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LIHEAP Clearinghouse News Bulletin - January 2016

LIHEAP Heating Programs Faced Demand, Budget Considerations

As many LIHEAP grantees geared up for the busiest months of their heating programs, some states faced challenges that ranged from low-income constituents already facing shutoffs all the way to legislative disputes that jeopardized supplemental funding.

In September 2015, Iowa utilities sent disconnect notices to 91,000 households. With that many households facing loss of utility service, it is not surprising that Iowa LIHEAP had plenty of applicants when its heating program started in October. By mid-November, it had already provided benefits to over 31,000 households.

"Energy is clearly unaffordable for a large segment of the population," Iowa LIHEAP Director Jerry McKim stated. "I still believe my [LIHEAP] benefit is wholly inadequate to address the energy insecurity that a lot of Iowa households experience."

Iowa bans disconnection of service between November 1 and April 1. However, it only applies to low-income households that are signed up for LIHEAP or weatherization. Therefore, an eligible low-income household that does not apply for either program could still be disconnected. Most states have policies outlining when utility service cannot be disconnected. Some prohibit disconnection during certain months of the year while others use specific temperature-based criteria. To read about these various state policies, see this table on the Clearinghouse website.

In the South, Georgia allowed the homebound and elderly to apply for heating assistance starting in December, with open enrollment for the general public commencing in January. This type of early or staggered enrollment for vulnerable populations is fairly common. At least 17 states use some form of early application for households containing elderly, disabled, or young people. Some of these states use staggered enrollment periods like Georgia, while others, like Montana and Utah, mail LIHEAP applications to households containing vulnerable members before their programs start.

There was plenty of need for energy assistance in Illinois, but a budget standoff held up the release of supplemental state funds. Early in 2015, Governor Bruce Rauner announced he wanted to use $265 million in supplemental funding for LIHEAP that is generated by a surcharge on Illinois ratepayers to help fill a $6 billion budget deficit (for more on these state funds see this overview on the Clearinghouse website). By mid-2015, the legislature had passed a budget that did not eliminate the state’s deficit. Governor Rauner responded with a list of planned cuts that would begin July 1 unless a budget addressing the deficit passed. Included in the list was the suspension of state supplemental LIHEAP funding.

This had immediate implications for low-income households. The head of the Illinois Association of Community Action Agencies said all federal LIHEAP funds had already been expended, with over 70 percent of his local agencies having run out in March. He said, without the state funds, local agencies wouldn't be able to provide energy assistance until FY 2016 LIHEAP funds arrived in October.

When no resolution happened before July 1, supplemental state funding was suspended. By September, the state had announced that seniors and people with disabilities could not start applying for heating assistance, which had been the practice in previous years. The state pushed this enrollment back to October. In early December 2015, the legislature passed and the governor signed a stopgap spending bill, which included $165 million in supplemental energy assistance funds. With these funds, the Illinois Association of Community Action Agencies said it could provide energy assistance to 150,000 low-income households.


A History of Negotiating Delivered Fuel Prices in Vermont

Did you ever notice what happens when your car needs gas? You scan gas station signs and steer your car to the lowest priced pump. But when was the last time you drove by an oil, propane or kerosene dealer and saw their per gallon prices? The reality is that fuel dealers have a myriad of prices that never get posted on a sign.

In a state where 93 percent of LIHEAP benefits are paid directly to delivered fuel dealers, Vermont has negotiated fuel discounts for LIHEAP clients since 2001. One of the challenges has been making sense out of the myriad of prices and plans that are offered by vendors. Prices may vary based on how fuel is purchased, with different prices for cash, credit, pre-buy, budget plans, or whether the recipient is a member of a fuel buyers group. Over the last two decades, Vermont’s LIHEAP program has employed four different pricing systems for fuel oil, propane and kerosene (O/P/K) with varying degrees of success and some challenges, explained Richard Moffi, formerly Vermont's LIHEAP Director.

