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Targeting LIHEAP Benefits

STATE STRATEGIES BASED ON HOUSEHOLD INCOME,ENERGY BURDEN AND HEATING COSTS Compiled by the LIHEAP Clearinghouse March 2010

Table of Contents

Introduction

Assuring that the highest LIHEAP benefit goes to households with the lowest incomes and highest energy costs in relation to income has always been an integral part of LIHEAP. Prior to 1994, Congress had charged program administrators to develop strategies to "assure that the highest benefits go to households with the lowest incomes and the highest energy costs in relation to income, taking into account family size," (Section 2605(b)(5), LIHEAP statute).

In its 1994 reauthorization of the LIHEAP program (Public Law 103-252, signed May 18, 1994), Congress put additional emphasis on awarding benefits to those who needed them most by defining the purpose of LIHEAP as, in part, to "provide assistance to low-income households in meeting their home energy costs, particularly those with the lowest incomes that pay a high proportion of household income for home energy."

Further, Section 2605(b)(5), cited above, and the one most relevant to this paper, was changed. States must now "provide, in a timely manner, that the highest level of assistance will be furnished to those households which have the lowest incomes and the highest energy costs or needs in relation to income, taking into account family size," (emphasis added).

For the first time, Congress defined both "energy burden" and "energy needs." "Energy burden" was defined as "the expenditures of the household for home energy divided by the income of the household." The phrase "highest home energy needs" was described as "taking into account both the energy burden of such household and the unique situation of such household that results from having members of vulnerable populations, including very young children, individuals with disabilities, and frail older individuals."

LIHEAP statutory amendments based on Public Law 103-252 require that states consider a household's energy need and energy burden at three programmatic points: outreach activities, eligibility determination, and provision of assistance.

In addition to the statute's additional emphasis on providing assistance to high burden households, Congressional committee notes made strong recommendations on that subject. In Congressional committee notes referencing the legislation (House Report 103-483 on H. R. 4250, Committee on Education and Labor), Congress explained its concern in expanding the statute as follows:

In order to ensure that LIHEAP assistance is targeted to those households which truly have the highest energy burdens, absolute level of income and energy burden must be considered together. The committee believes that States need to reassess their benefit structures designed as a result of this long-standing provision to ensure that they are actually targeting their various assistance levels based on both of these factors.

Energy burden alone may not ensure that LIHEAP assistance is truly targeted to households most in need. For example, two households may have energy burdens of 10 percent, but one household may have an income of $2,000 while the other has an income of $10,000. Clearly the household with the lowest income and 10 percent energy burden will have the harder time meeting its immediate energy needs.

...In addition, the committee urges states to use actual energy bills in determining energy burdens and designing their benefit structures.

Congress's concern over the energy burden of the low income was certainly not the first or the last time it had been called to public attention. Publications by the federal government and advocacy groups have noted the disproportionate energy burden of the low income for over a decade.

The Department of Health and Human Services in its annual "LIHEAP Home Energy Notebook" compares the energy burden of all households, low-income households and LIHEAP recipient households, both for total residential energy costs and for home energy, i.e., only heating or cooling costs. Consistently, the energy burden of low-income and LIHEAP recipient households has been around twice that of all households. The most recent versions of the Notebook, for FY 2007, reports that the residential energy burden for low-income households was 13.5 percent and for LIHEAP recipients it was 16 percent, compared with 7 percent for all households. The home heating burden for all households was 2.2 percent, compared with 4.4 percent for low-income households and 6.5 percent for LIHEAP recipients.

The 2007 Notebook, in a section on LIHEAP program goals and performance goals, also provides the most recent data (from 2005) on the performance of states in targeting high burden households.

In a 2008 paper, "The Burden of FY 2008 Residential Energy Bills on Low-Income Consumers," Economic Opportunity Studies used forecasts from Oak Ridge National Laboratory to conclude that during 2008 the LIHEAP eligible population, about 34 million households, could expect to pay an average of $1,864 for energy or 17 percent of their incomes; the lowest income would pay 22 percent, while the non-poor would pay around 4 percent. The paper also estimates energy burden for low-income households by census region and fuel type.

