multiple facets of low-income energy needs: defining the affordable energy needs in illinois

Multiple Facets of Low-Income Energy Multiple Facets of Low-Income Energy Needs:Needs:

Defining the Affordable Energy Needs in Defining the Affordable Energy Needs in IllinoisIllinois

Presentation to Illinois Community Action AssociationPresentation to Illinois Community Action Association

Presented by:Presented by:

Roger D. ColtonRoger D. Colton

Fisher, Sheehan & ColtonFisher, Sheehan & Colton

Belmont, MABelmont, MA

March 2009March 2009

Where do we start?Where do we start?Understanding Home Energy BurdensUnderstanding Home Energy Burdens

Home energy burden =Home energy burden =

Home energy bill / Household incomeHome energy bill / Household income

Total shelter burdens affordable at 30% of Total shelter burdens affordable at 30% of income.income.

Utility costs should be no more than 20% of Utility costs should be no more than 20% of shelter costs. shelter costs.

Utility costs affordable at 6% of incomeUtility costs affordable at 6% of income

(20% x 30% = 6%).(20% x 30% = 6%).

Illinois Home Energy Illinois Home Energy BurdensBurdens

Where have we been/where are we Where have we been/where are we going?going?

20042004 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%


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.






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.






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.

Illinois Home Energy Affordability Gap:Illinois Home Energy Affordability Gap:Where have we been/where are we Where have we been/where are we

going?going?

Home energy is a crippling financial burden Home energy is a crippling financial burden for low-income households in Illinoisfor low-income households in Illinois

2002 Home Energy Affordability Gap: 2002 Home Energy Affordability Gap: $504,263,015$504,263,015

2007 Home Energy Affordability Gap: 2007 Home Energy Affordability Gap: $1,497,076,818$1,497,076,818

Growth in Affordability Gap (2002 - 2007): Growth in Affordability Gap (2002 - 2007): $992,813,803$992,813,803

Every dollar found in the Home Energy Affordability GapEvery dollar found in the Home Energy Affordability Gapis a dollar is a dollar notnot available for housing, food, or medical care. available for housing, food, or medical care.

Home Energy Affordability Home Energy Affordability Gap:Gap:


Affordability GapAffordability Gap

2002: $504,263,0152002: $504,263,015

2007: $1,497,076,8182007: $1,497,076,818

Increase: Increase: $992,813,803$992,813,803

LIHEAPLIHEAP

2002: $97,000,7182002: $97,000,718

2007: 2007: $113,259,040$113,259,040

Increase: Increase: $16,258,322$16,258,322

Statewide LIHEAP allocation (IL) vs. increase in Home Energy Affordability Gap

(2002 - 2007)

LIHEAP is falling further and further behind in its capacity to provide meaningful energy assistance.

Unaffordable energy: Why do we Unaffordable energy: Why do we care?care?

Multi-aspect, interdependent Multi-aspect, interdependent consequencesconsequences Housing impactsHousing impacts

Public health impacts Public health impacts Public safety impactsPublic safety impacts Hunger and nutrition impactsHunger and nutrition impacts Education impactsEducation impacts Business competitiveness impactsBusiness competitiveness impacts Utility impactsUtility impacts


Housing affordability (Clinton County)Housing affordability (Clinton County)20032003

FMR (2BR): $691FMR (2BR): $691 Monthly energy: Monthly energy:

$98$98 Energy pct: 14.5%Energy pct: 14.5% FMR for rent: $593FMR for rent: $593

20082008 FMR (2BR): $711FMR (2BR): $711 Monthly energy: Monthly energy:


FMR = Fair Market Rent (published annually by HUD)

FMR: Up $20Home energy bill: Up $33FMR for rent: Down $13

Energy more than 20% of shelter costs in 2008: No


Housing affordability (Kane County)Housing affordability (Kane County)20032003

FMR (2BR): $928FMR (2BR): $928 Monthly energy: Monthly energy:





FMR: Up $16Home energy bill: Up $36FMR for rent: Down $20

Energy more than 20% of shelter costs in 2008: No


Housing affordability (St. Clair County)Housing affordability (St. Clair County)






