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LIHEAP Clearinghouse News Bulletin - September 2011

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LIHEAP Agencies Brace for Higher Energy Costs, Reduced Funding

Low-income energy officials are bracing for a winter of higher energy costs and the potential of reduced LIHEAP funding.
State officials in the Northeast, where higher percentages of households use heating oil, are encouraging LIHEAP clients to fill up their oil tanks early before prices rise in colder weather.
In Pennsylvania the week of September 19, heating oil prices were $3.39 per gallon, up $1 per gallon from a year ago; in New Hampshire, prices were at $3.67 per gallon.
Additionally, states are expecting reduced LIHEAP funding, based on budget recommendations from the Obama Administration and recent action by the Senate Labor HHS appropriations committee. The Administration has proposed cutting LIHEAP funding to $2.57 billion, a 45 percent cut from FY 2011 level of $4.7 billion, while the Senate has proposed $3.6 billion, of which about $200 million would be provided as emergency funding. As of September 26, the House had not put forth a proposal.
States are also expecting reduced funding from the Community Services Block Grant, which supports their operating budgets. Two agencies in Missouri have laid off staff and one is accepting LIHEAP applications by mail only.
Reacting to the Administration's LIHEAP proposal, Connecticut has proposed to provide energy assistance only to delivered fuel households, reasoning that utility customers are protected from gas and electric service disconnections during the coldest months. Connecticut has also proposed to reduce LIHEAP eligibility from 60 percent of state median income to 150 percent of federal poverty guidelines, with disabled and those 60 and over at 200 percent of FPG.
Pennsylvania is cutting its minimum benefit to $100 compared to $300 last year and its maximum crisis benefit from $400 to $300. Massachusetts is proposing to cut its benefits by about 50 percent.
Colorado has reduced its income eligibility maximum from 185 percent of FPG to 150; Nevada has cut its maximum from 150 percent of FPG to 110 percent. Nevada has also reduced its maximum benefit from $860 last year to $500.
The U.S. Energy Information Administration (EIA) projects heating oil prices will continue to rise for the remainder of the year and through the winter. The national average price has risen 8 cents a gallon since August to $3.82 per gallon. The price per gallon is expected to reach an average of $3.85 in October, and to peak at $3.96 in February before starting to drop, according to EIA.

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New PIPP Goes Statewide in Illinois

For the first time, some LIHEAP clients will have the option of choosing between the state's traditional Direct Vendor Payment (DVP) plan or the new Percentage of Income Payment Plan (PIPP). The PIPP is available to eligible LIHEAP clients who are customers of Ameren Illinois, ComEd, Nicor Gas and Peoples Gas/North Shore Gas.

Under the PIPP, participants will pay no more than 6 percent of their incomes for gas and electric service, will receive a monthly benefit towards their utility bill, and receive a reduction in their arrearages for every on-time payment they make by the bill due date. The traditional DVP plan is a one-time payment.

Program funding will come through LIHEAP and an existing meters charge that has provided supplemental funding for low-income energy assistance and energy efficiency in Illinois for over a decade. Legislation passed in 2009 authorized the PIPP and increased the meters charge by about 20 percent, from 40 cents to 48 cents for residential customers and a comparable increase for commercial/industrial customers.

Under the arrearage reduction component, participants who make their monthly PIPP payments on time will receive a monthly credit amounting to 1/12th of their past due bills, up to $1,000 per year for gas bills and the same amount for electric bills.

The Illinois Department of Commerce and Economic Opportunity, the LIHEAP and weatherization grantee, administers the PIPP in coordination with LIHEAP. The program began as a pilot in the Ameren service territory in February 2010.

The PIPP was designed to bring low-income households' home energy payments down to the same percentage that non low-income households pay for home energy — between 4 and 6 percent of their income. By comparison, LIHEAP households pay between 21 to 30 percent of their income for home energy.

State officials said that due to the start-up of PIPP, LIHEAP clients may experience longer wait times when applying for assistance, but they should ultimately receive better service delivery.

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Survey Details WAP Funding for PY 2010

The National Association for State Community Services Programs' (NASCSP) most recent survey of the 50 states and the District of Columbia shows about $950 million was available to the states and their respective local agencies to operate the Weatherization Assistance Program (WAP) in Program Year 2010. This represents a decrease of $232 million, or 19.5 percent, from the PY 2009 funding level of almost $1.2 billion.

A national network of states, local agencies, and private contractors used these funds to weatherize the homes of 143,192 low-income families, according to estimated production figures provided by the states. Of the total, about $176 million is from the U.S. Department of Energy (DOE) WAP allocation, with the remaining $782 million leveraged from federal, state and private sources, or approximately $4.45 in federal and non-federal resources for every dollar invested by DOE.

Leveraged funds come from two major sources: the U.S. Department of Health and Human Services (HHS) LIHEAP set-asides (states may use up to 25 percent of their LIHEAP block grant to fund weatherization-related activities) and "other funds" from utility companies, states, and property owner contributions. (See chart below).

Forty-two states, the District of Columbia and one territory transferred an estimated $571 million in LIHEAP funds into the WAP in PY 2010. This represented over half, or 59.6 percent, of the total WAP funds available that year.

The "other funds" category represented approximately $211 million, or 22 percent, of the total funds available for WAP in 2010. This category had been steadily increasing and reached a 15-year high in PY 2008 with over $400 million in funding from utilities, state general revenues, property owner contributions, and rehabilitation grants. As in previous years, utility companies were the primary source of "other funds", followed by the Regional Greenhouse Gas Initiative (RGGI), state general revenues and property owners.

Graph of WAP funding sources
     Source: National Association for State Community Services Programs'

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The content of this publication does not necessarily reflect the views or policies of the Department of Health and Human Services, nor does mention of trade names, commercial products, organizations or program activities imply endorsement by the U.S. Government or compliance with HHS regulations.
National Center for Appropriate Technology
News Bulletin, Number 12
September, 2011


In This Issue
LIHEAP Agencies Brace for Higher Energy Costs, Reduced Funding
New PIPP Goes Statewide in Illinois
Survey Details WAP Funding for PY 2010


What's New on Our Website

2010 State-by-State Supplements to Energy Assistance and Energy Efficiency


Low-Income Energy Events

October 23-28, 2011
NCAF Energy & Community Economic Development Conference, Vinoy Renaissance Hotel, St. Petersburg, FL. More information and registration is available on NCAF's website.
June 11-13, 2012
Save the date for next year's National Energy and Utility Affordability Conference at the Sheraton New Orleans Hotel in New Orleans, Louisiana.


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