Mapping Energy Assistance Infrastructure and Resources in Southeast Michigan

Sarah Shubitowski Prepared for McGregor Fund August 2012

TABLE OF CONTENTS

EXECUTIVE SUMMARY

2

INTRODUCTION

4

FEDERAL FUNDING SOURCES

5

Low Income Household Energy Assistance Program

5

Emergency Food and Shelter Program

5

Emergency Solutions Grant

6

STATE FUNDING SOURCES

7

Department of Human Services Administered State Emergency Relief

8

Home Heating Credit

9

Weatherization Assistance Program

10

$1 LIHEAP Program

11

Michigan Public Service Commission Administered Low Income Energy Efficiency Fund

11

Vulnerable Household Warmth Fund

15

Changes for FY 2013

16

LOCAL SHARE OF FEDERAL AND STATE FUNDING

17

OTHER SOURCES OF FUNDING

19

NAVIGATING ENERGY ASSISTANCE RESOURCES

20

CONCLUSION

21

$44,000

$2.3M

United Way of Southeastern Michigan

Emergency Food & Shelter Program Board

FEMA

$135,000

$135,000

Community Home Supports

Michigan State Housing Development Authority

Emergency Solutions Grant

HUD

$28M

$67M

Home Heating Credit (HHC)

Michigan Treasury

$772,140

$1 LIHEAP Pilot

Federal Level Funding

$15M

Weatherization Assistance Program (WAP)

LIHEAP

$227M

MI DHS

LIHEAP $4.7B

HHS

$56M

$180M

State Emergency Relief (SER)

$719,231

$73,390

DHS Deliverable Fuel

+

$158,642

Walk for Warmth

$134,889 +

Community Services Block Grant

$437,725

$527,300

$342,110

$3.2M

Society of St. Vincent de Paul

MCAAA

$35M $5M

$12.7M

TOTAL $107M

$18M

$43M

$8.2M

Government Grants

+

Foundations & Corporations

+

Events & Individual Gifts

$3.6M

$6.3M

THAW

Low Income Energy Efficiency Grants

LIEEF

$87M

MPSC

Michigan Energy Efficiency Grants

Detroit

$316,500

$316,500

Lighthouse Emergency Services

$58M

Low Income Energy Assistance Grants

$44M

DTE Customer Contributions

Consumers Energy Customer Contributions

$1.1M

$1.1M

Downriver Community Conference

$6M

Other Allocations

State Level Funding

ENERGY ASSISTANCE FOR TRI-COUNTY HOUSEHOLDS FY 2011

$1.9M

$305,392

Other Grants & Local Fundraising

$1.6M

$6.5M

The Salvation Army

KEY

$

$

$

$

LIHEAP Utility Company Match Other

$10M

$81,014

Consumers Energy PeopleCare Match Funds

$10.1M

DTE Match Fund

$18,486

$18,486

Friends, Family & Churches

Other Funding

$3.2M

Out of Area

LIHEAP

HUD

FEMA

COLORS BY FUNDING SOURCE

Subtotal

Organizations

Fund/Program

Origination of Funding

Estimated Amount

Agency Reported Amount

EXECUTIVE SUMMARY

Each year approximately $107M of energy assistance funding flows to the Tri-County area to help low-income individuals with their utility bills. There are many inputs, channels, and stakeholders that make up the infrastructure of energy assistance distribution. This special project, initiated by the McGregor Fund in May 2012, maps where energy assistance funding originates and the paths it takes to reach low-income residents of southeast Michigan. As the report moves through different channels of funding, it highlights important policy inputs that impact funding amounts and administration.

 Federal Funding for Energy Assistance:

The federal government provides the largest

source of energy assistance funding through the Low Income Household Energy Assistance Program (LIHEAP). LIHEAP is not an entitlement program, which means that funding is not guaranteed and fluctuates from year to year. LIHEAP was funded at $4.7B in FY 2011 and $3.5B in FY 2012. The President’s budget recommends funding LIHEAP at $3.02B in FY 2013. States may apply for LIHEAP funding which is distributed based on a formula created by Congress. Two federal mixed-use grants for basic needs, the Emergency Food and Shelter Program and Emergency Solutions Grant, also provide a small amount of funding for energy assistance.

 State Share of Federal Funding:

Michigan received $227.1M of federal LIHEAP

funding in 2011 and $173.4M in 2012 to fund three programs: State Emergency Relief (SER), Home Heating Credit (HHC), and the Weatherization Assistance Program (WAP). Each year Michigan’s Department of Human Services drafts a LIHEAP State Plan that indicates the allocation of funding to each program. Receiving the greatest share of the funding, SER provides assistance for home heating fuel, electricity, or energy-related home repairs based on a household's demonstration of immediate need. HHC is a credit to help low-income households cover the cost of heating their homes. WAP provides services such as air-sealing to cut household energy consumption and costs, but has not been funded through LIHEAP for the past two fiscal years.

 Customer Surcharge Funded Energy Assistance:

Since 2000, another significant

source of funding for energy assistance in Michigan was the Low Income Energy Efficiency Fund (LIEEF), with average annual revenue of $89M. Administered by the Michigan Public Service Commission (MPSC), the LIEEF distributed grants for low-income energy assistance, low-income energy efficiency projects, and development or improvement of 2

energy efficiency technologies. Funding for the LIEEF was first provided through securitization savings that were later rolled into the cost of service for DTE, Consumers Energy, and Michigan Consolidated Gas Company customers. In 2011, legal action resulted in the elimination of the LIEEF and previously awarded grant agreements were terminated. Funding of $56.3M for the LIEEF was put into an escrow account until it was decided in April 2012 to refund customers in the form of credits toward future energy bills.

 Replacing LIEEF:

To temporarily maintain assistance during the 2011-2012 heating

season, legislation was passed to allocate $35M to DHS for SER energy services and create the Vulnerable Household Warmth Fund (VHWF). The Fund allowed the MPSC to award grants consistent with their June 2011 awards under the LIEEF. Currently proposed legislation would establish the Low-Income Energy Assistance Fund, to be administered by DHS and funded through an annual surcharge on all utility customers, for a total of $60M. Other provisions include a simplified, single application for energy assistance and a requirement that entities contracting with DHS to provide energy assistance must also provide wraparound services.

