Integrating

Government-Funded and Ratepayer-Funded

Low-Income Fuel Assistance Programs

A Workbook Provided By:

LIHEAP Committee on Managing for Results
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
Office of Community Services, Division of Energy Assistance
May 2002

This document has been prepared for the Division of Energy Assistance's LIHEAP Committee on Managing for Results by Roger Colton of Fisher, Sheehan and Colton, under subcontract to the National Energy Assistance Directors' Association (NEADA) through ACF Contract # 98-8208. The work was also funded in part by the U.S. Department of Energy's Weatherization Assistance Program (WAP) under subcontract to Oak Ridge National Laboratory.

The U.S. Department of Health and Human Services' Administration for Children and Families (ACF) established the LIHEAP Committee on Managing for Results in October 1997 as a joint partnership between the states, local agencies, other program stakeholders and ACF. The Committee's task is to collaborate with ACF on developing recommendations on cost-effective performance goals and measures for LIHEAP that will meet the requirements of the Government Performance and Results Act (GPRA) of 1993. In addition, the Committee's task is to enhance management practices through the approach known as "Managing for Results." ACF has awarded NEADA small purchase orders to support the work of the Committee.

The views expressed in this workbook are solely those of the author and do not necessarily represent the views of either the U.S. Department of Energy or the U.S. Department of Health and Human Services, Administration for Children and Families.

The author wishes to acknowledge the many hours of assistance provided by the national group of program managers who provided oversight for this workbook. The members of the Oversight Committee are listed in Appendix D.

Table of acronyms

Introduction

Most asked policy questions

Most requested pieces of information

Linking LIHEAP with ratepayer-funded programs

Appendix A: NCAT description of public purpose programs

Appendix B: LIHEAP integration symposium report

Appendix C: National technical contact persons

Appendix D: Workbook development oversight committee

Audience and Purpose

This workbook will help program managers facilitate the integration of government-funded fuel assistance programs (such as the federal Low-Income Home Energy Assistance Program and state funded LIHEAP supplements) with ratepayer-funded fuel assistance programs (such as those funded through state system benefits charges). The intended primary audience for this workbook includes state LIHEAP administrators and other persons involved with administering state low-income fuel assistance programs.

The wide array of federal, state and private programs designed to reduce low-income home energy burdens and to improve low-income home energy affordability --through a combination of cash assistance, rate discounts, and energy efficiency measures-- presents an ideal opportunity to fulfill the mandate of the federal Government Performance and Results Act of 1993 (GPRA) that related programs be integrated to achieve their maximum effectiveness.

Having federal agencies coordinate efforts with related strategic or performance goals is a specific purpose behind GPRA. GPRA encourages the identification of, and coordination among, "cross-cutting programs." The U.S. General Accounting Office has said that:

A focus on results, as envisioned by the Results Act, implies that federal programs contributing to the same or similar results should be closely coordinated to ensure that goals are consistent and that, where appropriate, program efforts are mutually reinforcing. This suggests that federal agencies should look beyond their organizational boundaries and coordinate with other agencies to ensure that their efforts are aligned.

In this sense, the materials that follow are not for everyone. They are presented with a view toward helping those managers who are now faced with issues involving the integration of government-funded and ratepayer-funded programs. The materials are not intended to be a primer on natural gas and/or electric restructuring. Nor will the materials assess the impact of moving to retail competition on low-income consumers. The material assumes that sufficient progress has been made toward establishing ratepayer-funded programs that the question is not whether to do it, but how to do it.

'Neither does this workbook address the integration of the federal Weatherization Assistance Program (WAP) with ratepayer-funded weatherization programs. WAP presents its own issues of integration. In the interests of simplicity, this workbook is limited to issues involving the integration of fuel assistance programs.

While related, the purposes of publicly-funded and ratepayer-funded fuel assistance programs are not identical. As a result, program managers need tools that will allow them to fulfill the vision of integration. The purpose is not simply to comply with statutory mandates, but to engage in an active planning and management tool.

