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

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

1 Multiple Facets of Low-Income Energy Needs: Defining the Affordable Energy Needs in Indiana Presentation to Indiana Community Action Conference Presented by: Roger D. Colton Fisher, Sheehan & Colton Belmont, MA October 2008

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

3 Indiana Home Energy Burdens Where have we been/where are we going? 2004 n Statewide: 40.6% n Newton: 44.7% n Marion: 38.9% n Steuben: 44.9% n Posey: 39.2% n Clark: 37.6% 2007 n Statewide: 55.5% n Newton: 64.5% n Marion: 51.6% n Steuben: 65.6% n Posey: 52.3% n Clark: 50.2% 0 - 50% 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 Indiana Home Energy Burdens Where have we been/where are we going? 2004 n Statewide: 9.1% n Newton: 9.9% n Marion: 8.6% n Steuben: 10.0% n Posey: 8.7% n Clark: 8.3% 2007 n Statewide: 12.4% n Newton: 14.3% n Marion: 11.5% n Steuben: 14.6% n Posey: 11.6% n Clark: 11.2% 100 - 124% 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 Indiana Home Energy Burdens Where have we been/where are we going? 2004 n Statewide: 6.1% n Newton: 6.7% n Marion: 5.8% n Steuben: 6.7% n Posey: 5.8% n Clark: 5.6% 2007 n Statewide: 8.4% n Newton: 9.6% n Marion: 7.7% n Steuben: 9.8% n Posey: 7.8% n Clark: 7.5% 150 - 185% 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 Indiana Home Energy Affordability Gap: Where have we been/where are we going? Home energy is a crippling financial burden for low-income households in Indiana n 2002 Home Energy Affordability Gap: $225,363,622 n 2007 Home Energy Affordability Gap: $637,545,419 n Growth in Affordability Gap (2004 - 2007): $412,181,797 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: $225,363,622 2007: $637,545,419 Increase: $412,181,797 LIHEAP 2002: $43,919,200 2007: $51,280,512 Increase: $7,361,312 Statewide LIHEAP allocation (IN) vs. increase in Home Energy Affordability Gap (2002 - 2007) 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 n Housing impacts n Public health impacts n Public safety impacts n Hunger and nutrition impacts n Education impacts n Business competitiveness impacts n Utility impacts

9 Unaffordable energy: Why do we care? Housing affordability (Marion County) 2003 n FMR (2BR): $588 n Monthly energy: $87 n Energy pct: 14.9% n FMR for rent: $501 2007 n FMR (2BR): $693 n Monthly energy: $127 n Energy pct: 18.3% n FMR for rent: $566 FMR = Fair Market Rent (published annually by HUD) FMR: Up $105 Home energy bill: Up $40 FMR for rent: Up $65 Energy more than 20% of shelter costs in 2007: No

10 Unaffordable energy: Why do we care? Housing affordability (Posey County) 2003 n FMR (2BR): $529 n Monthly energy: $94 n Energy pct: 17.7% n FMR for rent: $435 2007 n FMR (2BR): $560 n Monthly energy: $139 n Energy pct: 24.8% n FMR for rent: $421 FMR = Fair Market Rent (published annually by HUD) FMR: Up $87 Home energy bill: Up $41 FMR for rent: Up $46 Energy more than 20% of shelter costs in 2007: Yes

11 Unaffordable energy: Why do we care? Housing affordability (Steuben County) 2003 n FMR (2BR): $494 n Monthly energy: $105 n Energy pct: 21.3% n FMR for rent: $389 2007 n FMR (2BR): $651 n Monthly energy: $169 n Energy pct: 26.0% n FMR for rent: $482 FMR = Fair Market Rent (published annually by HUD) FMR: Up $131 Home energy bill: Up $45 FMR available for rent: Down $14 Energy more than 20% of shelter costs in 2007: Yes

12 Unaffordable energy: Why do we care? Housing affordability (Lake County) 2003 n FMR (2BR): $721 n Monthly energy: $100 n Energy pct: 13.9% n FMR for rent: $612 2007 n FMR (2BR): $755 n Monthly energy: $153 n Energy pct: 20.3% n FMR for rent: $602 FMR = Fair Market Rent (published annually by HUD) FMR: Up $34 Home energy bill: Up $53 FMR available for rent: Down $19 Energy more than 20% of shelter costs in 2007: Yes

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

14 Unaffordable energy: Why do we care? Public safety n 1/2 of home heating fires & 3/4 of home-heating fire deaths: December, January and February. n Portable electric heaters: highest home heating fire death toll in 10 of the past 14 years. n 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).

15 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.)

16 Unaffordable energy: Why do we care? Public safety n Low-income status associated with: –increased incidence of home fires generally: –increased incidence of deadly fires. n 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).

17 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.

18 Unaffordable energy: Why do we care? Education n 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. n 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. n 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).

19 Unaffordable energy: Why do we care? Regional industrial/business competitiveness n Unreliable transportation, inadequate child care, and poor health are leading contributors to absenteeism, tardiness, and turnover among low-income workers. n 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).

20 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. 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).

21 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.

