2008 MultipleFacets-IN
Document Sample
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
Where do we start?
Understanding Home Energy Burdens
Home energy burden =
Home energy bill / Household income
Total shelter burdens affordable at 30% of income.
Utility costs should be no more than 20% of shelter
costs.
Utility costs affordable at 6% of income
(20% x 30% = 6%).
Indiana Home Energy Burdens
Where have we been/where are we going?
0 - 50% of Federal Poverty Level
2004 2007
Statewide: 40.6% Statewide: 55.5%
Newton: 44.7% Newton: 64.5%
Marion: 38.9% Marion: 51.6%
Steuben: 44.9% Steuben: 65.6%
Posey: 39.2% Posey: 52.3%
Clark: 37.6% Clark: 50.2%
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.
Indiana Home Energy Burdens
Where have we been/where are we going?
100 - 124% of Federal Poverty Level
2004 2007
Statewide: 9.1% Statewide: 12.4%
Newton: 9.9% Newton: 14.3%
Marion: 8.6% Marion: 11.5%
Steuben: 10.0% Steuben: 14.6%
Posey: 8.7% Posey: 11.6%
Clark: 8.3% Clark: 11.2%
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.
Indiana Home Energy Burdens
Where have we been/where are we going?
150 - 185% of Federal Poverty Level
2004 2007
Statewide: 6.1% Statewide: 8.4%
Newton: 6.7% Newton: 9.6%
Marion: 5.8% Marion: 7.7%
Steuben: 6.7% Steuben: 9.8%
Posey: 5.8% Posey: 7.8%
Clark: 5.6% Clark: 7.5%
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.
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
2002 Home Energy Affordability Gap: $225,363,622
2007 Home Energy Affordability Gap: $637,545,419
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.
Home Energy Affordability Gap:
Where have we been/where are we going?
Statewide LIHEAP allocation (IN) vs. increase
in Home Energy Affordability Gap
(2002 - 2007)
Affordability Gap LIHEAP
2002: $225,363,622 2002: $43,919,200
2007: $637,545,419 2007: $51,280,512
Increase: $412,181,797 Increase: $7,361,312
LIHEAP is falling further and further behind in its capacity to provide
meaningful energy assistance.
Unaffordable energy: Why do we care?
Multi-aspect, interdependent consequences
Housing impacts
Public health impacts
Public safety impacts
Hunger and nutrition impacts
Education impacts
Business competitiveness impacts
Utility impacts
Unaffordable energy: Why do we care?
Housing affordability (Marion County)
2003 2007
FMR (2BR): $588 FMR (2BR): $693
Monthly energy: $87 Monthly energy: $127
Energy pct: 14.9% Energy pct: 18.3%
FMR for rent: $501 FMR for rent: $566
FMR: Up $105
Home energy bill: Up $40
FMR for rent: Up $65
Energy more than 20% of shelter costs in 2007: No
FMR = Fair Market Rent (published annually by HUD)
Unaffordable energy: Why do we care?
Housing affordability (Posey County)
2003 2007
FMR (2BR): $529 FMR (2BR): $560
Monthly energy: $94 Monthly energy: $139
Energy pct: 17.7% Energy pct: 24.8%
FMR for rent: $435 FMR for rent: $421
FMR: Up $87
Home energy bill: Up $41
FMR for rent: Up $46
Energy more than 20% of shelter costs in 2007: Yes
FMR = Fair Market Rent (published annually by HUD)
Unaffordable energy: Why do we care?
Housing affordability (Steuben County)
2003 2007
FMR (2BR): $494 FMR (2BR): $651
Monthly energy: $105 Monthly energy: $169
Energy pct: 21.3% Energy pct: 26.0%
FMR for rent: $389 FMR for rent: $482
FMR: Up $131
Home energy bill: Up $45
FMR available for rent: Down $14
Energy more than 20% of shelter costs in 2007: Yes
FMR = Fair Market Rent (published annually by HUD)
Unaffordable energy: Why do we care?
Housing affordability (Lake County)
2003 2007
FMR (2BR): $721 FMR (2BR): $755
Monthly energy: $100 Monthly energy: $153
Energy pct: 13.9% Energy pct: 20.3%
FMR for rent: $612 FMR for rent: $602
FMR: Up $34
Home energy bill: Up $53
FMR available for rent: Down $19
Energy more than 20% of shelter costs in 2007: Yes
FMR = Fair Market Rent (published annually by HUD)
Unaffordable energy: Why do we care?
