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Multiple Facets of Low-Income Energy Needs: Defining the Affordable Energy Needs in Illinois Presentation to Illinois Community Action Association Presented.

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Presentation on theme: "Multiple Facets of Low-Income Energy Needs: Defining the Affordable Energy Needs in Illinois Presentation to Illinois Community Action Association Presented."— Presentation transcript:

1 Multiple Facets of Low-Income Energy Needs: Defining the Affordable Energy Needs in Illinois Presentation to Illinois Community Action Association Presented by: Roger D. Colton Fisher, Sheehan & Colton Belmont, MA March 2009

2 Where do we start? Understanding Home Energy Burdens Home energy burden = Home energy bill / Household income Total shelter burdens affordable at 30% of income. Total shelter burdens affordable at 30% of income. Utility costs should be no more than 20% of shelter costs. Utility costs should be no more than 20% of shelter costs. Utility costs affordable at 6% of income Utility costs affordable at 6% of income (20% x 30% = 6%).

3 Illinois Home Energy Burdens Where have we been/where are we going? 2004 Statewide: 42.7% Statewide: 42.7% Clark: 43.9% Clark: 43.9% Lake: 46.7% Lake: 46.7% Madison: 42.0% Madison: 42.0% McLean: 44.2% McLean: 44.2% Rock Island: 43.3% Rock Island: 43.3% St. Clair: 40.8% St. Clair: 40.8% 2007 Statewide: 55.5% Statewide: 55.5% Clark: 62.8% Clark: 62.8% Lake: 65.5% Lake: 65.5% Madison: 57.3% Madison: 57.3% McLean: 61.7% McLean: 61.7% Rock Island: 60.2% Rock Island: 60.2% St. Clair: 55.0% St. Clair: 55.0% % of Federal Poverty Level Households below 50% of Poverty are billed more than 50% of income for home energy. Note the difference between being billed a certain percentage of income and actually paying that bill.

4 Illinois Home Energy Burdens Where have we been/where are we going? 2004 Statewide: 9.5% Statewide: 9.5% Clark: 9.8% Clark: 9.8% Lake: 10.4% Lake: 10.4% Madison: 9.3% Madison: 9.3% McLean: 9.8% McLean: 9.8% Rock Island: 9.6% Rock Island: 9.6% St. Clair: 9.1% St. Clair: 9.1% 2007 Statewide: 13.2% Statewide: 13.2% Clark: 13.9% Clark: 13.9% Lake: 14.5% Lake: 14.5% Madison: 12.7% Madison: 12.7% McLean: 13.7% McLean: 13.7% Rock Island: 13.4% Rock Island: 13.4% St. Clair: 12.2% St. Clair: 12.2% % of Federal Poverty Level Energy burden of 10% - 12% is often seen as a cut-off for near-certain payment troubles. Moderately low-income customers are now above that cut-off.

5 Illinois Home Energy Burdens Where have we been/where are we going? 2004 Statewide: 6.4% Statewide: 6.4% Clark: 6.6% Clark: 6.6% Lake: 7.0% Lake: 7.0% Madison: 6.3% Madison: 6.3% McLean: 6.6% McLean: 6.6% Rock Island: 6.5% Rock Island: 6.5% St. Clair: 6.1% St. Clair: 6.1% 2007 Statewide: 8.9% Statewide: 8.9% Clark: 9.4% Clark: 9.4% Lake: 9.8% Lake: 9.8% Madison: 8.6% Madison: 8.6% McLean: 9.2% McLean: 9.2% Rock Island: 9.0% Rock Island: 9.0% St. Clair: 8.2% St. Clair: 8.2% % of Federal Poverty Level One of most troubling aspects of the Home Energy Affordability Gap is the movement of the higher income low-income households well above the 6% affordability line.

6 Illinois Home Energy Affordability Gap: Where have we been/where are we going? Home energy is a crippling financial burden for low-income households in Illinois 2002 Home Energy Affordability Gap: $504,263, Home Energy Affordability Gap: $504,263, Home Energy Affordability Gap: $1,497,076, Home Energy Affordability Gap: $1,497,076,818 Growth in Affordability Gap ( ): $992,813,803 Growth in Affordability Gap ( ): $992,813,803 Every dollar found in the Home Energy Affordability Gap is a dollar not available for housing, food, or medical care.

7 Home Energy Affordability Gap: Where have we been/where are we going? Affordability Gap 2002: $504,263, : $1,497,076,818 Increase: $992,813,803 LIHEAP 2002: $97,000, : $113,259,040 Increase: $16,258,322 Statewide LIHEAP allocation (IL) vs. increase in Home Energy Affordability Gap ( ) LIHEAP is falling further and further behind in its capacity to provide meaningful energy assistance.