 Local Share of Federal and State Funding: The largest amount of energy assistance funding that makes its way to the Tri-County area is through SER and HHC, which reported distributing $55.6M and $28.4M in FY 2011, respectively. In addition, $15.5M of the LIEEF resources were distributed in the Tri-County area through six organizations listed below: 

The Heat and Warmth Fund (THAW)



The Salvation Army



Michigan Community Action Agency Association



Lighthouse Emergency Services



Downriver Community Conference



Society of St. Vincent de Paul

 Other Sources of Funding: A significant source of energy assistance funding comes from utility company match programs, in the form of credits to individual accounts. In FY 2011, DTE Energy facilitated approximately $10M in match funds to benefit Tri-County resident accounts. Consumers Energy contributed $81,014 in match funds through their PeopleCare program. Smaller amounts of funding for energy assistance are provided through the charitable Walk for Warmth, the DHS Deliverable Fuel Program, and the state Community Services Block Grant Program.

 Navigating Energy Assistance Resources: There is not a single point of entry into the energy assistance system, which means individuals must visit several agencies and navigate differing eligibility requirements and intake processes.

3

FEDERAL FUNDING SOURCES INTRODUCTION

In May 2012, the McGregor Fund initiated a special project to map the infrastructure and resources that are available in southeast Michigan for providing energy payment assistance to low-income residents. This report is meant to complement the mapping document, and walk the reader through the multi-level infrastructure of energy assistance. It focuses on FY 2011, the fiscal year for which the most complete information exists. The purpose of the mapping document and report is to assist McGregor Fund trustees and staff with considering potential grantmaking by the Fund to support the infrastructure and aid available for energy assistance delivery. The research for this report began by investigating where local residents obtain energy assistance. All organizations listed in the 2011-2012 Energy Assistance Directory and 2-1-1 Online Database for Utility Assistance in the Tri-County area were contacted regarding their funding source and amount of distribution. With that information, further research was done on the state and federal funding that provide the resources that, ultimately, are paid to utility companies for the benefit of low-income Tri-County customers. The mapping exercise found that there are many inputs, channels, and stakeholders that make up the infrastructure of energy assistance as funding makes its way to southeast Michigan. The report is laid out to begin at the federal level and follow federal funding to Michigan, and from state-administered programs to local organizations directly allocating energy assistance on behalf of low-income individuals in the Tri-County area. As the report moves through different channels of funding, it highlights important policy inputs that impact funding amounts and administration. It ends with an estimate of total energy assistance funding distributed on behalf of Tri-County residents and a visual representation of the scale of each funding source. Finally, it is important to note that while this report attempts to provide a comprehensive picture of the infrastructure and total amount of energy assistance distribution, there are limitations that impact the completeness of information provided.

Low-Income Home Energy Assistance Program The largest source of funding for energy assistance comes from the federal government through the Low Income Home Energy Assistance Program (LIHEAP). The intent of the program is “to assist low income households, particularly those with the lowest incomes that pay a high proportion of their household income for home energy, primarily in meeting their immediate

4

home energy needs.” In addition to helping households with energy bill payments, up to 10% of LIHEAP funds may be used for weatherization. The legislative authority for LIHEAP is Title XXVI of the Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35), as amended.i LIHEAP was established as a Federal Mandatory Block Grant that is funded annually through Congressional appropriations. Because LIHEAP is not an entitlement program, the level of funding can fluctuate widely from year to year. That fluctuation has been evident in recent years as the total amount of funding appropriated to LIHEAP decreased from $4.7B in FY 2011 to $3.5B in FY 2012. The President’s budget recommends funding LIHEAP at $3.02B in FY 2013ii, which has caused an outcry from the advocate community claiming that this level of funding would result in devastating and unacceptable cuts to LIHEAP-funded services around the county. They ask that funding be restored to the authorized spending level of $5.1B.iii

FEDERAL LIHEAP FUNDING FY 2011

FY 2012

FY 2013

$4.7B

$3.5B

$3.02B*

*Proposed in President’s Budget Congress also provides the President with limited emergency LIHEAP contingency funds each year, which are reserved for emergency situations and released at the President's discretion.iv

Emergency Food and Shelter Program A smaller source of federal funding for energy assistance comes from the Emergency Food and Shelter Program (EFSP), which is funded through the Federal Emergency Management Agency (FEMA). If Congress approves funding for EFSP, FEMA provides a sum of money to the Emergency Food and Shelter Program National Board. The National Board is responsible for direct transfer of money to local recipient organizations (LROs) serving low-income individuals, which in the Tri-County Area is the United Way of Southeastern Michigan. While approximately $2.3M was allocated to the Tri-County Area in FY 2011, only $44,000 was distributed for utilities assistance to two agencies. Susan Kurth, Manager of the Michigan Benefits Access Initiative (MBAI) and Emergency Food and Shelter Program (EFSP) at the United Way of Southeastern Michigan, commented that, due to a cumbersome documentation process, local non-profit agencies are prone to non-compliance and often decline to participate in EFSP.v

5

Emergency Solutions Grant The Emergency Solutions Grant Program (ESG), formerly known as the Emergency Shelter Grant Program, also provides a nominal amount of funding for energy assistance. It is a federal block grant authorized by subtitle B of the McKinney-Vento Homeless Assistance Act and administered by the U.S. Department of Housing and Urban Development (HUD), to provide funding for emergency shelter and homelessness prevention activities. In FY 2011, Detroitbased Community & Home Supports used ESG funding to provide $135,000 in utility shutoff and eviction prevention in Detroit, Highland Park, and Hamtramck.vi

