WASHINGTON STATE REACH CONFERENCE
October 23, 2001
9 am - 4:30 pm
Snohomish PUD / Everett, WA

Promoting Affordable Energy Assistance to
Low-income Households in Washington State

REACH is the Residential Energy Assistance Challenge, a federal initiative of the Department of Health and Human Services Office of Community Services administered in Washington State by the Department of Community Trade and Economic Development in partnership with with A World Institute for a Sustainable Humanity (A W.I.S.H.).

Washington State REACH Conference
A Partnership for Low-income Energy Assistance
SPEAKER SUMMARIES

Conference Facilitator: Michael Karp
(A World Institute for a Sustainabile Humanity, 360-724-3215)

Conference Coordinator: Susanne Hindle
(Watermark Communications)

9:00 a.m.

WELCOME

CYNTHIA FIRST

President of the Board of Commissioners
Snohomish PUD
P.O. Box 1107
Everett, WA 98206-1107
(425) 783-1000
pudfirst@aol.com

Cynthia First was part of one of the first P.U.D. programs to offer low-income assistance to low income households. Her program started in 1979 and has been a success that has been modeled across the nation.

9:05 a.m.

OVERVIEW OF REACH

WILL GRAHAM

State of Washington Dept. of Community, Trade and Economic Development
Office of Community Services
P.O. Box 48300
Olympia, Washington 98504-8300
Phone: (360) 725-2854
willg@cted.wa.gov

The REACH conference represents a milestone event because they finally got an energy grant to help low-income families. There are some problems that need to be addressed. There were budgetary problems and funding issues, such as when would they receive funding and where would it come from.

These problems pale in comparison to the problems facing low-income families. First they have low budget due to a lack of income. Second, they are faced with rising energy costs. As a result, low-income families must face spending a larger and larger percentage of their budgets to cover energy costs. A breakdown of a low-income family's budget looks like this:Avg. Household income $784
Avg. Shelter costs 384
Avg. Energy costs 66 ($37 for heating alone)
Residual income $330

The REACH Program

A federally funded initiative in 1994 made money available to the REACH program. The first grants were issued in 1996 after going through a competitive bidding process. Grants were awarded to programs that were unique, but replicable across the nation.

REACH is a laboratory of sorts for creating new programs. It has a budget of approximately $6 million, with the bulk of the funding going to weatherization programs and co-op purchasing programs. All of these programs are currently being evaluated.

9:20 a.m.

OPENING ADDRESS: A NATIONAL PERSPECTIVE

JOEL EISENBERG

Program Manager
Oak Ridge National Laboratory
901 D Street SW, #910
Washington, D.C. 20024
Phone: (202) 479-0439
j2j@ornl.gov

The U.S. Department of Energy Weatherization Assistance Program received a $238 million appropriation for weatherization programs. They were asked to take a look at a national perspective, and conducted a national survey.

5,000 households were surveyed in which they went out and got actual utility bills from customers, making this the most accurate and comprehensive survey of its kind. The data presented at the REACH Conference is from 1997 and 1993 (year 2000 data still pending).

Findings:

Washington State is a leader in energy assistance.

10:20 a.m.

UTILITY PANEL

BRUCE FOLSOM

Avista Utilities
P.O. Box 3727
Spokane, WA 99220
(509) 495-8706
bruce.folsom@avistacorp.com

Energy Assistance Tariff Rider: Context and Development
Rates & Regulatory Department

RCW 80.28.068
Rates -- Low-income customers

Upon request by an electrical or gas company, the commission may approve rates, charges, services, and/or physical facilities at a discount for low-income senior customers and low-income customers. Expenses and lost revenues as a result of these discounts shall be included in the company's cost of service and recovered in rates to other customers.

 1. Chronology

• Prior to passage of the stat law. Avista's low-income (LI) efforts focused on LI DSM, CARES and Project Share.
• State law adopted (June 1999)
• Avisata and stakeholders met around innovative programs (July 1999)
• Trial balloons floated (September 1999)
• Focused on the makings of a rate assistance program (October 1999)
• Avista filed a general rate case (Noevember 1999)
• Stakholders intervened (May 2000) and no programs resulted from the rate case (September 2000)
• Under the leadership of a new company president (Noevember 2000), Avista and stakeholders resumed collaboration on specific programs
• This resulted in an agreement in principle (January 2001) with programmatic details remaining as work in progress (March 2001)
• The WUTC approved (April 2001) the 0.79% increase to both electric and natural gas service on 30 days notice, as filed iwth an agreement that the program would run three years and then be revisited for continuance, modification or termination.

