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 w Country’s primary anti-poverty program. w Refundable tax credit (cash back). Average refund: around $2, year retroactive refund application.  Few jurisdictions cannot increased by 5%.

NASUCA--Fall 2008 Earned Income Tax Credit: Reason to Pay Attention w 1/3 used to pay for past-due utility bills. w Only % of eligible claim. w Potential for innovative utility/CBO role.  Receipt at time of winter heating bills

NASUCA--Fall 2008 How Families Use the EITC SOURCE: Internal Revenue Service, EITC Outreach Office, Atlanta (GA).

NASUCA--Fall 2008 Earned Income Tax Credit (EITC) Potential Utility Action Steps w Mass utility outreach campaigns (NJ) w “Gap filler” outreach campaign Part-time workers Women-workers Hispanic workers w VITA campaign (Illinois--Ameritech) w Targeted outreach w Utility call center recorded message

NASUCA--Fall 2008 Utility/Ratepayer Funding: Tool #2: Rate Affordability Programs Four Essential Elements w Rate affordability assistance Be burden-based Address payment-troubles Recognize the “paid but unaffordable” bill Be tariff-based assistance w 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 w Crisis assistance Be shutoff free if agreed payments made Recognize economic fragility A “reasonable amount” set aside. w 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” w Eliminate late fees on low-income customers. w Eliminate late fees on paid-up DPAs. w Eliminate one-strike-you’re-out deferred payment arrangement (DPA) policies. w Eliminate barriers to entering budget billing. Arrrears as barrier Annual plan as barrier Application time of year as barrier w 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” w 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 w 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 w 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. w Substitute guarantee or surety for existing deposit. Use existing deposit to help pay arrears. w Agency-generated guarantees by local business/houses of worship. w Behavioral responses Financial literacy training Budget billing

NASUCA--Fall 2008 Tool #6: Utility Rate Refunds w When utility money is not utility money. w Supplier refunds / rate refunds appropriate. Federal fines (e.g., natural gas unauthorized use charges”) are akin to refunds. w Refunds can come years after-the-fact. w LI mobility is 35%+: x total population. Refunds returned to other than those who paid. w Refunds do not “belong” to current customers. w Concept of “cy pres” is established concept. w Kansas ad valorem tax refund/Colorado rate refunds.

NASUCA--Fall 2008 Tool #7: Replicate and expand Indiana’s Refrigerator Replacement Program w 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 w Tenant-paid utilities: Public housing Assisted housing w Covers: Electricity Heating/Cooling Water/Sewer w 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 w Review utility allowances to ensure annual update. w Provide notice to PHAs whenever rates change by 10% or more. w Review whether utility allowance pays for cooling

NASUCA--Fall 2008 Tool #9: The Excess Shelter Deduction w Food Stamp eligibility based on “countable income.” Shelter expenses above 50% an income deduction. Shelter = rent/mortgage + utilities (include telephone) w Actual shelter costs/Standard Utility Allowance (SUA)

NASUCA--Fall 2008 Excess Shelter Deduction: Reason to Pay Attention w If household income is lowered: Some qualify for Food Stamps when they otherwise would not Some qualify for more Food Stamps w Every $3 reduction in income yields $2 in benefits. Implications for spike in fuel prices! $30 - $40 a month in increased Food Stamps w 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 Allowance What needs to be done Annual Review w Take increased energy prices into account. Regular annual update Not simply CPI-U but CPI-U for particular fuels. w Take water and wastewater into account w Take all components of telephone bills into account.

NASUCA--Fall 2008 For more information: News Library

NASUCA--Fall 2008 For more information:

NASUCA--Fall 2008 Unaffordable energy in Indiana Appendix 30 things to do...today

NASUCA--Fall 2008 The Parable of the Olive Trees Once 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 w Promote the Earned Income Tax Credit w Promote participation in Summer Food Service programs. w Adopt automatic enrollment for FCC Lifeline.

NASUCA--Fall 2008 What do we do? Toolkit #2: Enforce existing laws regarding assistance w Enforce PHA utility allowance statutory mandates. w Enforce annual update to Food Stamp Standard Utility Allowance (SUA) w Screen for claims for Food Stamp Excess Shelter Deductions.

NASUCA--Fall 2008 What do we do? Toolkit #3: Eliminate wasteful energy usage w 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) w Insert Energy Star mandate into all publicly-issued housing procurements. w Target percentage of utility-based residential energy efficiency investments equal to percentage of low-income households. w Adopt special “energy efficient” utility allowances for Section 8 housing meeting Energy Star standards as incentive for owners to upgrade their properties. w 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” w Eliminate late fees on low-income customers. w Eliminate late fees on paid-up DPAs. w Eliminate one-strike-you’re-out deferred payment arrangement (DPA) policies. w Eliminate barriers to entering budget billing. w Offer non-annual budget billing plans. w 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. w 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 w 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 w Create a System Benefits Charge (SBC) fund: Rate affordability (NJ, PA, OH) Arrearage forgiveness Energy efficiency Crisis funding w 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. w Accept alternatives to cash security deposits. Financial alternatives (e.g., guarantees) Behavior alternatives (e.g., budget billing, financial literacy training) w Replace cash deposits with guarantees Use cash deposit as financial resource to pay bills. w Seek state legislation on escheated rate refunds/utility deposits/patronage dividends. w Adopt low-income set-aside of rate refunds. w Commit utility refunds to arrearage forgiveness (pipeline refunds, excess usage charges, etc.). w 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. w Seek state consumer protection rules regarding winter bulk fuel fill-ups Require offer of partial fill-ups. Allow budget billing. w Apply for state Propane Education and Research Council (PERC) funds for low-income conservation education. w Promote summer fill-up propane programs.