6

STATE FUNDING SOURCES

At the state level, there are two large sources of funding for energy assistance. The first is the aforementioned LIHEAP. States, territories, Indian tribes and tribal organizations that wish to assist low-income households in meeting the costs of home energy may apply for a LIHEAP block grant. The funds are then distributed to states through the U.S. Department of Health and Human Services (HHS). Congress established a formula for distributing funds to states based on each state's weather and low-income population. Once LIHEAP funding is allocated through the formula, administration of the program is left up to state, territorial or tribal governments. LIHEAP income-eligibility limits are calculated by HHS for each state based on federal poverty guidelines and state median income (SMI).vii The Michigan Department of Human Services (DHS) is the designated lead agency responsible for the administration of federal LIHEAP funding once it is allocated to Michigan. LIHEAP funds Michigan’s State Emergency Relief (SER) program, Home Heating Credit (HHC), and Weatherization Assistance Program (WAP).viii In FY 2011 and 2012, a small percentage of federal LIHEAP funding also went to the $1 LIHEAP Pilot Program (described below).ix The state’s allocation of federal LIHEAP funds to the aforementioned programs changes annually because of the fluctuation in federal LIHEAP funds available. The decision-making process begins in July when DHS creates a LIHEAP State Plan for the upcoming fiscal year that begins October 1st. The State Plan addresses funds available to each program area, eligibility requirements, and benefit levels. To formulate the plan, DHS must estimate the amount of federal LIHEAP funding Michigan will receive for the upcoming fiscal year and consider the amount of money distributed through the HHC during the previous fiscal year.x DHS also solicits public participation in the development of the plan. Notices are published announcing the proposed State Plan for LIHEAP and soliciting public comment regarding plan provisions. Two public hearings are also held during the two-week public comment period. DHS did not receive any comments at the hearings or during the public comment period for FY 2012.xi Once the plan is reviewed and revised, it is submitted to the State Budget Office where it can be approved or modified.xii

7

MICHIGAN’S LIHEAP FUNDING

The total amount of LIHEAP funding distributed to Michigan in FY 2011 was $227.1M. The amount distributed to Michigan for FY 2012 was $173.4M.xiii As of July 1, the

FY 2011

FY 2012

$227.1M

$173.4M

amount of FY 2013 funding had not yet been determined. The State Plans for FY 2011 and FY 2012 allocated federal LIHEAP funding as follows: FY 2011 Percentage

FY 2011 TOTAL

FY 2012 Percentage

FY 2012 TOTAL

Crisis Assistance (SER) Dept. of Human Services

57.3%

$130,105,590

61.6%

$106,849,080

Heating Assistance (HHC) Dept. of Treasury

32.4%

$73,512,270

28.0%

$48,552,000

Admin & Planning Costs

10.0%

$22,710,000

10.0%

$17,340,000

$1 LIHEAP Program

0.3%

$772,140

0.4%

$658,920

TOTAL

100%

$227,100,000

100%

$173,400,000

State Emergency Relief The largest allocation of federal LIHEAP funding goes to Michigan’s State Emergency Relief (SER) program. SER provides a wide range of non-energy and energy-related emergency services year round. Eligibility for SER energy services is based on the household's demonstration of immediate need for assistance with home heating fuel, electricity, or energyrelated home repairs. Immediate need may be demonstrated by a declared need for a deliverable fuel, presentation of a shut-off notice for natural gas or electricity, or a verified need for an energy-related home repair of a home owned or being purchased. In addition to immediate need, SER energy services eligibility is based on income to be received in the 30day period that begins with the application date. The LIHEAP/Energy Income Limits for all family sizes is below 60% of the state's median income.xiv To receive SER funds, an individual must fill out an application at their local DHS office, online, or at a community-based agency. An appointment is generally required and an asset test is also applied to some applicant households. (In some instances, asset-based copayment becomes required). SER energy services covered by LIHEAP include:

8



Heating Fuel: Payment is provided for any type of fuel used to heat the dwelling unit up to an annual maximum as follows: o

$850 for households which heat with natural gas or wood.

o

$1,500 for households which heat with deliverable fuel other than wood (fuel oil, propane, coal, etc.).

o 

$850 for household which are all-electric (including heat).

Electricity: Payment is provided for electricity needed to operate the heating system or to provide energy to the dwelling unit to make it livable, up to an annual maximum of $850 per household.



Home Repairs: Payment for energy-related home repairs is the minimum necessary to maintain a decent, safe, warm dwelling unit. The lifetime maximum is $4,000. Exceptions may be granted for unique and unusual circumstances.

Payment for heating fuel or electricity is the minimum amount necessary to prevent shut-off or to restore service and may include connection or hook-up fees which will not be waived by the provider. Payments for SER energy services are made within 30 working days of receipt of an invoice from the provider. However, emergency situations are most often resolved within 48 hours after eligibility is determined or within 18 hours if the situation is life-threatening. Payments are made directly to the heating fuel, electricity or home repair provider whenever possible. Payment in excess of the maximums may be made on an exception basis.xv The total expenditures for Michigan’s SER program was reported as $163.4M in FY 2011 and $121.7M in FY 2012.xvi It is worth noting that broad criticism of SER was expressed during the research for this report because of the way the program perpetuates crisis. Because immediate need for electricity or heat must be demonstrated through a shut-off notice, applicants are likely several months in arrears of energy payments at the time of application. As a result, the amount of energy assistance a person receives once presenting a shut-off notice will almost certainly not cover their entire amount of debt.

