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State PBF/USF History, Legislation, Implementation

Wisconsin

Last Updated: August 2016
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Rate Assistance

Since FY 2001, Wisconsin has integrated its low-income Public Benefits Fund (PBF) with LIHEAP funds in order to operate a program that addresses participants' total home energy costs.

Eligible low-income households receive a non-heating electric benefit, which is applied to their electric bill, while LIHEAP funds continue to be applied to their heating costs. The Wisconsin Department of Administration (DOA), the LIHEAP and Weatherization Assistance Program grantee, administers LIHEAP and the PBF under the Wisconsin Home Energy Assistance Program, which is under the umbrella of the Home Energy Plus program. Households with incomes at or below 60 percent of state median income are eligible for services, including energy assistance, crisis assistance and furnace repair and replacement.

During FY 2014, about $40.5 million in PBF funds was spent on energy assistance, helping 224,161 households through an electric benefit averaging $180, and $2.03 million was spent on crisis assistance for 9,937 households that received crisis assistance averaging $204. About $8.3 million was spent on furnace repair and replacement, along with other federal and state funds.

The PBF derives revenues from a fee collected by electric utilities from their customers and remitted to DOA. In addition, the Public Benefits Fund receives revenues equal to the amounts that major electric and gas utilities collected from their customers as of 1998 for utility-sponsored public benefits-type programs each year. For FY 2014 the fees amounted to $102.9 million and the utilities' previous collection amount totaled $21 million, as provided by law. (See "History" section below).

Municipal utilities and electric cooperatives have the option of implementing a low-income energy assistance program themselves or forwarding their fee collections to DOA for its statewide low-income public benefits program, thus allowing their customers to participate in the DOA program. In 2014, 15 of the state's 24 retail electric cooperatives and 54 of the state's 82 municipal electric utilities participated in the DOA-operated program, and they transferred about $2.9 million in fees to the agency.

The remaining utilities collected and kept their fees, which they are required to spend on their own "Commitment to Community" (CTC) programs, which must include low-income components. However, any customer or member receiving energy assistance from a municipal utility or electric cooperative may not also receive benefits under the DOA-operated program, although these customers are still eligible for LIHEAP or WAP. Many of these utilities require their low-income participants to verify their income eligibility through LIHEAP. Expenditure and participation data for the CTC programs are not available.

Energy Efficiency

Households eligible for weatherization can receive enhanced energy-saving measures through the PBF and other funds, including water heater conversions, refrigerator replacements, furnace upgrades, insulation, lighting and other electrical use upgrades, health and safety measures, and energy education.

The PBF funds are spent in coordination with the WAP. During program year 2014, public benefits expenditures for weatherization (direct labor and materials) totaled about $33.9 million with 6,291 units receiving PBF-funded measures and with an average savings of $413 per year.

History

The state's major electric utilities began offering demand-side management (DSM) programs in the mid-1980s, encouraged by the Public Service Commission (PSC) of Wisconsin as a way to reduce energy demand and thereby forestall the need for new power plant construction. Low-income energy efficiency programs were first initiated in 1982 as a component of both electric and natural gas utilities' DSM efforts. At the same time, the PSC began ordering major utilities to establish programs to assist low-income customers with their utility bill payments.

In some cases, utilities provided direct bill payment assistance for certain customers who were unable to make full payments, while other programs were preventative in nature and were designed to identify customers with severe financial problems and to provide assistance in such matters as household budgeting. The major utilities continued to operate these types of low-income programs into the mid-1990s, a period during which utilities in Wisconsin and elsewhere began to undergo significant changes and to consider utility restructuring.

In 1994 the PSC opened a docket to explore the costs and benefits of restructuring the electric utility industry. Two years later it opened another docket on public benefits programs, including energy efficiency and other programs for low-income customers. These were programs that the PSC determined could be at risk in a restructured regulatory environment. The PSC and other policy makers grappled with the issue of who would provide and fund these public benefits if they were no longer provided by the utilities.

In December 1997, the PSC issued a statement of policy and principles relating to measures that should be undertaken to maintain or enhance the existing public benefits programs; the statement stressed the importance of public benefits, detailed which public benefits should be continued and estimated the amount of funding that should be provided to support such benefits.

With respect to low-income programs, the PSC stated that the goal should be "to increase the affordability of energy services while protecting low-income customers from the health and safety consequences of losing access to energy sources and energy efficient housing. At minimum, the current level and quality of low-income services provided by utilities and government agencies should be maintained."

The legislature followed through on the PSC's work with the passage of the "Reliability 2000" law in late 1999. It addressed long-term energy reliability issues and created public benefits funding for energy efficiency, renewables and low-income energy programs. The low-income programs are permanently funded.

Funding for the low-income energy portion of the PBF varies each year and comes from three sources:

  1. Prior utility (gas and electric) low-income expenditures. This source, which doesn't change each year, represents the amount utilities spent on low-income rate assistance and energy efficiency programs in 1998, determined by the Public Service Commission of Wisconsin to be $21.3 million. This amount, referred to as the "transferred amounts" continues to be collected annually and is embedded in customers' bills. At the end of a three-year transition period in January 2003, the utilities were required to transfer these funds and program operations to the DOA's Division of Energy.
  2. A new access fee or customer charge collected from investor-owned utilities. This source, which is adjusted yearly, is based on a complex formula in the law that determines the level of low-income need as a function of income and energy cost. The law requires that 70 percent of the access fee come from residential customers and 30 percent from nonresidential customers. It also requires that any individual charge may not exceed the lesser of 3 percent of the total monthly bill or $3.15 per month for residential customers and $750 per month for industrial commercial customers. It must be stated on the customer's bill as the "state low-income assistance fee." These fees amounted to about $25 million in FY 2001, the first year they were collected, and by FY 2014 they had grown to $102.9 million.
  3. The current year's federal LIHEAP and weatherization allocations. These, of course, change each year based upon Congressional allocations. For federal FY 2014, Wisconsin's LIHEAP funding was $103.1 million of which about 15 percent, or $14.5 million, was set aside for weatherization. Wisconsin's 2014 regular allotment from the Department of Energy Weatherization Assistance Program was $6.7 million.

The law specifies that 47 percent of the total low-income funds must be dedicated to weatherization and 53 percent to bill payment assistance. However, under legislation passed in 2011, the DOA was permitted to take $10 million per year (through 2013) from weatherization and other energy conservation services and transfer it to energy assistance; this was done because LIHEAP funding had declined while weatherization had increased due to federal stimulus funds.

For More Information
State Report: Wisconsin, from Ratepayer-Funded Low-Income Energy Programs: Performance and Possibilities, APPRISE and Fisher, Sheehan, and Colton, July 2007

Home Energy Plus Public Benefits Annual Report (for 2014)

Assessment of Gas and Electricity Savings for Homes Treated under Wisconsin's Home Energy Plus Low-Income Weatherization Program, Wisconsin Energy Conservation Corporation, February 2014

Department of Administration's Energy Services Informational Paper 88, Wisconsin Legislative Fiscal Bureau, January 2013 (Includes PBF history and budgets through 2012)

Overview of 1999 authorizing bill

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