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Elements of Ratepayer-Funded Low-Income Programs

Elements of Ratepayer-Funded Low-Income Programs. Affordable Comfort May 2005 Jacqueline Berger, APPRISE Incorporated Suzanne Harmelink, WI Energy Conservation Corp. . Program Elements. Goals : what the program attempting to achieve

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Elements of Ratepayer-Funded Low-Income Programs

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  1. Elements of Ratepayer-FundedLow-Income Programs Affordable Comfort May 2005 Jacqueline Berger, APPRISE Incorporated Suzanne Harmelink, WI Energy Conservation Corp.

  2. Program Elements • Goals: what the program attempting to achieve • Program Manager: the organization that is responsible for managing the program • Eligibility: who can participate in the program • Targeting: what are the characteristics of the customers who the program is trying to reach

  3. Program Elements • Expenditure per home: how are expenditure levels set and reached • Measures: what are the energy-saving measures that are selected • Customer education: how are customers involved in the process of reducing energy usage

  4. Program Elements • Service delivery contractors: number and type of organization(s) used to provide service delivery • Service delivery procedures: system for delivering education and measures • Data manager: organization responsible for developing and maintaining database

  5. Program Elements • Data management systems: system for collection and managing customer and program data • Quality control: procedures for assessing the quality and consistency of services delivered • Evaluation: analysis of how efficiently/ effectively the program is working and the impacts that the program achieved

  6. Program GoalsOptions • Energy savings - % of pre-treatment use • Reduce ratepayer subsidy • Number of homes served • Amount spent per home or in the program year • Targeting high need customers (elderly, disabled, young children, high energy burden) • Innovative usage reduction measures • Innovative program delivery systems

  7. Program GoalsAdvantages and Disadvantages • Energy Savings • Advantages: sets concrete standards of measurement for program and contractor • Disadvantages: particular level of savings may be difficult reach depending on condition of customer homes and budget constraints

  8. Program GoalsAdvantages and Disadvantages • Ratepayer subsidy types • Percentage of income • Example: customer pays 8% of income • Ratepayers bear all the risk because when bill changes, customer payment is fixed • If bill declines due to usage reduction program, all benefits go to the ratepayers

  9. Program GoalsAdvantages and Disadvantages • Ratepayer subsidy types • Fixed credit • Example: customer receives a credit of $100 on the energy bill each month • Customer bears all of the risk, because when bill changes the subsidy is fixed • If bill declines due to usage reduction program, all benefits go to the customers

  10. Program GoalsAdvantages and Disadvantages • Ratepayer subsidy types • Discounted bill • Example: customer receives a 50% discount on the first 500 kWh used each month • Ratepayers and customers share the risk because when bills increase both the subsidy and the customer bill increase • If bill declines due to usage reduction program, benefits go to ratepayers and customers

  11. Program GoalsAdvantages and Disadvantages • Reduce ratepayer subsidy • Advantages: if achieved, the program will result in cost-effective savings for the ratepayers • Disadvantages: if all benefits go to the ratepayers, there may be less motivation for customers to participate in energy reduction strategies

  12. Program GoalsAdvantages and Disadvantages • Number of homes served • Advantages: ensure that benefits are distributed to a minimum number of customers • Disadvantages: with a set budget, places limits on the level of services that a household can receive

  13. Program GoalsAdvantages and Disadvantages • Amount spent per home • Advantages: ensure that a certain number of homes can be served within the allocated budget • Disadvantages: may not allow enough flexibility to address homes with severe problems

  14. Program GoalsAdvantages and Disadvantages • Targeting high need customers • Advantages: provides benefits to those who may suffer most from unaffordable energy bills • Disadvantages: may not provide the most cost-effective program if these are not the highest energy users

  15. Program GoalsAdvantages and Disadvantages • Innovative usage reduction measures • Innovative program delivery systems • Advantages: allows for testing of these new measures and systems that may prove to be cost-effective in the long-run • Disadvantages: due the to learning curve, program may not be as cost-effective

