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Low-income assistance is paying proposition
Shell out $10 million to help people pay their electric bills, and get back all your money, plus about $4 million in interest.
That's not a breakdown from the payday loan industry – it's the first financial report from the Oregon Energy Assistance Program (OEAP). Established through Oregon's 1999 electricity restructuring legislation, the program requires investor-owned utilities to contribute $10 million annually to aid households that have fallen behind on their bills. A recent audit found that the program returned $1.40 for every dollar utilities put into it.
Advocates of low-income energy assistance called the report a breakthrough. "This evaluation demonstrates exactly what we've argued for years – that there is a financial benefit to the utilities and ratepayers for running these programs," said Chuck Eberdt, director of The Energy Project.
The Northwest has lagged in extending bill assistance. Oregon's program is the first effort in the region to distribute energy assistance statewide – about 75 percent of Oregon residents live in the participating utilities' service territories.
According to the OEAP audit, conducted by an independent consultant, the typical Oregon family receiving energy assistance earns $720 a month – about 60 percent of the federal poverty level. Many are retirees living on Social Security. Energy costs can easily consume up to 20 percent or more of that income.
Unforeseen expenses often put these customers behind on their electric bills, creating situations that snowball into delinquent accounts, the report said. But customers helped to get out of arrears typically keep up with subsequent payments. In the program's first year, customers who received $207 from the program paid about $134 more toward their bills than did customers without assistance.
Utilities saved money by avoiding canceled balances and the administrative costs of collection and shutoff proceedings, the report stated. The extra time and extra phone calls made by employees managing overdue accounts were NOT factored into the cost savings. Even so, the study predicts that Oregon's energy assistance program will return up to $1.61 for every dollar it spends in its third year.
Charles Dalton, customer relations manager for the Eugene Water & Electric Board, found the audit results encouraging but not surprising. Three years ago, Dalton initiated the Universal Service Plan – a program offering energy and social services to low-income ratepayers. Dalton is convinced that the strategy has already paid off for his utility, which is about to order an audit similar to that performed at OEAP.
"I figured out pretty quickly that if I couldn't show a cost benefit, the humanitarian motivation would give out pretty soon," Dalton said.
His program extends services beyond cash assistance, putting participants – mostly seniors and customers with disabilities – on payment plans appropriate to their incomes and fitting their homes with new insulation and duct sealing.
Dalton said the number of collection procedures instigated against program participants fell from 78 to five in just one year. The utility lost only $10,000 of the $50,000 it had expected to lose writing off overdue account balances. Eugene Water & Electric doubled the number of program participants the next year and still has not exhausted its budget for canceled balances, Dalton said.
The results are especially impressive, he noted, given that EWEB raised rates 50 percent during the program's second and third years.
Dalton believes the savings stem primarily from reduced collection and credit activities. Efficiency savings were considerable as well: Energy use by program participants dropped 13 percent – a significant long-range benefit for a utility that must purchase most of its power.
It's hard to put a price on the absence of newspaper articles featuring customers shivering in the cold, or on the benefits of helping customers afford medicine and food, Dalton added.
"The real benefit to the customers is that they're more secure in their homes. They can live more comfortably."
Jeff Bissonnette of the Fair and Clean Energy Coalition pointed to the need for more programs like Eugene's. Since the legislature placed the $10 million cap on the statewide assistance program, Bissonnette said, Oregon's eligible population has exploded along with the numbers of unemployed.
Eugene's Dalton sees his program leading a trend. Utilities know they're taking a public-relations hit for rising rates and increased shutoff notices, and are looking for ways to mend fences.
"Politics are tending against them, and they're scrambling to figure out how to position themselves," he said. "They know that politically they need to step up to this customer satisfaction issue."