Since the inception of LIHEAP, states have developed a variety of targeting strategies to assure more equitable benefit levels based on income, energy costs and energy burden. In this paper, the LIHEAP Clearinghouse updates its 1996 compilation on state variations in targeting of LIHEAP benefits. The purpose of this paper is to select sample variations; it is not intended to cover all states' methods. The Clearinghouse has identified three separate approaches employed among the states.

1) The first approach is called the percentage of income payment plan (PIPP). The FY 2010 programs of North Dakota, Ohio, and Nevada are highlighted in the first section of this report, along with Colorado's, which resembles a PIPP. (Note: While there are numerous utility-sponsored PIPPs and variations upon them, they are beyond the scope of this paper. More information is available from the National Consumer Law Center and the LIHEAP Clearinghouse.)

2) The second approach is called burden-based targeting. Employed by some states in response to the 1994 LIHEAP statute reauthorization, it determines individual client energy burdens and directly factors them into the LIHEAP benefit determination, along with other factors such as presence of vulnerable persons (elderly, disabled or households with children) in the household. The FY 2010 practices of the states of Arizona and Louisiana are detailed in Section Two.

3) The third approach is called the cost-based method and it bases LIHEAP benefits on actual heating costs (or a reasonably accurate estimate thereof), with benefit matrices designed to ensure that those with the highest costs and lowest incomes receive the highest benefits. Of these cost-based approaches, FY 2010 examples from New Hampshire, Minnesota, Washington, Wisconsin and a pilot in Oregon are detailed in Section Three of this paper.

Section 1: Percentage of Income Targeting

Ohio

Ohio has had a statewide Percentage of Income Payment Plan (PIPP) since 1983 when it was created by the Public Utilities Commission of Ohio (PUCO). It is the largest and oldest state mandated PIPP in the country, serving over 230,000 households in 2009.

The PIPP was restructured in 2009 for the first time since it started, but the new program likely won’t be fully in place until November 1, 2010, when the ruling by the PUCO becomes effective.

Through the existing PIPP, qualified customers pay 10 percent of the household's current gross monthly income to the utility company which provides the primary source of heat, (typically natural gas) and 5 percent of the household's current gross monthly income to the company providing the secondary source of heat, (typically electricity). A customer served by a combination utility company or an all electric home pays 15 percent of monthly income to that utility company.

Customers who are at or below 50 percent of the federal poverty level pay 3 percent instead of 5 percent for their secondary source of heat during the winter season only. Or, if the lower income customer is served by a combination utility company or has only one heating source, the customer pays 13 percent of gross monthly income to that utility company.

Those customers with electricity as their primary heat source pay the specified percentage of income during the heating season, (November 1 through April 15); during the non-heating season (April 16 through October 31), they pay the percentage of income or the current bill, whichever is higher. Gas heat customers pay the 10 percent of their income year round.

If customers remain current on their PIPP payments, they cannot be shut off at any time regardless of the amount of their arrears.

When the new program is implemented, low-income participants will pay a maximum of 6 percent of their incomes on their natural gas bills and 6 percent on their electric bills for a total of 12 percent, or 10 percent if they heat with electricity. Both gas and electric PIPP customers will make payments year round and must make a minimum payment of $10 per month. If they make their monthly PIPP payment on time, they will receive a bill credit that is the difference, if any, between their monthly PIPP payment and their bill. Participants will also be offered a standard arrearage-crediting program.

The PIPP only applies to customers of gas and electric utilities regulated by the Public Utility Commission of Ohio; customers of municipal or cooperative utilities cannot participate. The amount of the bill not covered by a combination of the customer's PIPP payment, the LIHEAP payment, and any other energy assistance the customer may receive, is recovered through a tariff rider or surcharge on gas and electric utility bills.

With the passage of electric utility restructuring legislation in Ohio in 1999, the electric portion of the PIPP underwent several changes. Formerly each regulated utility company administered its own PIPP accounts; the restructuring legislation required that electric PIPP accounts be administered through the Ohio Office of Community Services (OCS), the LIHEAP grantee. (The gas portion of the PIPP remains unchanged.)

The electric PIPP rider was changed to a Universal Service Rider effective September 1, 2000, and all customer classes are assessed the rider. The electric utilities are required to collect rider revenues and remit them to OCS, which keeps them in an interest-bearing account called the Universal Service Fund (USF). OCS returns the verified amount of unpaid PIPP bills, or arrears, to the appropriate utility. Remaining funds from the rider collections stay in the USF, to be spent on a targeted energy efficiency program and consumer education services to high consumption, high arrears PIPP households.

