Thursday, February 05, 2009

No Emergency HEAP for Fuel Customers with Automatic Delivery

With high fuel prices and more workers unemployed, many households requested HEAP assistance for the first time this winter, leading to some confusion, chaos, and frustration.
Certainly the way New York State’s HEAP program operates is not for the faint of heart. Some of the eligibility requirements are Byzantine, depending, for example, whether there is an emergency and the type of fuel used to heat the home.

Unlike other assistance programs, many of the detailed eligibility guidelines are not spelled out in state statutes or officially published OTDA regulations. Instead they are contained in an annual State HEAP Plan devised by OTDA and submitted by the Governor for federal approval, (which is sometimes changed midstream in the program year without significant public input), in vendor agreements between fuel and utility suppliers and welfare officials, and in subregulatory guidelines.

Even before this winter’s State HEAP program re-opened in November, PULP began to receive a constant stream of inquiries, asking everything from routine questions (“Where do I apply and what do I need to bring?) to the more complex (“My regular heating fuel vendor has gone out of business and the only other local distributor hasn’t received its HEAP certification yet, what should I do?”), to the inexplicable (I applied two months ago for Regular HEAP and didn’t get a decision from Albany County, now we are facing an emergency, do I need to reapply?).

A recent question that arose in the past few days deserves attention – what happens if a household is otherwise eligible for an Emergency HEAP payment, but the family is an automatic delivery customer of a heating fuel distributor - for example, propane or fuel oil - but has no money to pay for the next delivery?

An automatic delivery customer is one who has a contract with a heating fuel distributor to receive a fuel delivery whenever the distributor determines that a delivery is needed. No separate request or authorization is necessary for each delivery. This is a highly convenient method of delivery for many families because the fuel dealer usually has the usage history and weather data in his computer to calculate when the tank is low and when another delivery is needed. Some dealer contracts require customers to have automatic delivery in connection with fixed price or various price cap plans.

A downside is that households on automatic delivery are being denied Emergency HEAP benefits. Apparently, in the eyes of OTDA there can be no “home energy crisis” and no "emergency" if the customer is able to obtain another delivery, even if he has no money to pay for it. (Note that this limitation is inapplicable to “Regular HEAP” payments, for which eligibility is based on income without a “crisis” requirement).

However, what happens when either or both spouses of a family get laid off and bills start to pile up? Can the fuel distributor suspend or terminate the automatic delivery account if a prior balance has not been paid, and convert the account into a will-call or cash account? The answer is yes. This may also cause the customer to be liable for substantial early contract termination charges, if he signed a fixed price or price cap contract.

State regulations require that during the winter heating season (November 1st through April 15th), this fuel delivery cut-off and conversion from automatic delivery to a cash sale basis can only occur with proper notice to the customer. The distributor must provide written notice to the customer no less than three calendar days prior to the date of suspension or termination. The notice must inform the customer of the reasons behind the change and that assistance may be available through the local social services office. Contact information for the social services office must be included. The distributor must also make at least three attempts to notify the customer of the service cut-off by telephone. If the distributor can not reach the customer by phone, it must notify the social services office and, if there is one, a third party designated by the customer to be notified of such changes. Even when the heating fuel distributor reaches the customer, it must still notify the local social services office regarding the service termination if the distributor believes “a severe or hazardous health situation” will result.

It is hard to imagine how terminating fuel delivery during the winter months would not result in “a severe or hazardous health situation” in many situations. In addition, a “designated emergency agency” must be contacted by the fuel vendor when two attempts to reach the social services office fail. Once contacted, the social services office must investigate the situation and “take whatever actions are appropriate and necessary” in order “to provide any financial assistance for which customers may be eligible, and to provide or arrange for the provision of such other forms of assistance or social services as may be available.” Additionally, the emergency agencies must act immediately “to prevent loss of life or serious danger to public health.”

It would seem that the utilities did a better job in shaping the OTDA HEAP plan than the oil and propane dealers. Utility customers who heat with natural gas or electricity receive notices of termination 15 days in advance, and that is sufficient to qualify them, if otherwise eligible, for an Emergency HEAP payment, even when utilities are forbearing from cold weather terminations.

In contrast, families using non-utility fuel to heat their homes who are on automatic delivery may have only three days notice that a tank will not be refilled. In some situations, if the tank is dry or nearly dry when the notice is given, that may not leave enough time for the family to apply for and receive an Emergency HEAP payment before the house goes cold, particularly in rural areas where the HEAP office is far away.

Households facing inevitable financial troubles may want to cancel their automatic fuel delivery arrangement in order to expedite their eligibility for an Emergency HEAP grant when the tank reaches the 1/4 level and they have no resources to pay for the next fill. As indicated above, however, this may cause them to incur further debt for early contract termination charges.
This may be a serious "Catch-22" for many customers who are locked into high fuel oil or propane contracts they signed last year when prices were spiking.

Lou Manuta

No comments: