Meeting Indiana

1
Meeting Indianas Energy Assistance
NeedsAffordable Energy Resources for Indianas
Low-Income Customers

• Roger D. Colton
• Fisher, Sheehan Colton
• Belmont, MA
• October 2008

2
The Need for a Toolkit Approach

• When your only tool is a hammer,
• you tend to see every problem as a nail.

3
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.

4
Filling the Home Energy Affordability Gap in
Indiana

• Public funds
• Utility funds
• Rates and customer service as low-income
  assistance
• Non-energy funding sources
• Usage reduction
• The special case of bulk fuels

5
Public Funds Sources of energy-based
supplemental income

• Earned Income Tax Credit (EITC)
• Public Housing Authority (PHA) utility allowances
  
• Food Stamp excess shelter deduction

6
Tool 1The Earned Income Tax Credit

• Countrys 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.

7
Earned Income Tax CreditReason 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

8
How Families Use the EITC
9
Earned Income Tax Credit (EITC)

• Potential CAA 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

10
Tool 1 (A)Alternatives to Paid Tax Preparers

• Low-income households often lose 300 or more of
  their EITC
• Pay between 100 and 200 to have their tax
  returns prepared.
• Sold refund anticipation loans at a cost of
  400 in interest.
• Things for CAA to do
• VITA campaign (Illinois--Ameritech)
• Nonprofit tax preparation (AARP) (Belmont)
• CAA as nonprofit tax preparation.

11
Tool 2PHA Utility Allowances

• Tenant-paid utilities
• Public housing
• Assisted housing
• Covers
• Electricity
• Heating/Cooling
• Water/Sewer

12
PHA Utility AllowancesReason to Pay Attention

• Covers (theoretically) 100 of bill
• Year-round -- not seasonal
• Regular update (if enforced)
• Public housing tenants lt50 FPL

13
PHA Utility AllowancesWhat 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
• More advanced advocacy
• Review reasonableness of utility allowances
• Call for help!

14
Tool 3The 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)

15
FS Excess Shelter DeductionReason 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!
• Customers indifferent as to source of dollars.

16
Excess Shelter DeductionWhy do it?

• 30 - 40/month for low-income HHs
• Dollar-for-dollar passthrough to feds
• USDA supports and encourages
• Elderly/disabled have no maximum on excess
  shelter deduction.

17
Food Stamps Standard Utility Allowance

• Annual Review
• Take increased energy prices into account.
• Take water and wastewater into account
• Take all components of telephone bills into
  account.
• More advanced advocacy
• Take load curves into account.
• (not simply average)

18
The Excess Shelter DeductionWhat needs to be
done?

• Update the Standard Utility Allowance (SUA)
  annually
• Ensure HHs are reassessed in light of increased
  energy bills.

19
Utility/Ratepayer FundingTool 4 Rate
Affordability Programs

• Four Essential Elements
• Rate affordability assistance
• Arrearage forgiveness
• Crisis assistance
• Energy efficiency
• Performance measurement

20
Rate Affordability Assistance

• Needs To
• Be burden-based
• Address payment-troubles
• Recognize the paid but unaffordable bill
• Be tariff-based assistance

21
Arrearage Forgiveness

• Needs To
• Be affordability-based
• Administratively practicable
• Allow for customer contribution

22
Crisis Assistance

• Needs To
• Be shutoff free if agreed payments made
• Recognize economic fragility
• A reasonable amount set aside.

23
Energy Efficiency

• Needs To
• Be integrated with rate affordability.
• Minimize lost opportunities program-wide.
• Minimize lost opportunities per each household.

24
Using the Regulatory Process

• End the regulatory war on the poor
• Enforcing regulatory requirements
• Using regulatory steps for innovative funding

25
Tool 5End the Regulatory War on the Poor

• Eliminate late fees on low-income customers.
• Eliminate late fees on paid-up DPAs.
• Eliminate one-strike-youre-out deferred payment
  arrangement (DPA) policies.
• Eliminate barriers to entering budget billing.
• Sharpen the trigger for issuing shutoff notices
• Dont send notices that utilities do not intend
  to follow-up on.

