy needs: energy assistance resources for low-income customers roger d....
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Meeting Affordable Energy Needs:Energy Assistance Resources for Low-Income Customers
Roger D. Colton
Fisher, Sheehan & Colton
Belmont, MA
November 2008
NASUCA--Fall 2008
The Need for a Toolkit Approach
“When your only tool is a hammer,
you tend to see every problem as a nail.”
NASUCA--Fall 2008
Tool #1:The Earned Income Tax Credit Country’s primary anti-poverty program. Refundable tax credit (cash back).
• Average refund: around $2,000.• 3-year retroactive refund application.
Few jurisdictions cannot increased by 5%.
NASUCA--Fall 2008
Earned Income Tax Credit:Reason to Pay Attention
1/3 used to pay for past-due utility bills. Only 50 - 80% of eligible claim. Potential for innovative utility/CBO role. Receipt at time of winter heating bills
NASUCA--Fall 2008
How Families Use the EITC
0
10
20
30
40
50
60
Save Pay bills Purchase Move Tuititon Purchase/repaircar
Other
First Second Third
SOURCE: Internal Revenue Service, EITC Outreach Office, Atlanta (GA).
NASUCA--Fall 2008
Earned Income Tax Credit (EITC)
Potential Utility Action Steps Mass utility outreach campaigns (NJ) “Gap filler” outreach campaign
• Part-time workers• Women-workers• Hispanic workers
VITA campaign (Illinois--Ameritech) Targeted outreach Utility call center recorded message
NASUCA--Fall 2008
Utility/Ratepayer Funding:
Tool #2: Rate Affordability Programs
Four Essential Elements Rate affordability assistance
• Be burden-based• Address payment-troubles• Recognize the “paid but unaffordable” bill• Be tariff-based assistance
Arrearage forgiveness• Be affordability-based• Administratively practicable• Allow for customer contribution
NASUCA--Fall 2008
Utility/Ratepayer Funding:
Tool #2: Rate Affordability Programs
Four Essential Elements Crisis assistance
• Be shutoff free if agreed payments made• Recognize economic fragility• A “reasonable amount” set aside.
Energy efficiency• Be integrated with rate affordability.• Minimize lost opportunities program-wide.• Minimize lost opportunities per each household.
NASUCA--Fall 2008
Tool #3:End the Regulatory “War on the Poor” Eliminate late fees on low-income customers. Eliminate late fees on paid-up DPAs. Eliminate one-strike-you’re-out deferred payment
arrangement (DPA) policies. Eliminate barriers to entering budget billing.
• Arrrears as barrier• Annual plan as barrier• Application time of year as barrier
Sharpen the trigger for issuing shutoff notices• Don’t send notices that utilities do not intend to follow-up on.
NASUCA--Fall 2008
Tool #4:Enforce Regulatory “Requirements”
Enforce consideration of “ability-to-pay” in structuring deferred payment plans for arrears. “Ability-to-pay” is not synonymous with “income.”• Absolute income• Discretionary income• Fragility of income• Seasonality of income (income, expenses)• Ability to meet exigencies
Enforce consideration of all regulatory factors in structuring deferred payment plans for arrears.• Time arrears outstanding.• Reason for arrears.• Ability to pay.
NASUCA--Fall 2008
Tool #5:Alternatives to Cash Security Deposits Agency-provided surety or “guarantee of payment”
• Provide letter guaranteeing payment• Guarantee only “kicks in” if customer leaves system with
bad debt.• For new deposit demands.
Substitute guarantee or surety for existing deposit.• Use existing deposit to help pay arrears.
Agency-generated guarantees by local business/houses of worship.
Behavioral responses• Financial literacy training
• Budget billing
NASUCA--Fall 2008
Tool #6: Utility Rate Refunds
When utility money is not utility money. Supplier refunds / rate refunds appropriate.
• Federal fines (e.g., natural gas unauthorized use charges”) are akin to refunds.
Refunds can come years after-the-fact. LI mobility is 35%+: 2 - 2.5x total population.
• Refunds returned to other than those who paid.
Refunds do not “belong” to current customers. Concept of “cy pres” is established concept. Kansas ad valorem tax refund/Colorado rate refunds.
NASUCA--Fall 2008
Tool #7: Replicate and expand Indiana’s Refrigerator Replacement Program
Existing Duke/INCAA program• Section 8 rental housing
• Energy efficiency utility allowance
• Low-income multi-family rental housing• Previously constructed LIHTC/HOME
properties• First time home buyers
NASUCA--Fall 2008
Tool #8:Bigger than LIHEAP: PHA Utility Allowances Tenant-paid utilities:
• Public housing• Assisted housing
Covers:• Electricity • Heating/Cooling • Water/Sewer
Reason to pay attention:• Covers (theoretically) 100% of bill• Year-round -- not seasonal• Regular update (if enforced)• Public housing tenants <50% FPL
NASUCA--Fall 2008
PHA Utility Allowances:What Needs to be Done
Review utility allowances to ensure annual update.
Provide notice to PHAs whenever rates change by 10% or more.