Home Heating Credit The Michigan Home Heating Credit (HHC) is the second largest program funded by LIHEAP. HHC is designed to assist low-income families with the cost of heating their homes. To apply for the credit, an individual must fill out a Michigan Home Heating Credit Claim (MI-1040CR-7 Form) by September 30th following the tax year. Eligibility is based on income, number of exemptions and household heating costs. Under provisions set forth in the State Income Tax 9

Act, the Michigan Department of Treasury processes the HHC claims and issues payments Public Act 335 of 2004 requires the Michigan Department of Treasury to send all HHC payments directly to heat providers to the benefit of individual accounts.xvii While it is not required to file federal or state income tax returns to claim the HHC, many eligible low-income Michigan residents who don’t file returns are unaware of the program. As a result, many eligible residents fail to receive energy assistance through this program. During FY 2011, 394,934 Michigan households received the HHC with an average credit of $169, for a total of $66.8M. Because the LIHEAP State Plan of 2011 documents a percentage allocation to HHC that would equal $73.5M, an estimated $6.7M went unclaimed in FY 2011. According to Brian Rooney, Deputy Director of DHS, 10% of unused LIHEAP funds can be carried over to the next fiscal year and reallocated.xviii The table below shows the total amount of HHC claimed in Macomb, Oakland, and Wayne counties in FY 2011, as well as the number of individuals that benefitted from the program. COUNTY

FY 2011

Macomb

$4,451,939

NUMBER OF CLAIMANTS 34,475

Oakland

$4,459,789

33,522

Wayne

$19,532,255

125,095

TOTAL

$28,443,983

193,092

Significantly less funding was appropriated to the HHC in FY 2012, at $35.2M. xix Data is not yet available for the amount of HHC claimed during the current fiscal year.

Weatherization Assistance Program The Michigan Weatherization Assistance Program (WAP) provides free home energy conservation services to low-income Michigan homeowners and renters to reduce home energy use and lower utility bills.xx While LIHEAP guidelines allow up to 10% of total funding for weatherization, funding was not allocated to WAP in the LIHEAP State Plans for FY 2011 or FY 2012. Despite that fact, the House Fiscal Agency reported spending $14.6M on weatherization in FY 2011,xxi and the DHS Budget Division reported that 4,705 Michigan households received weatherization services in FY 2011, with an average payment of $1,825.xxii Brian Rooney commented that improvements are being made to the management, delivery, and efficiency of WAP before funding is restored to the program. A decision has not yet been made regarding funding for WAP in FY 2013.xxiii

10

Administration and Planning Costs States may use up to 10% of LIHEAP funds for all indirect and direct state and local LIHEAP planning and administration costs, limited by Section 2605(b)(9) of the LIHEAP statute.xxiv Michigan chose to allocate the full 10% for administration and planning costs, $22.7M in FY 2011 and $17.3M FY 2012.

$1 LIHEAP Pilot Program A nominal amount of LIHEAP funding (less than 1%) went to the $1 Pilot Program, implemented to aid households receiving food assistance. Michigan’s DHS provides $1 of LIHEAP benefit on households’ EBT cards to acknowledge high energy costs, which is leveraged to increase SNAP benefits.xxv The amount of LIHEAP funding allocated to this program was $772,140 in FY 2011 and $658,920 in FY 2012.xxvi

Low-Income Energy Efficiency Fund For many years, the other large source of state funding for energy assistance was the LowIncome Energy Efficiency Fund (LIEEF), created within the Customer Choice and Electricity Reliability Act (Public Act 141 of 2000), and administered by the Michigan Public Service Commission (MPSC). It is important to understand the LIEEF before discussing temporary changes to the fund in the current fiscal year and proposed changes for the future. PA 141 provided funding for the LIEEF for a period of six years through "securitization savings exceed[ing] the amount needed to achieve a 5% rate reduction for all customers." Through a MPSC order, the securitization savings were later rolled into base rates for Detroit Edison's electric customers and funding for the LIEEF became part of the cost of service. Later MPSC orders authorized Consumers Energy to provide revenue annually to the LIEEF from its electric and natural gas customers, and for Michigan Consolidated Gas Company to provide money annually from its customers.xxvii In FY 2011, the final year of LIEEF, its total annual revenue was approximately $88.9M derived from the following utility company collections: 

The Detroit Edison Company (electric), $39.8M



Consumers Energy Company (electric), $26.6M



Consumers Energy Company (gas), $17.4M



Michigan Consolidated Gas Company (gas), $5.1M

The Legislature then granted MPSC spending authority from the fund through its yearly budget appropriation.xxviii MPSC distributed funds through a competitive bidding process to private and governmental service providers and researchers. Grants were made in three areas: low-income

11

energy assistance, low-income energy efficiency projects, and development or improvement of energy efficiency technologies. The Commission also distributed several other allocations for special projects, and could use up to 10% of the LIEEF to directly fund contractual services related to low-income assistance, energy efficiency, and energy technology. The following table shows the breakdown of the funding for FY 2011.xxix

2011 AWARDS AND ALLOCATIONS

AMOUNT

% OF TOTAL

# AWARDED

GRANTS Low-Income Energy Assistance

$58,000,000

66.69%

8

Low-Income Energy Efficiency

$18,000,000

20.70%

6

$5,000,000

5.75%

2

$81,000,000

93.14%

16

$5,000,000

5.75%

N/A

$7,100

0.01%

N/A

$0

0%

0

$957,700

1.1%

2

$5,964,800

6.86%

2

$86,964,800

100%

18

Michigan Energy Efficiency GRANTS SUBTOTAL OTHER ALLOCATIONS Additional Michigan Community Action Agency Association (MCAAA) Allocation Additional Cadmus Group Allocation Legislative Allocations Legi Contracts OTHER ALLOCATIONS SUBTOTAL TOTAL

Low-Income Energy Assistance Grants The purpose of the Low-Income Energy Assistance (LIEA) grant program was to provide energy assistance to low-income customers confronted with energy shut-off, and to maintain or develop preventative programs to reduce the number of customers experiencing energy shut-off. The program functioned by making large grants to organizations that then worked with individuals in need of assistance. Eligible organizations were non-profit and public organizations, and grants typically lasted less than one year.xxx In FY 2011, LIEA grants were awarded to seven organizations in addition to DHS.

