ten things to do to fill the home energy affordability gap in warm weather states presented to ncaf...
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Ten Things to Do to Fill the Home Energy Affordability Gap in Warm
Weather StatesPresented to NCAF Leveraging Conference by:
Roger D. Colton
Fisher, Sheehan & Colton (FSC)
Belmont, MA 02478
(voice) 617-484-0597
November 2007
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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).
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Home Energy Affordability Gap
South AtlanticEast South
CentralWest South
Central
2002 $3,240,292,399 $1,341,042,818 $2,905,634,202
2006 $5,301,449,483 $2,122,151,345 $5,444,579,916
Growth $2,061,157,084 $781,108,527 $2,538,945,714
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The Need for a Toolkit Approach
“When your only tool is a hammer,
you tend to see every problem as a nail.”
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Tool #1:Food Stamps: 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
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Tool #2: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 account.
More advanced advocacy:
Take load curves into account.
(not simply average)
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Impacts of Tool #1 and #2:Food Stamps: Excess Shelter Deduction
• 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.
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Tool #3:PHA Utility Allowances
• Tenant-paid utilities (public and assisted housing)
• Covers electricity, heating/cooling, water/sewer
• Covers (theoretically) 100% of bill
• Year-round -- not seasonal
• Regular update (if enforced)
• Annual review of utility allowances.
• Adjust when “rates” change by 10% or more.
– Retroactive to date of rate increaseMore advanced advocacy:
Does utility allowance pay for cooling?
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Tool #3 (continued):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
More advanced advocacy:
Review reasonableness of utility allowancesCall for help!
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Tool #4: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.
• 1/3 used to pay for past-due utility bills.• Only 50 - 80% of eligible claim.
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Tool #4 (continued):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
• Targeted outreach• Utility call center recorded message
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Tool #5: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 prepayers (AARP) (Belmont)
• CAA as nonprofit tax preparation.
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Tool #6:Alternatives 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 deposit.– Use existing deposit to help pay arrears.
• Ensure that deposit reflects:– budget bill (if 2x maximum bill).
– Weatherized bill (if WAP or DSM participant).
• Behavioral responses as alternatives to deposits:– Attendance in financial literacy training.– Enrollment in budget billing.
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Tool #7:Addressing 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 LIHEAP.
• GAO (2003): appropriate to use PERC funding to address the unaffordability of propane prices to low-income households.
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Tool #7:Addressing LPG (Propane) Gas
• Application to statewide propane council.
• 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.
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Tool #8: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 conservatively),
– that's $12/day x 20 school days a month or $240 EACH MONTH
• 2.85 million kids each day in Summer Food Service Program.
– BUT only 17.7 kids receive summer Food Service for every 100 kids in school lunch/school breakfast programs
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Tool #8:Summer Food Service Program
Things to do:– Promote Summer Food Service Centers.
• YMCA/YWCA
• Recreation Department summer sites
• Public schools
• Other nonprofits
– Promote participation at Summer Food Service Centers.
Visit: http://www.FRAC.org
(Food Research and Action Council)
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Tool #9:Using 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 contribution)
– Normal: 2% contributor and $10 contribution.
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Tool #10:Capturing Rate Refunds/Deposits
• Money that “escheats” to state if “abandoned.”– Rate refunds
– Deposits
– REC Patronage capital refunds/credits
• Low-income attributes that are relevant:– High mobility
– Less creditworthiness/more likely to post deposits
• Two ways to approach:– Assign deposits to low-income crisis fund rather than being
abandoned.
– Legislative directive to capture escheated utility funds.
• Colorado and 20% of rate refunds.
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My list of things to do on Monday:* Begin to draft internal process to calculate shelter costs as percentage of
income for all CAA clients.
* Begin to draft process of notifying Food Stamp if >50%.
* Request from state Food Stamp director: (a) last year’s Standard Utility Allowance (SUA); (b) this year’s 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).
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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 deposits.* 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.
* Find state propane council. Obtain their most recent (or two most recent) annual reports and annual budgets.
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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 state. * Inquire as to which of these RECs have fuel funds. * Inquire as to what policies exist regarding abandoned patronage capital credits.* Obtain annual report (including annual financial report).
* Contact FSC in Belmont (MA) for a copy of the Iowa Community Action Association (ICAA) REC fuel fund proposals.
* Write letter to State Treasurer 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.
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For more information:
http://www.fsconline.com
News
Library
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For more information: