Utility Assistance Programs

Request: We are looking for innovative and best practices for utility discount programs to reduce impacts to low income households, increase equity and support overall community well being.

PROGRAMS AND PROJECTS | Dec 19, 2019

Request: We are looking for innovative and best practices for utility discount programs to reduce impacts to low income households, increase equity and support overall community well being.

Background: Not only are municipalities expected to deliver quality and reliable services, but it is also becoming an expectation that services are equitable to all citizens. When referencing wealth inequity, the costs for necessary utilities such as water, sewer, and solid waste can reflect the challenges of families at different income levels. In response, municipalities are looking for new and innovative ways to provide utility cost relief to low-income families. Found below is the current status of research into utility assistance programs.

Summary: Overall there are few new and innovative programs regarding water, sewer, solid waste, and stormwater bill discounting. Those municipalities that do seem to have effective discount programs typically have programs that can reach a wide breadth of customers and are accompanied by high quality customer service abilities. For this report, we have chosen to organize the customer assistance programs we have found from most common to least common. Additionally, we have highlighted the benefits and drawbacks associated with each practice.  We have also listed consensus best practices for low income utility rate discount and subsidy programs. Lastly, we have included two municipalities with exemplary and/or innovative low-income utility relief programs. 

Existing Practices: 

  • Bill Discount: This refers to any monetary amount that is subtracted directly from the end bill that a customer would receive. 
    • Fixed Cost Discount: This method applies a discount for low-income earners directly to fixed charges associated with water and wastewater services.  
      • Benefits: Can encourage water conservation for low-income earners, removes fee costs from low-income earners, easily explained to constituents. 
      • Drawbacks: Makes bills more irregular for low-income earners, is not necessarily customized or equitable to customers. 
  • Percentage of Bill Discount: This method applies a discount of a certain percentage on the entirety of the low-income earner’s utility bill. 
  • Benefits: Fair and common discount method, easily explained to constituents. 
  • Drawbacks: Lower incentive for reducing water usage, not always equitable to customers. 
  • Variable Discount Rate Structure: This discount method is focused on providing different levels of discount based on the level of need of the individual applicant (see Philadelphia, PA example below). 
  • Benefit: Provides customized and equitable discounts to each customer.  
  • Drawbacks: Requires significantly more administrative action and cost, relatively uncommon in local government. 
  • Flexible Terms 
  • Bill Timing Adjustments: A bill timing adjustment program allows a utility provider to customize the payment dates of a low-income earner so that the customer is more likely to have the funds on hand to pay the bill. This is most beneficial in communities that have quarterly billing, as monthly billing is often more manageable for low-income earners.  
  • Benefits: Easier for a low-income earner to manage payments, increases chances a low-income earner pays off their bill.  
  • Drawbacks: Potentially higher administrative costs, lower participation rate than other methods 
  • Levelized Billing: This practice involves taking a low-income earner’s utility bill and restructuring the required payments into consistent regular amounts. This method is often paired with bill timing adjustments. 
  • Benefits: Provides consistency for low income earners, increases chances of fully collecting owed amount. 
  • Drawbacks: Potentially higher administrative costs, lower participation rate than other methods. 
  • Arrearage Management: Arrearage management programs often have terms that progressively reduce/forgive a low-income earners outstanding arrears so long as they continue to make regular payments. 
  • Benefits: Encourages repayment of outstanding debt, can help reestablish customers on a regular schedule. 
  • Drawbacks: Challenging for particular low-income earners who struggle to consistently provide payment. 
  • Lifeline Rate: The lifeline rate sets a certain amount of usage that will be billed at a subsidized rate. This usage amount is typically set at a level that is deemed reasonable to cover the customer’s basic needs. However, any usage over this preset subsidized amount is then charged at the normal rate. 
  • Benefits: Encourages water conservation, equitable and fair, high participation rates. 
  • Drawbacks: Can disproportionately affect families with extenuating circumstances, deciding what a reasonable level for basic needs is a considerable challenge for municipalities.   

 

  • Temporary Assistance: Temporary assistance programs provide a one-time discount to customers going through extraneous circumstances (e.g., death, job loss, divorce, domestic violence) that may impede their ability to pay.  
    • Benefits: Prevents customers from missing payments and accruing arrearage debt.  
    • Drawbacks: Does not specifically help low-income earners. 
  • Water Efficiency Programs: Rather than offer a specific discount on a utility bill, water efficiency programs offer low income earners access to water efficient fixtures (i.e. toilets, faucets, appliances) and services (i.e. leak repairs) at subsidized rates.  
  • Benefits: Improves water conservation and lowers utility bills, offers a long-lasting solution. 
  • Drawbacks: If a low-income earner changes their living situation the benefit is lost, can have a high capital cost for a municipality.  
  • Multi-Family Housing Assistance: Although uncommon, a few municipalities distribute funds to low-income earners that live in multi-family housing. The funds offered by the municipality are intended to offset the costs that those customers pay their landlord for utility uses.  
  • Benefits: Ability to reach low income earners who would not usually be eligible to receive help. 
  • Drawbacks: Unable to ensure the money is used for its specific use.  
  • Automated Meters: A few municipalities have begun to replace all of their existing meters with automated meters that do not need to be checked by hand. The goals are to reduce costs associated with having to manually check meters, identify leaks earlier, and provide real-time and easy to access information of water usage. 
  • Benefits: Allows low-income earners to know their water usage at any given time and act accordingly, reduces fees over the long-term. 
  • Drawbacks: Extremely high capital costs. 