According to Nick Sunday, state LIHEAP director, this provision of the restructuring law allows targeting of energy efficiency and consumer education services to high burden PIPP households. OCS coordinates with the Ohio Office of Energy Efficiency, the weatherization grantee, to monitor monthly consumption, bill payment and arrearage data from electric utilities for their PIPP accounts. Households whose total energy burdens exceed a certain threshold will be eligible for individually targeted services, to include electric baseload energy efficiency, weatherization measures, and energy efficiency education. The baseload and education measures are largely funded by the USF; weatherization by the Weatherization Assistance Program.

The combined resources of LIHEAP and the USF, if properly targeted, should reduce not only the cost of the PIPP to all ratepayers by reducing total accumulated arrears, but, most importantly, the energy cost burden on low-income consumers, Sunday said.

Ohio's LIHEAP is coordinated with the PIPP; households may sign up for both at the same time on a joint application. In practice, most households are enrolled or reinstated in the PIPP when they apply for LIHEAP crisis assistance. The LIHEAP program determines household eligibility for PIPP, and each year reverifies eligibility. Households must apply for LIHEAP in order to qualify for PIPP - income eligibility for LIHEAP is 200 percent for FY 2010 and the PIPP is 150 percent of the federal poverty level.

In addition to the targeting provided by the PIPP, Ohio's LIHEAP payment matrix takes into account prices for all fuel types by utility or provider, household size, income, and location in the state.

The LIHEAP program then uses heating cost estimates to determine its benefit distribution range by poverty ratio. In FY 2007, for those households at the lowest income level, the LIHEAP benefit covered up to 41 percent of winter heating costs; for those at the highest poverty level, LIHEAP covered about 15 percent of winter heating costs.

For more information, contact Nick Sunday, Dept. of Development, 77 South High St., 25th Floor, Columbus, OH 43266-0413; (614) 644-6846; nsunday@odod.state.oh.us.

Nevada

In Nevada an annual energy burden is calculated for each applicant's residence. The total energy burden includes natural gas, electricity plus any other source of heat such as wood, oil, propane etc. The eligible household’s energy burden is then compared with the statewide median household energy burden for natural gas and electricity. The statewide energy burden, 2.46 percent for FY 2010, is determined each year.

A Fixed Annual Credit (FAC) benefit is calculated for each eligible household in the following manner:

  1. Identify eligible household's gross annual income and multiply by the state median household energy burden, 2.46 percent, to determine the amount the household is expected to pay for its energy usage.
  2. Identify the eligible household’s annual energy usage in dollars (to include all energy sources).
  3. If the household energy burden is greater than 2.46 percent of the household’s annual income, the difference is the FAC amount for that household. The FAC is the benefit amount the household receives not to exceed the program benefit cap that is based on income, household size, poverty level and fuel type. (Households heating with oil or propane have a higher benefit cap.) Any household with an elderly or disabled member or a child under age six receives an additional $50.

Households are required to participate in the cost of their energy usage and a minimum of 2.46 percent of their income must be paid towards their energy costs. If the eligible household energy burden is less than 2.46 percent of the household's annual income, the household may receive a payment of $180.

North Dakota

The state is a pioneer in targeting, having had a percentage of income program with calculations for energy burden since 1980.

In a paper written for a LIHEAP workshop on targeting in 1987, former North Dakota LIHEAP coordinator Lawrence De Bilzan explained how the state complied with the existing LIHEAP statute (which required that states assure that the highest level of assistance is provided to households with the lowest incomes and the highest energy costs in relation to income).

"To accomplish this goal, or requirement," De Bilzan wrote, "we assumed we had to compute a specific benefit for each individual household that takes into account their income and energy cost. Developing a system of computing benefits that integrated the cost of heat, the household burden, the household income and the benefits needed became our objective."

The result of North Dakota's formula, he continued, was successful targeting of the highest level of LIHEAP benefits to the lowest income households that have the greatest heat burden. "Households with the lowest income may not receive the highest benefit if their heat burden is low. Conversely, a household with a higher level of income may receive greater benefits if their heat burden is greater."