FMR: Up $20Home energy bill: Up $43

FMR available for rent: Down $23Energy more than 20% of shelter costs in 2007: Yes


Public healthPublic health

Someone became sick b/c home too cold:Someone became sick b/c home too cold: Someone needed doctor b/c home too Someone needed doctor b/c home too

cold: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%16%

11%11%

32%32%

35%35%

National Energy Assistance Directors Association (NEADA)

2005 Energy Assistance Recipient National Survey.


Public safety Public safety 1/2 of home heating fires & 3/4 of home-heating fire deaths: 1/2 of home heating fires & 3/4 of home-heating fire deaths:

December, January and February. December, January and February. Portable electric heaters: highest home heating fire death toll Portable electric heaters: highest home heating fire death toll

in 10 of the past 14 years.in 10 of the past 14 years. Portable heaters (usage-weighted):Portable heaters (usage-weighted):

– do not cause more fires than central heating units, butdo not cause more fires than central heating units, but– associated with significantly more deaths, more injuries, and associated with significantly more deaths, more injuries, and

more direct property damage, than are central units.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).


Public safety Public safety Monthly High Use CAP Rate Accounts and

Monthly CAP Rate RH (Space Heating) Accounts (Philadelphia)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Nu

mb

er o

f A

cco

un

ts

No. CAP Rate accts > 1000 kWh (2004 - 2005) CAP Rate participants on RH Rate (2005 - 2006)

CAP Rate accounts with high winter usage that are not space-heating accounts.

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.)


Public safety Public safety Low-income status associated with:Low-income status associated with:

– increased incidence of home fires generally:increased incidence of home fires generally:– increased incidence of increased incidence of deadlydeadly fires. fires.

Factors contributing to this result: Factors contributing to this result: – not being able to afford smoke detectors; not being able to afford smoke detectors;

– not always being able to afford child care and leaving not always being able to afford child care and leaving children unattended or unsupervised; andchildren unattended or unsupervised; and

– not being able to afford a telephone.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).


Hunger and nutritionHunger and nutritionThe Journal of Nutrition (November 2006)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.”

PediatricsJournal 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.


EducationEducation 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).


Regional industrial/business Regional industrial/business competitivenesscompetitiveness ““Unreliable transportation, inadequate child care, and Unreliable transportation, inadequate child care, and

poor health are leading contributors to absenteeism, poor health are leading contributors to absenteeism, tardiness, and turnover among low-income workers.”tardiness, and turnover among low-income workers.”

““An evaluation of [households leaving the TANF An evaluation of [households leaving the TANF program] in New Jersey. . .reported that 52 percent program] in New Jersey. . .reported that 52 percent had been fired as a result of frequent tardiness or had been fired as a result of frequent tardiness or absenteeism related to child care or health problems.”absenteeism related to child care or health problems.”

Center for Workforce Preparation ( U.S. Chamber of Commerce)/Center for Workforce Success Center for Workforce Preparation ( U.S. Chamber of Commerce)/Center for Workforce Success (National Association of Manufacturers) (2004).(National Association of Manufacturers) (2004).


Regional industrial/business Regional industrial/business competitivenesscompetitivenessA survey in Detroit, Michigan “asked entry-level workers A survey in Detroit, Michigan “asked entry-level workers

and their supervisors in five companies about barriers to and their supervisors in five companies about barriers to employee advancement. 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 “Financial worry about making ends meet” appears to contribute to absenteeism, distraction on the job, contribute to absenteeism, distraction on the job, strained relations with supervisors and co-workers, and a strained relations with supervisors and co-workers, and a number of other factors that reduce productivity.”number of other factors that reduce productivity.”

Center for Workforce Preparation (U.S. Chamber of Commerce)/Center for Workforce Success Center for Workforce Preparation (U.S. Chamber of Commerce)/Center for Workforce Success (National Association of Manufacturers) (2004).(National Association of Manufacturers) (2004).


