Last Updated: January 2016
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Nevada provides rate assistance through the Energy Assistance Program (EAP), assisting eligible Nevadans in paying their utility costs and providing emergency assistance for households in crisis.
The EAP has two funding sources: the state's LIHEAP grant and the Nevada Fund for Energy Assistance and Conservation (FEAC). The FEAC is funded by a universal energy charge (UEC) assessed on all retail customers of Nevada's regulated electric and gas utilities, with some exceptions. The Public Utility Commission of Nevada (PUCN) has been collecting the UEC since August 2001 and takes up to 3 percent of the UEC for its administrative costs. The remainder is placed in an interest-bearing account of the state Division of Welfare and Supportive Services (DWSS), the LIHEAP grantee.
DWSS distributes up to 75 percent of this amount to the Welfare Division for its EAP, and up to 25 percent to the Nevada Housing Division's Weatherization Assistance Program (WAP). Any accumulated interest is distributed to the EAP and WAP programs. Funds are drawn down periodically as needed by each program thus enabling interest to accrue on the balance.
The FEAC distributed $14.8 million for state fiscal year (SFY) 2014; almost $11.1 million, 75 percent, went to the EAP.
DWSS administers the EAP and, since July 2002, has been using both federal LIHEAP and FEAC funds to operate an energy assistance program that requires participants to pay no more than a small percentage of their income for energy. According to Home Energy Affordability Gap analysis by Fischer, Sheehan & Colton, 2014 low-income household energy burdens in Nevada ranged from 18 percent for households below 50 percent of federal poverty guidelines (FPG) to 5 percent for households at 150 percent FPG. In comparison, the energy burden for non-low-income households was 4 percent.
The benefit through FEAC, referred to as a Fixed Annual Credit (FAC), is calculated for each eligible household. It is the amount sufficient to reduce the percentage of the applying household's income spent on natural gas and electricity to the state median percentage of household income spent on these services (see the calculation below). Both the state median household income and median household energy burden are updated annually. Nevada's SFY 2014 median household income was $69,475, and the statewide median household energy burden for natural gas and electricity was 2.23 percent.
UEC-eligible households may also receive help with their past due bills under the Arrearage Payment Program. The household must have paid an amount equal to at least 2.23 percent of its income toward the arrearage during the 12 months in which the arrearage occurred in order to receive a one-time benefit for heating or cooling. The only exceptions are households with chronic, long-term medical conditions that create a financial hardship and/or increase the energy consumption of the household. DWSS has the flexibility to restrict the Arrearage Payment Program to special households (child under 6, elderly, or disabled) or suspend the program entirely when program funding is limited.
The EAP spent about $5.7 million in UEC funds for rate assistance in SFY 2014. Combined with LIHEAP funds, the program provided an average benefit of $718 for heating and cooling to 24,333 households. This compares to about $8.4 million in UEC funds spent for rate assistance the previous year, which saw an average benefit of $729 to 26,039 households.
Only those households that are charged a UEC on their natural gas and/or electricity bill may receive a FAC benefit paid from the FEAC. Eligible households can receive both LIHEAP and FEAC funds, but FEAC funds can only be distributed to a participating UEC vendor. The two funding sources are separate and are disbursed and tracked separately. Eligibility for the FAC and Arrearage Payment Program is set at 150% of the federal poverty guidelines.
In cases where eligible households have only non-UEC vendors (electric cooperatives and bulk fuel dealers), the FAC benefit is paid with LIHEAP or other non-UEC funds, up to the maximum amount. Any remaining FAC benefit due will be paid with revenue from other sources, such as state general funding.
A portion of the UEC funds goes to the Nevada Housing Division (NHD) to be spent in coordination with federal funds from the U.S. Department of Energy Weatherization Assistance Program (WAP). All households receiving a FAC are referred by the Welfare Division, via the agency's computer system, to the NHD for energy efficiency services.
Under the weatherization portion of the UEC, the NHD received over $2.8 million for SFY 2014 and spent almost $2.9 million to weatherize 549 units. Almost half of the households had vulnerable populations: elderly (47.2 percent) or disabled (41.5 percent) and 14.9 percent of households had young children. The most common health and safety measures installed in homes included heating and cooling system repairs and replacement and installation of carbon monoxide monitors. Other measures included air sealing, insulation, lighting and refrigerator replacement.
Utilities contributed $247,500 in 2014 to complement and enhance the weatherization programs operated with UEC and DOE funds.
In July 2001 Nevada created a funding source to supplement existing low-income energy programs. AB 661 , the enabling legislation, created the FEAC through a mill tax assessment, or UEC, paid by residential, commercial and industrial customers of the state's regulated gas and electric utilities. The UEC is 3.30 mills per therm of natural gas and 0.39 mills per kWh of electricity purchased by these customers. Nevada's Energy Assistance Code clarifies what the UEC pays for as well as the duties of the Welfare Division and Housing Division in administering and implementing the law.
The monthly charge averages about 47 cents on the typical residential electric bill and 16 cents on the typical residential gas bill. For SFY2011, the FEAC revenue distributed between EAP and WAP was about $11.8 million, a 27 percent decline compared to funds available in SFY 2009. In 2011, there was an effort in the Nevada Legislature to increase the UEC but the proposed legislation, even though unopposed, failed to reach a final vote.
For SFY 2012, due to a projected 75 percent decrease in federal LIHEAP funds, several changes to the Arrearage Payment Program were instituted to ensure that limited funds were directed to households most in need:
- Income eligibility was reduced from 150 percent to 110 percent FPG
- Arrearage assistance component was suspendedL/li>
- Average payment was reduced approximately 43 percent from SFY 2011
Mid-year, LIHEAP funds were received at a higher level than originally planned, and DWSS made appropriate benefit and eligibility changes. For SFY 2013, program eligibility was restored to 150 percent FPG and the arrearage program was reinstated as of December 1, 2012. Targeted monthly benefits were increased from $555 to $776.
Evaluations have been completed for the first ten years (SFY 2007-2015) of the UEC-funded energy assistance and weatherization programs and are available on the DWSS's website.
Initially, the evaluations noted that DWSS was still ramping up the energy assistance program and spent less than a quarter of its FEAC during the first two years due to problems with outreach, computer technology and administration. These problems had largely been resolved by the end of the fourth year.
During SFY 2012, the weatherization program faced challenges in that funding from the American Recovery and Reinvestment Act and the Sustainable Energy Resources for Consumers residential renewable energy projects, funded through formula grants awarded by the DOE, represented the primary effort for most of the program year. These programs closed out June 30, 2012 and required priority processing over UEC weatherization projects because no federal funds could be carried forward. Consequently, NHD's subgrantees were unable to prioritize UEC projects until the latter part of SFY 2012. Subgrantees with unspent UEC funds were allowed to carry over remaining FEAC funds into SFY 2013.
The SFY 2013 evaluation concluded the amount of time used for application processing was reduced by nearly half. It also found increased benefit levels for households under 75 percent FPG reduced their energy burden but was still not enough to match the 2.3 percent statewide average.
The SFY 2015 evaluation determined that the EAP does significantly reduce the energy burden of participating households, but still doesn’t meet the goal of reducing the energy burden to the 2.23 percent state median, particularly for households with income less than 125 percent of the federal poverty level. The weatherization program slightly exceeded their goal for the number of homes weatherized.
Home Energy Affordability Gap, Fisher, Sheehan and Colton