8 Unaffordable energy: Why do we care? Multi-aspect, interdependent consequences Housing impacts Housing impacts Public health impacts Public health impacts Public safety impacts Public safety impacts Hunger and nutrition impacts Hunger and nutrition impacts Education impacts Education impacts Business competitiveness impacts Business competitiveness impacts Utility impacts Utility impacts

9 Unaffordable energy: Why do we care? Housing affordability (Clinton County) 2003 FMR (2BR): $691 FMR (2BR): $691 Monthly energy: $98 Monthly energy: $98 Energy pct: 14.5% Energy pct: 14.5% FMR for rent: $593 FMR for rent: $ FMR (2BR): $711 FMR (2BR): $711 Monthly energy: $131 Monthly energy: $131 Energy pct: 18.4% Energy pct: 18.4% FMR for rent: $580 FMR for rent: $580 FMR = Fair Market Rent (published annually by HUD) FMR: Up $20 Home energy bill: Up $33 FMR for rent: Down $13 Energy more than 20% of shelter costs in 2008: No

10 Unaffordable energy: Why do we care? Housing affordability (Kane County) 2003 FMR (2BR): $928 FMR (2BR): $928 Monthly energy: $110 Monthly energy: $110 Energy pct: 12.0% Energy pct: 12.0% FMR for rent: $818 FMR for rent: $ FMR (2BR): $944 FMR (2BR): $944 Monthly energy: $147 Monthly energy: $147 Energy pct: 15.5% Energy pct: 15.5% FMR for rent: $797 FMR for rent: $797 FMR = Fair Market Rent (published annually by HUD) FMR: Up $16 Home energy bill: Up $36 FMR for rent: Down $20 Energy more than 20% of shelter costs in 2008: No

11 Unaffordable energy: Why do we care? Housing affordability (St. Clair County) 2003 FMR (2BR): $691 FMR (2BR): $691 Monthly energy: $111 Monthly energy: $111 Energy pct: 16.4% Energy pct: 16.4% FMR for rent: $580 FMR for rent: $ FMR (2BR): $ FMR (2BR): $ Monthly energy: $154 Monthly energy: $154 Energy pct: 21.6% Energy pct: 21.6% FMR for rent: $557 FMR for rent: $557 FMR = Fair Market Rent (published annually by HUD) FMR: Up $20 Home energy bill: Up $43 FMR available for rent: Down $23 Energy more than 20% of shelter costs in 2007: Yes

12 Unaffordable energy: Why do we care? Public health Someone became sick b/c home too cold: Someone became sick b/c home too cold: Someone needed doctor b/c home too cold: Someone needed doctor b/c home too cold: Did not fill/took less than full prescription: Did not fill/took less than full prescription: Someone went w/o health/dental care: Someone went w/o health/dental care: 16%11%32%35% National Energy Assistance Directors Association (NEADA) 2005 Energy Assistance Recipient National Survey.

13 Unaffordable energy: Why do we care? Public safety 1/2 of home heating fires & 3/4 of home-heating fire deaths: December, January and February. 1/2 of home heating fires & 3/4 of home-heating fire deaths: December, January and February. Portable electric heaters: highest home heating fire death toll in 10 of the past 14 years. Portable electric heaters: highest home heating fire death toll in 10 of the past 14 years. Portable heaters (usage-weighted): Portable heaters (usage-weighted): –do not cause more fires than central heating units, but –associated with significantly more deaths, more injuries, and more direct property damage, than are central units. National Fuel Funds Network (NFFN) In Harms Way: Home Heating, Fire Hazards and Low-Income Households (2001).

14 Unaffordable energy: Why do we care? Public safety Customers losing access to their primary heating and turning to portable electric heaters can be identified by a sharp rise in temperature-sensitive electricity usage. (CAP Rate is low-income electric affordability program in Philadelphia.)

15 Unaffordable energy: Why do we care? Public safety Low-income status associated with: Low-income status associated with: –increased incidence of home fires generally: –increased incidence of deadly fires. Factors contributing to this result: Factors contributing to this result: –not being able to afford smoke detectors; –not always being able to afford child care and leaving children unattended or unsupervised; and –not being able to afford a telephone. National Fuel Funds Network (NFFN) In Harms Way: Home Heating, Fire Hazards and Low-Income Households (2001).

