ENERGY ASSISTANCE AND CONSERVATION PROGRAMS

July 15, 2008		2008-R-0407
Energy Assistance and Conservation Programs

By: Kevin E. McCarthy, Principal Analyst

You asked for a description of (1) state programs to help people pay their energy costs and (2) residential energy conservation programs, including funding for these programs. This report has been updated by OLR Report 2008-R-0507.

summary

The state’s primary energy assistance program is the Connecticut Energy Assistance Program (CEAP), which helps low income residents pay their heating bills. The program provides a basic benefit, which decreases with income. The basic benefit is higher for “vulnerable” households, i.e., those that include one or more members who are 60 or older, under six years old, or disabled. The program also provides (1) a one-time crisis assistance benefit for households who use heating oil or other deliverable fuels that have exhausted their basic benefits and (2) a safety net assistance benefit for households who use deliverable fuels and have exhausted their basic and crisis assistance benefits. Last heating season, the basic benefit for non-vulnerable households was $435 to $635, depending on income. The crisis assistance benefit was up to $400. The safety net benefit was also up to $400, with vulnerable households eligible for an additional payment of up to $400.

CEAP is entirely federally funded, and the funding level for the program is typically not determined until shortly before the heating season begins. There are proposals in Congress to provide the same level of funding for the program as last year (approximately $41 million for the state). While this would allow the benefit levels to be approximately the same as last year, there has been a significant increase in energy prices over the last year which would mean that the amount of energy that could be purchased with the benefit would decrease.

The electric and gas companies offer arrearage forgiveness programs for customers who are eligible for CEAP and who enter into and comply with amortization agreements.

Operation Fuel is a not-for-profit organization that provides emergency energy assistance to state residents who do not qualify for state assistance. Last year, the program provided grants of up to $400 during the heating season, as well as emergency grants after the heating season ended. The program also helps customers pay off their utility arrearages. The program is primarily funded by private contributions; currently it has a balance of $132,000. Last year the program provided a total of $1.4 million in assistance; it hopes to provide $1.5 million this year. In addition, most municipalities have fuel banks that provide assistance to needy residents.

The state exempts a wide range of energy efficiency products from the sales tax.

The electric companies (Connecticut Light & Power (CL&P)) and United Illuminating (UI)) offer a wide variety of conservation programs for their residential customers. These include home energy audits, installation of energy efficient devices, and incentives for energy efficient air conditioners. The Department of Public Utility Control (DPUC) has recently approved $136.7 million in conservation and related programs for 2008 ($115.9 million for CL&P and $20.8 million for UI).

By law, natural gas companies must develop annual conservation plans, which are subject to DPUC approval. The 2008 budget for conservation programs at the three gas companies (Connecticut Natural Gas, Southern Connecticut Gas, and Yankee Gas Services) is $6.8 million, of which approximately $3 million is for residential conservation programs. PA 07-242 requires that future plans be funded by the growth in the utilities gross receipts tax in each fiscal year over the amount contained in the revenue estimate in the adopted state budget for that year, subject to a $10 million per year cap. The act establishes a similar heating oil conservation program, with a $10 million annual funding cap ($5 million per year starting in FY 09).

The Connecticut Housing Investment Fund (CHIF) administers, on behalf of the Department of Economic and Community Development, a low-interest loan program that can, among other things, help customers replace electric heating systems with other types of heating. CHIF financed $2 million in loans through this program in 2007.

A DPUC website, http://www.ct-energyinfo.com/, provides information on and links to many of the programs described below.

ENERGY ASSISTANCE PROGRAMS

Connecticut Energy Assistance Program

CEAP helps low income residents of the state pay their heating bills. The program provides a basic benefit for households who heat with natural gas, electricity, and deliverable fuels (notably heating oil) who meet the program’s income and asset limits. The benefit is higher for “vulnerable” households, i.e., those that include one or more members who are 60 or older, under six years old, or disabled. The basic benefit decreases with household income.

The program also provides (1) a one-time crisis assistance benefit for households who use deliverable fuels who have exhausted their basic benefits and (2) a safety net assistance benefit for households who use deliverable fuels and who have exhausted their basic and crisis assistance benefits. Crisis assistance benefits are only provided if the household’s inability to obtain fuel creates a life threatening situation. The emergency assistance benefit is only provided as a last resort, if the household has exhausted its basic and crisis assistance benefit and can not otherwise find shelter with adequate heat. These benefits are available to homeowners and to renters who pay directly for their heat. There is also a benefit for income-eligible renters whose heat is included in their rent and who pay more than 30% of their gross income on rent.