Public health
Someone became sick b/c home too cold: 16%
Someone needed doctor b/c home too cold: 11%
Did not fill/took less than full prescription: 32%
Someone went w/o health/dental care: 35%
National Energy Assistance Directors Association (NEADA)
2005 Energy Assistance Recipient National Survey.
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.
Portable electric heaters: highest home heating fire death
toll in 10 of the past 14 years.
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 Harm’s Way: Home Heating, Fire Hazards and Low-Income Households (2001).
Unaffordable energy: Why do we care?
Public safety
Monthly High Use CAP Rate Accounts and
Monthly CAP Rate RH (Space Heating) Accounts
(Philadelphia)
45,000
40,000
Number of Accounts
35,000
CAP Rate accounts w ith high w inter usage
30,000
that are not space-heating accounts.
25,000
20,000
15,000
10,000
5,000
0
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
No. CAP Rate accts > 1000 kWh (2004 - 2005) CAP Rate participants on RH Rate (2005 - 2006)
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.)
Unaffordable energy: Why do we care?
Public safety
Low-income status associated with:
– increased incidence of home fires generally:
– increased incidence of deadly fires.
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 Harm’s Way: Home Heating, Fire Hazards and Low-Income Households (2001).
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.
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).
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.”
“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).
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).
Unaffordable energy: Why do we care?
Growth of Energy Assistance accounts in arrears
Iowa
45,000
40,000 Note the growth in the minimum # of accounts
in arrears. Arrears not getting paid off.
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1/
1/
1/
1/
1/
1/
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19
20
20
20
20
20
20
20
20
20
99
00
01
02
03
04
05
06
07
08
Unaffordable energy: Why do we care?
Growth in residential service disconnections
08
20
1/
7/ 08
20
1/
1/ 07
20
1/
7/ 07
20
1/
1/ 06
20
1/
7/ 06
20
1/
1/ 05
20
1/
7/ 05
20
1/
1/ 04
20
1/
7/ 04
20
1/
Iowa
1/ 03
20
1/
7/ 03
20
1/
1/ 02
20
1/
7/ 02
20
1/
1/ 01
20
1/
7/ 01
20
1/
1/ 00
20
1/
7/ 00
20
1/
1/ 99
19
1/
7/ 99
19
1/
1/
0
9000
8000
7000
6000
5000
4000
3000
2000
1000
Residential Accounts in Arrears: Indiana
Now-Low-Income Low-Income
July 06: 18% July 06: 39%
Sep 06: 21% Sep 06: 41%
Nov 06: 21% Nov 06: 31%
Jan 07: 20% Jan 07: 45%
Mar 07: 21% Mar 07: 47%
May 07: 20% May 07: 42%
Avg monthly: 20% Avg monthly: 41%
Residential Dollars in Arrears: Indiana
Now-Low-Income Low-Income
July 06: 0.26 July 06: 0.89
Sep 06: 0.29 Sep 06: 1.07
Nov 06: 0.25 Nov 06: 0.58
Jan 07: 0.34 Jan 07: 0.71
Mar 07: 0.27 Mar 07: 0.87
May 07: 0.36 May 07: 1.01
Avg monthly: 0.29 Avg monthly: 1.03
Residential Accounts in Arrears on
Agreement: Indiana
Now-Low-Income Low-Income
July 06: 5% July 06: 18%
Sep 06: 4% Sep 06: 11%
Nov 06: 3% Nov 06: 24%
Jan 07: 5% Jan 07: 15%
Mar 07: 6% Mar 07: 27%
May 07: 7% May 07: 21%
Avg monthly: 5% Avg monthly: 17%
Residential Revenue in Arrears on
Agreement: Indiana
Now-Low-Income Low-Income
July 06: 15% July 06: 20%
Sep 06: 12% Sep 06: 16%
Nov 06: 8% Nov 06: 8%
Jan 07: 8% Jan 07: 3%
Mar 07: 14% Mar 07: 33%
May 07: 21% May 07: 32%
Avg monthly: 13% Avg monthly: 14%
Ratio Disconnect Notices to
Disconnections: Indiana
Now-Low-Income Low-Income
July 06: 11.6 July 06: 11.1
Sep 06: 13.6 Sep 06: 15.7
Nov 06: 16.5 Nov 06: 13.6
Jan 07: 23.4 Jan 07: 25.8
Mar 07: 12.5 Mar 07: 16.1
May 07: 9.6 May 07: 5.8
Avg monthly: 13.8 Avg monthly: 9.9
Residential Accounts on Budget Billing:
Indiana
Now-Low-Income Low-Income
July 06: 21% July 06: 14%
