Friday, February 29, 2008

Needy Households Must Stop Paying Energy Providers to Obtain Supplemental HEAP Benefits

Good News: Additional Federal HEAP Funds
With much fanfare, in February, New York received $82.3 million in supplemental federal funds for operation of the HEAP program this winter. See, e.g., Governor Spitzer Announces Additional Heating Assistance To Combat Rising Energy Prices; N.Y. OKs Extra Aid to Pay for Heat Bills: Needy Families May See Added Payment of up to $700 this Winter, N.Y. Officials Say.

The added funds are, of course, good news. They will permit the chronically underfunded HEAP program, to which the state adds no state funding, to extend its closing date to May 15, 2008, so more households will receive benefits needed to defray high energy costs.

After May 15, households with energy emergencies may receive assistance, but in a more limited and restrictive state-funded utility emergency program. For example, the state emergency utility assistance program generally requires benefits to be repaid if the applicant's income is above the level of public assistance. HEAP eligibility limits are more realistic and recipients are not required to repay a HEAP grant.

Not So Good News: Limited to Emergencies
Overlooked, however, was the significance of a decision taken by the New York Office of Temporary and Disability Assistance (OTDA) to limit the bulk of the additional payments with the $82.3 million supplemental funds to the category of "Emergency HEAP." According to the OTDA Press Release
The program offers two components – a Regular Benefit and an Emergency Benefit. This season, the state increased the maximum Regular Benefit a household can receive to $540, up from $440 last winter. Additionally, qualified applicants facing an energy-related emergency, such as a power shutoff or less than 10 days supply of heating fuel, can apply for an Emergency Benefit.

Under the program changes announced today, a second Emergency Benefit of up to $700 will be available to those without sufficient resources to address another crisis situation, if it should arise.

The Emergency Benefit is not available unless the applicant lacks resources to resolve a heat-related utility emergency. This is defined as having received a termination notice for natural gas service or electricity needed for heat or to operate a heating system. Similarly, Emergency HEAP is not available for those who heat with oil, kerosene, propane or other fuels unless the supply is running out.

In order to qualify for a second supplemental HEAP payment, OTDA provides the following information

How to Apply for the Second HEAP Emergency Benefit
A second HEAP emergency benefit is available, effective February 11, 2008, to HEAP eligible low-income households to assist in meeting their energy emergency needs. A household that has already received a regular and emergency HEAP benefit may be eligible for an additional HEAP emergency benefit. Applicants must be in an energy emergency situation, which is defined as having less than a 10 day supply of fuel, having utility service terminated, or having utility service scheduled for termination. In addition, applicants must not have enough resources to take care of their emergency themselves.

Households that have already received a first HEAP emergency benefit during the 2007-08 HEAP season (the season that started on November 1, 2007) may apply for the second emergency benefit by either calling their local social services office or by completing a “Request for Second Emergency Benefit” form in person. This form is available at your local social services office.

To Pay or Not to Pay

As stated by PULP in recent comments, the allocation of the new funds to the Emergency HEAP component
ignores customers with very high energy burdens who have been scrimping on other household necessities to pay high energy bills. Unless these customers promptly stop paying, they will receive no additional energy assistance, and they may suffer hardship. Thus the clear message sent by this allocation to these customers who also need help with their high energy burdens is to stop paying their utility and fuel bills now, so as to precipitate the preconditions needed to qualify the household for a crisis assistance payment.
Unlike the supplemental funds, the initial allocation of HEAP funds was paid as "Regular HEAP" to eligible households without any requirement that they be facing imminent shutoff. The initial plan was to use 59.33% of the HEAP funds for Regular HEAP and 15.59% for Emergency HEAP crisis assistance. (The balance is allocated for the weatherization program and administrative costs).

Perhaps due to improvements in the Regular HEAP system, the number of Emergency HEAP payments is actually lower, at this point, than it was last year, despite the much colder winter this year and high prices. A significant portion of the new funds could have been allocated to provide a supplemental Regular HEAP payment, which could have been automatically and efficiently paid (by vendor payments to the utilities and fuel vendors on behalf of households) without a requirement that households reapply individually and demonstrate that they are in emergency circumstances.

The clear message being sent by OTDA for those unable to pay all their household bills, after receiving a Regular benefit, or a Regular and First Emergency payment, and who seek additional help this winter, is to qualify for an additional Emergency payment by halting payment to their utility or other energy vendor, to precipitate a home energy crisis.

The allocation creates obvious moral hazards, by encouraging more people to stop paying their bills. It will surely result in hardship to those who do not understand the new path to help charted by OTDA, or who are fearful of energy crisis brinkmanship.

In addition, the Public Service Commission has not been requiring utilities to reinstate deferred payment plans after they receive an Emergency HEAP payment, as it once did. The OTDA only requires utilities to continue service for 30 days after an Emergency HEAP payment, under its "vendor agreements" with the utilities. Thus, an Emergency HEAP payment may simply postpone the emergency for 30 days, when the utility again demands payment of all arrears or an amount the customer cannot afford. This could put the recipient in a situation, after the HEAP program closes, of having to apply for welfare benefits. And, due to a restrictive regulation of OTDA, they may be ineligible for that if they previously received utility assistance and did not repay it.

Focusing HEAP on Emergencies Lightens State and County Emergency Aid Budgets
According to the OTDA press release, the new HEAP funds - the bulk of which will be used for Emergency and not Regular benefits - will save the state and counties money they otherwise would be required to spend under the state's utility emergency assistance program.
Enabling county social services agencies to authorize a second HEAP Emergency Benefit for those eligible will avoid approximately $10 million in local costs by reducing the need for state and locally-funded emergency assistance payments.
In essence, some of the supplemental HEAP funds are being used to supplant pre-existing state and local obligations to assist the poor that would be borne by the general public in the absence of HEAP. Funds intended by Congress to be targeted to relieve the high home energy burdens of the poor this winter are, in effect, being used to reduce the budgets of state and local governments, and thus to benefit the general body of taxpayers.

More Public Input Is Needed Before Allocating Significant Sums of New HEAP Dollars

This allocation of the $82.3 million in supplemental federal LIHEAP funds, roughly 25% of this year's total HEAP funding for New York, was decided without any input from the HEAP Block Grant Advisory Council or other public participation. PULP recently filed comments regarding the needs assessment for next year's HEAP plan mentioning the lack of public participation in this year's decision, pointing out that
[s]uch action is contrary to the spirit of the federal law, which allows states to tailor their programs on condition that they have an open and transparent advisory process, i.e., “timely and meaningful public participation in the development of the plan....” 42 U.S.C.A. § 8624(b)(12) (emphasis added).
For more information, see the OTDA HEAP web page and PULP's web page on HEAP.

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