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State PBF/ USF History, Legislation, Implementation

Maine
Last updated: August 2010
Summary

Maine's restructuring law states that "the policy of the state is to ensure adequate provision of financial assistance." The 1997 legislation continued separate rate assistance programs, amounting to about $5.6 million yearly, which had been required of the three largest electric utilities since 1991. It also directed the Maine Public Utilities Commission (MPUC) to oversee the implementation of a statewide assistance program for low-income electricity customers.

The result was the MPUC's adoption of a Statewide Low-Income Assistance Plan in July 2001. The plan, set forth in Chapter 314 of the MPUC's rules, required each of Maine's transmission and distribution utilities to create or maintain a Low-Income Assistance Program (LIAP) for its customers by October 31, 2001.

These rate assistance programs are funded by one half percent of each utility's annual revenues. Chapter 314 created a central fund to finance the statewide plan and apportioned the fund to each utility according to the percentage of LIHEAP eligible persons in that utility's service territory. Each utility contributes money to the central fund based upon the number of residential customers residing in its service territory. The funds are then redistributed to the utilities based on the number of customers eligible for LIHEAP in each service territory.

Initially, the MPUC and some of the stakeholders favored a single, uniform assistance program, called the Electric Lifeline Program, similar to one of the same name operated by the largest utility, Central Maine Power. Like the CMP program, the proposed program would have used a percentage of income approach, in which participants' electric bill payments are based on their income, and those at the lowest income level pay a lower percentage than those at higher income levels.

However, after two rounds of hearings, comment periods and rule makings, the MPUC's final rule "represents a series of compromises that were necessitated, in part, by the need to get the statewide program in place by October 1, 2001." Utilities with existing low-income programs have continued those programs, and consumer-owned utilities developed their own LIAPs within the requirements of the rule. The MPUC left open the possibility that it can amend its rule to change the program, if necessary.

The Maine State Housing Authority (MSHA), the LIHEAP and weatherization grantee, administers, implements and coordinates the statewide plan and the individual LIAPs in conjunction with its delivery of LIHEAP. Eligibility for LIAP is contingent on LIHEAP eligibility.

In its initial years, total LIAP funding amounted to between $5 and $6 million annually. In May of 2006, the MPUC voted to increase LIAP funding by 20 percent to about $7 million yearly, effective October 1, 2006, to help low-income consumers keep pace with rising electricity rates. In August of 2008, again in response to higher electric rates, the MPUC increased LIAP funding by another 13 percent, or $906,000, bringing annual funding to $7.8 million and boosting the average annual benefit from $175 a year to $200 a year in electricity bill relief. In FY09, 28,284 households receive LIAP benefits through funding of nearly $9 million.

The different utilities use the fund in slightly different ways. For example, CMP's percentage of income program depends on a formula that keeps electric bills within a range from four to ten percent of a customer's total income. Bangor Hydro-Electric uses a straight low-income rate, while the other, smaller utilities give low-income customers one or two discounts a year on their bills if they make regular payments during the winter.

The final rule required that LIAP benefits be stratified so that participants with the greatest needs receive the highest benefits. Each LIAP that does not employ a percentage-of-income benefit structure must have a minimum of four separate benefit categories based on the federal poverty guidelines. The rule also requires that each LIAP track any changes in the LIHEAP program, such as an increase in the eligibility requirement, which may affect customers' LIAP eligibility.

Low-income conservation

Since January 2004, Efficiency Maine has been the state's portfolio of energy conservation programs for all customer classes, including the low income through the Low-Income Appliance Replacement Program. These programs are mandated by Maine's 2002 Act to Strengthen Energy Conservation, which replaced some of the conservation stipulations in the state's restructuring law.

Funding for Efficiency Maine is included in the rates of the major electric utilities, and at least 20 percent of its funds must be spent on low-income energy efficiency services. Before Efficiency Maine was fully funded and permanent, low-income households were served under an interim appliance replacement program funded at $300,000.

The low-income component of Efficiency Maine is implemented through the MSHA and the state's community action agencies. Agency workers install the new refrigerators and properly dispose of old ones when auditors find that a refrigerator replacement will save 750 or more kWh per year. While at a residence, workers also replace incandescent bulbs, halogen lamps and torchieres with compact fluorescent light bulbs (CFLs).

In FY 2009, the program delivered 1,652 refrigerators, 525 freezers and 18,432 CFLs to 2,417 low-income households at a cost of about $2.5 million. During 2008, the program mailed nearly 100,000 CFLs to low-income households; however, this program was not continued into 2009.

Altogether, the refrigerators and efficient lights are estimated to save each customer more than 2,000 kWh per year. The program is normally reported to be cost effective with a benefit-to-cost ratio of 1.21 to 1, according to previous annual reports. According to the 2009 annual report, the program's benefit-to-cost ratio went from a record high of 2.02 to 1 in 2008 to 1 to 1. The decline was attributed to a lower avoided energy cost and discontinuation of the highly effective CFL mailing in 2008.

In 2005, the Maine Legislature required gas utilities serving 5,000 or more residential customers in Maine to offer conservation programs to residential and commercial customers. Northern Utilities, which serves about 25,000 customers in the state, is the only gas utility to which the law applies. Under its Partners in Energy program, Northern provides weatherization measures to about 150 low-income customers in coordination with Maine's community action agencies.

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Page last updated: October 21, 2011