Growth of Energy Assistance accounts in Growth of Energy Assistance accounts in arrearsarrears

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1/1/1999

1/1/2000

1/1/2001

1/1/2002

1/1/2003

1/1/2004

1/1/2005

1/1/2006

1/1/2007

1/1/2008

Iowa

Note the growth in the minimum # of accountsin arrears. Arrears not getting paid off.


Growth in residential service disconnectionsGrowth in residential service disconnections

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

1/1/1999

7/1/1999

1/1/2000

7/1/2000

1/1/2001

7/1/2001

1/1/2002

7/1/2002

1/1/2003

7/1/2003

1/1/2004

7/1/2004

1/1/2005

7/1/2005

1/1/2006

7/1/2006

1/1/2007

7/1/2007

1/1/2008

7/1/2008

Iowa

Unaffordable home energy:Unaffordable home energy:What should we conclude?What should we conclude?

Home energy unaffordability is a community, not simply Home energy unaffordability is a community, not simply a household, problem.a household, problem.

The problem is bigger than the sum of its parts (housing, The problem is bigger than the sum of its parts (housing, education, health, employment are all interdependent).education, health, employment are all interdependent).

What is good for the low-income consumer is good for What is good for the low-income consumer is good for the utility.the utility.

Addressing the problem improves the competitiveness of Addressing the problem improves the competitiveness of local business.local business.

Addressing the problem cannot be done without Addressing the problem cannot be done without spending money.spending money.

Community Action is at the cutting edge of the Community Action is at the cutting edge of the community’s response: Don’t go “hat-in-hand.”community’s response: Don’t go “hat-in-hand.”

For more information:For more information:

http://www.fsconline.comhttp://www.fsconline.com

NewsNews

LibraryLibrary

For more information:For more information:

[email protected]@fsconline.com

Unaffordable energy in IllinoisUnaffordable energy in Illinois

AppendixAppendix

30 things to do. . .today30 things to do. . .today

The Parable of the Olive The Parable of the Olive TreesTrees

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

The Need for a Toolkit The Need for a Toolkit ApproachApproach

““When your only tool is a hammer,When your only tool is a hammer,

you tend to see every problem as a you tend to see every problem as a nail.”nail.”

What do we do?What do we do?Toolkit #1: Promote available public Toolkit #1: Promote available public

assistanceassistance Promote the Earned Income Tax Promote the Earned Income Tax

CreditCredit Promote participation in Summer Promote participation in Summer

Food Service programs.Food Service programs. Adopt automatic enrollment for FCC Adopt automatic enrollment for FCC

Lifeline.Lifeline.

What do we do?What do we do?Toolkit #2: Enforce existing laws regarding Toolkit #2: Enforce existing laws regarding

assistanceassistance Enforce PHA utility allowance Enforce PHA utility allowance

statutory mandates.statutory mandates. Enforce annual update to Food Enforce annual update to Food

Stamp Standard Utility Allowance Stamp Standard Utility Allowance (SUA)(SUA)

Screen for claims for Food Stamp Screen for claims for Food Stamp Excess Shelter Deductions.Excess Shelter Deductions.

What do we do?What do we do?Toolkit #3: Eliminate wasteful energy Toolkit #3: Eliminate wasteful energy

usageusage Require energy efficient construction in publicly-funded new Require energy efficient construction in publicly-funded new construction/rehab.construction/rehab.– Home Investment Partnership funding (Consolidated Plan)Home Investment Partnership funding (Consolidated Plan)– Community Development Block Grant (Consolidated Plan)Community Development Block Grant (Consolidated Plan)– Low-Income Housing Tax Credit (Qualified Allocation Plan)Low-Income Housing Tax Credit (Qualified Allocation Plan)

Insert Energy Star mandate into all publicly-issued housing Insert Energy Star mandate into all publicly-issued housing procurements.procurements.

Target percentage of utility-based residential energy efficiency Target percentage of utility-based residential energy efficiency investments equal to percentage of low-income households. investments equal to percentage of low-income households.