2. Context and Benefits

• Avista, like all energy companies, was looking ahead to high natural gas and electric costs based on forward market pricing
• Avista's top management was very concerned about at-risk (low-income) customers' ability to cope with large rate increases
• Avista hasa relatively high percentage of low-income customers
• While the Company had no ability to predict reduced no/slow pays and other quantitative benefits, Avista believed that some form of program was an important proactive action to take on customers' behalf simply from an ability for customers to use and pay for an essential service.
• Additional benefits have included more collaboration and coordination between the Company and CAAs

3. Program Details

• New revenue to fund program equals approximately $3,000,000 per year ($2,000,000 electric; $1,000,000 gas)
• Targets 6,600 additional households
• Majority of revenue goes to CAAs for provision to qualified customers
• Two types of programs...enhanced LIHEAP and enhanced emergency assistance
• Avista has established additional educational programs and support
• We have designed these programs around the principle of using existing CAA effectiveness to deliver the programs with some degree of flexibility to CAAs to fit with (and supplement / enhance) their other funding sources and requirements.
• Evaluation has been developed to measure program benefits, both quantitative and qualitative
• A stakeholders advisory group has been convened and will continue to monitor this program.

4. Conclusion

Several aspects have come together to spark what we expect will be very successful programs. These include:

• Top company management's commitment to this customer group
• -Stakeholder (SNAP) interest and willingness to work with Avista recognizing the Company's drivers (e.g., key issues)
• Regulatory/legislative support at all levels
• Balancing of need for meaningful programs with rate impacts on all customers

With higher than expected rate increases, Avista hopes that this is a helpful program at the right time 

Seattle City Light
700 5th Ave., Suite 3300
Seattle, WA 98104-5031
(206) 684-3377
andrew.lofton@ci.seattle.wa.us

Seattle City Light's Low-Income Programs:

There are three rate assistance programs available to low-income families. The two most prominent programs are coded as:

• "Rate 26" - for households 65 and older or disabled and having <70% of WA State median income
• "Rate 27" - Households receiving Social Security Income

Low income Master Meter Program

• Building owner's receive a credit that must be passed along to renters who qualify for rate assistance.

Seattle City Light also offers three financial service programs.

1. ELIA
Households receives a credit of up to 50% of the bill, up to a maximum of $200

2. Protect Share
A program that accepts voluntary contributions from regular SCL customers to help low income households

3. Budget Billing Plan
A household's annual bills are equalized over a twelve-month period to offset the burden of higher energy costs during the winter months by increasing the amount the customer pays in all other months.

SCL also encourages conservation and weatherization by providing incentives to builders who go beyond code minimums to make homes more energy efficient.

PacifiCorp / Pacific Power
825 NE Multnomah, Suite 300
Portland, OR 97232
(503) 813-5154
Rebecca.eberle@pacificorp.com

Washington Bill Assistance Pilot Program
Design Issues/Limitations

1. Ease to Administer

• Utility billing system capabilities are limited
• Qualification guidelines consistent with other programs
• Recipients understand program requirements and benefits
• Convenient to enroll

2. Financial Implications

• Discount covered by shareholders and/or non-participating customers
• Additional costs incurred for billing system upgrades, internal and external communications, increase in call volume, data collection and reporting requirements, participant certification and program evaluation
• Cost Effectiveness (Do overall benefits outweigh all associated costs?)

Utilities benefit from agreements with local agencies

• Agencies have knowledge of the needs of low-income households in their community
• Generally, utilities do not request income details from their customers
• Outreach and eligibility certification process can be included with other programs administered by agencies
• Customers are "comfortable" requesting services through agencies
• Referrals to other programs such as food banks, Head Start and weatherization provide additional benefits to participants
• Pacific Power has agreements in place for certification services with Blue Mountain Action Council in Walla Walla, Northwest Community Action Center in Toppenish and Yakima Valley O.I.C. in Yakima

Program Specifics

• Tariffs Approved by WUTC, Effective 2/01/01 through 4/30/03
• Schedule 17 - Low Income Bill Assistance Pilot Program
• Designed to target electric heating customers when bills are expected to be highest, with largest discounts available to customers with lowest incomes
• Discount available during six winter months (November through April)
• Recipients receive discount on usage in excess of 600 kWh/month
• Three energy credits available based on income:
  Tier 1 = 3.500 cents/kWh (0-75% of Federal Poverty Guidelines)
  Tier 2 = 2.355 cents/kWh (76-100% of Federal Poverty Guidelines)
  Tier 3 = 1.472 cents/kWh (101-125% of Federal Poverty Guidelines)
• Participant numbers are limited to 2,400 so that credit $ are not greater than surcharge $ collected and assume 50% Tier 1, 30% Tier 2 and 20% Tier 3.

Results of First 3 Months

• 926 Households Enrolled by April:

  Tier 1 = 567 (61%)
  Tier 2 = 227 (25%)
  Tier 3 = 132 (14%)

• Average Monthly Credit:

  Tier 1 = $24.14
  Tier 2 = $15.44
  Tier 3 = $10.24

• $197K Surcharge Collected

Evaluation

• Goal is to understand the value and effectiveness of the pilot including the delivery mechanism
• Company will work with interested parties to ensure the evaluator addresses their needs
• Two full heating seasons to be evaluated
• Evaluation to be completed by August 15, 2003

Bill Assistance in Other States

California

• Legislative mandate in 1988
• Discount of 15% on overall bills available to qualifying customers
• Surcharge collected from all non-participating customers = .082 cents per kWh
• Customer eligibility determined by state agency

Oregon

• Component of restructuring bill
• In effect January 2000
• Surcharge collected from all customers, residential = 35 cents/month
• Funds sent directly to Oregon Housing & Community Services and then they are distributed similar to LIHEAP

Utah

• Company worked with interested parties to design program
• In effect September 2000
• Credit of $8/month available to qualifying customers
• Surcharge collected from all non-participating customers, residential = 12 cents/month
• Customer eligibility determined by state agency

Clark County PUD
P.O. Box 8900
Vancouver, WA 98668
(360) 992-3000
jwatkins@clarkpud.com

GOSP - Guarantee of Service Plan

The Guarantee of Service Plan is a 'percentage-of-income payment plan' for low-income customers that provides an affordable energy payment based on income rather than usage, and allows the customer to play a key role in the solution to payment difficulties.

The network was formed from agencies throughout the community, and each agency plays an important part in providing the flexibility needed to resolve payment problems faced by low-income households.

The GOSP is aimed primarily at assisting customers in meeting their ongoing energy bill needs. Participation in the GOSP requires that a customer receive a LIHEAP grant or pay any past due balance before becoming a participant of the plan.

Once accepted on the plan, the customer's income and living expenses are evaluated and a payment amount is established which will not exceed 9% of the household income. The customer is given assurance that service will not be discontinued as long as the GOSP payments are made each month. After 12 monthly payments Clark Public Utilities will adjust off any portion of the account balance which was billed more than 30 days prior to completion of the plan.

GOSP Goals

• Affordable Electric Service for Low-income Customers
• Provide Adequate Incentive to Encourage Customer Participation Toward Self Sufficiency
• Improve Control of Utility Delinquencies and Losses

GOSP Customer Benefits

• Affordable Electric Service
• Protection from Shut-Off, Deposit Requirements, and Late Charges
• Remedy for Past Due Balances
• Available at Any Time of Year
• Reduced Stress
• Improved Self-Image

GOSP Utility Benefits

• Reduced uncollectable
• Fewer shut-offs
• Better control of delinquent accounts
• Reduced collection activity
• Elimination of adversarial relationship to customers
• Fewer Instances of fraud
• Community image as part of the solution instead of part of the problem
• Leveraging

Results of GOSP

• Participants: Presently 1,500.
• Successful Completions since 1988: 15,000 (either converted to the EPP, or have not expressed a need for further assistance)
• Average Assistance Grant (LIHEAP) Reduced from $230.00 to $169.00
• Delinquency: Reduced from 74% (prior to plan entry) to 18% (defaulted in GOSP payment plan)
• Disconnection of service to low-income: Reduced 64%
• Collection expenses reduced $115.00 per year for each successful placement.
• Average Customer Contribution: $67.00 per month – Up from $48.00 per month prior to plan entry.
• Average Adjustment from Pre-Plan Arrears: $283.00, Compared to $315.00 traditional average loss. Net Bad Debt reduced 10%. (Pre-identification of future losses = 10% reduction)

GOSP Plans

GOSP I - 125% of Poverty & Below

• Pay less than 9% of income
• Receive LIHEAP grant and/or Sr. Rate Credit
• GOSP adjustment in the amount of pre-plan arrearage after 12 payments
• Converted to CPU Equal Payment Plan

GOSP II - 125% of Poverty & Below

• Pay 9% of income
• Receive LIHEAP grant and/or Sr. Rate Credit
• GOSP adjustment in the amount of pre-plan arrearage, plus any additional shortfall, after 12 payments

GOSP III - Between 125% and 175% of poverty

• Pay up to 9% of income
• Accumulate shortfall – no outside assistance
• GOSP adjustment in the amount of accumulated shortfall, plus pre-plan arrearage, after 12 payments
• Requires energy counseling & goal setting

Manager of Customer Service
Snohomish PUD
P.O. Box 1107
Everett, WA 98206-1107
(425) 783-1000
skmarks@snopud.com

Snohomish PUD's assistance programs are geared towards assisting senior citizens and low-income households.

Their programs started in 1979 and initially were geared only to senior citizens. It was available from October through March only, which made the program somewhat limiting. In 1988 they added a disability discount as well.

