Energy Affordability Solutions for Very Low Income Customers Keeping Current Energy Affordability Solutions for Very Low Income Customers Mark Mueller 04.16.13

Ameren at a Glance Ameren serves 2.4 million electric and 900,000 gas customers throughout Missouri and Illinois across 64,000 square miles of service territory Headquartered in St. Louis, Missouri Ameren Missouri— 1.2 million electric and 126,000 natural gas customers

The Reality of Poverty in America Today

Energy Affordability and the Delinquency Cycle As costs for all consumer goods increase, the availability of funds for energy, especially electric and natural gas needed for cooling and warmth, become more scarce among the very low income. While electric and gas costs have not risen as much as other commodities such as food and gasoline, the overall energy burden on very low income customers may be as high as 25% or more of income. The energy burden on the average U.S. household is typically in the low single-digits (variable, based on income.)¹ With the filing of an Ameren Missouri electric rate case in 2009, the Missouri Public Service Commission requested that the company provide some type of program to address the needs of very low income customers who would be affected by an increase of rates. The company proposed a pilot program that would be developed through a collaborative effort of the company, the commission, the state consumer advocacy council, and other representatives of the low income community. 1. The Burden of FY 2008 Residential Energy Bills on Low-Income Consumers Meg Power, Ph.D. March 20, 2008

Developing an Idea Began program design process in early June 2010 Collaborative team included Ameren Missouri, MO PSC staff, Office of Public Counsel (OPC), AARP, Consumers Council of MO Met weekly throughout June with a July 1 deadline (for filing of tariff) Developed program based on what had worked/not worked with similar programs at other utilities and throughout the state Funding for program is $1,081,000/year for two years. $500K from Ameren Missouri and $581K through assessment on all customer classes. ($.03 for residential customers.)

Identifying Goals Energy Affordability How do we design a program so that very low income customers can afford their utility bills even as their energy burden is much higher than it is for most others? Developing a manageable bill-paying habit How do we design a program that will empower very low income customers to break the chronic delinquency cycle and become on-time bill payers? Encouraging low income seniors to turn on their air conditioners during hot weather.

The Design Eligibility Electric accounts only Heating program: Customers between 0-100% of Federal Poverty Level (FPL) Cooling program: Customers between 0-100% of FPL, or up to 135% of FPL if Seniors (60+), Disabled, or with a child under 5 years of age in household

The Design—Heating Program Arrearage Forgiveness Customer pays a downpayment equal to one-twelfth of past due balance; may be in form of pledge One twelfth of arrears balance is credited each month as long as customer remains in program (until paid off) If customer defaults out of program, remaining arrears balance becomes due on next month’s bill Heating program customers placed on levelized billing to ensure predictability Customers allowed one month “late” payment; two consecutive months late causes default out of program for one year

The Design—Heating Program Monthly Bill Credits Based on whether customer uses Electric Heating or Alternative Heating (i.e. natural gas) Dependent on FPL guidelines, i.e. 0-25% FPL, 26-50% FPL, etc. Electric Heating credit amounts: From $55/month at lowest income level to $10/month at highest income level Alternative Heating credit amounts: From $20 to $5 per month

Design—Cooling Program Monthly bill credits of $25 during each summer month for the customer’s June, July and August bill cycle Communicate with customers through the agencies to encourage air conditioning use during high-heat periods. Messaging to occur both prior to hot weather periods, but also during periods of extreme heat. Focused primarily on elderly, at- risk customers

Administering Keeping Current Ameren Missouri’s current Dollar More agencies serve as intake coordinators for program Determine FPL eligibility Facilitate signup and assist in identifying weatherization resources Align programs with those who are the “best fit” Serve as a resource for answering questions, explaining complexities of program Existing Dollar More database (developed and maintained by the United Way) serves as fund tracker so that agencies know how much Keeping Current money they have available

Program Evaluation APPRISE, Inc. (Applied Public Policy Research Institute for Study and Evaluation) performed ongoing, thorough analysis of the programs with stakeholders through interviews with both participants and agencies Feedback Program difficult to understand due to many different variables including eligibility, participant responsibilities, LIHEAP and weatherization application requirements and program benefits Ameren Missouri customer service representatives not well-equipped to answer complexities of program Application and follow-up for program very time-intensive for agencies Very low income requirements make finding the “right fit” difficult due target groups (elderly, disabled, families with young children) being difficult to reach

Program Evaluation Participants found upfront payment difficult if they were not eligible for a pledge Predictable, level payment is most beneficial aspect of program Bill credit and arrearage reduction components very difficult for participants to understand While many participants found program beneficial and that it helped them in keeping their electric service on, the majority (in the year-round heating program) still found that the required monthly payment was too high and 70% resulted in a default out of the program. Twenty-six percent of cooling customers stated that the credit did influence them to keep their air conditioning on during the summer; a change from their prior behavior.

Recommendations--Program Design Heating program credits should be reevaluated with the goal of providing an affordable energy burden for participants Local agency compensation should be higher due to complexities of program and to encourage agencies to follow up with participants who begin falling behind Income eligibility for the heating program should be extended to those up 135% of FPL United Way database—enhance access to information within the database so that agencies can get additional client data without having to go through Ameren Missouri’s contact center

Recommendations--Implementation Agency Training – Upfront training with caseworkers and managers Agency Activity – What do agencies need in the form of ongoing support? Customer Education – during enrollment Customer Referrals – to additional forms of assistance Customer follow-up – for those customers who miss payments LIHEAP and Weatherization – more education for customers Ameren Training – for contact center Budget Billing – Consider all low income customers to participate

Next Steps—Going Forward Keeping Current pilot program renewed in recent rate case. Collaborative team has addressed some of the key issues including Increasing the monthly credits for heating program participants Increasing administrative fees to agencies Increasing eligibility up to 125% of FPL Directing agency communication for the program to a team within the Ameren Missouri Energy Assistance group and not to the general call floor Developing enhancements to United Way database Developing more extensive training for agencies Dual-Marketing: Adding “Keeping Cool” for the cooling program to provide greater awareness