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

23 Residential Accounts in Arrears: Indiana Now-Low-Income n July 06: 18% n Sep 06: 21% n Nov 06: 21% n Jan 07: 20% n Mar 07: 21% n May 07: 20% n Avg monthly: 20% Low-Income n July 06: 39% n Sep 06: 41% n Nov 06: 31% n Jan 07: 45% n Mar 07: 47% n May 07: 42% n Avg monthly: 41%

24 Residential Dollars in Arrears: Indiana Now-Low-Income n July 06: 0.26 n Sep 06: 0.29 n Nov 06: 0.25 n Jan 07: 0.34 n Mar 07: 0.27 n May 07: 0.36 n Avg monthly: 0.29 Low-Income n July 06: 0.89 n Sep 06: 1.07 n Nov 06: 0.58 n Jan 07: 0.71 n Mar 07: 0.87 n May 07: 1.01 n Avg monthly: 1.03

25 Residential Accounts in Arrears on Agreement: Indiana Now-Low-Income n July 06: 5% n Sep 06: 4% n Nov 06: 3% n Jan 07: 5% n Mar 07: 6% n May 07: 7% n Avg monthly: 5% Low-Income n July 06: 18% n Sep 06: 11% n Nov 06: 24% n Jan 07: 15% n Mar 07: 27% n May 07: 21% n Avg monthly: 17%

26 Residential Revenue in Arrears on Agreement: Indiana Now-Low-Income n July 06: 15% n Sep 06: 12% n Nov 06: 8% n Jan 07: 8% n Mar 07: 14% n May 07: 21% n Avg monthly: 13% Low-Income n July 06: 20% n Sep 06: 16% n Nov 06: 8% n Jan 07: 3% n Mar 07: 33% n May 07: 32% n Avg monthly: 14%

27 Ratio Disconnect Notices to Disconnections: Indiana Now-Low-Income n July 06: 11.6 n Sep 06: 13.6 n Nov 06: 16.5 n Jan 07: 23.4 n Mar 07: 12.5 n May 07: 9.6 n Avg monthly: 13.8 Low-Income n July 06: 11.1 n Sep 06: 15.7 n Nov 06: 13.6 n Jan 07: 25.8 n Mar 07: 16.1 n May 07: 5.8 n Avg monthly: 9.9

28 Residential Accounts on Budget Billing: Indiana Now-Low-Income n July 06: 21% n Sep 06: 21% n Nov 06: 21% n Jan 07: 22% n Mar 07: 22% n May 07: 22% n Avg monthly: 21% Low-Income n July 06: 14% n Sep 06: 14% n Nov 06: 10% n Jan 07: 12% n Mar 07: 16% n May 07: 14% n Avg monthly: 14%

29 Ratio: Residential Reconnections to Disconnections: Indiana Now-Low-Income n July 06: 0.69 n Sep 06: 0.88 n Nov 06: 1.07 n Jan 07: 0.69 n Mar 07: 0.49 n May 07: 0.50 n Avg monthly: 0.68 Low-Income n July 06: 0.54 n Sep 06: 0.87 n Nov 06: 2.64 n Jan 07: 1.32 n Mar 07: 0.22 n May 07: 0.49 n Avg monthly: 0.56

30 Unaffordable home energy: What should we conclude? n Home energy unaffordability is a community, not simply a household, problem. n The problem is bigger than the sum of its parts (housing, education, health, employment are all interdependent). n What is good for the low-income consumer is good for the utility. n Addressing the problem improves the competitiveness of local business. n Addressing the problem cannot be done without spending money.

31 Unaffordable Home Energy: What low-income customers need from Indianas energy industry! n Low-income customers need data reporting. n Low-income customers need additional financial assistance. n Low-income customers need a can-do attitude. n Low-income customers need an energy industry that listens to and acts on low-income advocacy expertise. n Low-income customers need energy industry expertise on enforcement, as well as public policy issues. n Low-income customers need energy industry leadership within the community. n Low-income customers need energy industry advocacy on issues both energy and non-energy.

32 For more information: http://www.fsconline.com News Library

33 For more information: roger@fsconline.com

34 Unaffordable energy in Indiana Appendix 30 things to do...today

35 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.

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

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

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

39 What do we do? Toolkit #3: Eliminate wasteful energy usage n 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) n Insert Energy Star mandate into all publicly-issued housing procurements. n Target percentage of utility-based residential energy efficiency investments equal to percentage of low-income households. n Adopt special energy efficient utility allowances for Section 8 housing meeting Energy Star standards as incentive for owners to upgrade their properties. n Provide technical assistance to promote ESCOs in PHAs/large landlords.

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

41 What do we do? Toolkit #5: Enforce regulatory consumer protection requirements. n 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 n Enforce consideration of all regulatory factors in structuring deferred payment plans for arrears. –Time arrears outstanding. –Reason for arrears. –Ability to pay.

42 What do we do? Toolkit #6: Create needed rate affordability programs n Create a System Benefits Charge (SBC) fund: –Rate affordability (NJ, PA, OH) –Arrearage forgiveness –Energy efficiency –Crisis funding n 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.

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

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


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