Last heating season, the basic benefit for vulnerable households was $400 to $675, depending on the household’s income. Households with incomes of up to 150% of the federal poverty level were eligible (200% of the poverty level for households with a member who is at least 60 years old or disabled). The maximum income was $25,755 for a three-person household ($34,340 for a three-person household with senior or disabled members). The benefit range for non-vulnerable households was $435 to $635, depending on income. (The lower minimum for the vulnerable households reflected the fact that households with a member who is 60 or older or disabled are eligible for the basic benefit if their income is up to 200% of the federal poverty level, while the maximum income for other households is 150% of the federal poverty level.) The crisis assistance benefit was up to $400. The safety net benefit was also up to $400, with vulnerable households eligible for an additional payment of up to $400. The renters benefit was $240 to $270, depending on the household’s income.

Arrearage Forgiveness Programs

By law, the electric and gas companies must offer arrearage forgiveness programs for their residential customers. To be eligible, the customer must:

1. apply and be eligible for benefits under CEAP;

2. authorize the company to send a copy of his monthly bill directly to any energy assistance agency for payment; and

3. enter into, and comply with, an amortization agreement consistent with DPUC’s policies and decisions which reduce the customer’s bill by the amount of benefits the company reasonably expects to receive from CEAP or other energy assistance programs.

The company must budget a customer’s payments over a 12-month period, including an affordable additional amount to pay for any arrearage. The payment plan must be designed so that the customer will not lose any energy assistance benefits. At the customer’s request, different terms can apply. When a customer authorizes the company to bill an energy assistance agency directly, the agency must pay the company directly.

If the customer meets these requirements either from the time his or her account becomes delinquent or from November 1 to April 30, the company must forgive an amount equal to his or her heating payments plus the amount paid by CEAP between November 1 and April 30. The company must forgive an additional amount equal to the customer’s payment plus any payments made on the customer’s behalf if he or she continues to comply with the payment plan from April 30 to October 31. The benefits provided under the act cannot result in a credit balance in the customer’s account. Customers cannot be denied benefits due to company errors.

Operation Fuel

Operation Fuel is a not-for-profit organization that provides emergency energy assistance to state residents who do not qualify for government assistance. Operation Fuel uses a network of over 60 community organizations which provide grants to pay the utility bills of households in need. They are town social service agencies, community action agencies, and non-profit organizations such as the Salvation Army, Visiting Nurse Association, and religious organizations. These agencies voluntarily administer this energy assistance program.

The program provides cash grants paid directly to vendors. In most instances, families eligible to use Operation Fuel dollars have incomes between 151% and 200% of the federal poverty level ($30,975 - $41,300 for a family of 4) and therefore make too much money to be eligible for public assistance.

Residents who qualify for funding can receive up to $400 per heating season (December 1 through May 31). After May 31, people can apply for energy assistance for life threatening situations. In the event of a cold snap in the spring or utility shut-offs following the end of the winter moratorium (in which utilities are restricted from denying service) residents may qualify for an Operation Fuel energy grant.

In addition to its on-going programs, PA 07-242 required Operation Fuel, Inc. to establish a one-time grant program for low-income people with high utility bill arrearages. The program must provide one-time grants of up to $1,000 based on the customer's arrearage and income level. The grants can be used only for arrearages that are up to 24 months old. The program must also provide case management services such as budget counseling and help with utility payment programs. The act appropriated $2.5 million for this program. While most of this funding has been spent, Operation Fuel still has some funding for this program.

Further information about Operation Fuel’s programs is available at http://www.operationfuel.org/.

Fuel Banks

Most municipalities have fuel banks which help people pay their energy bills. An Operation Fuel Web site, www.operationfuel.org/NetworkCoverage_2007-08.pdf, has phone numbers for the fuel banks.

energy conservation programs

Tax Incentives

The law exempts energy efficiency products from the sales tax. The exemption applies to: (1) insulation, programmable thermostats, water heaters and water heater blankets, window film, window and door weather strips, and caulking; (2) natural gas and propane furnaces and boilers that meet federal Energy Star standards; (3) windows and doors that meet federal Energy Star standards; (4) oil furnaces and boilers that are at least 84% efficient; (5) ground-based heat pumps that meet the minimum federal efficiency rating; and (6) compact fluorescent light bulbs.

