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State PBF/USF History, Legislation, Implementation

Maryland

Last Updated: January 2017
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Rate Assistance

Maryland's ratepayer-funded Electric Universal Service Program (EUSP) has two components: bill payment assistance to help participants pay current electric bills and arrearage retirement payments to help them pay past due electric bills.

With oversight by the Maryland Public Service Commission (PSC), the EUSP is administered by the Department of Human Resources, Office of Home Energy Programs (OHEP), which also administers the state's LIHEAP, known as the Maryland Energy Assistance Program or MEAP. Clients can apply at local LIHEAP agencies for both programs from July through May. The EUSP has the same income eligibility level as MEAP, currently 175 percent of federal poverty guidelines.

The OHEP's FY 2015 EUSP report showed that 109,095 households received electric bill payment assistance, which was a decrease of 5.6 percent from the number served the previous fiscal year. The average bill assistance benefit decreased to $351 from the previous year's average of $357. The total amount of EUSP discounts for FY 2015 was $38.3 million.

Arrearage retirement assistance totaled $17 million during FY 2015 and helped 17,815 customers with an average benefit of $954. This component was originally funded through the EUSP; however, starting in 2010, funding has come from either LIHEAP or the Regional Greenhouse Gas Initiative (RGGI) funds. Maryland invests proceeds from the sale of carbon dioxide allowances, RGGI funds, into the State’s Strategic Energy Investment Fund (SEIF). For FY 2014 the arrearage component was funded entirely with SEIF/RGGI funds. For more about RGGI funds, see the "History" section below. To qualify for arrearage assistance, EUSP recipients must be at least $300 or more in arrears; the maximum arrearage benefit is $2,000. Those requiring additional assistance over the EUSP cap of $2,000 are referred to community-based programs for assistance.

Originally, arrearage benefits were only allowed once in a lifetime. Beginning in FY 2010, this restriction was modified to allow additional benefits after a period of seven years.

In FY 2009, OHEP implemented an arrearage waiver policy that allowed households that had received an arrearage retirement less than $300 to receive an additional benefit within the same seven years. Another waiver policy, instituted in FY 2014, allows vulnerable households that received an arrearage retirement benefit less than $800 during the past seven years to apply for additional assistance, not to exceed the $2,000 cap. "Vulnerable households" are those that have a household member overt he age of 65 or under two years old, and/or a member who is "medically fragile." In 2015, a total of 694 waivers were granted, providing $674,630 in benefits.

History

The EUSP is a result of Maryland's 1999 restructuring law, known as the Electric Competition Law, and SB 300, the Electric Customer Choice and Competition Act of 1999, which provided $34 million for an ongoing and non-lapsing universal service program. The law defines a universal service program as one that "helps low-income customers maintain electric service," and includes "customer bill assistance and payment programs, termination of service protection, and policies and services that help low-income customers to reduce or manage energy consumption in a cost-effective manner."

Collection of the universal service funds from customers started in July 2000, and the OHEP then began operating the newly-created EUSP with three components: bill payment assistance, arrearage retirement payments, and weatherization. The initial funding amount was $34 million. In response to escalating energy costs during the winter of 2005-06, the state legislature increased the funding to $37 million.

The majority of the EUSP funding, 74 percent, comes from industrial and commercial customers who pay about $27.4 million; residential customers contribute 26 percent, or $9.6 million, at a cost of about 36 cents per month. A 2014 PSC report regarding evaluation of low-income assistance programs and ratepayer funding of the EUSP noted that ratepayer collections for the EUSP fund continued to exceed the $37 million that was authorized by statute. In response, the PSC approved an adjustment to the current ratepayer surcharge. Beginning in August 2006, all residential customers have been assessed a flat EUSP surcharge of 37 cents per month. Starting on February 1, 2014, the residential surcharge was reduced to 36 cents per month.

In FY 2009, a new funding source was allocated to the EUSP from the RGGI. The RGGI is a coalition of Northeast and Mid-Atlantic states working to limit carbon dioxide pollution through a cap and trade system, whereby the participating states limit the amount of carbon dioxide that can be emitted by their power plants. In September 2008, the participating states began conducting RGGI quarterly auctions where they sold the region's annual emissions "budget" of approximately 188 million allowances.