Adopt special “energy efficient” utility allowances for Section 8 Adopt special “energy efficient” utility allowances for Section 8 housing meeting Energy Star standards as incentive for housing meeting Energy Star standards as incentive for owners to upgrade their properties.owners to upgrade their properties.

Provide technical assistance to promote ESCOs in PHAs/large Provide technical assistance to promote ESCOs in PHAs/large landlords.landlords.

What do we do?What do we do?Toolkit #4: End the regulatory “war on the poor”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-you’re-out deferred Eliminate one-strike-you’re-out deferred

payment arrangement (DPA) policies.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 noticesSharpen the trigger for issuing shutoff notices

– Don’t send notices that utilities do not intend to Don’t send notices that utilities do not intend to follow-up on.follow-up on.

What do we do?What do we do?Toolkit #5: Enforce regulatory consumer protections.Toolkit #5: Enforce regulatory consumer protections.

Enforce consideration of ability-to-pay in structuring Enforce consideration of ability-to-pay in structuring deferred payment plans for arrears.deferred payment plans for arrears.– Absolute incomeAbsolute income– Discretionary incomeDiscretionary income– Fragility of incomeFragility of income– Seasonality of income (income, expenses)Seasonality of income (income, expenses)– Ability to meet exigenciesAbility to meet exigencies

Enforce consideration of all regulatory factors in Enforce consideration of all regulatory factors in structuring deferred payment plans for arrears.structuring deferred payment plans for arrears.– Time arrears outstanding.Time arrears outstanding.– Reason for arrears.Reason for arrears.– Ability to pay.Ability to pay.

What do we do?What do we do?Toolkit #6: Create needed rate affordability Toolkit #6: Create needed rate affordability

programsprograms Create a System Benefits Charge (SBC) fund:Create a System Benefits Charge (SBC) fund:

– Rate affordability (NJ, PA, OH)Rate affordability (NJ, PA, OH)– Arrearage forgivenessArrearage forgiveness– Energy efficiencyEnergy efficiency– Crisis fundingCrisis funding

Create alternative fuel fund contribution structures.Create alternative fuel fund contribution structures.– Utility vendors/suppliers.Utility vendors/suppliers.– Donations of rate refunds/rebates.Donations of rate refunds/rebates.– Enrollment in ongoing donation plan.Enrollment in ongoing donation plan.– Donation of capital credits/patronage dividends.Donation of capital credits/patronage dividends.

What do we do?What do we do?Toolkit #7: Creatively seek new funding.Toolkit #7: Creatively seek new funding.

Accept alternatives to cash security deposits.Accept alternatives to cash security deposits.– Financial alternatives (e.g., guarantees)Financial alternatives (e.g., guarantees)– Behavior alternatives (e.g., budget billing, financial literacy Behavior alternatives (e.g., budget billing, financial literacy

training)training) Replace cash deposits with guaranteesReplace cash deposits with guarantees

– Use cash deposit as financial resource to pay bills.Use cash deposit as financial resource to pay bills. Seek state legislation on escheated rate refunds/utility Seek state legislation on escheated rate refunds/utility

deposits/patronage dividends.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 Commit utility refunds to arrearage forgiveness

(pipeline refunds, excess usage charges, etc.).(pipeline refunds, excess usage charges, etc.). Use direct load control technology as means of Use direct load control technology as means of

delivering low-income assistance.delivering low-income assistance.

What do we do?What do we do?Toolkit #8: Address the needs of bulk fuel Toolkit #8: Address the needs of bulk fuel

users.users. Seek state consumer protection rules Seek state consumer protection rules

regarding winter bulk fuel fill-upsregarding winter bulk fuel fill-ups– Require offer of partial fill-ups.Require offer of partial fill-ups.– Allow budget billing.Allow budget billing.

Apply for state Propane Education and Apply for state Propane Education and Research Council (PERC) funds for low-Research Council (PERC) funds for low-income conservation education.income conservation education.

Promote summer fill-up propane Promote summer fill-up propane programs.programs.

multiple facets of low-income energy needs: defining the affordable energy needs in illinois

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