PULP Comments on HEAP Plan for 2008 -2009

The Office of Temporary and Disability Assistance (OTDA) this week completed its hearings on the Draft Plan for the New York State Home Energy Assistance Program (HEAP) for 2008 - 2009. HEAP is New York's federally funded energy assistance program for low income households. See OTDA to Hold Hearings and Receive Comments on Draft 2008 - 09 HEAP Plan.

PULP submitted comments on July 18, 2008, recommending several ways to improve public participation in the allocation of expected supplemental federal funds, assure that utility vendors effectuate the purpose of the program, and assure that more eligible households receive the assistance they need.

PULP's comments ask for reform of the arrangements between the utilities, the PSC, and OTDA before Governor Paterson approves a HEAP Plan for 2008 - 09 and submits it to the federal government for approval by HHS.

Lack of Public Participation in Allocation of Supplemental Federal Funds
PULP raised concerns regarding the process for obtaining public participation in the development of the HEAP Plan, a requirement of the federal law that gives states great discretion in program design and administration. The Draft Plan assumes a 2008 - 2009 funding level proposed by President Bush in February that is scores of millions of dollars less than New York received last year. See Bush Proposes LIHEAP Custs in 2009 Budget. (The Draft Plan does not address the impact on New Yorkers if such a drastic reduction in federal aid were to occur in the coming year when far higher home energy costs are likely and household energy burdens are likely to increase).

It is likely that Congress will eventually address the situation by adding substantially to the President's budget. See Schumer Seeks to Double Federal Funding for Home Heating.

Last year, when Congress added to the President's budget, OTDA simply announced how supplemental federal funds of $83 million would be used . The decision on how to use the supplemental money was made behind closed doors with no public input.

Last year's additional funds were used mainly to extend the HEAP program year by a month and to add a second emergency payment. Customers who had a Regular grant in November might not have seen any actual reduction in the payments required by their current bills if the utility applied the OTDA vendor payment to old arrears under a DPA installment plan. They also were ineligible for any of the additional benefits unless they reapplied in person and demonstrated an emergency shutoff situation, and that they had exhausted all resources in order to obtain any of the supplemental emergency benefits. See Needy Households Must Stop Paying Energy Providers to Obtain Supplemental HEAP Benefits. People who really need the assistance are reluctant to risk termination of service.

This year, the supplemental Congressional funding for LIHEAP will bring perhaps more than $100 million more for New York's HEAP plan because of the higher energy prices this year. See Trouble Ahead: Outlook for Home Heating Costs Worsens.

PULP urged OTDA to receive more public input before allocating new money, and to make a more balanced allocation of funds by providing an additional Regular HEAP benefit automatically to those who receive a Regular HEAP benefit and have not reached a shutoff situation.

OTDA Utility Vendor Agreement Reform
Nearly a quarter billion dollars was spent by OTDA in the 2007 - 08 HEAP program. Most of it did not go directly to needy households. Instead, it was paid in the form of direct vendor payments to utilities and fuel dealers, who in turn then credit the HEAP grants to customer accounts.

The Draft HEAP Plan again contemplates that energy needs of eligible HEAP households will be adddressed via the terms and conditions of the Vendor Agreements. The Vendor Agreements, and their crucial terms, however, are secretly negotiated between OTDA and the utilities, and are not attached or their terms included in the Draft State Plan.

There are several areas where the the Vendor Agreements reflect utility capture of the OTDA HEAP program and the PSC. For example, the PSC supports utilities in their efforts to divert HEAP to pay off old arrears from prior years which are the subject of installment payment agreements, and has supported utilities when they refuse to accept an Emergency HEAP payment. See PSC Approves Grid "Affordability" Program in Which HEAP Payments Do Not Reduce Current Winter Bills.

Duty to Provide Service to HEAP Recipients
Amazingly, under last year's Vendor Agreements, the utility vendors -- who received a large portion of the $234 million in HEAP funds without having to collect it from customers -- were allowed to "accept or deny" a HEAP payment proffered by a local social services district.

The result is that an emergency may not be timely resolved even when the customer is awarded a HEAP grant. In a noted case several years ago involving the death of a customer in unheated premises in Buffalo, the utility had declined HEAP payments of approximately $700, demanded more, and refused to provide service. See Lawsuit Involving Death of Velma Fordham Settled by National Fuel, PULP Network, December 4, 2007.

OTDA should revise its Plan and Vendor Agreements to include provisions which unequivocally bind the vendor to restore utility service or deliver fuel upon receiving notification that a payment is to be made on behalf of a HEAP household, without allowing any discretion on the part of the vendor to refuse to accept a proffered Emergency HEAP payment. This is also needed in order to satisfy the federal statutory requirement that a state plan must provide energy crisis assistance that resolves the crisis within 18 or 48 hours. depending on the degree of emergency, and to protect customers and the public.

This situation and the need for OTDA Vendor Agreement reform reflects the continued failure of the PSC to require utilities to reinstate service when low income customers obtain HEAP assistance and to require reinstatement of deferred payment plans when utilities receive a HEAP payment. Since the utilities' regulatory agency, the PSC, is not requiring reasonable conduct when they are proffered HEAP payments, it is up to OTDA to insist upon these protections in the Vendor Agreements, and not continue to cave in to utility interests.

Application of HEAP Benefits to Current Charges
A customer who is regularly paying off arrears by installments under a written DPA must pay in full all charges for current service plus an agreed-upon amount each month to retire the balance of old arrears. Such a customer is likely to be hit by heavy new energy burdens this year due to much higher prices. When the customer receives a Regular HEAP grant of several hundred dollars, however, all the money is used by National Grid to reduce the balance of the DPA. As a result, despite the HEAP payment, the amount the customer must pay is not one dime less.

As a result, this year's HEAP money goes to pay for service provided years ago, which is being paid off gradually under a written installment payment agreement. The effect of reducing the DPA arrears balance with HEAP shortens the repayment period, which may not end for years, and does not affect the amount the customer must pay for the current month.

Last year's HEAP Vendor Agreements generally required utilities to apply benefits to the current account or current bill. The Public Service Commission, however, recently interpreted the "current account" language in the OTDA Vendor Agreement to allow utilities to apply a HEAP benefit to the balance of a Deferred Payment Agreement (DPA), and not to "current charges" for service. See PSC Approves Grid "Affordability" Program in Which HEAP Payments Do Not Reduce Current Winter Bills.

In such situations, the immediate benefit of the HEAP grant is not to help the poor household but to improve the utility's bottom line by collecting old arrears -- which it had agreed to accept in smaller repayments over time. The OTDA should not allow the utilities, and their apparently captured regulator, the PSC, to pervert the purpose of the HEAP program, which is to provide assistance to eligible households in meeting their immediate home energy needs. The immediate need is to pay for current charges plus the installment on the DPA, not to reduce the overall DPA balance. If anyone should be allowed to apply the HEAP grant to the arrears instead of current charges, it should be the who chooses that option, not the utility.

On the plus side, the Draft Plan eliminates restrictions on eligibility that PULP had fought for years, viz., the "tenant of record" requirement for emergency HEAP and the denial of any aid to certain tenants in public or subsidized housing without regard to their energy burdens.