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State PBF/ USF History, Legislation, ImplementationMaryland Maryland’s Electric Universal Service Program (EUSP) entered its tenth year on July 1, 2009. The program is a result of Maryland’s 1999 restructuring law, SB 300, which provided $34 million for a universal service program that is continuing and non-lapsing, to be administered by the Department of Human Resources (DHR) through the Maryland Office of Home Energy Programs (OHEP), the LIHEAP grantee. The universal service program, known as the Electric Universal Service Program or EUSP, has three components: 1) bill payment assistance to help participants pay current electric bills; 2) arrearage retirement payments to help them pay some past due electric bills; and 3) weatherization to provide electric energy efficiency measures to reduce future electric bills. Effective July 1, 2005, (SFY 2006), the weatherization component was transferred from OHEP to the Department of Housing and Community Development, the state’s weatherization grantee. The Department may receive $1 million yearly from EUSP funds for weatherization, and while the $1 million transfer occurred for FY 2006 through 2009; it was not made in FY 2010. In its FY 2009 plan, OHEP described FY 2008 as “truly challenging” because of a record number of assistance applications due to the impact of higher electric rates that came after rate caps, imposed under the restructuring bill, had expired. In its FY 2010 plan, OHEP said: “Trends for FY 2009 continued the pattern of FY 2008 as the growth seen in the prior year in the number of applications received continued at a similar pace. The full impact of the rise in electric rates coupled with the economic slowdown realized in mid-2009 is now being felt by greater numbers of families.” OHEP received 135,822 EUSP bill assistance applications in 2009, a 15.9 percent increase over 2008; of these it gave benefits to 116,136 households. In 2008 it processed 117,217 applications, a 15.4 percent increase over 2007. It predicted a 12 percent increase in applications for 2010 — as many as 164,000 applications. In FY 2009, a new funding source was allocated to the EUSP from the Regional Greenhouse Gas Initiative (RGGI). This is a coalition of ten Northeast and Mid-Atlantic states working to limit carbon dioxide pollution through a cap and trade system, whereby the participating states limit the amount of CO2 that can be emitted by their power plants. In September 2008, the participating states began conducting RGGI quarterly auctions where they sold the region’s annual emissions “budget” of approximately 188 million allowances. Maryland was among the states that allocated a portion of auction proceeds to low-income energy assistance. Initially, the amount was 17 percent of the proceeds, which amounted to $3.6 million for the EUSP in 2009. The 2009 legislature changed the amount to up to 50 percent of auction proceeds collected between March 1, 2009 and June 30, 2011. OHEP’s 2010 budget projected RGGI funding in the amount of $53.6 million, although, as of January, no funding had been received. For FY 2010, OHEP proposed the EUSP budget at $90.6 million, of which $37 million is collected from ratepayers and available for bill payment and arrearage retirement assistance. The remainder is the expected $53.6 million in RGGI funds. While the EUSP has received state general funds in the past, including $21.7 million in FY 2009, no state funds were expected for 2010. During SFY 2009, the bill assistance component served a record 116,316 households with an average grant of $688. The program also provided 22,295 households with arrearage retirement payments averaging $936, spending $20.9 million, some of which was LIHEAP funds. During SFY 2008, the program served 100,670 households with an average grant of $601. Using state funds, OHEP spent $6.4 million on arrearage forgiveness, serving over 7,857 households with an average grant of $801. As shown in the table below, EUSP bill payment assistance participation has increased substantially since the program’s inception. OHEP has reported that the increases are due to more families in need of assistance and more persons becoming aware of the program through OHEP’s expanded outreach.
