ENERGY PRICES AND THE HOME ENERGY ASSISTANCE PROGRAM

Despite the promises of regulators, utility executives, and electricity generators, the cost of electricity has risen exponentially during the past three years in the downstate areas where rates are being deregulated first.  For low income consumers in the Con Edison and Orange & Rockland utility service area this means that the disparity between their energy burden (cost of energy divided by income) and the average energy burden for all energy consumers in New York State has gotten wider.  Similarly, with some exceptions, most natural gas companies have reduced their efforts to stabilize the charges for commodity gas, and are flowing through volatile swings in short term prices to consumers, many of whom live on fixed incomes.

In response, many look expectantly towards existing assistance programs designed to defray home energy costs for low income consumers. These programs are stop-gap measures, designed in earlier times to function in a milieu of stable, cost-based rates, a situation fundamentally different from the volatile charges low income customers experience today.

For example, the Home Energy Assistance Program (``HEAP") is New York State's implementation of the federal Low Income Home Energy Assistance Act of 1981 (``LIHEAA").  ``Regular" HEAP assistance provides one-time payments to gas and electric vendors (utilities, ESCOs, and gas marketers) and other appropriate home energy vendors such as oil suppliers on behalf of their low income consumers.  When the funds are disbursed, the ``regular" HEAP program is closed, typically in the Spring, and no ``regular HEAP program funds are available to deal with energy needs arising later in the year. 

The ``Emergency HEAP" program provides crisis assistance only in situations of threatened or actual termination of heat, and heat-related electric, service.  It is unavailable to apartment dwellers whose heat is provided in their rent. It is not available to provide assistance in summer to deal with summer electric rate spikes.  Persons who used their rent or food money to pay the energy bills, and who are not faced with termination of service, will not get emergency HEAP.  Many people are deterred from seeking assistance through the daunting process of applying for HEAP at welfare offices.   And, the program is closed now due to the expenditure of the federal funds.  It may be possible to redefine ``emergency" and ``crisis" in New York's plan so that broader payments of Emergency HEAP may be made.  However, the nature of the program is ill-equipped to remedy unstable rates. For a detailed description of the current New York HEAP plan.

A program developed by New York State is the emergency utility payment program created in 1981.  Sometimes referred to as ``Chapter 895 assistance" or ``Section 131-s assistance," the law requires local departments of social services to make payments to utilities on behalf of recipients of and applicants for certain governmental benefit programs to prevent termination (or to restore) utility service.  Like Emergency HEAP, this crisis assistance program has as its goal stopping termination of utility service, or restoring it.  Subject to limited exceptions, most recipients of this assistance must pay it back to the department of social services.  Often the payback terms for this assistance are more stringent than required by utilities in their deferred payment plans for customers in arrears.

Neither HEAP nor New York's emergency utility payment program are  designed to deal with the problem newly created by deregulation policies of some utilities and the Public Service Commission:  rising energy rates coupled with unpredictable volatility.   These programs shift the responsibility for payment of the rising energy costs from the low income household to various governmental entities, city, county and state agencies, at times creating a new indebtedness of the recipient of assistance to the government. Ultimately, the net costs of unreasonable rates that poor people cannot afford to pay are shifted in these programs to state or federal taxpayers. 

Some utility sponsored ``arrears forgiveness" plans provide a combination of benefits to ease the burden of low income consumers, and reduce their arrearage if they pay part of the bill.  These programs in essence require that uncollected charges from low income consumers will be recouped by the utility through its rates. Ultimately, the net costs of these programs are passed on to ratepayers. 

In short, the existing mechanisms to deal with energy needs of  low income households are treated outside the venue where the problem arises - skyrocketing rates. The consequences of the increased rates are transmitted to households who cannot afford them, and then the programs deal incompletely with the most extreme situations without addressing the fundamental hardship and unreasonableness of the excessive and volatile charges. 

Yes, HEAP should be better funded.  Yes, New York's emergency utility payment program should be expanded, simplified, and better funded.  Yes, utility programs designed to assist ``payment troubled" customers should be expanded, simplified, made more inclusive and better funded. At the same time, it is necessary for utilities and the Public Service Commission to create comprehensive low income rate discount plans to make utility energy service affordable and meet the mandate that electric and gas corporations provide service at rates that are ``in all respects just and reasonable."