controlling payment troubles: affordable energy for low-income customers roger d. colton fisher,...
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Controlling Payment Troubles:Affordable Energy for Low-Income Customers
Roger D. Colton
Fisher, Sheehan & Colton
Belmont, MA
October 2006
E-Source Forum
Why do we care?Starting Point: Home Energy Burdens
Shelter burdens affordable at 30% of income.
Utility costs affordable at 6% of income (20% of shelter costs).
E-Source Forum
Iowa: Home Energy Burdens by Federal Poverty Level (FPL)
FPL 2004 2005 2006
Below 50% 44.1% 46.3% 50.6%
50 - 74% 17.8% 18.6% 20.3%
75 - 99% 12.7% 13.3% 14.6%
100 - 124% 9.9% 10.4% 11.4%
125 - 149% 8.1% 8.5% 9.3%
150 - 185% 6.6% 7.0% 7.7%
E-Source Forum
Home Energy Affordability Gap
Home energy is a crippling financial burden
for low-income Iowa households.
2002 Home Energy Affordability Gap: $137,598,051 2005 Home Energy Affordability Gap: $239,203,851 Growth in Affordability Gap (2002 - 2005): $101,651,800 2005 Home Energy Affordability Gap Index: 173.8
E-Source Forum
Growth in EA Accounts in Arrears: Iowa
05,00010,00015,00020,00025,00030,00035,00040,00045,000
Jan-99
Jul-99
Jan-00
Jul-00
Jan-01
Jul-01
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Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
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Jul-06
E-Source Forum
Growth in EA Accounts Written-offs: Iowa
-500
0
500
1000
1500
2000
2500Jan-99
Jul-99
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
E-Source Forum
Growth in Disconnects: Iowa
0100020003000400050006000700080009000
Jan-99
Jul-99
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
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Jul-06
E-Source Forum
The Need for a Toolkit Approach
“When your only tool is a hammer,
you tend to see every problem as a nail.”
E-Source Forum
Home Energy Affordability Gap:Growth in Gap/LIHEAP
Affordability Gap
2002: $137,598,051
2005: $239,203,851
Growth: $101,651,800
LIHEAP
2002: $31,226,126
2005: $34,570,110
Growth: $3,443,984
E-Source Forum
Home Energy Affordability Gap: LIHEAP Heating/Cooling coverage
2002
Gap: $66.6 million
LIHEAP: $31.1 million
LIHEAP coverage: 46.7%
2005
Gap: $126.9 million
LIHEAP: $34.6 million
LIHEAP coverage: 27.3%
E-Source Forum
Three “new” energy assistance tools:Sources of “energy-based” supplemental income
Food Stamp “excess shelter deduction” Earned Income Tax Credit (EITC) Public Housing Authority (PHA)
utility allowances
E-Source Forum
Tool #1:The Excess Shelter Deduction
Food Stamp eligibility based on “countable income.”• Shelter expenses above 50% an income
deduction.• Shelter = rent/mortgage + utilities (include
telephone) Actual shelter costs/Standard Utility Allowance
(SUA)
E-Source Forum
FS Excess Shelter Deduction:Reason to Pay Attention 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 benefits.
• Implications for spike in fuel prices!
Customers indifferent as to source of dollars.
E-Source Forum
Excess Shelter Deduction:Why 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.
E-Source Forum
The Excess Shelter Deduction:What needs to be done?
Update the Standard Utility Allowance (SUA) annually
Ensure HHs are reassessed in light of increased energy bills.
E-Source Forum
Tool #2:The Earned Income Tax Credit Country’s primary anti-poverty program. Refundable tax credit (cash back). Average refund: around $2,000. 3-year retroactive refund application.
E-Source Forum
Earned Income Tax Credit:Reason 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
E-Source Forum
How Families Use the EITC
0
10
20
30
40
50
60
Save Pay bills Purchase Move Tuititon Purchase/repaircar
Other
First Second Third
E-Source Forum
Earned Income Tax Credit:What need to be done
Mass utility outreach campaigns (NJ) “Gap filler” outreach campaign
• Part-time workers• Women-workers• Hispanic workers
VITA campaign (Illinois--Ameritech) Targeted outreach Call center recorded message
E-Source Forum
Tool #3:PHA Utility Allowances Tenant-paid utilities:
• Public housing
• Assisted housing Covers:
• Electricity
• Heating/Cooling
• Water/Sewer
E-Source Forum
PHA Utility Allowances:Reason to Pay Attention
Covers (theoretically) 100% of bill Year-round -- not seasonal Regular update (if enforced) Public housing tenants <50% FPL
E-Source Forum
PHA Utility Allowance What to look for
Annual review of utility allowances.
Adjust when “rates” change by 10% or more.• Retroactive to date of rate increase
E-Source Forum
PHA Utility Allowances:What Needs to be Done
Review utility allowances to ensure annual update. Provide notice to PHAs whenever rates change by
10% or more. Review whether utility allowance pays for
cooling. Review reasonableness of utility allowances.
E-Source Forum
What low-income customers need from today’s energy industry! Low-income customers need data reporting. Low-income customers need energy
assistance programs such as Pennsylvania, New Jersey, Ohio, Indiana.
Low-income customers need energy industry leadership.
Low-income customers need energy industry advocacy.
E-Source Forum
For more information:
http://www.fsconline.com
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