Overview of Low-Income Restructuring
Legislation and Implementation
Oregon
Last updated: April 2008
Oregon's restructuring legislation provided for about $18 million in new funding for low-income energy assistance and weatherization programs. Signed into law in July 1999, SB 1149 established a $60 million Public Purpose Charge (PPC) of which about 12 percent, about $7.5 million yearly, is earmarked for low-income weatherization.
The PPC is equal to three percent of the total revenues collected by participating electric utilities and funds "new cost-effective local energy conservation, new market transformation efforts, the above market costs of new renewable energy resources and new low-income weatherization." It will be collected for 10 years by the state's two investor-owned utilities – Portland General Electric (PGE) and PacifiCorp – which serve 80 percent of the state's electric customers.
The measure also authorized collection of money for low-income electric rate assistance through a meters charge on residential and commercial customers of PGE and PacifiCorp. From late 2001 through 2007 the meters charge collected about $10 million annually, the amount was an attempt to bring the state's total bill assistance funding up to the peak level of LIHEAP funding in 1985; Oregon received about $20 million for LIHEAP rate assistance that year.
Due to the passage of SB 461 by the Oregon Legislature in 2007, the amount collected through the meters charge has increased from $10 million annually to $15 million. The law also allows that amount to change each year in accordance with the percentage change in the number of residential customers and certain business electricity sales.
The law stipulates that the Oregon Department of Housing and Community Services (DHCS), the LIHEAP and weatherization grantee, administer both low-income funding sources. DHCS distributes the funds through the same local agencies that operate LIHEAP and the WAP, but energy assistance is under a separate program called Oregon Energy Assistance (OEAP). The law requires that priority assistance be directed to low-income electricity consumers in danger of having their electricity service disconnected. It also stipulates that bill payment and crisis assistance include programs "that effectively reduce service disconnections and related costs to retail electricity consumers and electric utilities."
The funds must be expended solely for low-income electric bills in the service area of the electric company from which the funds are collected. Income eligibility for the electric assistance funds is the same as for LIHEAP – 60 percent of state median income. The program served 26,529 households in FY 2007 with an average benefit of $250. During 2007, DHCS also reported that 17,152 utility shut-offs were prevented and 2,486 households that had been disconnected were reconnected.
An evaluation of the program was completed in January 2003.
Additionally, legislation enacted in 2001 allows natural gas companies to collect funds through a meters charge for bill payment assistance; as a result, three gas utilities collect these funds. The largest, NW Natural Gas, imposes a monthly charge of 25 cents per residential customer for a bill payment assistance program called Oregon Low Income Gas Assistance, which it administers. During 2007, NW Natural spent about $1.6 million through assistance payments to over 4,000 households. NW Natural also collects public purpose funds based on a percentage of revenues amounting to about $5 million yearly, of which about $1 million has been earmarked for low-income weatherization, helping about 350 households yearly. Another utility, Avista, collects about $230,000 yearly for bill payment assistance; in FY 2007 it helped about 700 households.
Consumer-owned utilities (public utility districts and municipal utilities) can choose whether to participate in restructuring. If they do participate, they are also obligated to collect the three percent public purpose charge from their customers. While a section of the law requires consumer-owned utilities to have bill assistance programs, it has no other guidelines or specifications. However, it does override an existing Oregon law that prohibited utilities from establishing reduced rates or other bill payment assistance for low-income customers based on the rationale that these rates are discriminatory.
According to the 2008 “Oregon Low-Income Energy Assistance Snapshot,” published each January by the Community Action Partnership of Oregon, each of the state’s 37 consumer-owned utilities provides assistance to their low-income customers. The report describes three forms of assistance: utility funded programs (using funds provided by ratepayers), voluntary contribution programs (using funds provided on a voluntary basis) and rate discount programs that are funded as a part of utility operations.
Together these utilities provide around $3 million per year for their low-income programs, according to the Snapshot. However, between 50 to 60 percent of this total is accounted for by a single utility, the Eugene Water & Electric Board, which serves about 18 percent of the consumer-owned utility customer base.
Low-income Weatherization Program
Collection of the low-income portion of the PPC began on March 1, 2002. These monies are distributed through DHCS and fund two separate programs – one for energy efficiency for low-income households and administered through the weatherization network, the second designed to reduce the energy usage and utility costs of lower income tenants in multi-family rentals. All expenditures must be for customers of PGE and PacifiCorp.
According to a 2006 report on the PPC, during an 18-month period from January of 2005 through June of 2006, $7.2 million was collected from PGE and $4.3 million from PacifiCorp and allocated to DHCS for two low-income weatherization programs.
Through the first program, called Energy Conservation Helping Oregonians (ECHO), low-income households that use electricity as their primary heat source can receive weatherization measures such as insulation, energy-related minor home repairs, air infiltration reduction, furnace repair and replacement, as well as baseload measures, including lighting and refrigerator replacement, and educational services. (About 70 percent of Oregon's low-income households use electricity for heat.) All other households may receive education and baseload measures. Over 3,000 homes received services during the period at a cost of about $8.6 million.
The second program, for multi-family rental housing, provides grants for the construction or rehabilitation of affordable rental housing. At least 50 percent of the units in the project must be rented to households whose income is at or below 60 percent of the area median income. Projects receiving funds must also remain affordable for at least 10 years. Program resources may be used for weatherization measures such as windows, doors, and insulation, as well as baseload measures, including energy-efficient appliances and lighting. Around $1.5 million was committed to about 22 projects during the 18-month period.
The overriding principle of the both programs is that 1 kWh must be saved for every dollar spent, and their effectiveness is evaluated according to that measure.
Additionally, DHCS receives and administers PPC funds for low-income housing. A total of 4.5 percent of the PPC funds are dedicated to low-income housing development projects, either construction of new housing or rehabilitation of existing housing for low-income families through the DHCS Housing Trust Fund.
Oregon is the first Northwest state to follow the recommendations of the 1996 "Comprehensive Review of the Northwest Energy System," a report generated by a committee convened by the governors of Montana, Idaho, Oregon and Washington to reach consensus on how to restructure the region's electric utilities. The Committee's report recommended that three percent of the revenues from the sale of electricity services in the region be set aside for public purpose programs. Montana's 1997 restructuring legislation set aside 2.4 percent; the other two states have not enacted restructuring legislation.
For more information on the low-income public purpose funds, see the following:
Report to Legislative Assembly on Public Purpose Expenditures, released in December 2006 by ECONorthwest.
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Page Last Updated: April 17, 2008