The state does not get actual costs from utilities, but does have a cost/consumption table for each county that is based on average usage or consumption for various sizes of living units, types of buildings and types of fuel. The consumption data, obtained from the Department of Housing and Urban Development (HUD), is stated in BTUs per hour by housing type and was developed by HUD in the late 1970s from records of actual fuel used by its low-income housing assistance recipients.

The consumption figures are combined with heating-degree-day data for various locations within the state, along with projected fuels costs, which are updated annually by fuel suppliers on a county-by-county basis. The result is a table listing heating costs by county, by building type, number of bedrooms, fuel type and supplier. Heating assistance benefits are an individually determined percentage of the eligible household's estimated heat costs incurred during the heating season, October through May. The amount the household can afford to pay is based on family size and income as follows:

  • 2 percent of adjusted annual income for those households between 0 and 20 percent of the state median income;
  • 4 percent of adjusted annual income for households between 21 and 40 percent of the state median income;
  • 6 percent if between 41 and 60 percent of state median income.

The household's "percentage of income heat burden" is the dollar amount above divided by the estimated cost of heat from the cost/consumption tables rounded down to the nearest 5 percent. The remainder is the LIHEAP percentage share of the actual heat cost, rounded up to the nearest 5 percent.

For example: a four-person household at 40 percent of the state median income with an income of $26,873 had an affordable payment of $1,075. ($26,873 times 4 percent). The family lived in a three-bedroom, electrically heated home, whose estimated heat cost, per the cost/consumption tables, was $1,318. Dividing $1,075 by $1,318 equals 82 percent, which, rounded down to the nearest five percent, equals 80 percent. This is the percentage the household must pay of its actual heating costs. The LIHEAP program pays the remainder, 20 percent.

Some households can demonstrate that they maintain home temperatures higher than anticipated in the cost/consumption table due to members' age, disability or health problems. If so, the household's percentage share will be based on actual costs from the previous year.

The maximum percentage of actual heating costs that LIHEAP pays is 95 percent, and the minimum is 10 percent. Eligible households whose LIHEAP percentage is less than 6 percent will receive a one-time $50 cash benefit. On average, according to North Dakota LIHEAP director Ron Knutson, LIHEAP pays about 75 percent of heating costs and clients pay 25 percent. The average benefit in FY 2009 was $919.

Unlike Colorado's program, North Dakota households are required to make the co-payment, although compliance is monitored by vendors, not the program itself. When clients are approved for the program, they receive a notice saying they are responsible for the predetermined percentage of their heating bill from October through May.

The household makes its co-payment directly to the supplier and the state makes the LIHEAP co-payment directly to the supplier on behalf of the eligible household. Knutson said most households make their co-payments.

To ease their co-payment obligation, households are encouraged to enter into even monthly payment plans with their supplier.

For more information, contact Ron Knutson, Dept. of Human Services, State Capitol - Judicial Wing, 600 E. Boulevard Ave. Dept. 325, Bismarck, ND 58505-0256, (701) 328-4882, rknutson@nd.gov.

Colorado

Colorado's targeting method resembles a PIPP in that a household income contribution is built into the matrix. The difference is that the contribution is a "soft commitment," according to former LIHEAP director Glenn Cooper, because the household doesn't have to make the contribution directly; rather, it is deducted up-front from benefits.

Whenever possible, Colorado reviews home heating costs from the previous winter, along with household income, to calculate LIHEAP benefits. According to Colorado's state plan, "estimated home heating costs minus household income contribution equals the LIHEAP benefit."

In FY 2009, Colorado's formula for determining the contribution was as follows: households at 0-75 percent of poverty contributed nothing; households at 76-100 percent contributed 1 percent of countable income and, households at 101-150 percent contributed 2 percent of countable income, and households at 151-185 percent of poverty contributed 3 percent of their countable income.

Colorado calculates estimated home heating costs by using the six-month home heating costs from the previous winter for the primary heating source, which vendors are required to provide.

In those situations when heating costs from a previous year are not available, Colorado employs a "flat-rate model," based on historical data, fuel and household types, to estimate heating costs. The following example from an actual case shows how Colorado's calculation works:

A household of two persons with a total monthly income of $1,250 applied for LIHEAP benefits. The household's six-month heating bill was $565, which when divided by 6 to determine a one-month heating average, equaled $94.17.

Then, after consulting information about the household's poverty level and the state's "Household Income Contribution Table," energy assistance personnel determined a household income contribution percentage. In this case, the household's contribution percentage was 1 percent of the total monthly income of $1,250. One percent of that amount is $12.50.

The household contribution, $12.50, was then subtracted from $94.17, leaving $81.67. Multiplied by 6 months, this figure then established this particular household's energy assistance benefit of $490.02.

In recalling how the state's payment system originated, Cooper said the state was sued in 1985 by legal services advocates who claimed that the payment matrix in effect at the time, based in part on climate zones, was inaccurate and inequitable.

The advocates recommended a graduated income contribution as a basis for payment. The first year the household contribution scale ranged from 1 to 8 percent of income, Cooper recalled. However, this formula proved unworkable; many clients were denied benefits because their income contribution exceeded their heating costs. Since then, the household income contribution has been capped at 4 percent, and the percentages for each income group have varied each year depending on the amount of LIHEAP funds available.

For more information, contact Todd Jorgensen, Dept. of Human Services, 789 Sherman St., Suite 440 , Denver , CO 80203; (303) 861-0325; todd.jorgensen@state.co.us.

Section 2: Burden-Based Targeting

Arizona

The state of Arizona's targeting strategy, for both its heating and cooling assistance programs, employs a point system which considers household income, energy burden, and energy need.

For example, according to criteria adopted in October 1995 and still in effect, a household at 0-74 percent of poverty is assigned 5 points and a household at 151-200 percent is assigned 1 point. A household whose energy burden is 21 percent (or more) of its household income is assigned 6 points and one whose burden is but 5 percent is assigned 0 points. The "energy need" criteria can assign 1 point for an elderly resident, 1 point for a disabled resident, 1 for a child age 6 and under and 1 point for working poor defined as any eligible household with at least one member who received or is due earnings from any type of employment, within 30 days prior to the date of application. A maximum of 1 point is given in each category.

Households whose points total between 12 and 15 can receive between $225-$640; between 7 and 11 points, $175-$480; between 3 to 6, $125-$320 and between 1 and 2, $75-$160.

To determine a household's energy burden, Arizona examines a one-month utility bill that covers a 30-day period. (The bill may be the current bill or past due; if it's a past due bill covering 2 months or more, the state takes the larger month's amount). It considers both electric and gas bills (or if the household uses propane or wood). If the applicant does not have copies of such bills, Arizona contacts an electric utility for a copy of the electric bill and allows a maximum of $50 for a gas or propane bill and $200 for wood. Utility bills are added to determine a "monthly utility cost." Monthly utility cost divided by monthly gross income provides the household's energy burden percentage.

Data from an actual case file from Arizona's LIHEAP offers an example of how its point system works:

An 84-year-old disabled woman applied for assistance. Her monthly income of $758.10 (from Social Security) placed her in the range of 75-100 percent of poverty. For this, she received 4 points.

Her one-month electric bill was $40, her gas bill was $34, totaling $74. This figure was divided by her monthly income of $758, placing her "energy burden" in the range of 6-10 percent. For energy burden, she received 3 points.

A calculation of the client's "energy need," which awards points based on vulnerability, awarded her 1 point for being elderly and 1 point for being disabled.

Thus, this client's total points were 9, placing her in the $175-$480 payment level.

For more information, contact Sandra Mendez, Dept. of Economic Security, P.O. Box 6123 , Phoenix , AZ 85005 ; (602) 542-6607; smendez@azdes.gov.

Louisiana

Since 1994 the state has structured its benefit payments to take into account energy burden and households containing children 5 years old or younger, as well as disabled or elderly individuals (60 years and older).

A household's one month energy bill (ideally the month with the highest cost for heating and/or cooling) is divided by the household's monthly income. The percentage figure obtained (the energy burden) is utilized to determine the fixed rate that will be credited toward utility costs. Maximum and minimum benefit levels are determined by the amount of LIHEAP funding.

Fixed rate benefit schedule used in FY 2010:

Percentage/

Burden
Household size

(1-3)
Household size

(4 or more)
24.5% & higher
$450
$500
18%- 24.4%
$350
$400
10% - 17.9%
$250
$300
9.9% or less
$150
$200

As household size increases, the benefit is increased by $50 in each percentage category and $100 is added for each household containing one or more members of the targeted priority groups — children, or a disabled or elderly individual. The maximum benefit for FY 2010 is $600, and the minimum is $50.

The program operates year round, with half of benefit funds allocated for heating assistance benefits and half for cooling, and people can apply once every six months generally during the coldest or hottest months when their bill is highest.

For more information, contact Darleen Okammor, Louisiana Housing Finance Agency, Energy Assistance Department, 2415 Quail Drive, Baton Rouge, Louisiana 70808; (225) 763-8700, Ext. 205; dokammor@lhfa.state.la.us.

Section 3: Cost-Based Targeting

Minnesota

Minnesota's targeting formula considers income, household size and the actual cost of heating fuel for 12 consecutive months including the previous heating season (October 1 through May 31).

To verify actual heating costs for the household, Minnesota uses the customer's vendor record. When actual cost is not available, a backup matrix is used that is based on average heating costs of participant households during the previous heating season and accounts for fuel type and dwelling type. To determine the amount of assistance a household will receive, Minnesota's 2010 EAP Income Eligibility Guideline Table, Cost-based Matrix is used (see below).

Using the chart, the example below shows how to determine the benefit for a household of one with a gross income of $3,000 for the previous three months and heating costs of $800 for the previous 12 months.

  1. $3,000 for a household of one is 30 percent of State Median Income (For FY 2010 Minnesota used 50 percent SMI as its maximum).
  2. Go to the first column and move down to Natural Gas.
  3. Move across to column labeled 30 percent SMI. The household would receive 43.1 percent of $800 or $345.
EAP 2010 Income Eligibility Guideline Table
Cost-Based Matrix
90 Day Income Levels
 
50% SMI
40% SMI
35% SMI
30% SMI
25% SMI
Wood-Coal

Biomass-Oil
23%
34.5%
46%
57.5%
69%
Propane or Steam
20.7%
31.1%
41.4%
51.8%
62.1%
Natural Gas
17.3%
25.9%
34.5%
43.1%
51.8%
Electricity
10.7%
16%
21.4%
26.7%
32.1%
Minimum Payment = $100

Maximum Payment = $1,400

For more information, contact John M. Harvanko, Director, Office of Energy Programs, 390 N. Robert, Annex, St. Paul, MN 55101, (651) 284-3275, john.harvanko@state.mn.us.

New Hampshire

New Hampshire grants the highest benefits to those households which have both the lowest income (75 percent of poverty or lower) and the highest energy cost. A "double matrix" approach determines benefits. The matrix has two components: part one is based upon household income (adjusted for family size); part two is based upon the previous year's home heating energy costs. (See matrix below).

Annual heating costs are determined in one of two ways: the qualified household can provide documentation of actual heating costs or the local CAP can consult state-generated "heating tables." The tables divide New Hampshire into six regions (degree days in the state in recent years range from 6,500 to 8,000) and consider building type (single family house, multi-family residence, or mobile home) number of rooms, and fuel type. These tables are updated regularly and the current tables take into account fuel price.

New Hampshire's LIHEAP program has 24 different benefit levels. The household income levels are: 75, 100, 125, 150, 175 185 percent of poverty and 60 percent of state median income. The home heating energy costs levels are: $100-$600, $601-$900, $901-$1200, and $1,201 and above.

Thus, a household at 75 percent of poverty with heating costs of more than $1,200 receives the greatest benefit. And, conversely, a household at 60 percent of state median income with heating costs of $600 or less receives the smallest benefit.

New Hampshire Benefit Matrix Chart – FY 2009
Costs
Income Levels
75%
100%
125%
150%
215% (60 SMI)
$1201+
$750
$600
$525
$450
$375
$901-$1200
$600
$480
$420
$360
$300
$601-$900
$450
$360
$315
$270
$225
$100-$600
$300
$240
$210
$180
$150

For more information, contact Celeste Lovett, Office of Energy and Community Services, 57 Regional Drive, Concord, NH 03301-8519; (603) 271-2155; celeste.lovett@nh.gov.

Washington

Washington has been using a heat-cost based method of targeting benefits since 1996. Benefits are determined through a mathematical formula that uses individual household income, household size and annual heat costs.

Heating costs are attained by the local agencies that can either access utility records through a dedicated computer terminal or online through a secure connection. Or, clients may bring in a copy of their bills.

A non-heating baseline cost is calculated by averaging the client’s last 12 months of utility costs; the remainder is the heat cost.

Households at zero percent of poverty receive a benefit equal to 90 percent of their annual heat costs, and households at 125 percent of poverty will receive a benefit equal to 50 percent of their annual heat costs. All households with incomes between zero and 125 percent of poverty will receive benefits which range between 50 and 90 percent of their annual heat costs. For FY 2010, benefits are subject to a maximum of $1,000 and minimum of $25.

When heat cost information is not available, historical dwelling heat costs may be used (these are costs that have been incurred by the previous residents of the applicant’s dwelling) or a back-up heat cost chart is used. Back-up heat cost charts are developed for: households that heat with wood; for oil and propane heated households without 12 months of vendor receipts; for electric and gas heated households without 12 months billing history; and for households whose heat is included in their rental payments. These charts are based on actual heat costs from the most recent client database, to the extent possible.

Depending on the household's dwelling type, a percentage of the back-up heat costs is used to determine benefits as follows: 100 percent for single family detached, duplex and triplex households and mobile homes that are 40 feet or longer; 75 percent for fourplexes, up to but not including high rises; 60 percent for high rise and recreational vehicles which are not heated by propane and are 40 feet or less; and 40 percent for recreational vehicles which are heated by propane and are 40 feet or less. An additional percentage of 25 percent of the back-up heat costs, after dwelling type is considered, is used for roomer/boarder households.

For more information, contact Cinque R. Finnie, Department of Commerce, P.O. Box 48350 , Olympia , WA 98504-8350; (360) 725-2855, cinque.finnie@commerce.wa.gov.

Wisconsin

With the advent of energy reliability legislation passed in 1999, Wisconsin created a Public Benefits Fund (PBF) that provided additional funding for low-income energy assistance and energy efficiency programs.

The new money allowed the Wisconsin Home Energy Assistance Program (WHEAP) to change from addressing only heating costs to addressing total heating fuel costs and household non-heating electric costs. For most households this represents the total home energy bill.]

The low-income portion of the PBF is administered by the WHEAP grantee, via contract from the Department of Administration, Energy Division. FY 2001 was the first year the department received PBF and incorporated them into the WHEAP program. In general, LIHEAP funds are used to pay a percentage of the total heating fuel costs for households regardless of fuel type. Households eligible for PBF also receive a benefit that covers a percentage of their non-heating electric cost.]

Wisconsin pays heating assistance benefits based on a sliding scale benefit structure. Households with the highest annual heating costs and lowest incomes receive the highest amount of assistance. The home energy information entered on the application is used to determine heating and non-heating costs.] Wisconsin's formula for calculating benefits considers a household's poverty level (income and household size) and past home heating fuel costs. With this formula:]

  • An estimated base load is subtracted from the total heating fuel costs. The remaining heating portion of the bill is "weather normalized," which adjusts the costs to represent an average winter based on heating degree days. The base load is then added back to the weather normalized heating portion of the bill for a total heating fuel cost. The LIHEAP benefit is based on this total.
  • A household at 60 percent of state median income ( SMI) receives a lower benefit than a household at 100 percent of the federal poverty level when both have identical heating fuel costs; and,
  • A household with low home heating costs receives a lower benefit than a household with high heating costs when both are at the same poverty level.
  • Applicants who don't report fuel costs are paid on the basis of 75 percent of a proxy value calculated based on dwelling type, size and heating fuel.

Each year Wisconsin's payment model is designed to provide benefits to all anticipated eligible applicants (based on historical data). The benefit formula, therefore, is adjusted annually based on anticipated recipients and federal appropriations. The benefit formula is as follows:

Grant Amount = (Annual heating costs) X [(267 - Percent of poverty) / benefit coefficient] X 0.01

(Note: In this formula, the number 267 sets the ratio between the highest and lowest percentage of bill paid at 4:1. The benefit coefficient determines the average benefit level, and 0.01 adjusts the results to a number between 0 and 1 that is multiplied by the heating fuel cost to determine the benefit amount. )

The average benefit for FY 2009 was $569; the maximum benefit for FY 2009 and FY 2010 is $1200.

