Philadelphia Tribune - Index

Philadelphia Tribune - Sunday, September 07 2008 - Index

Christopher Moraff
Tribune Correspondent
As the summer ends and
Americans prepare for what will
surely be an historic presidential
election, the topic of energy and
its cost has been shot into the
national spotlight perhaps more
than at any other time since the
gas crisis of the early 1970s.
The topic is almost certain to
be an important factor when
America heads to the polls in
November. Both John McCain
and Barack Obama are doing
their best to capitalize on widespread
anxiety over rising energy
costs as they aggressively promote
their own versions of a remedy.
Meanwhile, mounting inflation,
stagnant wages and a dwindling
job market have aroused mass
apprehension among American
families about just what the
future will bring.
With the nation engaged in a
collective belt-tightening in
almost every state, household
energy prices are experiencing a
steady upward climb. This has
both regulators and advocacy
groups worried that a bad winter
could potentially price the most
vulnerable homeowners out of
essential heating service.
Low-income households,
minorities and seniors living on a
fixed budget are especially at risk.
Research shows that low-income
homeowners expend a larger percentage
of their shrinking budget
— from a quarter to as much as
two-thirds of annual income —
on energy bills than their more
well-off neighbors. As a result,
not only are they getting behind
on their bills, but many are finding
it more and more difficult to
get out of debt.
Philadelphia Gas Works, for
instance, estimates that as of
2007, nearly a third of its customers
qualify as low-income and
together are in debt more than
$28 million. PECO puts the number
of low-income customers at
roughly 20 percent, with $34 million
in overdue bills. Even more
troubling: Only a fraction of these
indebted customers are currently
on a payment plan.
And energy costs are only getting
higher. Some experts estimate
that heating costs in particular
could run 35 percent to 50
percent higher this winter than
last year led by the rising price of
heating oil, which today costs
more than double what it did in
2005.
Add in the cumulative effect of
the ongoing recession and regulators,
consumer advocates and
representatives of the utility
industry say we’re facing a potentially
catastrophic winter.
“At a time when energy prices
are rapidly increasing, it is highly
likely that consumers will face the
same difficulties that rising energy
costs created in the late 1970s
and early 1980s,” said J. Michael
Love, president and CEO of the
Energy Association of
Pennsylvania, which represents
the interests of electric and natural
gas energy distribution companies.
The commonwealth’s chief regulators
agree.
“Nationally I would say that
there’s more concern about this
coming winter than any time
since Katrina,” said Mitch Miller,
director for the Bureau of
Consumer Services for the
Pennsylvania Public Utility
Commission. “It’s a big concern.
The concern is that deliverable
fuel — like heating fuel oil —
those prices are way up at a time
when a lot of people are struggling
with the economy and paying
gasoline prices that have
never been so high before. We’re
kind of preparing for the worst
and hoping for the best.”
As part of that preparation,
regulators say they are getting an
early start this year to educate
consumers about the options
available should they fall behind
on energy bills. To make sure
everyone who needs help knows
where to get it, the PUC is
launching its annual “Prepare
Now” campaign earlier than
usual this year.
“Prepare Now” is a statewide
informational and marketing
campaign managed through a
collaboration of the Public Utility
Commission’s Consumer
Advisory Council, communitybased
organizations and other
state agencies. On Sept. 11 the
commission is holding a planning
session and hopes to begin the
campaign by October.
“This campaign is really to help
people get ready for the winter
and help get educated on all the
tools they have to pay their heating
bills as well as knowing their
rights and responsibilities and
opportunities for grants for heat-
Sunday, September 7, 2008 • Page 6-B
Rising prices put utility bills, strife in spotlight
ing assistance,” said PUC Vice
Chairman Tyrone J. Christy.
“Prepare now encompasses all
that.”
The effort couldn’t come at a
better time. Statewide through
July, total utilities terminations
— including gas, electric and
water — are up 24 percent. Much
of the problem is directly attributable
to an overall increase in
energy prices.
According to the Energy
Information Administration —
the U.S. government’s official
energy statistics agency — average
U.S. residential electricity
prices are expected to increase by
5 percent in 2008 and by 10 percent
in 2009. And with an
increasing amount of natural gas
going towards the generation of
electricity, pressure is falling on
residential gas customers as well.
Locally, the problem is even
more pressing; Philadelphia residents
already pay more for energy
than the nation at large. In
May the Bureau of Labor
Statistics reported that although
gas prices in the region were less
than the national average,
Philadelphia area consumers
were paying 28 percent more for
electricity and 7.1 percent more
for utility gas than the U.S. city
average.
And costs continue to increase.
A kilowatt-hour (kwh) of electricity
costs Philadelphia area consumers
26.9 percent more this
year than in 1998, while the price
of residential natural gas has
grown steadily over the past four
years — from $12.20 per thousand
cubic feet in 2004 to more
than $16.50 today.