26
Tool 6Enforce Regulatory 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.

27
Tool 7Alternatives 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

28
Tool 8 Utility Rate Refunds

• When utility money is not utility money.
• Supplier refunds / rate refunds appropriate.
• 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.

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The Role of Non-Energy Programs in Providing
Energy Assistance

• Tool 9 Summer Food Service Program
• Summer time generally considered low cost
  energy months.
• Kid-related food expenses second-leading
  financial problem for customers in financial
  trouble with their utility.
• If you have
• two kids at home and spend 3/meal (VERY
  conservatively),
• that's 12/day x 20 school days a month or 240
  EACH MONTH
• 2.85 million kids each day in Summer Food Service
  Program.
• BUT only 17.7 kids receive summer Food Service
  for every 100 kids in school lunch/school
  breakfast programs

30
Non-Energy Programs as Energy AssistanceTool
9 Summer Food Service Program

• Things to do
• Promote Summer Food Service Centers.
• YMCA/YWCA
• Recreation Department summer sites
• Public schools
• Other nonprofits
• Promote participation at Summer Food Service
  Centers.
• Visit http//www.FRAC.org
• (Food Research and Action Council)

31
Usage Reduction Funding Sources

• Housing related programs
• Affordable housing plans
• Utility-related programs

32
Tool 10 Efficient energy usage in affordable
housing

• 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.

33
Energy Star buildingWhy doesnt everyone do it?

• Split Incentives
• Incentive exists if owner/developer are
  identical.
• If owner/developer/resident are not the same then
  no/incentive is said to be split.
• Developer alone no incentive unless competing
  developer is offering Energy Star homes.
• Lender no incentive.
• Buyer often not involved in building
  decisions.

34
Energy Star in Affordable HousingWhat needs to
be done

• Insert Energy Star into RFP/specifications for
  affordable housing.
• Insert Energy Star into Con Plan (HOME/CDBG)
• Insert Energy Star into Qualified Allocation
  Plan (LIHTC)
• Use of CDBG funds for energy efficiency matching.

35
Recommended Action

• Homeownership and rental units developed as
  either new construction or substantial
  rehabilitation by grantees or participating
  jurisdictions should be developed to Energy Star
  standards.

36
HUD Recommendation

• Include following in any Request for Proposals
  or procurement process
• All new buildings and gut rehab shall be
  designed to meet the National Energy Five Star
  efficiency performance standard of 86. All
  procedures used for this rating (86) shall comply
  with National Home Energy Rating System
  guidelines.

37
Tool 11 Inserting Energy into the HUD
Consolidated Plan

• Identifies affordable housing needs.
• Discusses housing market.
• Identifies barriers to affordable housing.
• Identifies and ranks action steps.

38
Impacts on affordable housing

• Impacts of energy on affordable housing
• Reduce the affordable sales price of single
  family homes.
• Freeze some lower income households out of the
  market altogether.
• Force lower income households into less expensive
  homes.
• Increase the risk of default by consumers.
• Other Advantages
• Adds value.
• Higher debt load for developer or a buyer.
• Increased discretionary income for a tenant or
  owner/resident.

39
Tool 12 Replicating and expanding Indianas
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

40
Tool 13Addressing Bulk Fuel Needs

• Maines Fair Trade Practices Act
• Applies to heating sales Oct 15 - April 30
• Once established customer (2 cash purchases)
• Immediate delivery/unscheduled delivery
• Defines charge for less than full fill-up
• Must sell for cash, even if arrears
• Vermonts Fair Trade Practices Act
• Minimum notice before refusal to deliver
• Requires reasonable payment plan for arrears
• No minimum delivery gt100 gallons
• Must deliver for cash payment

41
Tool 14Addressing LPG (Propane) Gas

• Propane Education and Research Council (PERC)
• 20 of PERC assessment collected in a state
  funneled back to state propane councils (or
  similar entity).
• 38 million total PERC nationwide (2003).
• More than 35 percent of the households using
  propane to heat their homes are eligible for
  LIHEAP.
• GAO (2003) appropriate to use PERC funding to
  address the unaffordability of propane prices to
  low-income households.