16 Unaffordable energy: Why do we care? Hunger and nutrition The Journal of Nutrition (November 2006)...greater proportions of poor households, especially poor elderly households, experienced very low food security (the more severe range of food insecurity) during times of the year when home heating and cooling costs were high, controlling for important covariates. Pediatrics Journal of the American Academy of Pediatrics (November 2006)...there is also evidence that hunger and food insecurity are associated with high utility costs and cold weather. In the United States, data show that families reporting unheated days or threats of utility turnoff are more likely to report that their children were hungry or at risk for hunger than families without either experience. Emphasis added--not in original.

17 Unaffordable energy: Why do we care? Education 22% of low-income households frequently moved over a two- year period because of unaffordable home energy costs. – –More than 70% of these frequent mover households had children under age 18. – –Only a small portion of frequent movers changed residences after a disconnect for nonpayment. Others simply looked for more affordable energy bills. Third grade students who have changed schools three or more times are two-and-a-half times as likely to repeat a grade as third graders who have never changed schools. Frequently-mobile students are more likely to be below grade level in both reading and math. National Low-Income Energy Consortium Paid but Unaffordable: The Consequences of Energy Poverty in Missouri (2004).

18 Unaffordable energy: Why do we care? Regional industrial/business competitiveness Unreliable transportation, inadequate child care, and poor health are leading contributors to absenteeism, tardiness, and turnover among low-income workers. Unreliable transportation, inadequate child care, and poor health are leading contributors to absenteeism, tardiness, and turnover among low-income workers. An evaluation of [households leaving the TANF program] in New Jersey...reported that 52 percent had been fired as a result of frequent tardiness or absenteeism related to child care or health problems. An evaluation of [households leaving the TANF program] in New Jersey...reported that 52 percent had been fired as a result of frequent tardiness or absenteeism related to child care or health problems. Center for Workforce Preparation ( U.S. Chamber of Commerce)/Center for Workforce Success (National Association of Manufacturers) (2004).

19 Unaffordable energy: Why do we care? Regional industrial/business competitiveness A survey in Detroit, Michigan asked entry-level workers and their supervisors in five companies about barriers to employee advancement. Financial worry about making ends meet appears to contribute to absenteeism, distraction on the job, strained relations with supervisors and co-workers, and a number of other factors that reduce productivity. A survey in Detroit, Michigan asked entry-level workers and their supervisors in five companies about barriers to employee advancement. After caring for a dependent, money problems were reported more frequently than 19 other potential problems ranging from understanding work assignments to getting along with colleagues. Financial worry about making ends meet appears to contribute to absenteeism, distraction on the job, strained relations with supervisors and co-workers, and a number of other factors that reduce productivity. Center for Workforce Preparation (U.S. Chamber of Commerce)/Center for Workforce Success (National Association of Manufacturers) (2004).

20 Unaffordable energy: Why do we care? Growth of Energy Assistance accounts in arrears Iowa Note the growth in the minimum # of accounts in arrears. Arrears not getting paid off.

21 Unaffordable energy: Why do we care? Growth in residential service disconnections Iowa

22 Unaffordable home energy: What should we conclude? Home energy unaffordability is a community, not simply a household, problem. Home energy unaffordability is a community, not simply a household, problem. The problem is bigger than the sum of its parts (housing, education, health, employment are all interdependent). The problem is bigger than the sum of its parts (housing, education, health, employment are all interdependent). What is good for the low-income consumer is good for the utility. What is good for the low-income consumer is good for the utility. Addressing the problem improves the competitiveness of local business. Addressing the problem improves the competitiveness of local business. Addressing the problem cannot be done without spending money. Addressing the problem cannot be done without spending money. Community Action is at the cutting edge of the communitys response: Dont go hat-in-hand. Community Action is at the cutting edge of the communitys response: Dont go hat-in-hand.

23 For more information:

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25 Unaffordable energy in Illinois Appendix 30 things to do...today

26 The Parable of the Olive Trees Once upon a time, a mansion owner called his gardener in and asked him to plant 100 olive trees. The gardener was aghast. But sir, the gardener said, those trees will not bear fruit for 50 years. Nodding in agreement, the mansion owner responded: Yes. That is why I would like you to plant them today.

27 The Need for a Toolkit Approach When your only tool is a hammer, you tend to see every problem as a nail.

28 What do we do? Toolkit #1: Promote available public assistance Promote the Earned Income Tax Credit Promote the Earned Income Tax Credit Promote participation in Summer Food Service programs. Promote participation in Summer Food Service programs. Adopt automatic enrollment for FCC Lifeline. Adopt automatic enrollment for FCC Lifeline.

