Ten Things to Do to Fill the Home Energy Affordability Gap in Warm Weather States Presented to NCAF Leveraging Conference by: Roger D. Colton Fisher, Sheehan

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

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 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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Ten Things to Do to Fill the Home Energy Affordability Gap in Warm Weather States Presented to NCAF Leveraging Conference by: Roger D. Colton Fisher, Sheehan