  • 1996-2001: Retail Price and Discount Parity.” Program rules stated: “For (O/P/K) fuel suppliers that provide discounts to their customers, the supplier agrees to grant Fuel Program (LIHEAP) recipients the same discounts for cash payment, prompt payment, preseason contract price, or any other discounts granted to any other heating fuel customer.” For those dealers that provided a discount, this worked reasonably well. But for dealers not offering any discount, there was nothing to be gained, and there was no universality of leveraging lower prices for all O/P/K LIHEAP clients.
  • 2001-2008: “Summer Fuel Purchase Program.” Vermont statute stated “The Secretary shall engage in cost-effective purchasing practices to maximize the purchasing power of (LIHEAP) public funds. (Including) preseason purchases, fixed price agreements and negotiations with fuel suppliers on behalf of Program beneficiaries for additional fuel price discounts.” This required a knowledgeable staff person who was dedicated to negotiating 75-100 similar-but-flexible contracts. The basic contracts utilized each dealer’s own established terms and conditions. The final negotiated deals were a blend of pre-buy and budget-plan pricing mechanisms. A maximum per gallon price was established and “downside” protection was required, meaning, if the retail price fell, so did the price the LIHEAP client was charged. Again there was not universality, not all dealers engaged in pre-buys or budget plans, and some dealers who did have those plans chose not to participate.
  • 2008-2013: “Required per Gallon Discounts.” The state LIHEAP looked into other options and, in FY 2009, participating vendors were required to provide a 3 percent discount off the retail price, or their current cash discount for heating oil, kerosene or propane, whichever was greater. In FY 2010, the discount changed to $0.05 per gallon off the dealer's retail price or the cash discount.
  • 2013- 2016: “Margin Over Rack (MOR) & Discount Off Retail (DOR).” Beginning in FY 2014, Vermont required fuel suppliers that participate in LIHEAP to choose either a Margin Over Rack or Discount Off Retail program. The MOR price is calculated by adding a margin of $0.50 to the Vermont Fuel Assistance Rack Price that is determined by Vermont’s LIHEAP office. At the time of delivery, the supplier applies the lower of the MOR price or the supplier's current daily posted retail price with the regular cash or prompt payment discount.

The DOR is a fixed discount of $0.15 per gallon off the supplier's daily posted retail price in addition to the supplier's regular cash or prompt payment discount. The MOR and the DOR apply to both regular and crisis assistance, however, the supplier is not required to apply the regular cash or prompt payment discount to crisis fuel deliveries in addition to the $0.15 DOR.

Vermont's MOR and DOR vendor agreements are available on the state's fuel assistance website. A Clearinghouse publication, LIHEAP Negotiations with Non-Regulated Fuel Vendors, has more information about fixed margin and summer fill programs and discounts that enhance other state LIHEAPs.

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Low-Income Energy Publications

Weatherization Assistance Program PY 2014 Funding Survey, National Association for State Community Services Programs, August 15, 2015. According to the report, the “WAP Funding Survey provides an opportunity for Grantees to estimate the number of homes to be weatherized using various funding sources.” These sources include the U.S. Department of Energy's WAP, the U.S. Department of Health and Human Services' Low-Income Home Energy Assistance Program (LIHEAP), and other programs including utility funds. The survey reports on the number of households weatherized during the 2014 program year, as well as the amount of funding expended in each state. The report also gives a brief history of weatherization efforts and funding trends.

Energy Costs and Burdens in Vermont: Burdensome for Whom?, Vermont Low Income Trust for Electricity, Inc. May 2014. This report examines fuel burdens in Vermont and finds that households that spend more than 10 percent of their household income on energy services can generally be considered “fuel poor.”. The report goes into greater detail about the effects on health and well-being that living in a “fuel poor” environment can have on the members of a household and gives recommendations for improvements to the Vermont Legislature.

LIHEAP: Impact on Communities of Color, David Honig, Energy Equity Alliance, April 2015. The report explores the impacts of LIHEAP on low-income communities among socially-disadvantaged minority groups in the United States.

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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 28,
January 2016


In This Issue

LIHEAP Heating Programs Faced Demand, Budget Considerations

A History of Negotiating Delivered Fuel Prices in Vermont


What's New on Our Website

Fiscal Year 2016 LIHEAP State and Tribal Plans

Table: State Percentage of Poverty Income Guidelines for Fiscal Year 2016

Table: LIHEAP Funds by Proram Components for State Grantees (FY 2016)


Low-Income Energy Events

June 4-5, 2016. NEADA Summer Meeting, Denver, CO. Check the NEADA website for more information.

June 6-8, 2016. National Energy and Utility Affordability Coalition's Annual Conference, Denver, CO. See the NEUAC brochure for registration information and more details.

OCS Regional LIHEAP Grantee Training Conferences. For registration and other information, see the OCS Meetings and Events website. Regional Conferences are set for:

March 15-17, 2016. New York City, NY

April 11-13, 2016. San Antonio, TX

May 4-6, 2016. Portland, OR

June 1-3, 2016. Denver, CO


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