Best Practices: 

1. Measures used to determine the affordability of water and wastewater rates to residential customers should be broadened. Affordability measures should include household size and income, size of approved rate increase, and rate of customer growth in the system. An affordability analysis should also focus on customer ability to pay, including the level of past due bills and the rates at which service is terminated and reconnected. Qualitative measures could include whether payment of water and sewer bills compromises ability to pay for other basic necessities, such as food and shelter, and a review of whether other assistance programs are available to the consumer. 

 2. Flexibility is key and should be incorporated into policies to achieve water and wastewater affordability. Some states have relaxed their interpretations of existing statutes to allow for rate relief in disadvantaged communities under certain circumstances. Flexibility to deviate from the strict application of district specific pricing or single-tariff pricing should be an option when reasonably necessary, based on all relevant factors. Tracking expenses on a district specific level even in the context of single-tariff pricing or rate consolidation may help to ensure that companies are held accountable and incur only those costs that are reasonable. Flexibility is also necessary to create effective payment plans that take into account the different circumstances of payment- troubled customers.  

3. Rather than a subsidy, low-income rates should be considered a “discount” in cases where low-income rates recover marginal costs and make a contribution to fixed costs, similar to “discount rates” that are offered to industrial customers.  

4. Payment plans should be implemented with the goal of maximizing the opportunities for payment-troubled customers to meet their payment obligations. Advocates can consider seeking a requirement from the commission that when a utility offers a customer a payment plan, it should be reasonable based upon each payment-troubled customer’s financial and special circumstances. A reasonable plan should maximize the customer’s opportunity and ability to pay as well as the ability to maintain essential services to the household. Utilities could be required to offer payment troubled customers at least one second payment agreement. Allowing customers to select a payment due date that will best enable customers to meet their payment obligations should be considered by policymakers.  

5. Discount programs and assistance programs should be paired with conservation training and leak repair programs.  

6. Use benchmarking to increase incentives for utilities to actively manage their customer bills, rates, and affordability programs. Regulators could set or approve realistic aspirations for utilities to achieve on a given affordability related measurement, such as number of customer terminations due to nonpayment. Benchmarks should be paired with meaningful utility obligations to help achieve affordability in the event that benchmarks are not met.  

Source 

 

Model Cities: 

Portland, Oregon: The City of Portland has taken a number of initiatives towards providing assistance to low-income families. These programs are designed to provide cohesive coverage to all low-income earners regardless of living situations. Below are listed some of the available programs and their details.  

  • Bill Discount: For qualifying families, a fixed dollar amount discount can be applied to both water and sewer/stormwater bills. As of July 1, 2019, the eligible discount is $63.20 for $110.57 on each quarterly bill.   
  • Payment Arrangements: For qualifying customers, payment deadline extensions are offered without penalty to help residents make payments. 
  • Crisis Assistance: Using partnerships with the Bureau of Environmental Service, qualifying customers can receive a $500 voucher once every twelve months to help deal with an emergency.  
  • Multi-Family Housing Assistance: After partnering with Home Forward, a non-profit, the City of Portland offers qualifying families facing eviction a $500 assistance voucher. This voucher is offered regardless of whether the family uses a shared meter.  
  • Fixture Repair and Replacement: After partnering with the county, qualifying customers can receive financial assistance for the repair and possible replacement of leaky appliances and fixtures.  
  • Monthly Statements: This program takes a customer's quarterly meter readings and divides the payment schedule into monthly invoices. The intention is to help low income families’ budget and make payments with greater ease. 
  • Utility Safety Net: The safety net’s intended purpose is to assist customers enduring unemployment, medical and other personal emergencies. Considered a last resort option, the program provides a deferred water shut-off, the waiving of any delinquency charges, an interest-free payment plans, and further financial assistance. The safety net is designed to give customers enough time to return to a normal payment schedule.  
  • Water Efficiency Program: The water efficiency program offers a $50 rebate for the purchase and installation of a low flow toilet in addition to offering a free water conservation kit to all residents that includes: a low flow showerhead, a kitchen faucet aerator, a shower timer, a toilet fill cycle diverter, bathroom faucet aerator, and toilet leak detection tablets.  
  • Clean River Rewards: For citizens that take the initiative to manage their property’s stormwater, they may qualify for a 100% discount for their on-site stormwater management charges.  

Through the use of these programs, Portland is able to help nearly all low-income families financially while also promoting water conservation. Additionally, to increase awareness of the programs they have created brochures and flyers in several languages as well as age friendly documents.  

Source 

Philadelphia, Pennsylvania: The City of Philadelphia has wrapped the majority of their low-income utility assistance into one program. This program is fairly unique and rather innovative which was only enhanced by their impressive outreach campaign. 

  • Tiered Assistance Program
  • Monthly bills based on income which can range from 2-4% of a customer’s total household income. Lowest income bracket may have a minimum bill of $12 per month. 
  • Outstanding balances accrued prior to TAP enrollment are put on hold.  
  • Earned forgiveness of prior penalties after 24 months of on-time payments. 
  • The Tiered Assistance Program was created due in part because some discount/subsidy programs failed to reach certain individuals while others overlapped. 
  • The new program was accompanied by a large scale pre and post launch informational marketing campaign.  
  • In total the program took two years from creation to full scale public launch. 
  • The City of Philadelphia also offers a phone hotline to assist customers in registering for the program and ensuring that those customers understand the benefits/discounts they are receiving.  
  • The program reaches nearly 60,000 customers and has begun to reduce the number of shutoffs in the City of Philadelphia. 
  • The City of Philadelphia estimated their implementation costs at approximately $2 million. 

Overall, the City of Philadelphia took an opposite approach to low-income utility assistance than did the City of Portland, Oregon. Rather than offering several programs, Philadelphia unified them under one program that is specifically aimed at assisting customers based on their ability to pay. However, what has truly set them apart is their customer service levels and advertising outreach abilities. 

Source 

 

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