12

ORGANIZATION

ORIGINAL AWARD $35,000,000

ADDITIONAL AWARD $1,909,200

$36,909,200

$1,000,000

$54,600

$1,054,600

$300,000

$16,500

$316,500

MCAAA

$3,000,000

$163,500

$3,163,500

Newaygo County Community Services Society of St. Vincent de Paul

$3,000,000

$163,500

$3,163,500

$500,000

$27,300

$527,300

The Heat and Warmth Fund

$6,000,000

$327,300

$6,327,300

The Salvation Army

$6,200,000

$338,100

$6,538,100

$55,000,000

$3,000,000

$58,000,000

Department of Human Services Downriver Community

TOTAL

Conference Lighthouse Emergency Services

TOTAL

Low-Income Energy Efficiency Grants The purpose of the Low-Income Energy Efficiency (LIEE) grant program was to improve energy efficiency and reduce energy consumption of low-income Michigan residents. Energy efficiency projects could include any of the following components: weatherization, energy education, and replacement of furnaces, water heaters, and other appliances. Projects were meant to complement existing programs by allowing eligibility up to 250% of the federal poverty level. A portion of grant funds could be used for house repairs to improve energy efficiency.xxxi The program functioned by making large grants to organizations that then worked with individuals in need of assistance. Grantees of the LIEF funding in FY 2011 are listed below. ORGANIZATION

AWARD

Department of Human Services

$10,000,000

Michigan Community Action Agency

$1,000,000

Association Michigan Saves, Inc.

$5,000,000

TrueNorth Community Services

$500,000

Urban Options, Inc.

$1,000,000

WARM Training Center, Inc.

$500,000 $18,000,000

TOTAL

Michigan Energy Efficiency Grants The purpose of the Michigan Energy Efficiency (MIEE) grant program was to develop or improve the quality or application of energy efficient technologies in all customer classes.

13

Preference was given to projects that would have a significant impact on both the energy efficiency and economy of Michigan. Two organizations received MIEE grant funding in FY 2011.xxxii ORGANIZATION Energy Works Michigan Great Lakes Energy

AWARD $4,400,000 $600,000

Service TOTAL

$5,000,000

Elimination of LIEEF In 2008, the provision within the Customer Choice and Electricity Reliability Act (CCERA) that created the LIEEF, Section 10d(7), was amended by Public Act 286 and all of the references to the LIEEF were deleted.xxxiii Nevertheless, subsequent legislation, 2009 PA 172, referred to the fund and the Legislature continued to recognize the fund through its yearly appropriation to the LIEEF.xxxiv In 2009, MichCon filed an application requesting an increase in natural gas rates. As part of the final order in the case, the Commission approved an expense level in the amount of $5,069,000 for funding the LIEEF. The Association of Businesses Advocating Tariff Equity (ABATE), a coalition of large industrial customers, and the Attorney General challenged the inclusion of an expense for the LIEEF and alleged that the Commission lacked authority to approve this expense as a component of MichCon’s rates. The challenge centered on the elimination of Section 10d(7) of the CCERA, which had removed the original reference to the LIEEF.xxxv It is important to note that this action from ABATE was not unexpected. ABATE was paying approximately a quarter of the contribution that was turned over to the Commission—a significant portion of that coming from commercial and industrial customers. For several years, the group had submitted testimony to MPSC challenging the continuation of the LIEEF. ABATE’s lack of support for LIEEF centered around two main points. First, that money coming from industrial and commercial entities funded a residential—not a business—customer. And, secondly, that a surcharge from customers of specific utility companies supported customers of all energy companies, even outside of DTE and Consumers Energy’s service areas. On July 21, 2011, the Court of Appeals ruled in favor of ABATE and reversed the Commission’s decision to include a LIEEF expense as a component of MichCon’s rates. They reasoned that “administration of a LIEEF does not fall within the scope of the [M]PSC’s general statutory powers, but depends in every instance on specific statutory authorization.” The perspective of

14

the advocate community is that ABATE’s challenge of the LIEEF during FY 2012 was finally successful due to a change in political leadership, and the presence of Court of Appeals judges more favorable to the business community. As a result of the Court of Appeals decision, $56.3M collected from utility customers in 2011 for the LIEEF was put into an escrow account.xxxvi This decision came after FY 2012 grants were announced in June, just one month earlier. In August and September of 2011, all LIEEFrecipient agencies and vendors were given 30 days advance notice of termination of grant agreements and contracts, respectively. Although the MPSC attempted to appeal the decision,xxxvii Public Act 276 eliminated the LIEEF on December 28, 2011.xxxviii On April 17th, 2012, a MPSC ruling required DTE Energy, MichCon, and Consumers Energy to refund to their customers the combined $56.3M that was collected for the LIEFF and being held in escrow. Customers were to receive their refunds in the form of credits to future bills.xxxix

Creation of the Vulnerable Household Warmth Fund Legislation passed in April 2012 created a new fund to temporarily provide funding for payment or partial payment of bills for electricity, natural gas, propane, heating oil, or any other type of fuel used to heat the primary residence of a vulnerable customer during the 2011-2012 heating season. Public Act 274 created the Vulnerable Household Warmth Fund (VHWF) within the State Treasury to be administered by the MPSC. Additional legislation, Public Act 275, authorized a one-time appropriation of $23M to the VHWF and directed the MPSC to award grants to all entities except DHS, consistent with the MPSC’s June 2011 awards under the LIEEF. Public Act 275 also authorized a one-time direct appropriation of $35M to DHS for SER energy services.xl ORGANIZATION

AWARD

Barry County United Way

$127,778

Downriver Community Conference

$851,852

Lighthouse Emergency Services

$255,556

MCAAA

$2,129,630

The Salvation Army

$6,708,333

The Society of St. Vincent de Paul

$681,481

The Heat and Warmth Fund

$9,689,814

TrueNorth Community Services

$2,555,556 $23,000,000

TOTAL

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Changes for FY 2013 Two complementary, tie-barred bills were introduced in May 2012 to replace the Vulnerable Household Warmth Fund and provide a more permanent solution to the elimination of the LIEEF. Senate Bill 1134 would create the Low-Income Energy Assistance Fund within the State Treasury that would require the MPSC to approve an annual surcharge (named a “home energy assistance funding factor”) on all utility customers statewide, up to $60M in the aggregate. Senate Bill 1135 would create the Michigan Energy Assistance Act, requiring that DHS establish and administer the statewide Michigan Energy Assistance Program and use federal LIHEAP funds, money received from the fund proposed by Senate Bill 1134, or any other money appropriated for the Michigan Energy Assistance Program to provide energy assistance to eligible low-income households. Other provisions proposed in Senate Bill 1135 include:xli 

Each entity that contracted with DHS under the proposed Act would be required to provide certain wraparound services to clients.



DHS would develop a simplified, single application for energy assistance and make it available to all entities that contracted with DHS to provide services.



DHS could not use the funds for weatherization or wraparound services.



Funds for the Lower Peninsula would be targeted to a high “crisis” season.



DHS could contract with private entities or local units of government to provide energy assistance to eligible low-income households.

S.B. 1134

S.B. 1135

Creates the LowIncome Energy Assistance Fund

Creates the Michigan Energy Assistance Act

Requires MPSC to authorize an annual surcharge on all utility customers, for a total of $60M

Requires that DHS establish and administer the Michigan Energy Assistance Program

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LOCAL SHARE OF FEDERAL AND STATE FUNDING

Department of Human Services

COUNTY

FY 2011

Macomb

$6,677,986

FY 2012 (first 7 months) $3,146,834

Oakland

$8,347,506

$3,674,052

Wayne

$40,934,091

$16,299,110

TOTAL

$55,959,583

$23,119,996

County DHS offices are responsible for handling applications for the SER program. The following amounts were distributed for energy assistance to assist low-income individuals in

Oakland, Macomb, and Wayne counties in FY 2011 and FY 2012 through the month of April.

Other Agencies In southeast Michigan there are many state-wide and community-based organizations that distribute energy assistance funds at the local level. However, the majority of funds flow through the six organizations that historically received grants through the LIEFF. The table below shows FY 2011 LIEEF recipients and their estimated distribution in the Tri-County area.

ORGANIZATION

TOTAL LIEEF AWARD $1,054,600

ESTIMATED LIEEF DISTRIBUTION IN TRI-COUNTY AREA $1,054,600

$316,500

$316,500

MCAAA

$3,163,500

$342,110

Newaygo County Community Services

$3,163,500

$0

$527,300

$437,725

The Heat and Warmth Fund

$6,327,300

$3,597,245

The Salvation Army

$6,538,100

$1,630,648

$20,036,200

$7,378,828

Downriver Community Conference Lighthouse Emergency Services

Society of St. Vincent de Paul

TOTAL

The Heat and Warmth Fund As documented above, The Heat and Warmth Fund (THAW) distributes the most energy assistance dollars in southeast Michigan of any non-governmental agency. THAW is an independent non-profit 501(c)(3) agency formed in December 1985 by a coalition of businesses, social service agencies and concerned private citizens, in partnership with area utility companies. THAW utilizes 74 screening sites located at non-profit agencies in 51 counties

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throughout upper and lower Michigan to provide energy assistance to low-income families and individuals during times of temporary financial crisis. Of those sites, 33 are located in Wayne, Oakland, or Macomb County. At the sites, trained counselors interview the applicant, verify eligibility, and complete an online THAW application. If determined eligible, THAW pays the utility or fuel provider directly.xlii The following table shows the amount of THAW funding distributed in the Tri-County area during their FY 2011, beginning July 1st.

COUNTY

# OF APPLICATIONS

THAW FUNDED

UTILITY MATCH

Macomb

701

$290,471

$78,886

TOTAL APPLICANT BENEFITS $369,356

Oakland

1,260

$557,738

$139,106

$696,844

Wayne

13,024

$7,389,774

$2,364,854

$9,754,628

TOTAL

14,985

$8,237,982

$2,582,846

$10,820,828

Although THAW received a significant amount of funding from LIEEF, their energy assistance was also funded by foundation and corporate support, additional government grants, special events, and individual support.xliii

Other LIEEF/VHWF Grantees  The Eastern Michigan Division of the Salvation Army distributed $2.4M in energy assistance in the Tri-County area in FY 2011 and $2.1M in the first 8.5 months of FY 2012.  The Society of St. Vincent de Paul distributed $579,172 in the Tri-County area in FY 2011.  Downriver Community Conference (DCC) distributed $1.1M of energy assistance received from LIEEF in FY 2011 to 17 communities in Wayne County, excluding Detroit. In FY 2012, DCC’s funding from the VHWF, $851,852, was distributed to residents of Monroe County and 17 communities in western Wayne County.  Lighthouse Emergency Services distributed funds received from the state in Oakland County, $316,500 from LIEEF in FY 2011 and $255,556 from VHWF in FY 2012.  Michigan Community Action Agency Association (MCAAA) is the state association of 29 Community Action Agencies.xliv Separate CAA’s exist for Wayne, Oakland, and Macomb counties to serve the residents of metro Detroit. In addition to their state funding, the TriCounty agencies received $134,889 from the state Community Services Block Grant Program, $158,642 from the charitable Walk for Warmth, and $73,390 through the DHS Deliverable Fuel Program.xlv These funds made it possible for MCAAA to distribute energy assistance totaling $719,231 in Wayne, Oakland, and Macomb counties during FY 2011.

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OTHER SOURCES OF FUNDING

Utility Company Match Programs and Partnerships Utility companies provide a significant amount of funding for energy assistance through match credits to low-income customer accounts. Detroit-based organizations report different percentage matches depending on program funding source and utility company. THAW partner agencies use the online THAW SafetyNet System to facilitate energy assistance. The system allows the organization to credit assistance on a customer’s account and see the match amount applied. The match portion from DTE is automated, but Semco Energy and Consumers Energy apply the match manually. DTE Energy, which provides electricity services for the entire TriCounty area and gas services only to Wayne County, credited approximately $10M of match funds in FY 2011 to low-income customers.xlvi Consumers Energy, which services Oakland, Western Wayne, and Macomb counties with natural gas, reported contributing $81,014 in match funds to the Tri-County area through their PeopleCare program in FY 2011, facilitated by the Salvation Army.xlvii Cents for Energy is an energy assistance program created by DTE Energy and THAW that allows current DTE customers to round up their energy bill payment to the nearest dollar or add up to an additional $10 donation.xlviii The Cents for Energy program raised $19,233 in FY 20112012. However, it was not distributed due to stringent program criteria.xlix

Additional Funding Sources During the research for this report, all organizations listed in the 2011-2012 Michigan Energy Assistance Directoryl for Macomb, Oakland, and Wayne Counties were contacted regarding their energy assistance distribution. While thirty different organizations were listed, none distributed energy assistance beyond funding from THAW. Furthermore, they all reported that THAW funding for the current fiscal year had already been depleted. The United Way for Southeastern Michigan’s 2-1-1 Online Database is another resource for energy assistance. The only additional source of assistance listed was the previously mentioned Community & Home Supports.li Finally, the Salvation Army collects information on other sources individuals used for energy needs. The individuals that applied for energy assistance from Salvation Army in the Tri-County area during FY 2011 reported receiving $7,075 from churches and $11,412 from friends and family. In the first 8.5 months of FY 2012, individuals reported receiving $1,943 from churches and $13,986 from friends and family.lii 19

NAVIGATING ENERGY ASSISTANCE RESOURCES

Currently there is not a single point of entry for energy assistance. This was mentioned as a criticism of the current energy assistance infrastructure because of the time-consuming way individuals must visit several different agencies and go through several different intake processes. Furthermore, due to the shut-off notice eligibility requirement, an individual seeking assistance will already be several months in arrears on their account, and it is highly unlikely an adequate amount of assistance would come from one source. There are several common points of entry into the energy assistance system. If DTE Energy is contacted about payment assistance, the customer is directed to THAW, DHS, the United Way, and the HHC. If someone calls 2-1-1 for assistance, they are also directed to THAW and DHS, as well as agencies funded through the Emergency Solutions Grant. It is also possible that someone would enter the energy assistance system by visiting a trusted, local social service agency that is a designated THAW partner. However, THAW eligibility requires a SER decision letter (except for seniors) and individuals are re-directed to DHS. An individual may be eligible for THAW assistance regardless whether DHS will assist financially. The Society of St. Vincent de Paul and the Salvation Army do not require a decision letter from DHS, which demonstrates another complexity of the energy assistance system—organizations offering energy assistance do not have uniform eligibility requirements. Many sources of assistance also have a cap on assistance amounts. SER has a cap of $850$1,050, annually for heat and electricity costs. THAW has a $1,000 cap on a single account (electric/heat) and a $2,000 cap on combined accounts. It is common for individuals to visit multiple organizations seeking assistance. While the cap for the HHC is unknown, the average credit was only $169 in FY 2011. Individuals can access HHC applications and instructions from public libraries, Secretary of State Branch Offices, DHS Branch Offices, Northern Michigan Post Offices, and State of Michigan Treasury Offices or website. Residents of southeastern Michigan can receive help filing for the HHC from the Accounting Aid Society between January 16th and September 30th.

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CONCLUSION

There are many public, private, and nonprofit stakeholders that make up the infrastructure for energy assistance in Michigan. Each plays an important role in the administration, funding, and distribution of energy assistance to low-income individuals in the Tri-County area. The greatest portion of funding for energy assistance comes from federal LIHEAP funding which provided a total of $227.1M in FY 2011. Of that amount, it is estimated that $6.7M of funding designated for HHC went unclaimed in FY2011. This suggests that there is room for outreach around funds available through this program. The second largest source of funding comes from utility company matches, with DTE Energy reporting approximately $10M in match funds provided on behalf of Tri-County residents in FY 2011. The state-level fund, formerly the LIEEF, and THAW’s fundraising efforts also provided notable amounts of funding. Relatively small amounts of funding for energy assistance came from sources such as EFSP, the Walk for Warmth, DHS Deliverable Fuel, Community Services Block Grant, friends, family members, and churches. In total, approximately $107M of energy assistance is facilitated to benefit low-income Tri-County residents.

Utility Match Funds 10%

Distribution of LIEEF, Utility Match, and Other Funding Sources By Agency (Excluding DHS)

