AZ Energy Unaffordability, Poverty
Documented in Conference Analysis
 
While both the poverty rate and energy prices are increasing in Arizona , the state gets one of the smallest LIHEAP allocations, and it needs nearly $200 million to bring low-income households’ bills to an affordable level.

These were among the findings released at a news conference June 13 at the Joint Low-Income Energy Conferences in Phoenix highlighting a preliminary analysis of energy poverty in Arizona by David Carroll of APPRISE, Inc.

Arizona was selected for the energy poverty analysis because more than 600 people from three national organizations convened in Phoenix June 12-16 for annual conferences for the National Fuel Fund Network, the National Energy Assistance Directors’ Association, and the National Low Income Energy Consortium (NLIEC).

According to NLIEC Executive Director Sue Present, NLIEC tries to give back to the community where the conference is held. She added that the conference provides a prime opportunity to examine local energy-related issues and to focus much-needed attention on areas of the country like Arizona that have extreme heat and associated problems such as unaffordable summer cooling bills and heat-related illness and death.

In Arizona , the number of households eligible for LIHEAP has increased by 20 percent over three years, from 362,800 in 2000 to 436,000 in 2003. Yet, in 2003, only four percent (18,600) of eligible households received LIHEAP. Arizona uses 150 percent of federal poverty guidelines for LIHEAP eligibility.

Natural gas prices in Arizona increased by 16 percent from 1999 to 2001 while electricity prices remained stable. It is expected that gas and electricity price have increased even more since 2001 and APPRISE’s final analysis, to be released later this summer, will update those energy prices up to 2005.

Energy burden, a measurement that assesses the difficulties that households have in paying their energy bills, is defined as the percent of income a household spends on energy. In 1999, 44 percent of LIHEAP-eligible households in Arizona had an energy burden of 10 percent or greater and 17 percent spent more than of 25 percent of their income on energy. By comparison, the median residential energy burden for all households in the United States was 3 percent.

The APPRISE study states that an additional $222 million in energy assistance funding is needed to reduce the energy burden of Arizona households to 5 percent; more than $128 million is needed to reduce their energy burdens to 10 percent of household income.

In FY 2004, LIHEAP provided $5.7 million in home energy assistance in Arizona . Another $16.4 million came from state resources such as unclaimed utility deposits, fuel funds, and utility rate discounts, leaving a funding shortfall, or energy affordability gap, of $200 million, according to the analysis.

APPRISE used existing data resources to analyze the energy needs of Arizona ’s low income. State level data used in this analysis were derived from the Census 2000 Public Use Microdata (PUMS) Five Percent Sample and the 2002-2004 Current Population Survey Annual Social and Economic Supplement (ASEC).

APPRISE also examined energy affordability in Phoenix where 17.5 percent of households are eligible for LIHEAP. Summer cooling is essential in the city, but 12 percent of LIHEAP-eligible households do not have air conditioners. Among the households that have air conditioners, 37 percent have energy burdens of 10 percent or greater and 18 percent have energy burdens of 25 percent or greater.

The preliminary Arizona energy poverty analysis is available on the NLIEC website.

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Trends in Home Energy Affordability:
Rise in Energy Bills, LIHEAP Population

The past quarter century has seen a doubling of the LIHEAP-eligible population, yet the percentage of eligible households receiving LIHEAP has declined, as has the portion of low-income energy bills covered by LIHEAP. At the same time there’s been an increase in average low-income home energy bills and a near tripling of the aggregate low-income residential energy bill.

That’s according to national and regional data on home energy consumption, expenditures and burden and trends in low-income home energy as presented by David Carroll of APPRISE at this year’s NLIEC conference in Phoenix. Carroll, who has been compiling such information since 1979, presented comparative low-income energy data from 1979 through 2003.

During this time, the total average energy usage in low-income households decreased although changes among end uses of energy varied. Heating usage decreased by almost half from 1979 to 2003, while cooling usage more than doubled and other types of energy usage increased slightly. Other energy usage, which comprises 57 percent of total energy usage, includes water heating, appliances and refrigeration.

Changes in energy prices, weather and energy efficiency are usually the driving forces behind changes in energy consumption and expenditures. Taking into account the rise in energy prices and variations in weather, the decrease in heating usage from 1979 to 2003 is most likely due to energy efficiency measures, APPRISE concluded.

More low-income households using air conditioners and a greater number of home appliances probably account for increases in cooling and other usage. Thirty-seven percent of low-income households had air conditioners in 1979 growing to 67 percent by 2001. Yet improvements in energy efficiency since 1979 have kept the energy usage of household appliances from increasing greatly.

