September 11, 2008
ENERGY ASSISTANCE AND CONSERVATION PROGRAMS
By: Kevin E. McCarthy, Principal Analyst
You asked that we update OLR Report 2008-R-0407, which describes energy assistance and conservation programs, to reflect subsequent actions taken by the legislature.
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. In addition, a component of CEAP called the Contingency Heating Assistance Program helps moderate income households with their winter heating bills.
Historically, CEAP has been entirely federally funded, and the federal 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 CEAP 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. By law, the governor must submit an annual plan for allocating the federal funds to the legislative committees with jurisdiction over CEAP. The governor proposed increasing benefit levels for people who heat with oil and other deliverable fuels, to offset the increase in their cost. The committees modified the plan to increase benefits for all program participants.
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. In addition, most municipalities have fuel banks that provide assistance to needy residents.
PAs 08-1 and 08-2, August Special Session, credit the unappropriated FY 08 General Fund surplus to FY 09 General Fund revenue and appropriate the credited funds for various existing and new energy assistance and energy efficiency programs. Among other things, the acts: (1) provide funding for increased CEAP benefits, (2) provide additional funds for Operation Fuel, (3) modify an existing program to provide rebates to people who replace their furnaces or boilers with more efficient ones and increases funding for this program, and (4) establish new programs to provide energy assistance to the elderly, weatherize the housing of low-income residents, and fund repairs for residential furnaces and boilers.
The state has taken many steps to promote energy conservation. It exempts a wide range of energy efficiency products from the sales tax. Pursuant to state law, 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 (DECD), 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 is available to households with incomes of up to 150% of the federal poverty level (200% of this level for vulnerable households). For a three-person household, these limits are $26,400 and $35,200, respectively.
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. 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. 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. In addition, when federal funding has been available, a component of CEAP called the Contingency Heating Assistance Program (CHAP) has provided energy assistance for moderate income households.
Historically, CEAP has been entirely federally funded. By law, the governor must submit a plan for allocating the federal funds to the relevant legislative committees (Appropriations, Energy and Technology, and Human Services). The committees can, by concurrent action, modify the plan. If they do not act within 30 days of receiving the plan, the governor's plan goes into effect.
This year the governor proposed increasing benefits for households using deliverable fuels. The legislative committees amended the plan to provide for further increases for all program participants. Under the amended plan, the basic benefit ranges from $650 to $925, depending on the household's income, for vulnerable households (those with a member who is elderly, disabled, or under age six). The basic benefit ranges from $685 to $885 for other households. The renter benefit ranges from $425 to $455, depending on income. The crisis assistance and safety net benefits, both of which are only available for households who use deliverable fuels, are $565 and $625, respectively. The CHAP benefit, which is available for households with incomes of between upper CEAP income limits and 60% of the state median income ($47,286 for a three-person household), is $565.
The projected cost of both the governor's plan and the amended plan exceed the amount that the Department of Social Services (DSS) estimates that the state will receive from the federal government. PAs 08-1 and 08-2 credit the unappropriated FY 08 General Fund surplus to FY 09 General Fund revenue, thus forestalling its transfer to the Budget Reserve Fund and, once the Budget Reserve Fund's balance reaches 10% of the current year's General Fund appropriations, to the State Employees' Retirement Fund. The acts appropriate the credited funds for various purposes, primarily for energy assistance and energy efficiency programs as described below.
PA 08-2, August Special Session, appropriates to OPM any excess FY 08 surplus funds, up to $ 35 million, credited to FY 09 that remain after appropriations for that act and PA 08-1, August Special Session. OPM must deposit the funds in an energy contingency account that the OPM secretary can use to (1) provide emergency home heating assistance for Connecticut residents, giving consideration to households with all-electric systems, and (2) supplement federal funding for the Connecticut energy assistance program.