Significant Funding Sources for Energy Assistance THAW 4%

LIEEFGrants 7%

DCC 7%

MCAAA 4%

Lighthouse 2%

St. Vincent de Paul 4%

LIHEAPHHC 26%

Salvation Army 15%

LIEEF-SER 10% LIHEAPSER 43%

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THAW 68%

i

ii

iii iv

v vi vii

viii

ix

x xi

xii xiii

xiv

xv

xvi

xvii

xviii xix

xx

xxi

xxii

xxiii xxiv

xxv

xxvi

xxvii

xxviii

Department of Health and Human Services. N.p., 18 Jan 2011. Web. 16 May 2012. . Koornstra, Kevin. “Human Services.” House Fiscal Agency. Michigan House of Representatives. Dec 2011. Web. 15 June 2012. . The Campaign for Home Energy Assistance. N.p., 2011. Web. 20 June 2012. . Department of Health and Human Services. N.p., 18 Jan 2011. Web. 16 May 2012. . Kurth, Susan. Telephone interview. 18 July 2012. Lapides, Sharon. “Re: Confirming grant info.” Message to Sarah Shubitowski. 16 June 2012. Email. Department of Health and Human Services. N.p., 18 Jan 2011. Web. 16 May 2012. . MI Energy Assistance Programs. State of Michigan, 2011. Web. 17 May 2012. . Rooney, Brian. “LIHEAP State Plan 2012.” Department of Human Services. State of Michigan, 2011. Web. 27 June 2012. < http://www.michigan.gov/documents/dhs/DHS-LIHEAP-2012-State-Plan_370027_7.pdf>. Rooney, Brian. Telephone interview. 29 June 2012. Rooney, Brian. “LIHEAP State Plan 2012.” Department of Human Services. State of Michigan, 2011. Web. 27 June 2012. < http://www.michigan.gov/documents/dhs/DHS-LIHEAP-2012-State-Plan_370027_7.pdf>. Rooney, Brian. Telephone interview. 29 June 2012. LIHEAP Clearinghouse. U.S. Department of Health and Human Services, 23 March 2012. Web. 16 May 2012. . MI Energy Assistance Programs. State of Michigan, 2011. Web. 17 May 2012. . MI Energy Assistance Programs. State of Michigan, 2011. Web. 18 May 2012. . House Fiscal Agency. “Human Services” Michigan House of Representatives, Dec 2011. Web. 15 Aug 2012. MI Energy Assistance Programs. State of Michigan, 2011. Web. 20 May 2012. . Rooney, Brian. Telephone interview. 29 June 2012. House Fiscal Agency. “Human Services” Michigan House of Representatives, Dec 2011. Web. 15 June 2012. MI Energy Assistance Programs. State of Michigan, 2011. Web. 19 May 2012. http://www.michigan.gov/heatingassistance/0,4593,7-215-33212-106407--,00.html House Fiscal Agency. “Human Services.” Michigan House of Representatives, Dec 2011. Web. 15 June 2012. DHS Budget Division. “Program Descriptions FY 2013.” Department of Human Services. State of Michigan, 15 March 2012. Web. 25 May, 2012. . Rooney, Brian. Telephone interview. 29 June 2012. Department of Health and Human Services. N.p., 29 Nov 2010. Web. July 2012. http://www.acf.hhs.gov/programs/ocs/liheap/guidance/action_transmittals/at11-01att1.html. Frequently Asked Question: “Heat and Eat” Initiative. California Food Policy Associates, N.d. Web 3 Aug 2012. http://cfpa.net/CalFresh/Legislation/AB6-Heat%26EatFAQ-2010.pdf. “Report of the Low-Income Energy Efficiency Fund Fiscal Year 2011.” Public Service Commission Department of Licensing and Regulatory Affairs. Michigan Public Service Commission, 28 October 2011. Web. 8 June 2012. . Stutzky, Susan, and Paul Holland. “Legislative Analysis – LIHEAP Program.” Michigan Legislature Website. House Fiscal Agency, 18 December 2011. Web. 1 June 2012. . “Report of the Low-Income Energy Efficiency Fund Fiscal Year 2010 .” Public Service Commission Department of Licensing and Regulatory Affairs. Michigan Public Service Commission, 29 October 2010. Web. 8 June 2012. . “Report of the Low-Income Energy Efficiency Fund Fiscal Year 2011.” Public Service Commission Department of Licensing and Regulatory Affairs. Michigan Public Service Commission, 28 October 2011. Web. 8 June 2012. . xxx Anders, Barbara. “LIHEAP State Plan 2011.” Department of Human Services. State of Michigan, 2011. Web. 11 July 2012. < http://www.michigan.gov/documents/dhs/DHS-LIHEAP-2011-State-Plan_347993_7.pdf> xxxi Ibid xxxii “Report of the Low-Income Energy Efficiency Fund Fiscal Year 2011 .” Public Service Commission Department of Licensing and Regulatory Affairs. Michigan Public Service Commission, 28 October 2011. Web. 8 June 2012. . xxxiii Stutzky, Susan, and Paul Holland. “Legislative Analysis – LIHEAP Program.” Michigan Legislature Website. House Fiscal Agency, 18 December 2011. Web. 1 June 2012. . xxxiv “Report of the Low-Income Energy Efficiency Fund Fiscal Year 2011.” Public Service Commission Department of Licensing and Regulatory Affairs. Michigan Public Service Commission, 28 October 2011. Web. 8 June 2012. . xxxv https://ex.democracydata.com/B9F7401FD69FDBC94986E822CFE4226C2EBF8B59/4c33020b-15f9-489a8ed8-94889f99a307.pdf xxxvi Stutzky, Susan, and Paul Holland. “Legislative Analysis – LIHEAP Program.” Michigan Legislature Website. House Fiscal Agency, 18 December 2011. Web. 1 June 2012. . xxxvii “Report of the Low-Income Energy Efficiency Fund Fiscal Year 2011.” Public Service Commission Department ofLicensing and Regulatory Affairs. Michigan Public Service Commission, 28 October 2011. Web. 8 June 2012. . xxxviii Great Michigan. N.p., 2012. Web. 26 June 2012. . xxxix Sands, David. "DTE Energy, Consumers Energy Must Refund Heating Assistance Surcharges.” Huffington Post. TheHuffingtonPost.com, 2012. Web. 16 May 2012. xl Stutzky, Susan, and Paul Holland. “Legislative Analysis – LIHEAP Program.” Michigan Legislature Website. House Fiscal Agency, 18 December 2011. Web. 1 June 2012. . xli Cassidy, Julie. “S.B. 1134 & 1135: Committee Summary.” Michigan Legislative Website. Senate Fiscal Agency, 28 May 2012. Web. 26 June 2012. . xlii The Heat and Warmth Fund. N.p., 2012. Web. 17 May 2012. . xliii Lesnew, Ganelle. "Re: McGregor Fund Energy Assistance Mapping Project." Message to Sarah Shubitowski. 25 June 2012. E-mail. xliv Michigan Community Action Agency Association. N.p., n.d. Web. 29 June 2012. . xlv Biddle, Jeremy, Joseph Cooke and Joan Leshley. “Re: MCAAA Energy Assistance 2011-2012.” Messages to Sarah Shubitowski. June 2012. Email. xlvi Bari, Shafiqul. “Information promised by Fred Shell.” Message to Sarah Shubitowski. 8 Aug 2012. Email. xlvii Skeans, Whitney. "Question RE: PeopleCare.” Message to Sarah Shubitowski. 15 Aug 2012. Email. xlviii “Cents for Energy.” DTE Energy Company, 2012. Web 12 June 2011. http://www.dteenergy.com/residentialCustomers/productsPrograms/centsForEnergy.html xlix Brunett, Jill. “Re: Cents for Energy Program.” Message to Sarah Shubitowski. 16 July 2012. Email. l ”Michigan Energy Assistance Directory 2011-2012.” The Coalition to Keep Michigan Warm. N.p., 28 September 2011. Web. 24 June 2012. li “2-1-1 Online Database.” United Way for Southeastern Michigan. United Way for Southeastern Michigan, 2012. Web. 28 June 2012. lii Wilkins, Mary. “Re: Mapping Energy Assistance in SE Michigan.” Message to Sarah Shubitowski. 21 June 2012. Email. xxix

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