Malloy plan would end heat aid to gas and electric utility customers

Forecasting a drop of more than $68 million in federal funds to help low-income residents heat their homes, the Malloy administration has proposed limiting assistance to people who buy fuel from dealers, leaving more than 80,000 households with electric or gas heat without the aid.

The administration’s plan notes that state law protects low-income residents with electric or gas heat from having their utilities shut off because of unpaid bills between Nov. 1 and May 1. No such protection exists for those who buy fuel such as oil or propane from dealers–so-called “deliverable” fuel.

wrice, patricia, liheap

Patricia Wrice of Operation Fuel: ‘It’s going to have a devastating effect’

More than 60 percent of households that have participated in the Low Income Home Energy Assistance Program get heat from utilities and would not be covered by LIHEAP next winter under the administration’s plan, unless additional funds become available.

“Our plan is focused on what we see as the most critical public policy goal of low-income heating assistance, which is preventing people from freezing to death,” said Benjamin Barnes, secretary of the Office of Policy and Management, Gov. Dannel P. Malloy‘s budget office.

The plan drew opposition from the advisory board that oversees LIHEAP, which recommended an alternative that would reduce benefit levels, rather than eligibility, if additional federal funds don’t come through. The administration’s plan requires legislative approval.

“It’s going to have a devastating effect,” said Patricia J. Wrice, a board member and executive director of Operation Fuel, which provides emergency energy assistance to people who are not eligible for government programs.

Shirley Bergert, director of the public benefits task force at Connecticut Legal Services and a member of the Low Income Energy Advisory Board, questioned the legality of the administration’s plan and called it “by far the most harmful thing we’ve ever seen in Connecticut.”

“Connecticut’s not prepared to deal with the level of spring shutoffs” that will occur, she said.

Barnes said having people’s utilities shut off in May if they can’t pay their bills is a concern, but he said he is “far less concerned about people facing shutoff in May than people facing shutoffs in December.”

Many people eligible for LIHEAP will be eligible for an earned income tax credit in the spring, which Barnes said would provide some assistance paying utility bills. He noted that the legislature could address the matter when it is in session, possibly by adjusting the ability of utility companies to shut off service, but said he’s reluctant to say the state could make up for a drop in federal funding.

The administration’s plan directs community action agencies to help low-income residents with gas or electric heat enroll in programs to reduce their payments or negotiate reduced rates with the utility companies.

LIHEAP last year served 117,876 Connecticut households, with $115 million in federal funds. Under the administration’s proposal, the program would serve approximately 36,826 households this winter, when heating oil prices are estimated to be 64 cents per gallon higher than last year. LIHEAP’s program year is aligned to the federal fiscal year, which runs from Oct. 1 to Sept. 30.

If benefit levels and caseload growth match what they were last year, Connecticut would need nearly $120 million for LIHEAP this year. Instead, the administration’s plan assumes that the state will receive $46.4 million from the federal government.

In February, President Obama recommended slashing LIHEAP funding, leaving Connecticut with less than half of what it received last year. Congress can deviate from the president’s recommendation, and Malloy and several other governors wrote to Congressional leaders earlier this month asking for LIHEAP funding to remain level. But the emphasis on cutting government spending in Washington has left advocates less than optimistic about increased LIHEAP funding.

The state could adapt to the shortfall in one of two ways: Leave the program as is and give every recipient less money, or change the program structure so fewer people get assistance.

The administration’s plan takes the latter strategy, making funding available only for people who rely on deliverable fuel. The state would continue to provide funding through two benefits, known as crisis assistance benefits and safety net assistance, that are only available to households heated by deliverable fuel.

In past years, everyone in the program, regardless of type of heat, received “basic benefits,” and people who rent their homes and have heat included in their rent were eligible for rental assistance benefits. Under the administration’s plan, their availability would depend on federal funding.

The plan would also tighten eligibility for a benefit for higher-income households in the program, lowering the threshold from 60 percent of the state median income to 200 percent of the poverty level. For a family of four, that means lowering the limit from $61,276 to $44,700. Bergert said 9,721 households that received LIHEAP funds for deliverable fuel last year would lose eligibility because of the income limit change.

Barnes said he respects the position of advocates who want the state to take another approach, but he said it would be reckless for the state to move forward with a program that can’t be sustained, potentially leading to a need for emergency shelters in the winter.

Lowering the benefit for everyone would make the program meaningless, Barnes said. Oil deliveries require a minimum of 100 gallons, and spreading the funding across all heat types could leave oil-heated households without enough money for a delivery.

And running the program as it has run in the past and expecting federal funding could mean the program runs out of money in November, he said.

“I just think that if there’s a risk of not receiving that additional funding, I think it’s prudent to have the risk be borne by the utility-heated households, because they, frankly, won’t get [turned] off for the winter,” Barnes said. “Whereas the other folks, they won’t get a delivery.”

Department of Social Services Commissioner Roderick L. Bremby called the administration’s plan realistic given the expected cuts in federal funding. He said additional federal funding could become available, but it would be irresponsible to count on it.

“The plan focuses on helping low-income households that heat with deliverable fuels because these families and individuals are most at risk of freezing this winter,” he said.

Wrice said she understands the state’s position, given the projected funding level. In past years, she’s been optimistic that the federal funding levels originally anticipated would be increased, but this year, she said, she’s less hopeful.

But Wrice said that limiting the assistance to people with fuel heat will hurt families in urban areas, where electric and gas heat are more common.

“If you have limited resources, then distribute the resources equitably. Don’t favor one source of heating against another,” she said.

Bergert called the administration’s approach a “radical and damning departure from any prior Connecticut energy assistance plan.” She said the plan ignores a federal requirement that energy assistance be focused on the lowest-income households that pay a high proportion of their income for energy, and a state law that prohibits energy assistance programs from discriminating based on heat source in the basic benefit provided to eligible households.

In addition, she said, changing the LIHEAP structure could create problems for other services that help low-income residents with energy costs, including debt forgiveness programs offered by utilities, because they depend on LIHEAP eligibility and benefits. The community access agencies that administer the program are likely to see their funding slashed since it is based on LIHEAP funding, making it more difficult for them to process as many applications.

Changing the program’s structure could also make it more difficult to adjust if more money comes through later in the year, Bergert said.

The administration’s plan would also lower the income threshold for people to receive federally funded weatherization services. The program has the same application as LIHEAP, and Bergert said families with utility heat who do not expect to get LIHEAP benefits are unlikely to apply.

The board that oversees LIHEAP recommended that the state maintain the program’s existing structure and eligibility levels, but modify benefits based on how much money is available. The board also recommended that the state provide funding for the benefits and for the community action agencies and other organizations to administer the program.

The legislature’s Appropriations, Human Services and Energy and Technology committees will hold a public hearing on the administration’s plan on Tuesday, Sept. 27, at 3 p.m., in the Legislative Office Building in Hartford.