2008 MultipleFacets-IN by fanzhongqing

VIEWS: 8 PAGES: 44

									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/


         1/


         1/


         1/


         1/
           1/


           1/


           1/


           1/


           1/


           1/


           1/


           1/


           1/


           1/
              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.

								
To top