Even though average low-income energy usage is down, average energy expenditures have doubled from 1979 to 2003 and the number of households eligible for LIHEAP has nearly doubled. As a result, the aggregate residential energy bill for low-income households has almost tripled.

The number of low-income households paying 15 percent or more of their income on energy decreased slightly from 1979 to 2003, while the number of households that pay 5 percent or more of their income for energy showed a modest increase. The mean group burden for low-income households in 1979 and 2003 is over four times that of all households. And, for these high burden households, the energy gap almost doubled for those paying 15 percent or more of their income on energy and increased by a third for those paying 5 percent or more of their income on energy. The energy gap is the amount of LIHEAP needed to reduce the energy burden for low-income households to an affordable level that is comparable to that of all households.

The portion of low-income energy bills that is covered by LIHEAP has decreased from 26 percent in 1981 to 11 percent in 2003. And, the percentage of LIHEAP-eligible households receiving LIHEAP has decreased from 36 percent in 1979 to 13 percent in 2003.

Even though the energy affordability gap has widened, there was little change in heat interruptions from 1981 to 2000. A heat interruption is defined as a period of two or more hours when a household wanted to use its main heating system but could not because its utilities were disconnected or it could not pay for a fuel delivery. Delivered fuel households accounted for 50 percent of heat interruptions.

Aggressive consumer protections and moratoria that have been in place in most states have contributed to the stability of heat interruptions. But, as recent changes in Pennsylvania’s consumer protections indicate, this could change. (See "Utility Shut-offs Up in Pennsylvania.)

Data sources for APPRISE’s analysis include the Residential Energy Consumption Survey (RECS) and Current Population Survey Annual Social and Economic Supplement (CPS ASEC).

More information on the home energy affordability gap is available on the website of Fisher, Sheehan and Colton .

Detailed data on energy consumption, expenditures, burden and more trends in home energy are available in the recently released LIHEAP Home Energy Notebook for 2003. Contact Leon Litow (llitow@acf.hhs.gov) for a copy of the Notebook.

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Texas Low-Income Discount Ends,
Low-Income Wx Gets Funding Restored

As of September 1, low-income electric customers in Texas will no longer receive the rate discount that’s been available to them since January of 2002. In addition, some will have more trouble getting electric service if they have a poor history of paying their utility bills on time.

The 2005 Texas legislature, in an attempt to balance the state budget for the next biennium, decided to shift $200 million annually from a system benefit fund (SBF) that financed the low-income discount to the state’s general fund. Starting August 8, the Texas Public Utility Commission (PUC) sent letters to about 391,000 recipients informing them their electric bill discounts would end after their August bill and that "it will not be known until the legislature meets in 2007 whether or not the program will again be funded."

Since 2002, electric customers in deregulated areas of the state have paid a monthly fee of 65 cents per 1,000 kWhs. The fee was designated by the state’s 1999 restructuring law to fund the low-income discount, energy-efficiency projects and a consumer-education campaign.

Low-income customers in deregulated areas have been eligible for the discount, (called LITE-UP Texas) since January 2002. The discount started out at 10 percent, averaging about $10 per month. In May of 2002, the PUC increased the discount to 17 percent.

During FY 2002, over 750,000 households received discounts totaling about $87 million, but the discount soon became a target for a legislative raid. In late 2003, faced with a budget deficit, the legislature redirected about $183 million from the SBF to the state's general fund. As a result, the discount dropped to 10 percent and rule changes instituted during 2004 made it harder for families to qualify for it. The state’s low- income weatherization program, which also had been receiving money from the SBF – $9 million in FY 2003 – was also zeroed out at the end of that year.

Also effective September 1 is new legislation allowing credit scoring. New competitive electricity suppliers that are still breaking into the state’s deregulated market may use a customer's utility payment history to deny service until 2007. At that point, when rate controls expire for incumbent utilities, all companies will be able to use credit scoring to set electricity prices.

Utilities and the Texas PUC have begun a process of creating a statewide database of bill-payment histories, which consumer advocates refer to as a "blacklist" that discriminates against the poor.

The issue of credit scoring has been controversial in Texas since a year ago when TXU, the state’s largest utility, proposed a system of scoring based on bill payment history wherein higher rates would be charged to those with poor utility bill payment histories, which translate into low credit scores.

