Wednesday, July 02, 2008

State Leaders Discuss Looming Home Energy Crisis

New York State lacks a comprehensive strategy for addressing the home energy needs of the substantial portion of the population increasingly at risk of hardship and loss of essential heat and utility service due to rising energy prices and stagnating incomes and public benefit levels. See Wages of 30% of New Yorkers Do Not Cover Minimum Needs.

With much fanfare, state government leaders met yesterday to discuss possible action to alleviate the looming home energy crisis for low and moderate income households. See Governor Paterson Convenes Winter Fuels Summit to Plan for Rising Heating Costs this Winter; Heating Costs in State Might Rise 40%, Officials Warn at Meeting.

A One Dollar Home Energy Assistance Grant. Evidencing no new state commitment to supplement the HEAP program, as other states do, New York State announced that in the Draft HEAP plan it will give a new one dollar (yes, $1) HEAP benefit to previously ineligible households who reside in subsidized housing with heat included in the rent. The one-time Regular HEAP benefit for such households not in subsidized housing has been reduced over the years to about $40. It is hard to see how this benefit disparity can be reconciled with any methodology based on income and energy burdens, as is generally required under the federal LIHEAP program. The rationale for the $1 grant is that this will leverage added federal Food Stamp funds. See State Aims to Help Families Struggling to Buy Food.

More than 15 years ago, on behalf of subsidized housing tenants, PULP resisted the State's elimination of benefits for financially eligible households with heat included in rent, but the exclusion was upheld by the federal courts in light of the broad power given states under the federal LIHEAA "block grant" program to tailor the contours of its home energy assistance program.

So, even a $1 HEAP grant is some progress, even if nominal, if it recognizes that households living in subsidized housing are needy and helps them to leverage benefits in other programs.

Once eligible for HEAP, in addition to being eligible for increased Food Stamp benefits, utility customers are also eligible for telephone lifeline assistance (which can be worth approximately $150 per year) and for low income utility rates for electric and natural gas service, the benefit of which varies from utility to utility. For example, Niagara Mohawk reduces electric rates for HEAP customers by $5 per month and proposes to reduce gas rates for 50,000 HEAP customers by a similar amount in the pending gas rate case. So, if tenants in subsidized housing are not receiving utility rate reductions now, their receipt of a token HEAP grant could leverage utility rate reductions worth more than the normal small HEAP grant for renters.

Some modest suggestions. We suggest that state agencies could benefit from self scrutiny and take a few actions to ease their practices that now work to grind New Yorkers deeper into poverty.

The Public Service Commission (PSC)
  • stop the deliberate introduction of more volatility into natural gas and electric rates than can be handled by households without savings to absorb price spikes,
  • reduce utility cost burdens on low income households by improving low income rate structures, as other states like Massachusetts and California have done. Allocation of lower rate burdens to the poor in the utility rate setting process is a very efficient way to target their critical needs without added outlays of tax funds by the state and local governments, a concern during times of budget austerity. See N.Y Wants to Help Poor -- But How to Afford It? State Must Not Create More Taxes, Bureaucracy, in Attempt to 'Help Us'.
  • implement more adequate universal service policies and revitalize the telephone Lifeline program which in recent years disenrolled more than 400,000 New York customers
  • vigorously enforce the Home Energy Fair Practices Act and cease allowing utilities to train Office of Consumer Services staff who deal with customer complaints against utilities.
The Office of Temporary and Disability Assistance (OTDA) could revise its obsolete public assistance fuel allowance standards. These provide $60 a month or less for families of up to four and have not been updated to reflect rising natural gas costs for since 1987, when the average delivered price to New York residential customers was $.688/ccf. Today, National Grid is charging approximately $2/ccf, more than double the prices when the allowance schedule was set by the state agency. As a result, families with low incomes and high energy expenses are not deemed needy, because their incomes are slightly above the obsolete public assistance standard of need, while those who receive public assistance have their grants reduced when they get emergency aid to prevent terminations. OTDA also could eliminate restrictive conditions on state utility emergency assistance that result in increasing numbers of households going without essential utility service. Also, OTDA could adopt changes in the HEAP program that would assure better use of funds for current winter heating costs, and institute other measures to improve the program by tightening up the responsibilities of utilities in the weak vendor agreements the agency negotiates with utilities.

For example, OTDA vendor agreements currently allow utilities, who ultimately receive the bulk of HEAP funds each year, to refuse Emergency HEAP funds needed to prevent service termination or restore it, and the PSC does not require utilities to provide new installment payment plans after receiving significant Emergency HEAP payments.

Instead, the emergency is not actually resolved, as the federal LIHEAA statute contemplates. It is merely allowed to fester and recur after a month, when the utility again demands the full amount of arrears which is often far beyond the ability of customers to pay, and refuses a reasonable installment payment agreement. We are now seeing the consequences of this inadequacy as customers who received Emergency HEAP in May are again being terminated for the same arrears that triggered the initial termination. See PULP Urges HEAP Program Reforms.

The Division of Housing and Community Renewal (DHCR) could update its obsolete schedule of rent reductions that affect many tenants of low and moderate income housing in buildings where landlords are allowed to sell electricity separate from rent. Under the outdated DHCR schedule from 2003, landlords who stop providing electricity included in rent, and who submeter it, lower their rents by a small amount, for example, $39, while exposing customers to electric bills of $100 per month. Every month a continuous stream of submetering applications is approved by DHCR and the PSC, inflicting hardship upon already financially pressed tenants.

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According to the news articles, state officials will announce their actions later this week.

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