As a result, more and more
area residents are finding themselves
unable to afford the cost of
heating their home. Each year in
December the PUC releases its
Annual Cold Weather Survey,
which calculates how many
households are entering the winter
season without heat. While
the number of households without
heat-related utilities appears
to have dropped slightly last year,
experts say these numbers don’t
tell the whole story.
“The statistics have to be taken
with a grain of salt,” admits said
PUC Vice Chairman Christy. “You
have to look at these statistics
and consider the fact that they do
not include people who were terminated
more than one year ago.
They are just based upon the
folks we contact that have been
terminated in the past year to see
where they are for the upcoming
winter.”
What’s more, the statistics are
released in the midst of a statemandated
winter moratorium on
terminations for low-income
households (below 150 percent of
the federal poverty line) and during
Pennsylvania’s Low Income
Home Energy Assistance
Program (LIHEAP) season, which
runs from Nov. 5 to March 21. As
a result, the numbers don’t reflect
the spike in shut-offs that occurs
right after the moratorium ends
and LIHEAP expires.
“There are a negligible number
of terminations during the moratorium,
which coincides with the
LIHEAP season, but when that’s
over, boom. They happen,” said
John Rowe, executive director of
Utility Emergency Services Fund
(UESF), a Philadelphia-based
nonprofit group.
Rowe says this past April when
LIHEAP ended for the season,
there followed 60,000 terminations,
up from 40,000 the year
before.
A yawning gap
In an effort to gauge just how
much of a burden energy costs
have become, in April 2003,
Fisher, Sheehan & Colton — a
Boston-based law and economics
consulting firm — introduced a
measure called the energy affordability
gap. This gap represents
the difference between what a
family can afford to spend on
energy bills and what they actual-
John Rowe, executive director of Utility Emergency Services
Fund, sits in his office. In front of him are piles of applications
for heating assistance. — SHIRA YUDKOFF/TRIBUNE STAFF PHOTOGRAPHER
In the foreground, Esmeralda Martinez and her daughter, Leslie Murrel, 4, wait at the Friends
Neighborhood Guild, one of the UESF intake sites, to apply for heating assistance.
— SHIRA YUDKOFF/TRIBUNE STAFF PHOTOGRAPHER
WHEN YOU CAN’T
PAY A BILL
If you know you will be unable to pay a bill, think you are in danger
of losing service or already have …
Start by calling your utility company. They can, and often do, help.
State regulations require each company to maintain a Customer
Assistance Program, or CAP, to assist residential customers maintain
electric service and eliminate their past-due balances. For PECO,
call (800) 744-7040; for PGW call (215) 235-1000.
If that doesn’t work, call the PUC at (866) 550-4355. They will walk
you through the steps to ensure your utilities stay on this winter. The
PUC also runs the Stay Warm PA program (www.staywarmpa.com),
which offers tips on energy conservation and what to do if your energy
is turned off.
To contact a LIHEAP representative, call (866) 857-7095, Monday
through Friday (individuals with hearing impairments may call the
TDD number at 800-451-5886)
In Philadelphia, the Universal Energy Services Fund offers grants
to qualified homeowners who lose heating or electric service. They
can be reached at (215) 972-5170.
ly do spend.
In their initial assessment, FSC
found a national “affordability
gap” of $18.2 billion — which
meant as a whole, Americans in
2003 were spending nearly $20
billion more than they could
afford on keeping their homes
warm in the winter, cool in the
summer and lit all year round.
Even worse, FSC noted that federal
fuel assistance provided
through programs like LIHEAP
covered just a fraction of that gap.
Three years later, the shortfall
between actual home energy bills
and affordable home energy bills
had increased to $23.2 billion, an
increase of 27 percent. According
to the FSC data, in 2007
Pennsylvanians paid $2 billion
more for energy than they could
afford, an average of more than
$1,600 per household, up 120
percent from 2002.
In the real world, the affordability
gap translates into termination
notices and shut offs. Last
winter alone, PUC reported nearly
17,000 new homes without
central heating service. If that’s
not bad enough, shut-offs lead to
increased use of alternative
sources — like kerosene and electric
heaters, which are a leading
cause of house fires.
Knowing where to look
The PUC’s Miller says the good
news is that despite the problems,
Pennsylvania has among
the best set of programs in place
for ensuring that once a customer
gets service terminated, they are
able to get reconnected.
“I think that experience would
show that the vast majority of
consumers that get their service
terminated can get it reconnected
eventually,” he said. “The problem
is that tragedies do occur
during that time period of trying
to get service restored and some
consumers never get their service
restored.”
Miller stresses the importance
of being proactive and says the
worst tragedies he’s come across
almost always involve people who
have not sought help.
“The worst thing a consumer
can do is to not call the utility,
and second is to not contact the
PUC once they’ve run into problems
with the company,” he said.
“The law requires the companies
to do at least one payment
arrangement and the next step is
to call the PUC. So, the help is out
there.”
But Miller says that even
though utility companies are
required to give out the commission’s
phone number, a very
small percentage of consumers
who get into trouble actually call.
The commission is hoping that
getting the word out early this
year might help reverse that pattern.
For regulators and advocates,
LIHEAP remains the primary
weapon in addressing lowincome
energy issues. A federal
program, administered by
Department of Public Welfare,
LIHEAP consists of three components:
Cash benefits to help eligible
low-income households pay
for their home-heating fuel; crisis
payments, if needed, to resolve
weather-related, supply shortage,
and other household energyrelated
emergencies; and energy
conservation and weatherization
measures to address long-range
solutions to the home-heating
problems of low-income households.
The Fiscal Year 2008 Omnibus
Appropriations bill included
$2.57 billion for LIHEAP, of which
$183.7 million in funding went to
Pennsylvania. The program
makes grants from Nov. 5 to
March 21 for qualifying households.
For the coming season, a
family of four with an annual
income of up to $31,800 is eligible
for assistance.
While LIHEAP provides a vital
safety net for millions of American
families, just about everyone
agrees the program has not kept
up with the level of need and the
federal government could do a lot
more.
“If you look at the funding levels
for LIHEAP since the early
1980s, the actual dollar amount
that we got last year is nearly
identical to what it was in 1984,”
Miller explains. “Meanwhile, the
price of the commodity [energy]
has gone up 300 percent, sometimes
400 percent, in the course
of the last 25-30 years, yet the
federal government’s program to
address the consumers’ inability
to pay has not increased at all.
“If you adjust for inflation and
cost of living, the actual value of
the grant — if you’re lucky
enough to get one — is about a
third of what it was at one time.
Rowe, of the nonprofit Utility
Emergency Services Fund,
agrees, and says advocates have
been working hard to pressure
Congress into raising the LIHEAP
allocation.
“There are about 800,000 families
in Pennsylvania that are eligible
for LIHEAP — only half get it
though,” he explained. “The federal
government can authorize up
to $5 billion of aid and they don’t.
They allocate about half that
amount — and it’s a constant
struggle on the federal level to get
that to happen.”
Even the funding that is available,
he says, only serves a fraction
of client needs. “Even with
400,000 Pennsylvanians getting
this aid, the amount is very small;
the aid represents only about 8
percent of their total winter bill.
So, it’s a little bit of money for the
households and only half the
households that are eligible are
able to get it.”
Ironically, he says, this year
there was $9 million in unspent
LIHEAP money left over when the
program closed in March. He
worries that could send the
wrong message.
“If there is money left over
when time runs out, the impression
is given that there’s enough
money. The message that gives
the federal government is ‘Thank
you for the money, but we’re OK,’
but we’re not OK and we feel the
effect of it here at UESF.”
Rowe is currently participating
in a LIHEAP Advisory Committee,
which is working to make sure
that doesn’t happen again. He
says the main problem is that the
relatively short season during
which LIHEAP awards grants is
masking the extent of the need.
“Make the season longer. Of the
50 states, 44 have longer seasons
than Pennsylvania and 22 of those
are open year round. If you do that
it will be clear the need is high.”
To pick up where LIHEAP
leaves off, UESF works in partnership
with the city’s major utility
companies, local corporations
and individual donors, to provide
its own grants to needy families.
The group works with 11 outreach
centers throughout the
city, and all UESF grants are
matched dollar-for-dollar by the
utility company.
Rowe, a former city housing
planner and program director for
the nonprofit Energy
Coordinating Agency, has been
running the agency for just over a
year during which time he says
he increased the number of
households served from 3,000 to
nearly 6,000 a year.
“There’s a picture sometimes of
people who need assistance as
they want a handout. That’s not
what we’re seeing; we’re seeing
people who are struggling. This is
a rough time,” he said. “The level
of income is not rising fast
enough and utilities prices are
rising quickly.”
Rowe says UESF helps the
most vulnerable families; The
average client is a female head of
house, with two children, making
$12,000 a year. Last year the
group distributed $3.3 million in
a combination of direct grants
and utility bill credits.
In 2004 Gov. Ed Rendell signed
the Responsible Utility Customer
Protection Act, which made it
easier for utilities to shut off service
for nonpayment. Among the
changes, companies are now permitted
to cancel service in the
winter without notifying the PUC
as long as the account holder
does not qualify as low income.
Vice Chairman Christy at the
PUC says while it’s not his job to
make policy, he accepts that a
balance needs to be maintained
between allowing the market to
regulate itself and government
stepping in when it’s required.
“Absently giving away heating
service for free to everyone, the
legislature has drawn that line
that at some point you have to
take corrective action,” he said.
“We always have to be mindful of
the balance that has to be taken
here to provide some level of protection
for the good paying customers
and we have to keep in
mind that there are plenty of poor
people out there that struggle paying
their bills but somehow they
manage to do it — so there is that
balance that has to be reached.
But certainly there’s the compassion
side of this; nobody wants to
see someone get shut off of their
heating service in the middle of
winter. That’s a very dangerous
situation. It’s a real balancing act
and it’s a tough act.”