Programs for Electric and Natural Gas Customers

The electric and gas companies offer the Home Energy Solutions (HES) program which can help customers reduce their energy costs with an in-home visit by a trained energy-efficiency specialist. The service includes:

1. thorough inspection of the customer’s home to identify and seal drafts and leaks;

2. evaluation of attic and basement insulation, with the customers receiving a rebate form with specifications to be used when contacting an insulation professional;

3. installation of energy-efficient light bulbs, showerheads, and faucet aerators;

4. advice and tips to help make the home as comfortable and energy-efficient as possible; and

5. water heater and pipe insulation

The program is free to customers who heat their homes with electricity or natural gas; those who heat with oil or propane are charged $300 for the service. The companies also offer a “light” version of this program for customers that do not require all of the services offered under HES. These include smaller homes and those without forced air heating and air conditioning systems, which is available at no charge to all consumers that fit this profile.

The electric and gas companies also offer efficiency programs targeted to low- and moderate-income customers. In CL&P’s service territory the program is called WRAP and helps renters or homeowners with an income at or below 60% of the state median income. In UI’s service territory the program is called UI Helps and assists households with an income of up to 200% of the federal poverty level. In addition to the services provided under the Home Energy Services program, these programs provide wall and attic insulation and additional efficiency measures, as needed.

Both electric companies offer a program that encourages customers to remove old, inefficient window air conditioners and replace them with models that meet federal Energy Star® standards. Participating customers receive a rebate on the new air conditioner that ranges from $25 to $100, depending on the price of the new air conditioner. Customers must present an existing window air conditioner unit to a participating retailer for proper, environmentally-friendly disposal in accordance with state and local regulations. The old unit must be in working order; the participating retailer reserves the right to check the unit to verify it is operable. There is a limit of three turned-in units per customer and rebates for multiple turned-in units cannot be combined. This program ends September 1, 2008. Both companies also offer incentives of up to $500 for customers who install new central air conditioners with a Seasonal Energy Efficiency Ratio (SEER) rating of 14 or higher. In addition, the companies’ Smart Living Catalog offers a wide variety of lighting products at a discount.

Programs for Natural Gas and Heating Oil Customers

By law, natural gas companies must develop annual conservation plans. The 2008 plan calls for expenditures of $6.8 million, of which approximately $3 million is for residential conservation programs. The bulk of this funding goes to the HES and WRAP/UI Cares programs described above. A program that helps customers buy and install high-efficiency on-demand tankless water heaters and indirect water heaters received approximately $360,000 in funding.

PA 07-242 requires that the plans be funded by the growth in the utilities gross receipts tax in each fiscal year over the amount contained in the revenue estimate in the adopted state budget for that year, subject to a $10 million per year cap. Under the act, the money goes into a special account, which is used to reimburse gas companies for their conservation expenditures. By law, the gas conservation programs are subject to the same evaluation and approval processes as the current electric conservation programs, i.e., programs must be cost-effective and reviewed by the Energy Conservation Management Board.

PA 07-242 also establishes a fuel oil conservation program, subject to cost-effectiveness and other requirements that parallel those that apply to electric and natural gas conservation programs. Under the act, funding for the oil conservation programs comes from the excess in revenue from the petroleum products gross receipts tax sales above the 2006 revenue, subject to a $10 million annual cap. (PA 07-1, June Special Session, reduced the limit to $5 million per year starting in FY 09; PA 08-2, June Special Session accelerates when the funding from the FY 08 will be made available for the program.) The money goes into a separate nonlapsing General Fund account. The Fuel Oil Conservation Board must authorize specific amounts from the account for grants, which must be awarded twice a year.

CHIF Program

CHIF administers the Energy Conservation Loan program on behalf of the Department of Economic and Community Development. Through this program, households can borrow up to $25,000 and pay it back over a 10-year period. The loans can be used for thermal windows and doors, energy efficient furnaces and boilers, insulation, storm windows and doors, caulking and weather stripping, and efficient hot water heaters. The loans can also be used to convert all-electric homes to non-electric heating systems. Households with an income at or below 50% of the median family income (MFI) are not charged interest on these loans. Households with incomes between 50% and 150% of the MFI pay interest. Further information about this program is available at www.chif.org.

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