Maryland was among the states that allocated a portion of auction proceeds to low-income energy assistance. Initially, the amount was 17 percent of the proceeds, which amounted to $3.6 million for the EUSP. The 2009 legislature changed the amount to up to 50 percent of auction proceeds collected. The 2011 Legislature continued the 50 percent allocation through FY 2014.

While the EUSP has received state general funds in the past, including $21.7 million in FY 2009, no state funds have been received since then. Until 2007, the EUSP was required under its enabling legislation to provide bill assistance at a minimum of 50 percent of the determined need. Also, at that time, the amount of ratepayer funding that could be allocated to the arrearage component of the EUSP was capped at $1.5 million, and an electric customer was limited to a one-time use of EUSP arrearage assistance.

However, due to several statutory revisions, the EUSP is not required to provide bill assistance at a minimum of 50 percent of the determined need, and EUSP participants may receive arrearage assistance once every seven years with certain waiver policies in effect.

Since 2006, OHEP has calculated electric bill payments based on income and household size, actual household electricity consumption, and electricity prices. The calculation is designed so ensure that households with the lowest incomes and the highest electricity usage receive the greatest benefit from the EUSP.

For 2014, the income group at 0-75 percent of poverty received an electric bill benefit that is equal to 40 percent of the estimated annual electric bill; at 76-110 percent, it was 35 percent. The group from 111-150 percent received a benefit equal to 27 percent of the estimated annual electric bill; while those from 151-175 percent of poverty received 17 percent. The benefit for those households living in subsidized housing was 15 percent of the annual bill.

Generally, the EUSP helps pays for a customer's usage (according to poverty level) up to 14,000 kWh annually. Above 14,000 kWh, a customer is presumed to be an electric heating customer, and OHEP applies the customer's LIHEAP grant for any EUSP recipient whose usage exceeds 14,000 kWh up to a maximum of 24,000 kWh.

In November 2011, the OHEP released a report it had prepared on request of a legislative committee. Titled "Report on Long-term Funding Sustainability for Energy Assistance," it outlined several scenarios to increase EUSP funding and otherwise address its future.

Regarding funding, it said that increasing the residential monthly charge to $1.54 from 40 cents would add an estimated $40.6 million to the EUSP fund, generating about $68 million annually.

However, the OHEP noted that increasing the amount collected from residential ratepayers requires a statutory change to public utility law and would require subsequent action by the PSC in order to implement the change. The report also reviewed other scenarios such as reducing eligibility levels, benefits and arrearage payments, along with shortening the application period, but noted that each of these would likely hurt families in need.

In its annual report to the commission for FY 2011, OHEP expressed uncertainty about whether sufficient funding would be available for future years.

Responding to the concerns raised by OHEP, the PSC in January 2012 began a comprehensive review of the state's energy assistance programs in order to determine whether the programs are fulfilling, or can fulfill, their intended purpose and whether they are adequately funded.

In November 2012, the PSC staff submitted a proposal for a program that would replace or reform current programs. Termed the Affordable Energy Plan (AEP), it would feature a percentage of income payment plan to provide affordable bills; arrearage forgiveness with affordable customer payment contributions; integration with existing energy efficiency programs; case management for a targeted group of customers; and crisis assistance. Unlike the EUSP, which is available only to electric customers, all assistance under the AEP would be available for electric and natural gas customers. According to a 2014 status report, the PSC has no plans to proceed with the AEP due to increased RGGI funding ($39.6 million in 2013 and $43.8 million in 2014), and the potential for new programs funded by EmPOWERing Clean Communities to address some of the concerns outlined in the AEP.

Evaluation

In May 2007, PA Consulting group completed an evaluation of the EUSP, presenting the results of process and impact evaluations of the program conducted from July 1, 2004 to June 30, 2006. Among the conclusions of the evaluation:

  • The program is reaching and helping households that have the most severe needs.
  • New or recent participants in the program don't exhibit improved bill payment behaviors and probably can't respond with improved bill payment behaviors in the short term, because they have other substantial needs as well.
  • Participants continuing in the program do show improvements in bill payment behavior.
  • The annual growth in eligible applicants served since 2001 was 48 percent.
  • The program is reaching households in great need of electric assistance as seen by the high average electric burden of participants and by the customer survey results showing the needs of these households and their concerns with meeting monthly electric costs
  • High participant satisfaction was shown with the budget billing and arrearage component of the program, as well as with the application process