The secretary must spend the money according to a plan that is subject to legislative review. He can submit one or more such plans to the legislature, but cannot submit the first one until after November 1, 2008. If the relevant legislative committees modify the plan, it is subject to further review and modification by the entire legislature and the governor. Under the act, any funds remaining in the account at the end of FY 09 must be carried forward to FY 10.
When the governor submitted her plan, OPM estimated that the plan's increased benefits and a projected 5% growth in the number of households participating in CEAP could result in a funding shortfall of approximately $41 million. The changes made in the amended plan increase the project cost of the program by approximately $30 million. As noted above, PAs 08-1 and 08-2, August Special Session, authorize the use of up to $35 million for energy assistance. However, if this funding is insufficient to meet the demand for the program (1) the Finance Advisory Committee could move funds within DSS's budget, (2) the legislature could appropriate additional money for the program, or (3) program benefits could be reduced.
DSS has a toll-free number (1-800-842-1132) for winter energy assistance. Further information about CEAP is also available at http://www.ct.gov/dss/cwp/view.asp?a=2353&q=305192.
Operation Fuel is a 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.
PA 08-1 of the August Special Session appropriates $8.5 million from the funds credited to the General Fund for FY 09 to OPM to expand Operation Fuel, Inc. to provide emergency home heating assistance between November 1, 2008 and April 30, 2009. The assistance must be provided to Connecticut households with income levels of more than 150% to 200% of the applicable federal poverty level (FPL). The act appropriates another $5 million for FY 09 from the credited funds to expand Operation Fuel, Inc. to provide emergency home heating assistance in the same period to Connecticut households with income levels of 200% or more of the applicable FPL so long as this is no more than 100% of the applicable state median household income, as determined by the most recently published DSS figures.
For both appropriations, the funding must serve households who cannot make timely payments on deliverable fuel, electricity, or natural gas bills. Operation Fuel, Inc. must pay the assistance directly to the fuel vendor, electric or gas company, or municipal electric or gas utility.
Further information about Operation Fuel's programs is available at http://www.operationfuel.org/.
Heating Assistance for the Elderly
PA 08-1 of the August Special Session appropriates $4 million for FY 09 to OPM to provide home heating assistance to seniors age 65 and older who have incomes at or below 100% of the state median household income and are unable to make timely payments on deliverable fuel, electricity, or natural gas bills. The state median household income must be determined by using the most recent state median income figures published by DSS.
The act requires OPM to determine eligibility criteria and allows the agency to spend up to $500,000 of the $4 million to identify eligible residents and notify them that the energy assistance is available. It requires OPM to pay fuel vendors, municipal utilities providing electricity or natural gas, and electric or natural gas companies directly for the home heating assistance provided.
The act requires OPM to prepare an allocation plan for the grant, which is subject to legislative approval. The relevant committees of the legislature can modify the plan, which then becomes subject to subsequent modifications by the governor and the legislature as a whole.
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.
Most municipalities have fuel banks which help people pay their energy bills. An Operation Fuel website, www.operationfuel.org/NetworkCoverage_2007-08.pdf, has phone numbers for the fuel banks.
ENERGY CONSERVATION PROGRAMS
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 who 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 HES 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 required 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 established 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.
PA 08-2, August Special Session, requires OPM to establish a program to subsidize energy audits conducted by qualified oil dealers or other entities for people who heat their homes with fuels other than natural gas or electricity. The program must cover the balance of the cost of such audits conducted from September 1, 2008 through June 30, 2009 for qualified oil companies or other entities that show they (1) provided an energy audit to a residential customer and (2) collected a $ 75 fee from the customer for the audit. The act appropriates $ 7 million of the funds credited to the General Fund in FY 09 to OPM for the program. Any unexpended funds do not lapse at the end of the FY 09 and are available for expenditure during FY 10.
