Overview of Low-Income Restructuring
Legislation and Implementation
New Hampshire
January 2009
New Hampshire's Electric Assistance Program (EAP), also called the tiered-discount program (TDP), and its Core Energy Efficiency Programs were implemented statewide during 2002 for customers of regulated electric utilities. The legislature had passed a restructuring law in 1996 that authorized a system benefits charge (SBC) for such programs.
The 2005 legislature continued authorization of the SBC through June of 2008 with the same amount of funding for the low-income programs; the 2007 legislature removed that sunset date and continued the programs indefinitely.
Until October 1, 2008, the SBC, paid by all electric customer classes, totaled 3.0 mills per kWh and was divided between the EAP (1.2 mills) and the Core Energy Efficiency Programs (1.8 mills). In September 2008, in response to increased electric rates and program need, the New Hampshire Public Utilities Commission (PUC) raised the SBC for the EAP portion from 1.2 mills per kWh to the maximum allowable by law, 1.5 mills per kWh. That action adds about $3.3 million the EAP’s annual budget and allows another 6,000 households to receive benefits.
A residential customer using 500 kWh monthly will see a bill increase of 15 cents, or an annual increase of $1.80. The average small business customer will see a $7.50 annual increase, while the average large commercial or industrial customer will see a $3,400 increase.
During FY 2008, the EAP provided electric rate discounts averaging $430 to about 27,000 households, spending about $12 million. At the end of the year, there were about 4,500 households on the program’s waiting list, which prompted the PUC to increase the funding level. Households at or below 185 percent of federal poverty guidelines are eligible and they must be customers of the following regulated utilities: Public Service of New Hampshire, National Grid, New Hampshire Electric Co-op, and Unitil.
Background
On May 30, 2002, the New Hampshire PUC issued an Order, Docket # DE 02-034, explaining its consideration of three different assistance program designs and adopting the tiered discount design. The order stated that the adopted design “strikes the best balance between cost efficiency and program efficiency" and that the program would reach several thousand more households than either of the other two proposals.
The EAP, in effect since October 1, 2002, replaced an interim program, adopted in 1999, which had provided a discount of approximately 25 percent on the electric bills of eligible households. That program served about 13,000 households in 2001, at a cost of $1.1 million.
The tiered-discount program is a modified percentage of income plan. The tiers were originally structured to provide qualified low-income households with monthly electric bill payments equal to, on average, four percent of income for general use customers and six percent for electric heat users. In 2006, the PUC changed that to 4.5 percent for all electric use. Local community action agencies determine eligibility and then identify the discount for each benefit level.
Participants are eligible for the discount for 12 months and must recertify annually. Income-eligible senior customers over 65 years of age and customers on fixed incomes must recertify every 24 months. Participants must make their payments on time; failure to do so results in traditional collection activity by the utility.
The early EAP also included a one-time pre-program arrearage retirement component for arrearages that were less than 24 months old. Only arrearages existing on or before August 31, 2002 were eligible for retirement. The program paid out over $500,000 in arrears forgiveness during its first three years. It was discontinued prior to FY 2005-06 so that more direct benefits could be paid.
Substantial changes were made to the program effective FY 2007. After asking stakeholders to review the program for possible changes, the PUC issued Order No 24,664 on September 1, 2006, incorporating a new program design that was based on consensus among the stakeholders including utilities, the state community action association and the state utility consumer advocate.
The new design, effective October 1, 2006, made the EAP a uniform statewide program, rather than utility specific, maintained the program funding level at 1.2 mils per kWh, and expanded enrollment up to 30,000 households annually, from about 24,000 previously.
The PUC and stakeholders favored increased EAP enrollment in order to maintain the FY 2006 level, which had been expanded in response to escalating energy costs. Late in 2005, the New Hampshire legislature temporarily boosted EAP funding by allowing $3 million to be reallocated from SBC-funded efficiency programs. The funding law, SB 228, required the state’s electric utilities to allocate more money to the EAP, up to $3 million, and then pay themselves back from the energy efficiency portion of the SBC fund over the next three years. As a result, about 6,500 low-income households on the EAP waiting list received assistance during the winter of 2006 through a temporary program called the Supplemental Winter EAP.
The PUC also changed the way EAP benefits were determined in order to take into account a household’s poverty level and household size rather than income alone. As a result of this change and the expanded enrollment, the average EAP benefit was reduced for some households with higher incomes and increased for some with smaller incomes. There are six benefit levels ranging from at or below 75 percent of FPG to 185 percent of FPG, with an average annual benefit of approximately $420 compared to over $600 previously.
