HARRISBURG, Pa., Dec. 4, 2007 (PRIME NEWSWIRE) -- If we as a society wish to prevent low-income families from losing energy service, then we need to change the federal government's unwillingness to provide adequate funding for energy assistance. How can federally elected officials cut funding for low-income energy assistance at a time when energy prices are increasing?
The U.S. Energy Information Administration (EIA) recently published winter energy cost projections for the Northeast. The EIA concluded that heating oil will rise by 25-30%, propane costs will increase by 20% or more, natural gas will see a 10% increase and electricity costs will rise by 7%. Armed with this information, the federal government failed to approve funding increases for the Low Income Home Energy Assistance Program (LIHEAP), which is the only federal program that provides direct assistance to the poor to pay for heat.
Indeed, since LIHEAP funding was established in 1981, the dollars budgeted by the federal government have gone up a mere 17% and have actually decreased in terms of spending power. During those same 26 years, the cost of living has risen 133% and energy prices have doubled or tripled. For federal appropriations to be comparable to those increases, LIHEAP funding should be $4.2 billion, and the federal Energy Policy Act of 2005 recommended LIHEAP funding of $5.1 billion. However, the proposed federal budget for LIHEAP provides only $2.0 billion.
What this means for Pennsylvania is fewer and fewer households receiving LIHEAP cash assistance each year. In 2005-06, approximately 385,000 households received LIHEAP grants; in 2006-07, that number decreased to 369,600. The number will fall again for the 2007-08 program year based on current appropriations.
State LIHEAP Supplements Not Continued
Faced with this decreasing level of support by the federal government, the Commonwealth of Pennsylvania did act. In the winter of 2005-06, the Governor and the legislature supplemented LIHEAP federal dollars with state funds for the first time. However, state funding for LIHEAP has not continued.
Electric and gas utilities, however have been doing their part to identify and assist their low-income households. The number of customers participating in utility customer assistance programs (CAP) has increased by 34% since the passage of Pennsylvania legislation in 2004, commonly referred to as Chapter 14. Chapter 14 has been successful both at increasing collection from those who can and should pay and at providing a statutory safety net for those who do not have the means to pay rising energy costs. The total number of utility CAP customers at the end of 2006 was 410,000, which exceeds the 369,900 households that received LIHEAP cash assistance in 2006-07. Programs administered by utilities and their community partners, and funded with dollars collected through rates, are meeting the needs of low-income households in Pennsylvania.
Support from Gas and Electric Distribution Companies Likely to Expand
Most telling, however, is that Pennsylvania's gas and electric distribution companies spent more than $327 million in 2006 on programs to assist their low-income payment-troubled customers. Utilities are likely to expend even more in 2007. That figure dwarfs the $133 million in federal LIHEAP grants provided to Pennsylvania citizens in 2006-07. The federal funding picture for 2007-08 is even bleaker. Pennsylvania only expects to receive an estimated $118 million for LIHEAP.
At the end of the day, who has the greater responsibility to assist the poor, private parties (including utilities and their ratepayers) or federal and state government? If your answer is the utility and its customers, then we are doing just that. If your answer is government, then inadequate LIHEAP funding must be addressed.
The Patriot-News, Harrisburg, has consistently expressed concerns about low-income households' ability to cope with higher energy bills. In the Veteran's Day editorial, "Shut Offs," the Patriot-News incorrectly stated that payment-troubled customers do not receive adequate notice from utilities of forthcoming termination of service.
In an editorial, December 4, Patriot-News leadership acknowledge in a final paragraph that this entire issue is far from just a utility problem -- it is a social issue. We agree. Yet, most of the editorial continues to petition for personal notification of customers.
Consumers receive a minimum of four or more notices prior to termination of service. These include the utility bill itself, a second notice when the bill is overdue, a third notice 10 days prior to termination, and a fourth notice 72 hours prior to termination either by telephone (2 attempts) or by a visit to the premise where telephone service is not available. During the winter months, utilities provide a fifth notice, providing an additional 48 hours, if they are unable to contact the customer or responsible adult on the day of termination. Chapter 14 did not materially change the practice of multiple customer notices. In fact, the written notices themselves were significantly enhanced to provide more detailed information to payment-troubled customers on where to find assistance in paying the utility bill.
The notion that an in-person notification process was eliminated through the enactment of Chapter 14 is wrong. Utility workers responsible for physically turning off service at a premise are not trained social workers and never acted as such. While there may have been isolated instances of a utility worker receiving payment upon arriving at the premise (which stopped the termination process), in the majority of cases no adult was home and one last notice was provided. Forty-eight hours later, a second premise visit was made and service was terminated. Both before Chapter 14 and now, the customer would have received multiple notices of impending termination prior to the actual termination of utility service.
Chapter 14 Is Working
Chapter 14 has resulted in various positive developments. For instance, medical certifications have been expanded to allow greater coverage of people facing both medical illness and increased energy bills.
* The use of medical certifications to reconnect service has grown from 4,600 prior to Chapter 14 to more than 10,600 after Chapter 14. * Under Chapter 14, the total number of utility customers in debt has dropped by 160,000. Lower uncollectable costs mean lower rates for all customers. The number of full payments received from customers following termination and prior to reconnection has increased by 9,000 to 13,000 individuals monthly. This means that people who can afford to pay are actually paying, which benefits all ratepayers. * The annual reconnect ratio, a measure used by the Public Utility Commission to determine how quickly terminated service is reconnected, has risen to 66% since the enactment of Chapter 14. It was at 50% prior to Chapter 14.
This is positive news and clear evidence that the number of households entering the winter without electric or gas service is lower after the implementation of Chapter 14 provisions.
The Real Solution
What's needed is a partnership involving federal and state government, utilities, consumer advocates and others to address the energy-related needs of low-income households. Adding a sixth or seventh past due notice, depending on the time of year, will not help that customer who cannot afford rising energy costs. Our state legislature should continue to endeavor to assist consumers who are facing mounting energy prices, not amend existing legislation. Senate Bill 76 (Tomlinson, Greenleaf, Musto and Boscola) would expand LIHEAP eligibility to the working poor, and House Bill 1201 (Preston, Godshall, George and Barrar) would include funds to supplement both LIHEAP and weatherization by $10 million each annually.
On behalf of the thousands of utility employees who work hard to provide safe and reliable energy, and offer programs and services to help low-income customers, I am proud to say that our industry honors its social commitment to all of its customers by helping those truly in need and encouraging the timely payment of bills from all customers.