29 What do we do? Toolkit #2: Enforce existing laws regarding assistance Enforce PHA utility allowance statutory mandates. Enforce PHA utility allowance statutory mandates. Enforce annual update to Food Stamp Standard Utility Allowance (SUA) Enforce annual update to Food Stamp Standard Utility Allowance (SUA) Screen for claims for Food Stamp Excess Shelter Deductions. Screen for claims for Food Stamp Excess Shelter Deductions.

30 What do we do? Toolkit #3: Eliminate wasteful energy usage Require energy efficient construction in publicly-funded new construction/rehab. Require energy efficient construction in publicly-funded new construction/rehab. –Home Investment Partnership funding (Consolidated Plan) –Community Development Block Grant (Consolidated Plan) –Low-Income Housing Tax Credit (Qualified Allocation Plan) Insert Energy Star mandate into all publicly-issued housing procurements. Insert Energy Star mandate into all publicly-issued housing procurements. Target percentage of utility-based residential energy efficiency investments equal to percentage of low-income households. Target percentage of utility-based residential energy efficiency investments equal to percentage of low-income households. Adopt special energy efficient utility allowances for Section 8 housing meeting Energy Star standards as incentive for owners to upgrade their properties. Adopt special energy efficient utility allowances for Section 8 housing meeting Energy Star standards as incentive for owners to upgrade their properties. Provide technical assistance to promote ESCOs in PHAs/large landlords. Provide technical assistance to promote ESCOs in PHAs/large landlords.

31 What do we do? Toolkit #4: End the regulatory war on the poor Eliminate late fees on low-income customers. Eliminate late fees on low-income customers. Eliminate late fees on paid-up DPAs. Eliminate late fees on paid-up DPAs. Eliminate one-strike-youre-out deferred payment arrangement (DPA) policies. Eliminate one-strike-youre-out deferred payment arrangement (DPA) policies. Eliminate barriers to entering budget billing. Eliminate barriers to entering budget billing. Offer non-annual budget billing plans. Offer non-annual budget billing plans. Sharpen the trigger for issuing shutoff notices Sharpen the trigger for issuing shutoff notices –Dont send notices that utilities do not intend to follow-up on.

32 What do we do? Toolkit #5: Enforce regulatory consumer protections. Enforce consideration of ability-to-pay in structuring deferred payment plans for arrears. Enforce consideration of ability-to-pay in structuring deferred payment plans for arrears. –Absolute income –Discretionary income –Fragility of income –Seasonality of income (income, expenses) –Ability to meet exigencies Enforce consideration of all regulatory factors in structuring deferred payment plans for arrears. Enforce consideration of all regulatory factors in structuring deferred payment plans for arrears. –Time arrears outstanding. –Reason for arrears. –Ability to pay.

33 What do we do? Toolkit #6: Create needed rate affordability programs Create a System Benefits Charge (SBC) fund: Create a System Benefits Charge (SBC) fund: –Rate affordability (NJ, PA, OH) –Arrearage forgiveness –Energy efficiency –Crisis funding Create alternative fuel fund contribution structures. Create alternative fuel fund contribution structures. –Utility vendors/suppliers. –Donations of rate refunds/rebates. –Enrollment in ongoing donation plan. –Donation of capital credits/patronage dividends.

34 What do we do? Toolkit #7: Creatively seek new funding. Accept alternatives to cash security deposits. Accept alternatives to cash security deposits. –Financial alternatives (e.g., guarantees) –Behavior alternatives (e.g., budget billing, financial literacy training) Replace cash deposits with guarantees Replace cash deposits with guarantees –Use cash deposit as financial resource to pay bills. Seek state legislation on escheated rate refunds/utility deposits/patronage dividends. Seek state legislation on escheated rate refunds/utility deposits/patronage dividends. Adopt low-income set-aside of rate refunds. Adopt low-income set-aside of rate refunds. Commit utility refunds to arrearage forgiveness (pipeline refunds, excess usage charges, etc.). Commit utility refunds to arrearage forgiveness (pipeline refunds, excess usage charges, etc.). Use direct load control technology as means of delivering low- income assistance. Use direct load control technology as means of delivering low- income assistance.

35 What do we do? Toolkit #8: Address the needs of bulk fuel users. Seek state consumer protection rules regarding winter bulk fuel fill-ups Seek state consumer protection rules regarding winter bulk fuel fill-ups –Require offer of partial fill-ups. –Allow budget billing. Apply for state Propane Education and Research Council (PERC) funds for low-income conservation education. Apply for state Propane Education and Research Council (PERC) funds for low-income conservation education. Promote summer fill-up propane programs. Promote summer fill-up propane programs.


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