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State PBF/USF History, Legislation, Implementation

Arkansas

Last Updated: December 2016
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Energy Efficiency

While Arkansas lacks ratepayer-funded bill assistance for low-income customers, it does have a statewide weatherization program those customers can access. Establishment of the program followed a series of events in the regulatory, legislative, and judicial arenas.

The Arkansas Weatherization Program (AWP) began October 1, 2007, and targets "severely energy inefficient" homes. Eligibility is based on the age of the resident and the homes lack of energy efficiency, not the resident's income level. The cost of AWP service is split between the customer and the customer's utility. Low-income customers eligible for the U.S. Department of Energy's Weatherization Assistance Program (WAP) have their co-payment covered by the federal program. The seven utilities participating in AWP recover their expenses through "Energy Efficiency Cost Rate Riders," a surcharge on all customers' bills.

During 2015, AWP spent $500,000 on weatherization for 94 homes. Services included: ceiling, floor, and wall insulation, air infiltration reduction, window replacement and storm window installation, heating and air conditioning replacement, water heater insulation jackets and pipe-wrap, refrigerator replacement, CFL retrofits, and smart thermostats. The 2015 numbers represented about 82 percent less in funding than in 2014 and about 44 percent less homes served.

In 2013, the Arkansas General Assembly passed legislation that moved the Department of Energy's WAP from the Arkansas Department of Human Services to the Arkansas Energy Office (AEO). AEO proceeded to reduce the number of agencies providing services under WAP (and AWP) from 15 to six. Of those six agencies, only five reported working on AWP homes. Some parts of the state were not covered as a result.

In addition to the program’s move from DOE to AEO, Arkansas Community Action Agencies Association (ACAAA) filed a petition to transfer coordination and oversight duties—including implementation, evaluation, and reporting— for the AWP to the Central Arkansas Development Council, Inc. (CADC). The transfer was approved by the PSC on January 26, 2015.

A continuing challenge cited by ACAAA is that many customers seeking AWP services don't meet the eligibility requirements for WAP, which means they can't access federal funds for the co-payment. However, many of these customers don't have enough income to make the co-payments themselves.

The AWP in its historical form came to an end in 2016. The PSC (Docket 13-002-U) approved a request by utilities and others to launch the Uniform Weatherization Program. The AWP was folded into this new effort. One of the main advantages of the new program, according to supporters, was that it reduced the amount of the co-pay required by participating households. The hope is that this will help increase participation in energy efficiency program across all residential customers.

History

AWP came on the heels of a legislative attempt to create a low-income weatherization program that was ultimately struck down by the courts. The Arkansas State Legislature passed Act 120 and Act 121 in 2003. These gave electric and natural gas utilities the option to contribute to two new funds (the Alternative Fuels Fund and the Weatherization Assistance Fund) by charging residential customers a monthly surcharge of up to $1.00.

Entergy Arkansas, Inc. (EAI), one of the state's largest electric utilities, was the only company that chose to collect the fee upon implementation of the acts in January 2004. An EAI customer filed a complaint in February 2004 challenging the legality of Act 120 and Act 121. The lawsuit named EAI, as well as the Arkansas Auditor, the State Treasurer, the Alternative Fuels Commission, and the directors of the state's Finance and Health and Human Services departments as defendants.

In 2005, a court ruled against the state's new laws. It found that monies collected under the legislation were a tax and not a fee. Furthermore, the court said the legislature had delegated to EAI the authority to decide to impose the tax, which the legislature couldn't do because EAI wasn't a political subdivision of the state. Collection of funds through the EAI surcharge were termed an "illegal exaction" and, therefore, unconstitutional. The defendants were enjoined from collecting further funding and ordered to refund all monies collected on or after January 6, 2004, the filing date of the lawsuit. Even before the court's ruling, EAI stopped participating in the program and ceased collecting ratepayer dollars in May 2004.

The ruling was a setback for low-income advocates. They had expected the surcharge to rise between $6.7 and $7 million annually, with 70 percent going to the Weatherization Assistance Fund. The remaining monies would have gone to the Alternative Fuels Fund for grants and research.

With the legislative plan from 2003 ruled unconstitutional, the next chance for a weatherization program to help low-income customers came in January 2007. The Arkansas Public Service Commission (PSC) adopted its "Rules for Conservation and Energy Efficiency Programs," which led to the state's first utility-funded energy efficiency programs.

Citing record natural gas prices, the nation's energy crisis, and Arkansas' ranking as one of the states with the fewest conservation programs in the country, the PSC stated it was critical that more attention be focused on ways to reduce usage of electricity and natural gas. The PSC ordered all jurisdictional electric and gas utilities to begin implementing cost-effective energy efficiency programs for all customer classes.

The PSC's rules resulted from a collaborative process. Participants included the state's utilities, ACAAA, industrial and commercial customers, and the PSC. The commission ordered utilities to file plans for programs that could be implemented on a "quick start or pilot" basis by April 12, 2007, with implementation no later than September 1, 2007.

Working together, seven utilities and the ACAAA proposed AWP under the PSC's new rules. In February 2010, the commission approved AWP to run through June 2011. Subsequent orders have extended AWP through 2018.

Arkansas Weatherization Program
Program Year

Utility Funding

Houses Treated

2009
$644,900
463
2010
$1.19 million
862
2011
$1.27 million
810
2012
$1.17 million
641
2013
$503,212
297
2014
$275,564
168
2015
$503,212
94
Source: Arkansas Community Action Agencies Association
Note: While the above total is all households treated, annual reports state that the majority of participants are WAP households

AWP experienced a spike in the number of homes treated and completed projects in 2010 and 2011, due to an infusion of stimulus funds from the American Recovery and Reinvestment Act. However, the state didn't receive any WAP funding for 2012. This meant, once the stimulus funds were exhausted, there wasn't money to help low-income customers with co-payment charges.

More Information:

Arkansas Community Action Agencies Association annual reports on AWP:

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