42
Addressing LPG (Propane) Gas Needs

• Potential uses of PERC funding
• Education re. price stabilization options
• off-season purchases.
• budget-billing
• PERC funding is not likely available for
  comprehensive weatherization.
• However, low-cost energy efficiency packets can
  be one element of a propane education program.

43
Tool 15Using Your Rural Electric Co-ops

• Soliciting patronage capital refunds.
• Iowa average patronage capital refund 67/year
• Impact of solicitation of found money
• CEAF (now Energy Outreach Colorado) rate refund
• 10 of all customers donated something
• Collected 4 of total refund back to distribute
  as energy assistance (25 average per
  contribution)
• Normal 2 contributor and 10 contribution.

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For more information

• http//www.fsconline.com
• News
• Library

45
For more information

• roger_at_fsconline.com

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My list of things to do on Monday

• Begin to draft internal process to calculate
  shelter costs as percentage of income for all CAA
  clients.
• Begin to draft process of notifying Food Stamp if
  gt50.
• Request from state Food Stamp director (a) last
  years Standard Utility Allowance (SUA) (b) this
  years SUA and (c) date of most recent update to
  reflect change in prices.
• Request from relevant Local Housing Authorities
  (a) the utility allowance schedules currently in
  use for section 8, for public housing, and for
  any other assisted housing. Ask for date of most
  recent update to those utility allowances.
• Contact state utility commission (state energy
  office?) and ask for any regular periodic reports
  on energy prices for primary fuels in state.
• Submit request to Internal Revenue Service (IRS)
  for the local penetration of EITC among eligible
  recipients. Submit locally (or to Atlanta).

47
My list of things to do on Monday

• Draft letter to all local utilities asking for
  how they promote the EITC. Find out who
  administers call center for local utility.
• Obtain script for a call-center EITC message for
  utility call centers and schedule appointment to
  discuss using such script on call-center holds.
• Obtain EITC outreach kit from Center on Budget
  and Policy Priorities EITC Outreach Campaign
  (Washington D.C.).
• Find all all free tax preparation clinics (VITA,
  AARP, other) and prepare outreach for all persons
  making in-person contact with CAA.
• Draft letter to all utility contacts asking for
  complete set of policies on the extent to which
  utility accepts alternatives to cash security
  deposits.
• Begin drafting process through which to ask all
  clients making in-person contact with CAA (a) do
  you have a cash deposit with the utility (b) do
  you want a deposit refund (in whole or in part)
  if possible and (c) do you want us to request
  such a refund if available.
• Review Rogers 5 Things to Do handouts.

48
My list of things to do on Monday

• Find state propane council. Obtain their most
  recent (or two most recent) annual reports and
  annual budgets.
• Find list of all Summer Food Service Program
  sites in your locality. Find out who is local
  director and schedule appointment.
• Contact state utility commission to obtain a list
  of all Rural Electric Cooperatives (RECs) in the
  state.
• Inquire as to which of these RECs have fuel
  funds.
• Inquire as to what policies exist regarding
  abandoned patronage capital credits.
• Obtain annual report (including annual financial
  report).
• Contact FSC in Belmont (MA) for a copy of the
  Iowa Community Action Association (ICAA) REC fuel
  fund proposals.
• Write letter to State Treasurer to request data
  on the number of dollars that have escheated to
  the state each year for the past five years from
  utilities or RECs.
• Post e-mail and phone number of Roger on office
  wall (or on computer) in order to contact him for
  help with pursuing any of these suggestions.