  16. Program GoalsExamples • NJ Comfort Partners Program • 10% average electric savings for electric space heaters • 15% average gas savings for gas heaters • Ohio Electric Partnership Program • Reduce the costs of PIPP for the Ohio ratepayers

  17. Program GoalsExamples • WI - Targeted Home Performance with ENERGY STAR • Number of homes served • Savings of 28% heating & 11% electric • WI - Enhanced Targeted Home Performance with ENERGY STAR • Number of homes served

  18. Program ManagerOptions • Public Utility Commission • State • Utility • 3rd Party Administrator

  19. Program ManagerAdvantages and Disadvantages • Centralized program – PUC or State • Advantages • Customers across the state receive equivalent benefits • Utilities may work together to develop best practices for combined approach • Disadvantages • Utilities may not have the same program commitment and involvement • May lose utility-specific customer knowledge

  20. Program ManagerExamples • Pennsylvania: Each utility manages its own usage reduction program • New Jersey: The Board of Public Utilities manages a statewide usage reduction program • Wisconsin: Public Benefits – State Dept of Administration oversees statewide program

  21. Program EligibilityOptions • Income level • Usually 0 – 150% of Federal Poverty Level • Housing Types • Usage • Participation in bill payment assistance programs

  22. Program EligibilityAdvantages and Disadvantages • Income level • Advantages: more restrictive income limits mean that those with the least ability to pay their bills receive services • Disadvantages: more restrictive income limits may mean that the highest use customers are not served

  23. Program EligibilityAdvantages and Disadvantages • Housing types • Advantages: more restrictive housing type selection may allow for more households to receive service • Disadvantages: more restrictive housing type selection may mean that the highest use customers are not served

  24. Program EligibilityAdvantages and Disadvantages • Usage • Advantages: targeting of highest use customers usually results in greatest energy savings • Disadvantages: exclusive focus on usage does not allow for serving those most in need, i.e. lowest income, highest energy burden, elderly, disabled, young children

  25. Program EligibilityAdvantages and Disadvantages • Participation in bill payment assistance programs • Advantages: reductions in usage result in reduction in subsidies that burden the ratepayers • Disadvantages: customers who do not participate in bill assistance will not receive usage reduction benefits

  26. Program EligibilityExamples • Ohio Electric Partnership Program – must be a PIPP participant and have specified electric usage: • Baseload services: baseload usage > 6,000 kWh • Weatherization services: heating or cooling usage > 6,000 kWh • Moderate use services: baseload usage of 4,000 to 6,000 kWh

  27. Program EligibilityExamples • WI - Targeted Home Performance with ENERGY STAR • Income Guidelines of 150-200% • Single to 4-unit Buildings (owner & rental)

  28. Customer TargetingOptions • Highest use customers • Highest subsidy customers • Payment troubled customers • Vulnerable households (young children, elderly, disabled)

  29. Customer TargetingAdvantages and Disadvantages • Highest use customers • Advantages: usually results in highest energy savings • Disadvantages: may not focus on lower usage customers with high needs due to income, energy burden, other characteristics

  30. Customer TargetingAdvantages and Disadvantages • Highest subsidy customers • Advantages: benefits of the program go to the ratepayers • Disadvantages: other needy customers may not be served

  31. Customer TargetingAdvantages and Disadvantages • Payment troubled customers • Advantages: may increase bill payment coverage rates • Disadvantages: may not result in greatest usage reduction

  32. Customer TargetingAdvantages and Disadvantages • Vulnerable households(young children, elderly, disabled) • Advantages: reduce energy usage for those who may suffer most from unaffordable bills • Disadvantages: may not result in greatest usage reduction

  33. Customer TargetingExamples • NJ Comfort Partners Program • USF participant • Highest use customers • WI - Enhanced Targeted Home Performance with ENERGY STAR • Arrearage requirement

