Reform of OTDA Fuel Allowances and Utility Assistance Loan Program is Needed

With growing recognition that the rising costs of fuel will cause enormous hardship to low income families in the coming months, attention is being paid to raising federal appropriations for the Low Income Home Energy Assistance Program (LIHEAP). See State Commissioner Discusses Plans for Upcoming Heating Season: Calls on Washington to Boost Funding for Low-Income Families.

In addition, however, New York needs to reform aspects of its state-funded assistance programs.

Fuel allowances for public assistance recipients have not been adjusted by OTDA for more than two decades. The OTDA Fuel for Heating regulation, last changed in 1987, establishes a fuel allowance for a family of four heating with natural gas and living in Albany County of $56 per month. For the same family, the OTDA regulation setting rent allowances provides $348 per month.

The public assistance allowance for other needs of a family of four is $307 (last set in 1990), plus the so-called "home energy allowance" of $38.70 and the "supplemental home energy allowance of $30 (these were really welfare grant increases in 1981 and 1986 labelled as energy allowances in order to avoid Food Stamp reductions).

A natural consequence of the unrealistic public assistance allowances is the increased disqualification of persons with income slightly above the eligibility level, who are denied any assistance.

Without assistance, many customers fall behind in utility bills and service is shut off by the utility. New York utility terminations are dramatically up this year:

In New York state, there was a 41% increase in shutoffs of utility services among people who did not pay their bills in April 2008 versus April 2007, to 31,305 from 22,209, according to the Public Service Commission.

Winter Could Test Energy Math; Rising Heat Costs May Be Last Straw For Family Budgets.
The trend of terminations and families living for extended periods without utility service will only worsen as energy burdens go up. This is contrary to state policies favoring continued utility service and impairs public safety. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.

The emergency utility assistance program created under Social Services Law 131-s was amended to require social services officials to offer loans to customers who needed assistance to prevent termination or to restore utility service but whose income is above the public assistance level. (Those whose income is below the outdated public assistance level can get a grant of assistance without signing a 12-month repayment agreement). The loan provision was really unnecessary, because all state public assistance is subject to repayment under longstanding provisions of the Social Services Law, so there was no necessity for a separate repayment agreement to achieve recovery from anyone who could really afford to pay back the assistance.

Making matters worse, OTDA then adopted a rule barring any further loans to a customer who previously defaulted in repayment of a prior utility assistance loan. That administratively created disqualification was not required by the plain language of the statute. It was, however, upheld in a court decision.

Many Niagara Mohawk customers lost gas or electric service after past natural gas price spikes and received loans from their local departments of social services which they have not been able to repay. As a result, they are now ineligible for any further loans, and may go without service for prolonged periods, increasing the risk of harm.

The problems become particularly acute when HEAP assistance is unavailable due either to the seasonal closure of the HEAP program or to exhaustion of HEAP benefits, which, under OTDA Vendor Agreements with utilities, only assure 30 days of continued service.

In the winter of 2005 - 2006, OTDA relaxed its harsh regulation that bars additional loans for utility assistance to those who have not repaid a prior loan.

Matters are likely to become much worse in the coming months. It is time for OTDA to repeal or waive the ban on subsequent utility assistance loans to applicants whose income is above the outmoded public assistance levels.