In furtherance of the objective of providing tools to assist a determination of whether integration is appropriate, and to help ease that integration when found to be so, this workbook is presented in two sections. The first section examines the most asked policy questions regarding integration. The second section examines the most requested pieces of information. In addition, Appendix C provides a list of persons who provide technical assistance on a national basis.

Most Asked Policy Questions

Experience with the creation of ratepayer-funded programs in the various states has revealed that certain questions arise in each state that are common to each program. Rather than having program managers grapple with such questions as though they had never been raised or addressed before, this section will, for each question, provide background on the policy and program implications presented.

Again, the discussion that follows is not intended to be an introduction to either electric or natural gas restructuring. It is instead intended to help identify questions that specifically relate to linking existing LIHEAP programs with new ratepayer-funded programs.

Ratepayer funding generally arises from what is called a "system benefits charge." A system benefits charge is a nonbypassable surcharge on the bills of regulated utilities. Such a charge is generally, though by no means necessarily, associated with the move of a state to retail choice (sometimes also called "direct access" or electric and/or natural gas "restructuring").

A system benefits charge is not necessarily designed exclusively to provide low-income rate affordability assistance. Instead, some states have designed these charges to fund a range of public benefits that are placed at risk in a more competitive industry. These benefits include, but are not limited to, assistance for low-income consumers, renewable energy, research and development, energy efficiency, and the like.

In reviewing this section, readers should be aware of the differences in how certain terms and phrases are used. Most importantly, references to "home energy" throughout this section are intended to refer to a low-income household's total residential bill (including heating, cooling and appliance usage). Home energy is not limited exclusively to heating and cooling as defined for LIHEAP purposes in the LIHEAP statute.

Most Requested Pieces of Information

This section of the workbook is designed to help LIHEAP program administrators identify what information is most helpful in the process of linking LIHEAP programs with ratepayer-funded low-income fuel assistance programs. In particular, the sources presented allow access to information regarding:

• Residential energy consumption

• Residential energy expenditures

• Income and other demographic information

• Utility expenses and revenues

• Utility rates and customer service fees

• Utility payment troubles, including shutoffs, arrearages, and the like

• Utility collection practices

On-line sources for obtaining that information are noted in particular. Explanatory comments and notes are provided when useful to helping program administrators obtain the necessary information.

When looking for information on the impacts of utility restructuring on low-income energy issues, the LIHEAP Clearinghouse is the best source.

In addition, the federal LIHEAP office annually publishes the LIHEAP Home Energy Notebook. This notebook includes state-specific information on the number of households eligible for LIHEAP as well as the number of LIHEAP recipients. The notebook further includes regional information on home heating and cooling usage, expenditures, and energy burdens. This information is presented for all residential customers, for low-income households, and for LIHEAP recipients. Copies of the LIHEAP Home Energy Notebook can be obtained by writing: llitow@acf.hhs.gov.

Future Updates

'The underlying questions for both sections of this workbook were developed through a series of workshops involving state program administrators and other persons involved with the administration of state low-income fuel assistance programs. Questions and issues facing state administrators, however, will likely change and expand over time.

Accordingly, this workbook will be revised and updated over time to respond to the changing needs of program managers and to communicate the lessons that are learned over time. Each state that has been through the process of creating ratepayer-funded programs has presented a unique situation. Distilling and communicating those past lessons, as well as identifying and future lessons as they arise, will allow others to learn from this growing body of experience as it occurs.

Revisions to the workbook will be made available through the LIHEAP Clearinghouse. Periodic supplements and revisions to the workbook will be electronically posted to the LIHEAP Clearinghouse website. Persons interested in having certain policy questions and/or pieces of information addressed in this workbook are encouraged to submit their requests to the LIHEAP Clearinghouse. Information on how to contact the Clearinghouse is provided on the Acknowledgement Page at the beginning of this workbook.