State PBF/USF History, Legislation, Implementation
Last Updated: August 2012
Maryland's Electric Universal Service 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, and 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.
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. The 2011 Legislature continued the 50 percent allocation through FY 2014. The EUSP has received a total of $68.3 million in RGGI funds; however, OHEP noted in its 2011 report that the amount raised from auctions has declined in recent years, so future RGGI funding is uncertain.
For FY 2011, EUSP expenditures totaled $80.6 million, of which $38.5 million was collected from ratepayers; other sources were $22.9 million from RGGI and $19.2 from LIHEAP.
OHEP's FY 2011 EUSP report showed that 132,504 households received electric bill payment assistance, an increase of 2.2 percent over households served the previous fiscal year. The average bill assistance benefit was $446, a decrease from the 2010 average of $612. (See EUSP summary table below with data from FY 2001-2011.) OHEP reported that applications for the EUSP continued at a record pace during FY 2011, although at a slower rate than in FY 2010.
Arrearage retirement assistance totaled $19.2 million during 2011 and helped 19,243 customers with an average benefit of $931, a decrease from the average of the year before, which was $1,025. Funding came from LIHEAP or RGGI. To qualify for arrearage assistance, EUSP recipients must be at least $300 in arrears; the maximum arrearage benefit paid was $2,000.
Because the EUSP and LIHEAP are administered by OHEP, clients can apply at local LIHEAP agencies for both programs from July 1 through May 7, as well as for the Maryland Weatherization Assistance Program, operated by another department. EUSP has the same income eligibility level as Maryland Energy Assistance Program (MEAP), currently 175 percent of federal poverty guidelines.
The FY 2012 budget for the EUSP included the $37 million from ratepayers and $17.1 million from RGGI with an unknown amount from LIHEAP. OHEP forecasted an increase of 3 percent in EUSP applications during FY 2012 to approximately 164,800, with about 138,000 expected to receive benefits. OHEP estimated that for FY 2012 it would need a minimum of $63.3 million from all fund sources to maintain the benefit and application levels of FY 2011; for 2013 it would need about $70 million.
Since its inception in 2001, the EUSP has seen a steady increase in both the number of applications it received and the number of households it assisted. At the same time, ratepayer funding has remained almost the same, RGGI funds have been declining and LIHEAP funding is unpredictable from year to year.
In November, 2011, OHEP released a report it had prepared on request of a legislative committee. Titled "Report on Long-term Funding Sustainability for Energy Assistance," it outlined several scenarios to increase EUSP funding and otherwise address its future.
Regarding funding, it said that increasing the residential monthly charge to $1.54 from $.40 would add an estimated $40.6 million to the EUSP fund, generating about $68 million.
However, OHEP noted that increasing the amount collected from residential ratepayers requires a statutory change to public utility law and would require subsequent action by the Public Service Commission (PCS) in order to implement the change.
The report also reviewed other scenarios such as reducing eligibility levels, benefits and arrearage payments, and shortening the application period, but noted that each of these would likely hurt families in need.
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 initial funding amount was $34 million. In response to escalating energy costs during the winter of 2005-06 the state legislature increased the funding to $37 million.
The lion's share of the EUSP funding, 74 percent, comes from industrial and commercial customers who pay about $27.4 million; residential customers contribute $9.6 million at a cost of about 40 cents per month.
While the EUSP has received state general funds in the past, including $21.7 million in FY 2009, no state funds were received in 2010 or 2011, nor were any expected for 2012.
Until 2007, the EUSP was required under its enabling legislation to provide bill assistance at a minimum of 50 percent of the determined need. Also, at that time, the amount of ratepayer funding that could be allocated to the arrearage component of the EUSP was capped at $1.5 million, and an electric customer was limited to a one-time use of EUSP arrearage assistance.
However, due to several statutory revisions, the EUSP is not required to provide bill assistance at a minimum of 50 percent of the determined need; there is no cap on arrearage retirement assistance; and an EUSP participant may receive arrearage assistance once every seven years.
Since 2006, OHEP has calculated electric bill payments based on income and household size, actual household electricity consumption, and electricity prices. The calculation is designed to ensure that households with the lowest incomes and the highest electricity usage receive the greatest benefit from the EUSP.
For 2011, the income group at 0-75 percent of poverty received an electric bill benefit that is equal to 75 percent of the estimated annual electric bill; at 76-110 percent, it was 60 percent. The group from 111-150 percent received a benefit equal to 50 percent of the estimated annual electric bill; while those from 151-175 percent of poverty received 20 percent. The benefit for those households living in subsidized housing was 14.5 percent of the annual bill.
Generally, the EUSP pays for a customer's usage (according to poverty level) up to 14,000 kWh annually. Above 14,000 kWh, a customer is presumed to be an electric heating customer, and OHEP applies the customer's LIHEAP grant for any EUSP recipient whose usage exceeds 14,000 kWh up to a maximum of 24,000 kWh.
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 underspent during the program's early years.
Effective July 1, 2005, the weatherization component was transferred from OHEP to the Department of Housing and Community Development, the state's weatherization grantee. The transfer was expected to result in a more efficient program because it will be coordinated with the federal weatherization program. The Department may receive $1 million yearly from EUSP funds for weatherization. While the $1 million allocation occurred from FY 2006-09; it was not made from FY 2010-12 due to the availability of ARRA weatherization funds.
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.
* EUSP expenditures from 2007 on include other funding sources (state, RGGI, federal)
Source: Maryland Department of Human Resources, Office of Home Energy Programs
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:
- The program is reaching and helping households that have the most severe needs.
- New or recent participants in the program don't exhibit improved bill payment behaviors and probably can't respond with improved bill payment behaviors in the short term because they have other substantial needs as well.
- Participants continuing in the program do show improvements in bill payment behavior.
- The annual growth in eligible applicants served since 2001 was 48 percent.
- The program is reaching households in great need of electric assistance as seen by the high average electric burden of participants and by the customer survey results showing the needs of these households and their concerns with meeting monthly electric costs.
- High participant satisfaction was shown with the budget billing and arrearage component of the program, as well as with the application process.
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:
- Electric Universal Service Program Evaluation: Final Evaluation Report, PA Consulting Group, May 2007
- Filings from stakeholders on issues related to the EUSP. Enter Case Number 8903.
- Years One Through Eight Reports on the EUSP
- PSC Order Number 75935, which adopted the DHR's plan for initial EUSP operation.