The non-heating electric benefit is determined in the same manner; the only difference is the benefit coefficient and the non-electric heating cost it's based on. For those with electric heating, 45 percent of the annual bill is considered non-heating electric. Applicants who don't report electric costs are paid on the basis of 50 percent of a proxy calculated based on the number of household members.

The average electric payment in FY 2009 was $204; in FY 2010, it's expected to be $115.

The program's computer system can generate two payments, one to the primary heating vendor using LIHEAP funds and another to the electric vendor using public benefit funds.

Additionally, the state flags households with high heating fuel costs and high energy burdens as an indicator for local agencies to provide proactive assistance to the household. Depending upon the extent that local agencies provide proactive services (there is wide variation across the state), the client may receive or be referred to client education, budget counseling, case management, or other services as needed.

For more information, contact Susan Brown, Deputy Administrator, Wisconsin Dept. of Administration, P.O. Box 7868 , Madison , WI 53707-7868 ; (608) 267-3680; heat@wisconsin.gov.

Oregon

Oregon’s LIHEAP heating benefit levels are determined through a payment matrix that allows agencies to address household energy burden through income level, climate variation, household size and the type of fuel used.

For example, a household that is below 100 percent of the federal poverty level, living in central Oregon and heating with oil will receive the highest benefits.

Local agencies may choose to give priority eligibility to elderly, disabled and families with young children by implementing a targeted intake period at the start of the heating season.

Throughout the program year, local agencies may also opt to target specific, allowable populations based on unique community need, including outreach to households that have not previously received assistance or households who opt to participate in long-term case management, energy education and/or arrearage management programs.

Oregon is presently working with subgrantees to develop statewide matrices which more effectively target benefits to households with varying energy burden. In PY 2010 the State will pilot an alternative benefit matrix using the following formula:

Energy Burden =
Average Annual Energy Costs

Annual Income

Energy Burden
Benefit
Less than 11% =
20% of annual energy costs
11% to 40%=
25% of annual energy costs
40% to 80%=
30% of annual energy costs
Greater than 80%=
35% of annual energy costs

Minimum and maximum benefits are set at $200 and $550.

Average annual energy costs are calculated from data gathered from the Energy Information Administration and are based on fuel type, number of individuals in the household and climate region.

The pilot formula also accounts for subsidized housing by assuming that at least 30 percent of subsidized household energy costs are covered by utility allowances.

Local subgrantees are allowed to adjust a household benefit in cases where a large portion of energy costs are subsidized (e.g. heat included in rent) or provide supplemental assistance when subsidized households are paying more than 70 percent of their energy costs out of pocket. Sub-grantees must outline procedures to ensure consistent application of any such exceptions within their agency work plans.

Oregon Housing and Community Services (OHCS), the LIHEAP grantee, will evaluate the overall effectiveness of the pilot matrix and conduct research during PY 2010 to assess the energy burden of subsidized households across Oregon. These findings will help OHCS develop and improve energy assistance programs to better serve the low-income population.

For more information, contact Melissa Torgerson, Oregon Department of Housing and Community Services, 1600 State Street Salem, OR 97310; 503) 986-2094; melissa.torgerson@hcs.state.or.us.

Related Resources

  • Home Energy Affordability Gap series:

    Introduced in 2003 by Fisher, Sheehan 7 Colton, it is an annually updated model that estimates the "home energy affordability gap" on a county-by-county basis for the entire country, detailing each year the shortfall between actual home energy bills and affordable home energy bills. On a scale of 1 to 51, each state is given an "energy gap ranking," which compares it to other states in terms of energy burdens for the very low income, the percent of persons below 100 percent of poverty, and the percent that each state's heating/cooling affordability gap is covered by LIHEAP.
  • LIHEAP Energy Burden Evaluation Study, Final Report: Prepared by APPRISE for the HHS Division of Energy Assistance, this study measure the effectiveness of the FY 2001 LIHEAP program in serving high burden households, quantifies program effectiveness using targeting performance measures, and identifies procedures for updating energy burden targeting performance statistics in the future.