Also, as mentioned above, the new design for the EAP eliminated different discount levels for electric and non-electric heat usage. The program was originally structured so that low-income households had electric bill payments equal to, on average, four percent of household income for general use customers and six percent for electric heat users. Under the new design, customers are responsible for electric bills equal to approximately 4.5 percent of household income.
In May of 2005, partially in response to escalating natural gas prices, the Commission opened an investigation into the benefits of a low-income rate assistance program for natural gas customers. (Around 18 percent of New Hampshire’s low-income households use natural gas as their primary heating fuel.) Both KeySpan and Northern agreed that such a program was needed and that they would work toward implementing it for the winter of 2005-06. Both utilities operate low-income discount programs in Massachusetts and both indicated they could pattern a New Hampshire program after their Massachusetts programs. Keyspan expected about 6,000 of its low-income customers to participate and Northern expected about 1,000.
The New Hampshire Public Utilities Commission (PUC) on September 1 approved an order creating a one-year pilot program for qualifying customers of Keyspan and Northern. Customers who qualified for one of 13 means-tested programs, including LIHEAP and the EAP, were eligible for the pilot and received a discount of up to 50 percent on the delivery portion of their bill, amounting to about $800,000 during FY 2006. In June of 2006, the utilities and the PUC agreed to continue the program and to no longer consider it a pilot. The discount was raised to 60 percent off the delivery price and funding amounts to about $1.3 million annually.
Low-Income Energy Efficiency Program
As mentioned above, the SBC funds energy efficiency programs as well as the EAP. In May 2002, the New Hampshire Public Utility Commission ordered implementation of a Core Energy Efficiency Program for all customer classes for 19 months. It included a $3.1 million low-income energy efficiency program that began June 1.
After the initial program concluded, the PUC has approved program funding each year, with annual funding totaling about $18 million, including about $2 million for low-income customers through the Home Energy Assistance Program. Eligible households can receive up to $4,000 in energy efficiency measures and program services. Households that also qualify for the federal Weatherization Assistance Program (WAP), which is administered through local community action agencies, can receive additional energy efficiency measures and program services from a combination of the state and federal funds.
The services provided to low-income customers include insulation, air sealing, new thermostats, electric hot water measures, refrigerator replacement, lighting upgrades, health and safety measures, and a home energy audit and rating (the rating is based on a computer model of the home's relative efficiency). In 2008, about 1,200 units received energy efficiency measures under a program budget of $2.6 million. (The budget had a one-time increase of about $800,000 due to a funds transfer from another program that was undersubscribed; this allowed an additional 340 housing units to be served.
In a 2005 publication, the American Council for an Energy Efficient Economy identified the Home Energy Assistance Program as an “exemplary” low-income efficiency program. It said the program uses holistic practices and state of the art software and data tracking. Because it is delivered by CAAs that also deliver the federal WAP, it leverages several different funding sources, allowing customers to receive more services than they would with a utility-funded program. It also achieves relatively high electricity savings per household, the ACEEE report said, because it prioritizes electrically-heated and other high energy use homes.
When it released its order implementing the Core programs, the Commission also issued an Order of Notice to investigate whether it would be in the public interest to re-institute energy efficiency programs by New Hampshire's two natural gas utilities, Northern Utilities and KeySpan. On October 2, 2002, KeySpan submitted its Energy Efficiency Proposal for 2003-2005 and Northern filed a final Energy Efficiency Proposal on November 27, 2002. In December 2002, the Commission approved a Settlement Agreement that allows implementation of the natural gas companies' energy efficiency programs.
Specific programs offered by KeySpan and Northern include residential low-income audits and up to $3,600 in qualifying weatherization services to eligible households. KeySpan's low-income program has a $332,823 annual budget with a participant goal of 129. Northern proposed a budget of $48,500 for each program year and estimated participant levels of 17 to 20 per year. The programs will operate through April 2009.
For more information:
Settlement Agreement authorizing the continuation of the Core Energy Efficiency programs for 2004
Settlement authorizing 2005 Core Energy Efficiency programs
Order authorizing 2006 Core Energy Efficiency programs
The Core Energy Efficiency Programs website describes each utility’s programs.
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Page Last Updated: January 8, 2009