Furnace Replacement and Repair Programs
By law, OPM must provide a rebate of up to $ 500 for people who replace their residential furnaces or boilers with energy efficient ones. The rebate is available for equipment installed in residential structures containing up to four dwelling units. Replacement gas furnaces and boilers must be Energy Star-rated and oil and propane equipment must be at least 84% efficient. PA 08-1 of the August Special Session (1) eliminates a $ 5 million annual cap on the rebates; (2) moves the end date of the program from July 1, 2017 to June 30, 2017; and (3) explicitly requires that the furnace or boiler be purchased and installed between July 1, 2007 and June 30, 2017 to be eligible for the rebate.
By law, the amount of the rebate decreases with the purchaser's Connecticut adjusted gross income in the same way as the property tax credit against the income tax. PA 08-1 of the August Special Session specifies that the purchaser's eligibility for the program is based on his or her Connecticut personal income tax return for the tax year before the tax year when he bought the furnace or boiler.
The act prohibits a person from receiving a rebate under this program if he or she has received a grant for furnace or boiler replacement under any program administered by the Fuel Oil Conservation Board or any other state or federal grant program that pays the full cost of furnace or boiler replacement. But, a person using a state or federal low interest loan program to pay for a furnace or boiler replacement may be eligible for a rebate. In any case, the rebate cannot exceed the total expenditure for the furnace or boiler replacement.
The act entitles a person not required to file a federal income tax return because his or her income does not meet the filing requirements and who otherwise qualifies for the rebate to the maximum rebate, subject to verification of income in a manner prescribed by the secretary.
Under the act, rebates under the program (1) do not count as taxable income for income tax purposes and (2) must be excluded from any calculation of income for purposes of determining the eligibility for, or the
benefit level of, any individual under any state or local program fully or partially state-financed. OPM has a webpage on the program, http://www.ct.gov/opm/cwp/view.asp?a=2994&q=420476&opmNav_GID=1808.
The act additionally requires the OPM secretary to provide a rebate to eligible state residents to repair or upgrade their existing boilers and furnaces to improve their efficiency on or after August 1, 2008. Eligibility for these rebates must be determined using the eligibility criteria established for the existing program for replacements. People may apply to the secretary, on a form he prescribes, to receive the rebate. The new rebate is available only for residential structures containing up to four dwelling units. Rebates are capped at $ 500 or 50% of the cost of the repair or upgrade, whichever is less. The act appropriates $ 2 million from the credited funds to OPM for FY 09 to increase funding for the rebate program. Any unexpended funds appropriated for this purpose do not lapse on June 30, 2009, but are available for expenditure during FY 10.
Weatherization for Low Income Households
PA 08-2, August Special Session, appropriates $ 2 million of the credited funds to DSS to develop a plan for (1) funding weatherization projects for low-income households who participate in CEAP, (2) giving priority to helping households with incomes below 200% of the federal poverty level, and (3) coordinating this assistance to maximize effectiveness of its funds with the weatherization assistance provided to low-income households administered by the municipal electric utilities and utility companies under existing programs overseen by the Energy Conservation Management Board (ECMB) and the Fuel Oil Conservation Board (FOCB). By November 1, 2008, and at least 45 five days before implementing the plan, DSS must submit the plan to the Connecticut Energy Advisory Board, FOCB, and the ECMB for input and advice. ECMB may order that the plan be modified to ensure effective prioritization and coordination of weatherization assistance.
CHIF administers the Energy Conservation Loan program on behalf of DECD. 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.
PA 08-2, August Special Session increases the maximum income for a household to participate in this program from 150% to 200% of the median area income for the household's size. It sets a 0% interest rate for loans for natural gas furnaces or boilers that meet or exceed federal Energy Star standards and propane and oil furnaces and boilers that are at least 84% efficient, including those eligible for an existing rebate of up to $500.
The act appropriates $2 million from the credited funds in FY 09 to DECD to provide additional loans for this program for the efficiency improvements, alternative energy devices, and replacement furnaces and boilers. It allows DECD to spend up to $250,000 of the appropriation for administrative expenses and promotion of the program.
Households with an income at or below 50% of the median household income are not charged interest on these loans. Households with incomes between 50% and 200% of the median pay interest, except as described above. Further information about this program is available at www.chif.org.