Ten Things to Do to Fill the Home Energy Affordability Gap in Warm Weather States

Ten Things to Do to Fill the Home Energy Affordability Gap in Warm

Weather StatesPresented to NCAF Leveraging Conference by:

Roger D. ColtonFisher, Sheehan & Colton (FSC)

Belmont, MA 02478(voice) 617-484-0597

November 2007

November 2007 Filling the Affordability Gap: NCAF Leveraging Conference

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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 Atlantic East SouthCentral

West SouthCentral

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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Ten Things to Do to Fill the Home Energy Affordability Gap in Warm Weather States

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