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Meeting Indiana


Meeting Indiana s Energy Assistance Needs: Affordable Energy Resources for Indiana s Low-Income Customers Roger D. Colton Fisher, Sheehan & Colton – PowerPoint PPT presentation

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Title: Meeting Indiana

Meeting Indianas Energy Assistance
NeedsAffordable Energy Resources for Indianas
Low-Income Customers
  • Roger D. Colton
  • Fisher, Sheehan Colton
  • Belmont, MA
  • October 2008

The Need for a Toolkit Approach
  • When your only tool is a hammer,
  • you tend to see every problem as a nail.

The Parable of the Olive Trees
  • Once upon a time, a mansion owner called his
    gardener in and asked him to plant 100 olive
    trees. The gardener was aghast. But sir, the
    gardener said, those trees will not bear fruit
    for 50 years. Nodding in agreement, the mansion
    owner responded Yes. That is why I would like
    you to plant them today.

Filling the Home Energy Affordability Gap in
  • Public funds
  • Utility funds
  • Rates and customer service as low-income
  • Non-energy funding sources
  • Usage reduction
  • The special case of bulk fuels

Public Funds Sources of energy-based
supplemental income
  • Earned Income Tax Credit (EITC)
  • Public Housing Authority (PHA) utility allowances
  • Food Stamp excess shelter deduction

Tool 1The Earned Income Tax Credit
  • Countrys primary anti-poverty program.
  • Refundable tax credit (cash back).
  • Average refund around 2,000.
  • 3-year retroactive refund application.
  • Few jurisdictions cannot increased by 5.

Earned Income Tax CreditReason to Pay Attention
  • 1/3 used to pay for past-due utility bills.
  • Only 50 - 80 of eligible claim.
  • Potential for innovative utility/CBO role.
  • Receipt at time of winter heating bills

How Families Use the EITC
Earned Income Tax Credit (EITC)
  • Potential CAA Action Steps
  • Mass utility outreach campaigns (NJ)
  • Gap filler outreach campaign
  • Part-time workers
  • Women-workers
  • Hispanic workers
  • VITA campaign (Illinois--Ameritech)
  • Targeted outreach
  • Utility call center recorded message

Tool 1 (A)Alternatives to Paid Tax Preparers
  • Low-income households often lose 300 or more of
    their EITC
  • Pay between 100 and 200 to have their tax
    returns prepared.
  • Sold refund anticipation loans at a cost of
    400 in interest.
  • Things for CAA to do
  • VITA campaign (Illinois--Ameritech)
  • Nonprofit tax preparation (AARP) (Belmont)
  • CAA as nonprofit tax preparation.

Tool 2PHA Utility Allowances
  • Tenant-paid utilities
  • Public housing
  • Assisted housing
  • Covers
  • Electricity
  • Heating/Cooling
  • Water/Sewer

PHA Utility AllowancesReason to Pay Attention
  • Covers (theoretically) 100 of bill
  • Year-round -- not seasonal
  • Regular update (if enforced)
  • Public housing tenants lt50 FPL

PHA Utility AllowancesWhat Needs to be Done
  • Review utility allowances to ensure annual
  • Provide notice to PHAs whenever rates change by
    10 or more.
  • Review whether utility allowance pays for cooling
  • More advanced advocacy
  • Review reasonableness of utility allowances
  • Call for help!

Tool 3The Excess Shelter Deduction
  • Food Stamp eligibility based on countable
  • Shelter expenses above 50 an income deduction.
  • Shelter rent/mortgage utilities (include
  • Actual shelter costs/Standard Utility Allowance

FS Excess Shelter DeductionReason to Pay
  • If household income is lowered
  • Some qualify for Food Stamps when they otherwise
    would not
  • Some qualify for more Food Stamps
  • Every 3 reduction in income yields 2 in
  • Implications for spike in fuel prices!
  • Customers indifferent as to source of dollars.

Excess Shelter DeductionWhy do it?
  • 30 - 40/month for low-income HHs
  • Dollar-for-dollar passthrough to feds
  • USDA supports and encourages
  • Elderly/disabled have no maximum on excess
    shelter deduction.

Food Stamps Standard Utility Allowance
  • Annual Review
  • Take increased energy prices into account.
  • Take water and wastewater into account
  • Take all components of telephone bills into
  • More advanced advocacy
  • Take load curves into account.
  • (not simply average)

The Excess Shelter DeductionWhat needs to be
  • Update the Standard Utility Allowance (SUA)
  • Ensure HHs are reassessed in light of increased
    energy bills.

Utility/Ratepayer FundingTool 4 Rate
Affordability Programs
  • Four Essential Elements
  • Rate affordability assistance
  • Arrearage forgiveness
  • Crisis assistance
  • Energy efficiency
  • Performance measurement

Rate Affordability Assistance
  • Needs To
  • Be burden-based
  • Address payment-troubles
  • Recognize the paid but unaffordable bill
  • Be tariff-based assistance

Arrearage Forgiveness
  • Needs To
  • Be affordability-based
  • Administratively practicable
  • Allow for customer contribution

Crisis Assistance
  • Needs To
  • Be shutoff free if agreed payments made
  • Recognize economic fragility
  • A reasonable amount set aside.