On the positive side, more funding will be available for low-income weatherization programs in Texas . The legislature passed SB 712, which requires that SBF funds for low-income weatherization, which were zeroed out by the 2003 legislature, be restored by individual utilities as part of their energy efficiency plans. It is estimated that this provision, effective September 1, 2005 , will result in about $10 million yearly for low-income weatherization.

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Several States Attain New or Expanded Funding

Around the country, actions by a utility commission, a legislature and a governor have resulted in additional funding for three states.

New Hampshire

New Hampshire’s legislature has extended through June 2008 a system benefits charge (SBC) that funds an Electric Assistance Program for the state’s low-income.

Beginning October 1, 2002 , the state began using the SBC to operate a Tiered Discount Program, a modified percentage of income payment plan. The tiers are structured to provide qualified low-income households with monthly energy bill payments equal to, on average, four percent of income for general use customers and six percent for electric heat users. Local community action agencies determine eligibility based on income levels and then identify the discount that goes with each income level. Overall, the discounts range from 15 to 90 percent. Payments to 22,774 participants totaled about $10 million for 2004.

The SBC was scheduled to sunset at the end of June unless the legislature reauthorized it. The current legislation appears to retain the previous EAP funding level.

Georgia

Effective May 1, low-income seniors who are customers of Atlanta Gas Light (AGL) saw their monthly discount go from $10.50 to $14.00. The Georgia Public Service Commission (PSC) approved the increase in April as part of its decision in an AGL rate case.

The Commission also approved $1 million to fund the Company's proposed Home and Heart Warming program. These funds will be used to buy space heaters for qualified low-income customers and for other energy efficiency measures yet to be determined. The program will be administered by the Atlanta-based Resource Service Ministries, which has for several years operated a small furnace repair and replacement program for AGL using company foundation funds.

The PSC has mandated the senior discount since 1987. Major gas and electric utilities must waive their monthly service charge for customers age 65 or over, who own their homes and have a household income of less than $12,000 per year. During 2004, over 35,000 seniors received the discount through AGL, amounting to about $4.5 million in savings. A similar discount is provided by the state's major electric utilities.

Colorado

On May 5, Colorado Gov. Bill Owens signed two bills to help low-income Coloradans get help paying their heating and power bills. SB 201 provided for $7.6 million in state money for the state’s LIHEAP, which was immediately used to raise LIHEAP benefits. The money came from interest the state has earned on federal money it has received, and from mineral and energy severance taxes paid to the state.

Owens also signed SB 1, which creates an ongoing donation program through the state's utilities. Customers can sign up for the program through their utility and tell it how much they'd like to donate every month to Energy Outreach Colorado, a private, nonprofit organization that raises and distributes money year-round to help Colorado's poor pay energy bills. Supporters of the new program, referred to as an "opt-in" program, expect it to raise between $2 million and $3 million a year.

Supporters had preferred an "opt-out" program because it would have raised more money, and the legislature had passed a bill allowing such a program during the 2004 session; however, the Governor vetoed that bill because he viewed the opt-out provision as a mandatory fee.

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Utility Shut-Offs Up in Pennsylvania

A new, less restrictive disconnection policy enacted in Pennsylvania in December 2004 has resulted in significant increases in the number of gas, electric and water utility service terminations this year versus last year.

Citing state Public Utility Commission (PUC) statistics, state newspapers report that electric and gas shutoffs have more than doubled in the first four months of this year compared to the same period last year. Newspapers also report that water disconnections have soared.

Furthermore, according to the National Consumer Law Center (NCLC), increasing numbers of disconnected customers are unable to get reconnected.  NCLC has a graph on its website documenting the gap between disconnections and reconnections as of June 2005.

The Responsible Utility Customer Protection Act (Act 201 of 2004) changed rules that apply to termination and reconnection of utility service, payment arrangements, cash deposits and the filing of termination complaints by electric, gas and water utility customers.

Proponents said the Act was intended to protect responsible bill-paying customers from rate increases attributable to the uncollectible accounts of customers that can afford to pay their bills, but choose not to. On the other hand, opponents said it guts Pennsylvania’s longstanding utility consumer protections, among the most liberal in the country. The bill was strongly opposed by over 35 consumer advocacy groups across the state.

Prior to enactment of Act 201, utilities had to get PUC approval in order to disconnect service to a delinquent customer from December 1 through March 31. Under Act 201, PUC approval is not required prior to disconnection if a household’s income exceeds 250 percent of the federal poverty guidelines (FPG). If the household is a customer of Philadelphia Gas Works, service can be turned off in the winter for those with incomes between 150 percent and 250 percent of FPG, although restrictions apply for vulnerable households.

