Overview of Low-Income Restructuring
Legislation and Implementation

Nevada
Last Updated: January 2009
Summary

In July 2001 Nevada created a funding source to supplement existing low-income energy programs. AB 661 — the enabling legislation — created the Nevada Fund for Energy Assistance and Conservation (FEAC), funded through a mill tax assessment, or Universal Energy Charge (UEC), paid by residential and commercial customers of the seven regulated gas and electric utilities in the state.

The Public Utility Commission of Nevada (PUCN) has been collecting the UEC, which is based on consumption, since August 2001. The PUCN takes up to 3 percent of the UEC for its administrative costs. The remainder is placed in an interest-bearing account of the state Division of Welfare and Supportive Services, the LIHEAP grantee.

The Division distributes up to 75 percent of this amount to its LIHEAP, also known as the Energy Assistance Program or EAP, and up to 25 percent to the Nevada Housing Division's Weatherization Assistance Program (WAP). Any accumulated interest is distributed to the EAP and WAP programs. Funds are drawn down periodically as needed by each program thus enabling interest to accrue on the balance.

The monthly charge averages about 47 cents on the typical residential electric bill and 16 cents on the typical residential gas bill. For state fiscal year (SFY) 2009, starting July 1, 2008, the UEC is expected to generate about $12.6 million.

As of July 2002, the Division began using both federal LIHEAP and its FEAC funds to operate a new energy assistance program that requires participants to pay no more than a small percentage of their income for energy. The energy assistance benefit, referred to as a Fixed Annual Credit (FAC), is calculated for each eligible household. The FAC is the amount sufficient to reduce the percentage of the applying household's income spent on energy to the state median percentage of household income spent on energy. To determine the FAC benefit, the Division has a computer-generated exchange with the state’s major utilities to ascertain the annual energy usage of the address at which the applicant resides.

The lower the household’s income (which takes into account family size), and the higher its usage, the greater its benefit will be. Both the median household income and the median household energy burden are updated annually for each new program year. Nevada’s SFY 09 median household income is $66,095, and the statewide median household energy burden for natural gas, electricity, fuel oil and propane is 2.55 percent of that amount.

The following is an excerpt from the state's FY 2009 plan explaining how the FAC benefit is calculated:

a. Identify eligible household’s gross annual income and apply 2.55 percent to determine the amount the household is expected to pay for its energy burden.

b. Identify eligible household’s annual energy usage in dollars (to include all energy sources).

c. Compare the 2.55 percent figure to the eligible household’s annual energy burden (usage in dollars).

d. If the household energy burden is greater than 2.55 percent of the household’s annual income, the difference is the Fixed Annual Credit (FAC) amount for that household. The FAC is the benefit amount the household receives not to exceed UEC annual usage or the program benefit cap.

The Division imposed FAC benefit cap for the first time in SFY 2009. The benefit cap is based on income, household size and poverty level. For example, the 2009 maximum FAC for a household of four earning less than 75 percent of FPG is $1,380; for the same sized household earning between 126 and 150 percent of FPG the FAC is $1,021. Any household with an elderly or disabled member, or a child under age six receives an additional $50.

If the eligible household energy burden is less than 2.55 percent of the household’s annual income, the household may receive a payment of $180 paid with non-UEC monies. Eligible households having a fixed annual credit up to, and including $179, may receive a payment of $180. The FAC portion is paid with UEC funds and the remainder of the $180 is paid with non-UEC monies.

 All households receiving a FAC will be referred by the Division, via the agency’s computer system, to the Housing Division for energy efficiency services.

Only those households that are charged a UEC on their natural gas and/or electricity bill may receive a FAC benefit paid from the FEAC. Eligible households can receive both LIHEAP and FEAC funds. LIHEAP funds will be paid out before FEAC funds, and FEAC funds can only be distributed to a participating UEC vendor. The two funding sources are separate and are disbursed and tracked separately.

In cases where eligible households have only non-UEC vendors (electric cooperatives and bulk fuel dealers), the FAC benefit is paid with LIHEAP or other non-UEC funds, up to the maximum amount. Any remaining FAC benefit due will be paid with revenue from other sources, such as state general funding.

Eligible households may elect to have their FAC benefit: go directly to their UEC heating provider, go directly to their UEC cooling provider, or be equally split between their UEC heating and cooling providers.

UEC-eligible households may also receive help with their past due bills under the Arrearage Payment Program. An eligible household may receive an arrearage benefit only once in a lifetime. The only exceptions are households with chronic, long-term medical conditions that create a financial hardship and/or increase the energy consumption of the household. The one-time payment may be for heating or cooling.

The household must have paid an amount equal to at least 3.6 percent of its income toward the arrearage during the 12 months in which the arrearage occurred.

During SFY 2008, the Division expended about $10.4 million in UEC funds, providing 14,265 households with a FAC benefit averaging $730. About $1.2 million was spent for arrearage assistance with 3,719 households receiving an average arrears payment of $334.

That same year, the Housing Division spent about $3.5 million in UEC funds providing energy conservation measures such as insulation in ceilings, floors and ducts, weather-stripping and caulking, heating and cooling system repairs and replacement, and water heater repairs and replacement. Over 1,200 units received services.

Evaluations have been completed for the first four years of the UEC-funded energy assistance and weatherization programs (SFY 2003 through SFY 2006) and the 2006 evaluation is available.

Initially, the evaluations noted that the Division was still ramping up the energy assistance program and, due to problems with outreach, computer technology and administration, spent less than a quarter of its FEAC during the first two years. By the end of the fourth year, the evaluation reported that problems with implementation and spending had largely been solved.

Because of the initial under spending, the state-funded program came under criticism during 2004, and, as a result, the Division contracted with a professional marketing firm to develop and implement an aggressive outreach campaign, targeting low-income elderly, disabled, and families with children 6 years and under. The outreach paid off, as shown in a significant increase in households served during SFY 2005.

Reports / Evaluations

State Report: Nevada, from Ratepayer-Funded Low-Income Energy Programs: Performance and Possibilities, APPRISE and Fisher, Sheehan, and Colton, July 2007

For more information, including annual plans and evaluations, visit the website of the Nevada State Division of Welfare and Supportive Services.

Chapter 702, the Energy Assistance Code, is available at
www.leg.state.nv.us/NRS/NRS-702.html

 

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Page Last Updated: September 24, 2009