Energy Efficiency
  • Needs To
  • Be integrated with rate affordability.
  • Minimize lost opportunities program-wide.
  • Minimize lost opportunities per each household.

Using the Regulatory Process
  • End the regulatory war on the poor
  • Enforcing regulatory requirements
  • Using regulatory steps for innovative funding

Tool 5End the Regulatory War on the Poor
  • Eliminate late fees on low-income customers.
  • Eliminate late fees on paid-up DPAs.
  • Eliminate one-strike-youre-out deferred payment
    arrangement (DPA) policies.
  • Eliminate barriers to entering budget billing.
  • Sharpen the trigger for issuing shutoff notices
  • Dont send notices that utilities do not intend
    to follow-up on.

Tool 6Enforce Regulatory Requirements
  • Enforce consideration of ability-to-pay in
    structuring deferred payment plans for arrears.
  • Absolute income
  • Discretionary income
  • Fragility of income
  • Seasonality of income (income, expenses)
  • Ability to meet exigencies
  • Enforce consideration of all regulatory factors
    in structuring deferred payment plans for
  • Time arrears outstanding.
  • Reason for arrears.
  • Ability to pay.

Tool 7Alternatives to Cash Security Deposits
  • Agency-provided surety or guarantee of payment
  • Provide letter guaranteeing payment
  • Guarantee only kicks in if customer leaves
    system with bad debt.
  • For new deposit demands.
  • Substitute guarantee or surety for existing
  • Use existing deposit to help pay arrears.
  • Agency-generated guarantees by local
    business/houses of worship.
  • Behavioral responses
  • Financial literacy training
  • Budget billing

Tool 8 Utility Rate Refunds
  • When utility money is not utility money.
  • Supplier refunds / rate refunds appropriate.
  • Refunds can come years after-the-fact.
  • LI mobility is 35 2 - 2.5x total population.
  • Refunds returned to other than those who paid.
  • Refunds do not belong to current customers.
  • Concept of cy pres is established concept.
  • Kansas ad valorem tax refund/Colorado rate

The Role of Non-Energy Programs in Providing
Energy Assistance
  • Tool 9 Summer Food Service Program
  • Summer time generally considered low cost
    energy months.
  • Kid-related food expenses second-leading
    financial problem for customers in financial
    trouble with their utility.
  • If you have
  • two kids at home and spend 3/meal (VERY
  • that's 12/day x 20 school days a month or 240
  • 2.85 million kids each day in Summer Food Service
  • BUT only 17.7 kids receive summer Food Service
    for every 100 kids in school lunch/school
    breakfast programs

Non-Energy Programs as Energy AssistanceTool
9 Summer Food Service Program
  • Things to do
  • Promote Summer Food Service Centers.
  • Recreation Department summer sites
  • Public schools
  • Other nonprofits
  • Promote participation at Summer Food Service
  • Visit http//
  • (Food Research and Action Council)

Usage Reduction Funding Sources
  • Housing related programs
  • Affordable housing plans
  • Utility-related programs

Tool 10 Efficient energy usage in affordable
  • Require energy efficient construction in
    publicly-funded new construction/rehab.
  • Home Investment Partnership funding (Consolidated
  • Community Development Block Grant (Consolidated
  • Low-Income Housing Tax Credit (Qualified
    Allocation Plan)
  • Insert Energy Star mandate into all
    publicly-issued housing procurements.

Energy Star buildingWhy doesnt everyone do it?
  • Split Incentives
  • Incentive exists if owner/developer are
  • If owner/developer/resident are not the same then
    no/incentive is said to be split.
  • Developer alone no incentive unless competing
    developer is offering Energy Star homes.
  • Lender no incentive.
  • Buyer often not involved in building

Energy Star in Affordable HousingWhat needs to
be done
  • Insert Energy Star into RFP/specifications for
    affordable housing.
  • Insert Energy Star into Con Plan (HOME/CDBG)
  • Insert Energy Star into Qualified Allocation
    Plan (LIHTC)
  • Use of CDBG funds for energy efficiency matching.

Recommended Action
  • Homeownership and rental units developed as
    either new construction or substantial
    rehabilitation by grantees or participating
    jurisdictions should be developed to Energy Star

HUD Recommendation
  • Include following in any Request for Proposals
    or procurement process
  • All new buildings and gut rehab shall be
    designed to meet the National Energy Five Star
    efficiency performance standard of 86. All
    procedures used for this rating (86) shall comply
    with National Home Energy Rating System

Tool 11 Inserting Energy into the HUD
Consolidated Plan
  • Identifies affordable housing needs.
  • Discusses housing market.
  • Identifies barriers to affordable housing.
  • Identifies and ranks action steps.