*Includes state funds History SB 300, Maryland's 1999 restructuring law, defined a universal service program as one that "helps low-income customers maintain electric service," and includes "customer bill assistance and payment programs, termination of service protection, and policies and services that help low-income customers to reduce or manage energy consumption in a cost-effective manner." Collection of the universal service funds from customers started in July 2000, and OHEP then began operating the newly-created Electric Universal Service Program with the three components: bill payment assistance, arrearage retirement payments and weatherization The restructuring law said that for the first three years, at least half of the fund should be spent on bill payment assistance, and the remainder on energy efficiency and retirement of arrearages incurred by low-income households prior to the initial implementation date of the program (July 1, 2000). The law's provision for arrearage retirement stemmed from studies showing that the inability of low-income households to pay utility bills was partly due to accrual of significant arrearages. The restructuring law authorized the EUSP for three years. On June 30, 2003, Maryland allowed the EUSP to waive income eligibility guidelines to provide bill payment assistance finished the initial three years. In April 2003, the EUSP was given an extension, and its funding of $34 million per year was continued, subject to annual review and approval by the Maryland Public Service Commission ( PSC) and the legislature. SB 504, the bill to extend the program, was signed into law April 22, 2003. SB 504 continued the original program structure, except that it capped arrearage retirement funding at $1.5 million per year and limited payments to those customers who hadn’t previously received arrearage retirement assistance. That funding cap was removed through subsequent legislation, and the Maryland PSC now sets the amount for arrearage retirement, allowing funding increases each year. Legislation also revised the once in a lifetime restriction on receiving arrearage benefits to once every seven years. The lion's share of the EUSP funding comes from industrial and commercial customers; during the first 6 years it was $24.4 million; due to subsequent legislation legislature (see below), it is now $27.4 million. The remaining $9.6 million comes from residential customers, who pay about 40 cents per month. In response to escalating energy costs during the winter of 2005-06 and to the controversy that accompanied the electric rate cap expiration, the state legislature took the following actions:
Because EUSP is administered by OHEP, clients can apply at local LIHEAP agencies for both programs year round, as well as for the Maryland Weatherization Assistance Program, operated by another department. EUSP has the same income eligibility level as MEAP. In designing the SFY 2006 program, OHEP proposed and attained PSC approval for changes in its benefit determination methodology for the bill assistance component with a goal of better targeting assistance to the most needy. These changes have remained in effect. OHEP now calculates electric bill payments based on income and household size, actual household electricity consumption, and electricity price. Previously, OHEP’s calculation took into account average or approximate consumption and income. The EUSP benefit is integrated with the state’s LIHEAP benefit, which, as of FY 2006, also utilizes a more targeted benefit matrix. OHEP explained in its program proposal that its previous benefit calculations had resulted in some households with low consumption receiving a credit on their utility bills. Beginning in SFY 2006, OHEP reconfigured its poverty criteria for determining benefit levels by utilizing income groupings of 0-75 percent of federal poverty guidelines (FPG), 76-110 percent FPG and 111-150 percent FPG in order to provide better targeting of benefits. For the 2007 program year and beyond, it added another grouping: 151-175 percent FPG. For FY 2010, the income group at 0-75 percent of poverty was to receive an electric bill benefit that is equal to 65 percent of the estimated annual bill; at 76-110 percent, it was 50 percent. The group from 111-150 percent was slated to receive a benefit equal to 40 percent of the estimated annual electric cost; while those from 151-175 percent of poverty were to receive 20 percent. The benefit for those households living in subsidized housing was also planned at 20 percent of the annual bill. Under the arrearage management component, OHEP added a requirement that applicants must have a minimum of $100 in past due bills (this was changed to $300 for FY 2008 and thereafter) and the maximum benefit amount is capped at $2,000. In early EUSP documents, both the OHEP and the PSC noted that implementation of the weatherization program lagged behind the other two components. Because of start-up issues and delays in issuing an invitation to bid for program operation, the EUSP weatherization funds were under spent most years. The transfer of the weatherization component to the state weatherization office in 2006 was expected to result in a more efficient program because it will be coordinated with the federal weatherization program. Evaluation In May 2007, PA Consulting group completed an evaluation of the EUSP, presenting the results of process and impact evaluations of the program conducted from July 1, 2004 to June 30, 2006. Among the conclusions of the evaluation:
Among recommendations for improvements, the evaluation said OHEP should: explore ways to increase program retention of eligible households from year to year; investigate the trade-off between greater program standardization to deliver services consistently throughout the state and inefficiencies that may result from greater standardization; strengthen program processes that will improve the equitable distribution of EUSP benefits across the state; convene the EUSP working group to discuss ways to increase the effectiveness of EUSP administration, in particular, review changes needed in administrative funding limitations in order to address improvements in application processing, local agency training and the OHEP information system; and explore ways to better coordinate EUSP with other assistance programs. For more information on Maryland's EUSP, check the following:
Page Last Updated: January 27, 2010 |
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