Another major change pertains to the PUC helping negotiate payment plans for customers who aren’t happy with the ones they have. Previously the PUC could use its discretion in setting the terms of payment arrangements; it now must use set payback periods based on income level. If a customer breaks a payment arrangement, the PUC cannot help unless the customer’s income has changed or there has been a significant change in circumstances such as illness or loss of residence. For low-income customers enrolled in Customer Assistance Programs wherein they make utility payments based on their income, the law no longer allows the PUC to establish a payment arrangement if a customer has failed to make the monthly CAP payment.

As a result, through July 8 of this year, the PUC has turned away nearly 20,000 customers seeking more favorable payment arrangements. That compares with about 1,700 in the first half of 2004, according to an article in the Pittsburgh Tribune Review.

There are also more stringent deposit requirements. Deposits are now required for those who do not have good credit, are shut off for an overdue bill, or have missed two consecutive payments in a year. The deposit may be the amount of two average monthly bills.

For more information, a fact sheet is available on the PUC website.

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MN Utility May Be Fined $5 Million

Minnesota 's attorney general is recommending that CenterPoint Energy be fined $5 million because it deliberately ignored state law by cutting off customers with unpaid natural gas bills last fall.

Attorney General Mike Hatch said in June that CenterPoint, a Texas-based company that has 760,000 customers in Minnesota , failed to tell customers about their rights to negotiate a payment plan so they could keep their homes heated and took some clients' LIHEAP benefits without reconnecting their service or reconnecting it only weeks or months later.

Hatch alleged that CenterPoint caused an unknown amount of harm to some of Minnesota 's poorest residents. Some had pipes break; others lost water heaters and even toilets when they were unable to heat their homes. At least one customer allegedly lost a business and one allegedly lost her home.

Before losing her home, the customer had lost her job because of a disability and had fallen $500 behind on her gas bill. CenterPoint shut off her service in August. Three months later, the state's LIHEAP paid $548 to CenterPoint to cover her bill, but the company continued to demand payment and refused to reconnect her service. As a result, her trailer froze so solidly that the sewer line cracked and her home is uninhabitable.

Minnesota has a Cold Weather Rule that says that people below a certain income level cannot be cut off for nonpayment until after April 15 if they agree to a payment plan with their utility. By mid-December of 2004, when nighttime temperatures began dropping below zero, the Public Utilities Commission (PUC) discovered that more than 1,000 of those customers were without gas service and ordered Hatch to investigate. It is up to the PUC to decide whether and by what amount CenterPoint should be fined.

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Illinois Launches Cooling Program

As temperatures soared around the country during late July and early August, Illinois was among the states hit hardest and it responded on several fronts.  The state’s two senators, Barack Obama and Dick Durbin, and Governor Rod Blagojevich joined other entities in calling for the President to release the remaining $47.6 million in LIHEAP emergency contingency funds. 

Blagojevich also directed the Department of Healthcare and Family Services, (DHF) the LIHEAP grantee, to spend $8 million on a summer cooling program, to begin August 1. Under the program, electricity bill payments were made on behalf of seniors, the disabled, families with very young children, and people with medical conditions that are aggravated by extreme heat. Applications were accepted on a first-come, first-serve basis through August 12 or until funding ran out.

The DHF also opened nine cooling centers that operated on weekends to provide high-risk populations a safe, air-conditioned environment. After hours, citizens were referred to community shelters and other facilities.

ComEd, the utility serving Chicago, contributed $3 million to a program called Cool Care to address its low-income customers' cooling needs; $2 million was to help pay the bills of LIHEAP customers in the ComEd service territory, and $1 million supported the City of Chicago's heat emergency response capability.

Ameren, which serves other areas of the state, donated $350,000 to its fuel funds that help its low-income customers with their electricity bills.

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LOW-INCOME ENERGY RESOURCES

New resources presented at the recent Joint Low-Income Energy Conferences that are available on the Internet are:

User Notes on 2000 Decennial Census Tabulations of Households Estimated to be Income Eligible for LIHEAP, Division of Energy Assistance, Office of Community Services, ACF, HHS June, 2005. These tabulations contain state-level data on low-income household characteristics including levels of income, sources of income, household size, race and ethnicity, type and age of housing, primary heating fuel and annual household fuel costs.