Impacts on affordable housing
  • Impacts of energy on affordable housing
  • Reduce the affordable sales price of single
    family homes.
  • Freeze some lower income households out of the
    market altogether.
  • Force lower income households into less expensive
  • Increase the risk of default by consumers.
  • Other Advantages
  • Adds value.
  • Higher debt load for developer or a buyer.
  • Increased discretionary income for a tenant or

Tool 12 Replicating and expanding Indianas
Refrigerator Replacement Program
  • Existing Duke/INCAA program
  • Section 8 rental housing
  • Energy efficiency utility allowance
  • Low-income multi-family rental housing
  • Previously constructed LIHTC/HOME properties
  • First time home buyers

Tool 13Addressing Bulk Fuel Needs
  • Maines Fair Trade Practices Act
  • Applies to heating sales Oct 15 - April 30
  • Once established customer (2 cash purchases)
  • Immediate delivery/unscheduled delivery
  • Defines charge for less than full fill-up
  • Must sell for cash, even if arrears
  • Vermonts Fair Trade Practices Act
  • Minimum notice before refusal to deliver
  • Requires reasonable payment plan for arrears
  • No minimum delivery gt100 gallons
  • Must deliver for cash payment

Tool 14Addressing LPG (Propane) Gas
  • Propane Education and Research Council (PERC)
  • 20 of PERC assessment collected in a state
    funneled back to state propane councils (or
    similar entity).
  • 38 million total PERC nationwide (2003).
  • More than 35 percent of the households using
    propane to heat their homes are eligible for
  • GAO (2003) appropriate to use PERC funding to
    address the unaffordability of propane prices to
    low-income households.

Addressing LPG (Propane) Gas Needs
  • Potential uses of PERC funding
  • Education re. price stabilization options
  • off-season purchases.
  • budget-billing
  • PERC funding is not likely available for
    comprehensive weatherization.
  • However, low-cost energy efficiency packets can
    be one element of a propane education program.

Tool 15Using Your Rural Electric Co-ops
  • Soliciting patronage capital refunds.
  • Iowa average patronage capital refund 67/year
  • Impact of solicitation of found money
  • CEAF (now Energy Outreach Colorado) rate refund
  • 10 of all customers donated something
  • Collected 4 of total refund back to distribute
    as energy assistance (25 average per
  • Normal 2 contributor and 10 contribution.

For more information
  • http//
  • News
  • Library

For more information

My list of things to do on Monday
  • Begin to draft internal process to calculate
    shelter costs as percentage of income for all CAA
  • Begin to draft process of notifying Food Stamp if
  • Request from state Food Stamp director (a) last
    years Standard Utility Allowance (SUA) (b) this
    years SUA and (c) date of most recent update to
    reflect change in prices.
  • Request from relevant Local Housing Authorities
    (a) the utility allowance schedules currently in
    use for section 8, for public housing, and for
    any other assisted housing. Ask for date of most
    recent update to those utility allowances.
  • Contact state utility commission (state energy
    office?) and ask for any regular periodic reports
    on energy prices for primary fuels in state.
  • Submit request to Internal Revenue Service (IRS)
    for the local penetration of EITC among eligible
    recipients. Submit locally (or to Atlanta).

My list of things to do on Monday
  • Draft letter to all local utilities asking for
    how they promote the EITC. Find out who
    administers call center for local utility.
  • Obtain script for a call-center EITC message for
    utility call centers and schedule appointment to
    discuss using such script on call-center holds.
  • Obtain EITC outreach kit from Center on Budget
    and Policy Priorities EITC Outreach Campaign
    (Washington D.C.).
  • Find all all free tax preparation clinics (VITA,
    AARP, other) and prepare outreach for all persons
    making in-person contact with CAA.
  • Draft letter to all utility contacts asking for
    complete set of policies on the extent to which
    utility accepts alternatives to cash security
  • Begin drafting process through which to ask all
    clients making in-person contact with CAA (a) do
    you have a cash deposit with the utility (b) do
    you want a deposit refund (in whole or in part)
    if possible and (c) do you want us to request
    such a refund if available.
  • Review Rogers 5 Things to Do handouts.

My list of things to do on Monday
  • Find state propane council. Obtain their most
    recent (or two most recent) annual reports and
    annual budgets.
  • Find list of all Summer Food Service Program
    sites in your locality. Find out who is local
    director and schedule appointment.
  • Contact state utility commission to obtain a list
    of all Rural Electric Cooperatives (RECs) in the
  • Inquire as to which of these RECs have fuel
  • Inquire as to what policies exist regarding
    abandoned patronage capital credits.
  • Obtain annual report (including annual financial
  • Contact FSC in Belmont (MA) for a copy of the
    Iowa Community Action Association (ICAA) REC fuel
    fund proposals.
  • Write letter to State Treasurer to request data
    on the number of dollars that have escheated to
    the state each year for the past five years from
    utilities or RECs.
  • Post e-mail and phone number of Roger on office
    wall (or on computer) in order to contact him for
    help with pursuing any of these suggestions.