  34. Expenditure Per HomeOptions • Comprehensive – maximize savings per home • Cost threshold / $ Limit per household • Minimal – increase number of households served

  35. Expenditure Per HomeAdvantages and Disadvantages • Comprehensive • Advantages • Maximize usage reduction for homes served • Minimize administrative expenses as a percentage of total costs • Achieve most cost-effective program • Disadvantages • Fewer homes may be served

  36. Expenditure Per HomeAdvantages and Disadvantages • Cost threshold • Advantages • Serve a greater number of households • Ensure that a minimum number of households are served • Disadvantages • Does not take individual household circumstances into account • May spend more than what is cost-effective in some homes

  37. Expenditure Per HomeAdvantages and Disadvantages • Minimal • Advantages • Increase number of households served • Disadvantages • Customers may not receive significant savings • Administrative costs are duplicated when other programs return to serve the household

  38. Expenditure Per HomeExamples • Ohio Electric Partnership Program • Any cost-effective measure can be installed • NJ Comfort Partners • Expenditure guidelines are provided, based on energy usage • WI – Targeted Home Performance • Any cost effective measure may be installed

  39. Measure - Options • Refrigerator/freezer replacement • Compact fluorescent light bulbs • Aerators/ showerheads • Insulation • Air sealing • Fuel switching – clothes dryer, hot water heater • Equipment (Heating System, Water Heater, Central A/C) • Custom measures

  40. MeasuresAdvantages and Disadvantages • Advantages • Any measure that provides cost-effective savings provides benefits to the customer and/or the ratepayer • Disadvantages • Installing all cost effective measures will increase program cost • Emphasis on specific measures may neglect other high uses in the home

  41. Customer EducationOptions • Partnership between program/educator and customer • Understanding the energy bills • Energy use and costs around the home • Customer goals for usage reduction • Customer action plan • Follow-up

  42. Customer EducationAdvantages and Disadvantages • Partnership between program /educator and customer • Advantages: if successful, customer has more motivation to take steps to reduce energy usage • Disadvantages: takes skilled and dedicated auditor to make it work

  43. Customer EducationAdvantages and Disadvantages • Understanding the energy bills • Energy use and costs around the home • Advantages • If the customer understands how to read the bill and determine when usage is decreasing, it provides positive re-enforcement for energy-saving actions • Allows customer to make decisions about energy usage based on the costs of those uses • Disadvantages • Requires auditor with good communication skills • Increases length of audit

  44. Customer EducationAdvantages and Disadvantages • Customer goals for usage reduction • Customer action plan • Advantages • Provides motivation for customer to reduce energy usage • Provides direction for customer • Disadvantages • Some customers will not be interested • Auditors must be skillful and willing to take the time required

  45. Customer EducationExamples • New Jersey Comfort Partners Program • Education training provided to all auditors • Education notebook and cards • Partnering process • Bill and energy usage education • Customer action plan

  46. Customer EducationExamples • WI - Targeted Home Performance with ENERGY STAR • Partnering process • Customer action plan • Voluntary participation by providers • WI – Home Energy Plus Weatherization • Planning phase for comprehensive plan

  47. Service Delivery ContractorsOptions • Private contractors • Weatherization agencies • Community Action Agencies • Other nonprofit • Mix of the above groups

  48. Service Delivery ContractorsAdvantages and Disadvantages • Private contractors • Advantages • Cash flow management • Data management capabilities • Ability to hire additional staff • Disadvantages • May have less knowledge/experience with other public programs

  49. Service Delivery ContractorsAdvantages and Disadvantages • Weatherization agencies • Community Action Agencies • Other nonprofit • Advantages: ability to provide joint service delivery with other programs such as WAP • Disadvantages: may not have experience with contract work

  50. Service Delivery ContractorsExamples • Ohio Electric Partnership Program • Allowed private contractors and agencies to bid on program • First year: 18 authorized providers were selected (1 private contractor) • Second through fourth years: 9 authorized providers were selected (1 private contractor)

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