Overview of Low-Income Restructuring
Legislation and Implementation
Nevada
December 2007
In July 2001 Nevada created a funding source to supplement existing low-income energy programs. AB 661 – the enabling legislation – created the Nevada Fund for Energy Assistance and Conservation (FEAC), funded through a mill tax assessment, or Universal Energy Charge (UEC), paid by residential and commercial customers of the seven regulated gas and electric utilities in the state.
The Public Utility Commission of Nevada (PUCN) has been collecting the UEC, which is based on consumption, since August 2001. The PUCN takes up to 3 percent of the UEC for its administrative costs. The remainder is placed in an interest-bearing account of the state Division of Welfare and Supportive Services (formerly Welfare Division), the LIHEAP grantee.
The Division distributes up to 75 percent of this amount to its LIHEAP, also known as the Energy Assistance Program or EAP, and up to 25 percent to the Nevada Housing Division's Weatherization Assistance Program (WAP). Any accumulated interest is distributed to the EAP and WAP programs. Funds are drawn down periodically as needed by each program thus enabling interest to accrue on the balance.
The monthly charge averages about 47 cents on the typical residential electric bill and 16 cents on the typical residential gas bill. For state fiscal year (SFY) 2008, starting July 1, 2007 , the UEC is expected to generate about $12.6 million.
As of July 2002, the Division began using both federal LIHEAP and its FEAC funds to operate a new energy assistance program that requires participants to pay no more than a small percentage of their income for energy. The energy assistance benefit, referred to as a Fixed Annual Credit (FAC), is calculated for each eligible household. The FAC is the amount sufficient to reduce the percentage of the applying household's income spent on energy to the state median percentage of household income spent on energy. To determine the FAC benefit, the Division has a computer-generated exchange with the state's major utilities to ascertain the annual energy usage of the address at which the applicant resides.
The lower the income (which takes into account family size), and the higher the usage, the greater the benefit. Both the median household income and the median household energy burden are updated annually for each new program year. Nevada's SFY 08 median household income is $48,314, and the statewide median household energy burden for natural gas, electricity, fuel oil and propane is 3.53 percent of that amount.
The following is an excerpt from the state's FY 2008 plan explaining how the FAC benefit is calculated:
- Identify eligible household's gross annual income and apply 3.53 percent to determine the amount the household is expected to pay for their energy burden.
- Identify eligible household's annual energy usage in dollars (to include all energy sources).
- Compare the 3.53 percent figure to the eligible household's annual energy burden (usage in dollars):
• If the household energy burden is greater than 3.53 percent of the household's annual income, the difference is the FAC for that household. The FAC is the benefit amount the household receives not to exceed UEC annual usage.
• If the eligible household energy burden is less than 3.53 percent of the household's annual income, the household may receive a payment of $180 paid with non-UEC monies. Eligible households having a fixed annual credit up to, and including $179, may receive a payment of $180. The FAC portion is paid with UEC funds and the remainder of the $180 is paid with non-UEC monies
All households receiving a FAC will be referred by the Division, via the agency's computer system, to the Housing Division for energy efficiency services. A list of eligible households with a FAC of $2,200 or greater is also provided to the Housing Division on a daily basis with a goal of prioritizing these high burden households. The maximum allowable FAC is based on income, household size and poverty level.
Only those households that are charged a UEC on their natural gas and/or electricity bill may receive a FAC benefit paid from the FEAC. Eligible households can receive both LIHEAP and FEAC funds. LIHEAP funds will be paid out before FEAC funds, and FEAC funds can only be distributed to a participating UEC vendor. The two funding sources are separate and are disbursed and tracked separately.
In cases where eligible households have only non-UEC vendors (electric cooperatives and bulk fuel dealers), the FAC benefit will be paid with LIHEAP funds, up to the maximum amount. Any remaining FAC benefit due will be paid with revenue from other sources, such as state general funding.
Eligible households may elect to have their FAC benefit: go directly to their UEC heating provider, go directly to their UEC cooling provider, or be equally split between their UEC heating and cooling providers.
During SFY 2007, the Energy Assistance Program expended about $9.4 million in UEC funds, serving 10,220 households. The average benefit was $923. Nearly $900,000 was spent for arrearage assistance with nearly 3,000 households receiving an average benefit of $304.
Evaluations of the program for its first four full years of operation (SFY 2003 through SFY 2006) have been completed and the 2006 evaluation is available at http://dwss.nv.gov/dmdocuments/EAP_SFY06Eval.pdf
Initially, the evaluations noted that the Division was still ramping up the energy assistance program and, due to problems with outreach, computer technology and administration, spent less than a quarter of its FEAC during the first two years. By the end of the fourth year, the evaluation reported that problems with implementation and spending had largely been solved.
Because of the initial under spending, the state-funded program came under criticism during 2004, and, as a result, the Division contracted with a professional marketing firm to develop and implement an aggressive outreach campaign, targeting low-income elderly, disabled, and families with children 6 years and under. The outreach paid off, as shown in a significant increase in households served during SFY 2005.
During SFY 2007, the Housing Division spent about $3.1 million in UEC funds providing energy conservation measures such as insulation in ceilings, floors and ducts, weather-stripping and caulking, heating and cooling system repairs and replacement, and water heater repairs and replacement. Over 1,000 household received services.
For more information, including annual plans and evaluations, visit the website of the Nevada State Division of Welfare and Supportive Services.
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Page Last Updated: July 23, 2008