Among recommendations for improvements, the evaluation said OHEP should: explore ways to increase program retention of eligible households from year to year; investigate the trade-off between greater program standardization to deliver services consistently throughout the state and inefficiencies that may result from greater standardization; strengthen program processes that will improve the equitable distribution of EUSP benefits across the state; convene the EUSP working group to discuss ways to increase the effectiveness of EUSP administration, in particular, review changes needed in administrative funding limitations in order to address improvements in application processing, local agency training and the OHEP information system; and explore ways to better coordinate EUSP with other assistance programs.

Energy Efficiency

The EmPower Maryland Low-Income Energy Efficiency Program (LIEEP), administered by the Maryland Department of Housing and Community Development (DHCD), helps low-income households by installing energy conservation materials in their homes at no charge. The DHCD is also the federal Weatherization Assistance Program grantee, and it administers its programs through a network of 18 local agencies.

Customers of the five regulated electric utilities are eligible if their income is less than 200 percent of FPG. (The five utilities are Baltimore Gas and Electric Company; Potomac Edison Company/Allegheny Power; Potomac Electric Power Company; Delmarva Power & Light Company; and Southern Maryland Electric Cooperative.) Customers may receive any of the following measures: insulation in the attic, floors and walls; hot water system improvements, lighting retrofits, furnace cleaning, tuning and safety repairs; refrigerator retrofits, if applicable, and health and safety items.

During FY 2015, with an allocation of almost $38.3 million, LIEEP provided efficiency services to 19,220 low-income homes.

History

Originally, the EUSP had three components: bill payment assistance, arrearage retirement payments, and weatherization. In the first years of the EUSP, allocations were made for weatherization, ranging from $1.5 to $3.5 million. In early EUSP documents, both the OHEP and the PSC noted that implementation of the weatherization program lagged behind the other two components. Because of start-up issues and delays in issuing an invitation to bid for program operation, the EUSP weatherization funds were underspent during the program's early years.

Effective July 1, 2005, the weatherization component was transferred from OHEP to the DHCD, the state's weatherization grantee. The transfer was expected to result in a more efficient program, because it would be coordinated with the federal weatherization program. The Department may receive up to $1 million yearly from EUSP funds for weatherization; however, it hasn't received EUSP funds since 2009 due to the availability of ARRA and other weatherization funds.

In 2008, the Maryland General Assembly passed the EmPower Maryland Energy Efficiency Act, creating a new source of funding for low-income energy efficiency. The legislation set a target reduction of 15 percent in per capita electricity consumption and demand by 2015 from a 2007 baseline.

The act required the five regulated Maryland electric utilities to submit three-year plans, providing energy efficiency programs under EmPower Maryland to all customer classes including low income. LIEEP, the low-income component, began operations under utility administration in 2009.

In 2012, the DHCD petitioned the PSC to designate it as the LIEEP implementation agency. It cited its long experience running the WAP, its network of 18 local weatherization agencies, and its success in ramping up weatherization activities statewide with the infusion of ARRA weatherization funds. The PSC complied with the DHCD request and, in April 2012, the agency began operating LIEEP with a three-year budget of over $45 million.

In addition to providing RGGI funds to energy assistance, Maryland allocated a portion of these funds for low-income energy efficiency; originally the amount was 23 percent, but effective 2012 it was reduced to 17 percent. However, due to ARRA funding, the low-income weatherization program received this funding sporadically; the largest amount it received was $3.6 million in FY 2010; the remaining RGGI funding went for energy retrofits in multi-family buildings for low to moderate income families. In 2014, SEIF/RGGI funds for energy efficiency amounted to $1 million.

For more information

Electric Universal Service Program Evaluation: Final Evaluation Report, PA Consulting Group, May 2007

Filings related to the EUSP (Enter Case Number 8903)

The EmPOWER Maryland Energy Efficiency Act, Standard Report of 2015

Filings related to EmPower Maryland and EmPower Maryland Low Income Energy Efficiency Program (Enter Case Numbers 9153, 9154, 9155, 9156, 9157)

Electric Universal Service Report 2014 Annual Report

PSC Order Number 75935, which adopted the DHR's plan for initial EUSP operation.

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