Sep 06: 21% Sep 06: 14%
Nov 06: 21% Nov 06: 10%
Jan 07: 22% Jan 07: 12%
Mar 07: 22% Mar 07: 16%
May 07: 22% May 07: 14%
Avg monthly: 21% Avg monthly: 14%
Ratio: Residential Reconnections to
Disconnections: Indiana
Now-Low-Income Low-Income
July 06: 0.69 July 06: 0.54
Sep 06: 0.88 Sep 06: 0.87
Nov 06: 1.07 Nov 06: 2.64
Jan 07: 0.69 Jan 07: 1.32
Mar 07: 0.49 Mar 07: 0.22
May 07: 0.50 May 07: 0.49
Avg monthly: 0.68 Avg monthly: 0.56
Unaffordable home energy:
What should we conclude?
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).
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 cannot be done without
spending money.
Unaffordable Home Energy:
What low-income customers need from Indiana’s
energy industry!
Low-income customers need data reporting.
Low-income customers need additional financial assistance.
Low-income customers need a “can-do” attitude.
Low-income customers need an energy industry that listens to
and acts on low-income advocacy expertise.
Low-income customers need energy industry expertise on
enforcement, as well as public policy issues.
Low-income customers need energy industry leadership within
the community.
Low-income customers need energy industry advocacy on
issues both energy and non-energy.
For more information:
http://www.fsconline.com
News
Library
For more information:
roger@fsconline.com
Unaffordable energy in Indiana
Appendix
30 things to do. . .today
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.”
The Need for a Toolkit Approach
“When your only tool is a hammer,
you tend to see every problem as a nail.”
What do we do?
Toolkit #1: Promote available public assistance
Promote the Earned Income Tax Credit
Promote participation in Summer Food
Service programs.
Adopt automatic enrollment for FCC
Lifeline.
What do we do?
Toolkit #2: Enforce existing laws regarding assistance
Enforce PHA utility allowance statutory
mandates.
Enforce annual update to Food Stamp
Standard Utility Allowance (SUA)
Screen for claims for Food Stamp
Excess Shelter Deductions.
What do we do?
Toolkit #3: Eliminate wasteful energy usage
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.
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.
Provide technical assistance to promote ESCOs in PHAs/large
landlords.
What do we do?
Toolkit #4: End the regulatory “war on the poor”
Eliminate late fees on low-income customers.
Eliminate late fees on paid-up DPAs.
Eliminate one-strike-you’re-out deferred
payment arrangement (DPA) policies.
Eliminate barriers to entering budget billing.
Offer non-annual budget billing plans.
Sharpen the trigger for issuing shutoff notices
– Don’t send notices that utilities do not intend to
follow-up on.
What do we do?
Toolkit #5: Enforce regulatory consumer protection
requirements.
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.
– Time arrears outstanding.
– Reason for arrears.
– Ability to pay.
What do we do?
Toolkit #6: Create needed rate affordability programs
Create a System Benefits Charge (SBC) fund:
– Rate affordability (NJ, PA, OH)
– Arrearage forgiveness
– Energy efficiency
– Crisis funding
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.
What do we do?
Toolkit #7: Creatively seek new funding.
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
– Use cash deposit as financial resource to pay bills.
Seek state legislation on escheated rate
refunds/utility deposits/patronage dividends.
Adopt low-income set-aside of rate refunds.
Commit utility refunds to arrearage forgiveness
(pipeline refunds, excess usage charges, etc.).
Use direct load control technology as means of
delivering low-income assistance.
What do we do?
Toolkit #8: Address the needs of bulk fuel users.
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.
Promote summer fill-up propane programs.