They now offer agencies that assist their customers with completing the necessary forms with a payment of $5 per application.

They now offer three programs:1 - Budget payment plan
2 - Helping Hands
3 - the Matchmaker Program

11:30 a.m.

WASHINGTON STATE LAW

ANDREA McNAMARA

Washington State Energy, Technology and Telecommunications Committee
210 John A. Cherberg Building
P.O. Box 40466
Olympia, WA 98504-0466
(360) 786-7483
mcnamara_an@leg.wa.gov

1. Legislature enacted a moratorium in 1984.a. It identified dates official dates for winter

2. In 1986 they extended protection for an additional four years

3. In 1991 they removed the sunset law and protection become permanenta. It identified steps that customers must take to avoid shut-offs.
b. Agree to payment plan (by following October)
c. 7% of monthly income + 1/12 of arrears
d. Must agree to continue payment plan, even if they move.

4. In 1979 the legislature first authorized rate discounts for senior citizens

5. In 1988 they extended these discounts to disabled customers

6. In 1998 the distinction between low income seniors and low income disabled customers is eliminateda. The utility can offer discounts to any low-income household, but it must be approved by the utility.

7. In 1999 the legislature enacts laws allowing investor owned utilities to offer discounts.

Utility Tax Credit

1. How should state allocate funds for these programs?

2. Initiative 601

3. Electricity deregulationa. Across the board charge to fund low income assistance
b. Precedent supports low income assistance

Legislative Response to Budget Cuts to LIHEAP

1. Look for non-general funds

2. No new tax funds

Tax Credit

1. Available to all gas and electric utilities for fiscal 2002

2. Qualifying contributionsa. Must be utility money
b. Must provide billing discounts
c Any reduction to low income customers

3. Designed to encourage new programs and expand existing ones (to 125% of value)

4. Receive 50¢ on each dollar spent by the utility

5. Program is caped at $2.5 milliona. Not done on a first come, first serve basis
b. Every utility is eligible

Current Program Participants

1. 5 gas companies
2. 1 water & power company
3. 2 investor owned electric companies
4. 4 municipalities
5. 5 PUDs
6. 5 rural co-ops

Challenges for Utilities Today

1. There is a $1 billion deficit
2. A loss of momentuma. Public opinion is that energy crunch is over ( supply and demand in balance)
b. Wholesale gas and electric prices are falling
c. Legislature has a "wait and see" mindset

3. But not likely to see a decrease in the utility tax credit

1:30 p.m.

WHAT OTHER STATES ARE DOING

JIM MORTON

District XI Human Resource Council
1801 S. Higgins Avenue
Missoula, Montana 59801-5763
(406) 728-3710
jpm@hrcxi.org

• Two main utilities in Montana
• Offered 10% discount tied to low-income assistance
  a. Possible by not charging for administrative costs
• In 1997 a new law enacted
  a. 3% of revenues to go to public services
  b. non-bypassable charge of 3%
  c. legislature adopts 2.4% instead
  c. Governor earmarks 17% for low-income assistance
  d. Bill assistance raised to 15%
  e. Only 25% of eligible households participate in these programs
• There are 10 CACs in Montana
• Each applied for REACH grants
• 600 households were surveyed regarding heating source retrofit
  a. 57% had health or and/or safety concerns
  b. 60% used gas
  c. 13% used electricity
  d. 5% used propane
  e. Households are required to rent propane tanks from the supplier
• REACH goals were to:
  a. Help people buy their own propane tanks
  b. Provide CO detectors in the home
  c. Provide smoke detectors in the home
• Market profile of average user
  a. High school graduates but no job opportunities
  b. They need a lot of education and outreach

REACH findings

• Urban areas had higher program usage rates
• Rural residents had lower usage rates because they didn't understand the programs

Latino Issues Forum
785 Market Street, 3rd Floor
San Francisco, CA 94103
(415) 284-7224
susanbrown@lif.org

The California Crisis

• Programs are paid by rate-payer bonds $28 billion
• Payer got 10% discount and fixed costs
• Valid until utilities recovered their stranded costs
• Rate caps kept them from charging more
• Public Utility Commissions (PUC) failed to lift rate caps
• Natural gas prices went through the roof
  a. Utilities couldn't keep current
  b. Edison and PGE file for bankruptcy protection
• The governor orders the purchase of the utility bonds
  a. PUC refuses to ratify the bonds purchased by the governor
  b. Insist contract, terms, and rates are too high
• CARE penetration at 80% in Edison territory
• CARE penetration at 65% in PGE territory
• Governor begins a grassroots education campaign
  a. Churches, schools, ethnic organizations, etc.
  b. Allocate $24 million for low-income assistance and CARE outreach.
  c. AC exchange program put into place.
  d. Weatherization and conservation programs enacted.

2:45 p.m.