"Memo on Statewide Fuel Funds," Roger Colton, Fisher, Sheehan and Colton , April 2005. This memo considers issues related to combining operations of multiple small local fuel funds into a single stateside fuel fund through surveys of fuel funds in NJ, PA, MI, CO, and OR. Provides important details on fuel funds’ operations.

"Profile of Low Income Households: Phoenix and Arizona," APPRISE, June 2005. Presented at a press conference at the joint conferences, it contains the results of an analysis of the energy needs of low-income households in Arizona and metropolitan Phoenix .

"LIHEAP Income Limits and Assets Tests: A Review of State Policies," Glenn Cooper , Colorado State LIHEAP, June 2005. Slides from a presentation by Cooper surveying state practices involving income guidelines and states’ rationale for changing or not changing them; and state practices involving assets tests, including Colorado’s experience with dropping them.

"Illinois Affordable Energy Plan," Illinois Affordable Energy Campaign, September 2004. This document provides the background for a presentation on the topic by John Colgan, Illinois Community Action Association. It details unaffordable energy bills in the state and a proposal to improve the existing program through a Percentage of Income Payment Plan, new reconnection rules, a higher priority for energy efficiency and a strategic hedging plan to cap the price of natural gas.

State Fiscal Year 2004 Evaluation of the NRS 702 Energy Assistance Program & Weatherization Assistance Program, H. Gil Peach & Associates LLC., April 2005, is the second of mandatory annual evaluations of Nevada 's state-funded energy assistance and weatherization program. Funded by a universal energy charge (UEC) that is assessed on most gas and electric utility customers, and operating in coordination with the state’s LIHEAP and WAP, the program has made progress in spending funds, addressing computer and staffing problems and undertaking an outreach plan, the evaluation says.

Home Energy Affordability Gap, Fisher, Sheehan and Colton , May 2005. Available for download from the FSC website, the latest addition is FSC’s 2004 state-by-state calculation of the Home Energy Affordability Gap, the difference between actual and affordable home energy bills. It details the extent to which federal LIHEAP resources are inadequate, i.e., the amount by which low-income energy bills exceeded affordable energy bills at this year's and last year's fuel prices. On a scale of 1 to 51, each state is given an "energy gap ranking," which compares it to other states in terms of energy burdens for the very low income, the percent of persons below 100 percent of poverty, and the percent that each state's heating/cooling affordability gap is covered by LIHEAP. Also shows the percent of the low-income energy bill that goes to each end use, i.e., heating, cooling, non-heating and cooling electricity, and water heating. Available on CD by contacting Roger Colton at: rcolton101@aol.com.

Nonpayment of Energy Bills by Low-Income Customers, Francine Sevel, Ph.D., The National Regulatory Research Institute (NRRI) and Mitch Miller, Pennsylvania Public Utility Commission, June 2005. The NARUC Staff Subcommittee on Consumer Affairs Low-Income Work Group was formed in 2002 and conducted a survey of state public utility commissions concerning low-income consumers’ inability to pay their energy bills. The study collected state-specific data for electric, gas and combination utilities regarding arrearages, disconnections, number of accounts receiving assistance and total revenue owed. In 2004 the study was partially replicated using a shorter survey instrument. Sixteen states responded. This report contains the results.

"Energy Assistance Eligibility Issues," Moises Gallegos, City of Phoenix , June 2005.  Details how Arizona has responded to Proposition 200, which requires verification of citizenship or immigration status when public benefits are applied for. 

"Myths Regarding Low-Income Consumers: Implications for Consumer Education," Fran Sevel, National Regulatory Research Institute, June 2005. From a presentation on statewide consumer education highlighting various approaches to low-income consumer education.

"Making WAP/Utility Partnerships Smoother and More Substantial," Jack Laverty, Columbia Gas of Ohio , June 2005.  How utility programs interact with the federal weatherization program for maximum effectiveness varies by state. This session features Columbia ’s program as well as other successful practices from around the country.

"Hot Climate Initiatives," Alex Moore, D&R International, June 2005.  A visual guide to weatherization techniques used in warmer climates.

"Energy Advocacy and Intervention: Basic Skills," John Howat, June 2005. This is the National Consumer Law Center’s training on basics of utility intervention. The goal is to increase the number of advocates with the basic intervension skills. 

"Credit Scoring: A Help to Low Income Customers," Larry Nowicki, Columbia Gas of Pennsylvania , June 2005.  While credit scoring is controversial among low-income advocates, some utilities claim it’s a win-win solution for them and their customers. 

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