Review whether utility allowance pays for cooling
NASUCA--Fall 2008
Tool #9:The Excess Shelter Deduction Food Stamp eligibility based on “countable
income.”• Shelter expenses above 50% an income
deduction.• Shelter = rent/mortgage + utilities (include
telephone) Actual shelter costs/Standard Utility
Allowance (SUA)
NASUCA--Fall 2008
Excess Shelter Deduction:Reason to Pay Attention If household income is lowered:
• Some qualify for Food Stamps when they otherwise would not
• Some qualify for more Food Stamps Every $3 reduction in income yields $2 in benefits.
• Implications for spike in fuel prices!
• $30 - $40 a month in increased Food Stamps Customers indifferent as to source of dollars.
• Dollar for dollar passthrough to feds
• Disabled and elderly have no cap on income disregard.
NASUCA--Fall 2008
Food Stamps: Standard Utility AllowanceWhat needs to be done
Annual Review Take increased energy prices into account.
• Regular annual update• Not simply CPI-U but CPI-U for particular
fuels. Take water and wastewater into account Take all components of telephone bills into
account.
NASUCA--Fall 2008
For more information:
http://www.fsconline.com
News
Library
NASUCA--Fall 2008
Unaffordable energy in Indiana
Appendix
30 things to do. . .today
NASUCA--Fall 2008
The Parable of the Olive TreesOnce upon a time, a mansion owner called his gardener in and asked him to plant 100 olive trees. The gardener was aghast. “But sir,” the gardener said, “those trees will not bear fruit for 50 years.” Nodding in agreement, the mansion owner responded: “Yes. That is why I would like you to plant them today.”
NASUCA--Fall 2008
What do we do?Toolkit #1: Promote available public assistance
Promote the Earned Income Tax Credit Promote participation in Summer Food
Service programs. Adopt automatic enrollment for FCC
Lifeline.
NASUCA--Fall 2008
What do we do?Toolkit #2: Enforce existing laws regarding assistance
Enforce PHA utility allowance statutory mandates.
Enforce annual update to Food Stamp Standard Utility Allowance (SUA)
Screen for claims for Food Stamp Excess Shelter Deductions.
NASUCA--Fall 2008
What do we do?Toolkit #3: Eliminate wasteful energy usage
Require energy efficient construction in publicly-funded new construction/rehab.
• Home Investment Partnership funding (Consolidated Plan)• Community Development Block Grant (Consolidated Plan)• Low-Income Housing Tax Credit (Qualified Allocation Plan)
Insert Energy Star mandate into all publicly-issued housing procurements.
Target percentage of utility-based residential energy efficiency investments equal to percentage of low-income households.
Adopt special “energy efficient” utility allowances for Section 8 housing meeting Energy Star standards as incentive for owners to upgrade their properties.
Provide technical assistance to promote ESCOs in PHAs/large landlords.
NASUCA--Fall 2008
What do we do?Toolkit #4: End the regulatory “war on the poor”
Eliminate late fees on low-income customers. Eliminate late fees on paid-up DPAs. Eliminate one-strike-you’re-out deferred payment
arrangement (DPA) policies. Eliminate barriers to entering budget billing. Offer non-annual budget billing plans. Sharpen the trigger for issuing shutoff notices
• Don’t send notices that utilities do not intend to follow-up on.
NASUCA--Fall 2008
What do we do?Toolkit #5: Enforce regulatory consumer protection requirements.
Enforce consideration of ability-to-pay in structuring deferred payment plans for arrears.• Absolute income
• Discretionary income
• Fragility of income
• Seasonality of income (income, expenses)
• Ability to meet exigencies
Enforce consideration of all regulatory factors in structuring deferred payment plans for arrears.• Time arrears outstanding.
• Reason for arrears.
• Ability to pay.
NASUCA--Fall 2008
What do we do?Toolkit #6: Create needed rate affordability programs
Create a System Benefits Charge (SBC) fund:• Rate affordability (NJ, PA, OH)
• Arrearage forgiveness
• Energy efficiency
• Crisis funding Create alternative fuel fund contribution structures.
• Utility vendors/suppliers.
• Donations of rate refunds/rebates.
• Enrollment in ongoing donation plan.
• Donation of capital credits/patronage dividends.
NASUCA--Fall 2008
What do we do?Toolkit #7: Creatively seek new funding.
Accept alternatives to cash security deposits.• Financial alternatives (e.g., guarantees)
• Behavior alternatives (e.g., budget billing, financial literacy training)
Replace cash deposits with guarantees• Use cash deposit as financial resource to pay bills.
Seek state legislation on escheated rate refunds/utility deposits/patronage dividends.
Adopt low-income set-aside of rate refunds. Commit utility refunds to arrearage forgiveness (pipeline refunds,
excess usage charges, etc.). Use direct load control technology as means of delivering low-
income assistance.
NASUCA--Fall 2008
What do we do?Toolkit #8: Address the needs of bulk fuel users.
Seek state consumer protection rules regarding winter bulk fuel fill-ups• Require offer of partial fill-ups.
• Allow budget billing.
Apply for state Propane Education and Research Council (PERC) funds for low-income conservation education.
Promote summer fill-up propane programs.