The Affordability of Overall Shelter Costs, It Creates Significant Business Risks for the State’S Utilities As Well;
Total Page:16
File Type:pdf, Size:1020Kb
HOME ENERGY AFFORDABILITY GAP: 2011 Connecticut Legislative Districts Prepared for: Operation Fuel Bloomfield, Connecticut Pat Wrice, Executive Director Prepared by: Roger D. Colton Fisher, Sheehan & Colton Public Finance and General Economics Belmont, Massachusetts December 2011 TABLE OF CONTENTS Table of Contents………………………………………………………….. i Table of Tables…………………………………………………….……… iii The Home Energy Affordability Gap in Connecticut……………………... 1 Home Energy Affordability Gap Reaches into Moderate Income……....... 3 Home Energy Burdens…………………………………………………….. 5 Federal LIHEAP Coverage……………………………………………....... 6 Basic Family Needs Budgets……………………………………………… 7 What Contributes to the Inability to Meet Basic Needs Budget………… 10 Overall Median Income………………………………………………… 10 Mean Income by Poverty Level………………………………………… 10 The Particular Needs of the Working Poor…………………………….. 11 Impact of Energy Prices on Total Shelter Costs…………………………... 13 The Consequences of Home Energy Unaffordability in 14 Connecticut………………………………………………………………... The “Social Problems” of Home Energy Unaffordability………………. 15 Public Health Implications……………………………………………. 15 Nutrition Implications…………………………………………………. 17 Public Safety Implications…………………………………………….. 19 The Competitiveness of Business and Industry……………………….. 20 Connecticut Home Energy Affordability Gap: 2011 Page i Summary………………………………………………………………. 22 The “Business Problems” of Home Energy Unaffordability……………. 22 Home Energy Burdens and Utility Bill Payment Problems…………... 23 Utility Bill Payment Problems………………………………………... 24 The Early Data………………………………………………………. 24 The More Recent Data: SIPP and RECS……………………………. 26 The Indiana Billing and Collection Reports………………………… 29 Summary………………………………………………………………. 30 Increasing Funding for Bill Payment Assistance Programs………………. 31 Funding for LIHEAP…………………………………………………… 31 State Public Benefits Programs………………………………………… 31 Fuel Fund Funding……………………………………………………… 33 The Earned Income Tax Credit (EITC) as “Energy Assistance”……... 34 The Importance of the EITC to Connecticut Utilities……………….. 34 The Households who Claim the EITC……………………………….. 37 Unclaimed EITC Benefits in Connecticut…………………………... 37 EITC Recommendations…………………………………………….. 38 Connecticut Home Energy Affordability Gap: 2011 Page ii TABLE OF TABLES TABLE Total Home Energy Affordability Gap by Congressional 1 3 District…………………………………………………………… Increase in Home Energy Affordability Gap by Federal Poverty 2 4 Level……………………………………………………………... 3 Poverty Households in Connecticut (2000 Census)……….…….. 5 State Aggregate Home Energy Burdens by Ratio of Income to 4 6 Federal Poverty Level and Year…………………………………. LIHEAP and Connecticut’s Home Energy Affordability 5 7 Gap………………………………………………………………. Basic Family Needs Budget in Dollars and Percentage of Federal 6 9 Poverty Level by Geographic Area……………….……………... 7 Household Median Income by Poverty Level (2005 – 2010)…… 10 Mean Family Income by Ratio of Income to Federal Poverty 8 11 Level (2006 – 2010)……………………………………………... Average Wage and Salary per Job by County and by Metro/Non- 9 12 Metro Area (2006 - 2009)… 10 Summary of Job Loss in Connecticut (2006 – 2009) 13 Shelter Affordability by Selected Metropolitan Areas (2006 & 11 14 2011)……………………………………………………………... Heat Interruption: Inability to Use Main Source of Heat in the 12 27 Past 12 Months by Poverty Level (2005)……………………… Received Notice of Threat to Discontinue Electricity or Home 13 Heating Fuel Due to not Having Enough Money for the Energy 28 Bill During the Past Year: By Poverty Level (2005)……………. Connecticut Home Energy Affordability Gap: 2011 Page iii 14 Energy Affordability Problems by Income Group……………… 29 Payment-Troubled Status of Residential and Low-Income 15 30 Residential Customers (Indiana) (2005 – 2007)………………… 16 EITC Credits Claimed in Connecticut by Year (2006 – 2008)….. 36 EITC Tax Returns, Refund Anticipation Loans, Paid Tax 17 36 Preparers, Use of Free Tax Clinics (2006 – 2008))……………… 18 EITC Tax Returns by Adjusted Gross Income (2005 – 2008)… 37 Appendix A Home Energy Affordability Gap Fact Sheets: State Legislative (House) Appendix B Home Energy Affordability Gap Fact Sheets: State Legislative (Senate) Home Energy Affordability Gap Fact Sheets: Federal Legislative Appendix C (Congress) Connecticut Home Energy Affordability Gap: 2011 Page iv At the same time the capacity of low-income Connecticut households to pay their home energy bills declined in 2011 relative to 2010, the federal energy assistance program designed to help pay those bills fell far short in its ability to stem the tide of home energy unaffordability. The discussion below reviews the Home Energy Affordability Gap in Connecticut in 2011. The data and analysis leads to the following conclusions: The Home Energy Affordability Gap in Connecticut, which represents the dollar amount by which actual home energy bills exceed affordable home energy bills, is substantial; is statewide, affecting both urban and rural areas of the state; and is increasingly affecting households that have traditionally been considered moderate income. The federal fuel assistance program, known as the Low-Income Home Energy Assistance Program (LIHEAP), covers a fraction of the home energy costs for a fraction of the income eligible population. Low-income households do not have the discretionary income to absorb energy bills that are not offset by public or private assistance programs; At the same time the increasing unaffordability of home energy places other non-energy household necessities at risk, including the affordability of overall shelter costs, it creates significant business risks for the state’s utilities as well; Specific action steps are available to the State of Connecticut that could help fill the Home Energy Affordability Gap. Each of these conclusions is considered in more detail below. THE HOME ENERGY AFFORDABILITY GAP IN CONNECTICUT The State of Connecticut has a large Home Energy Affordability Gap facing its low-income households, with available resources grossly insufficient to address the problem. As a result of this mismatch between energy bills and the resources needed to pay them, many low-income households incur unpaid bills and experience the termination of service associated with those arrears. In addition, the paid-but-unaffordable bill is a real phenomenon in Connecticut. Even when low-income households pay their bills in a full and timely manner, they often suffer significant adverse hunger, education, employment, health and housing consequences in order to make such payments. Energy prices have placed a substantial burden on the public and private energy assistance agencies in Connecticut. Current home heating, cooling and electric bills in Connecticut have driven the average per-household Home Energy Affordability Gap for households living with incomes at or below 185% of the Federal Poverty Level (FPL) to crushing levels. The average annual shortfall between actual and affordable home energy bills for households at or below 185% of FPL now reaches nearly $2,200 per household. The aggregate Home Energy Affordability Gap in Connecticut now reaches more than $505 million statewide. Connecticut Home Energy Affordability Gap: 2011 Page 1 This $505 million is not the total low-income home energy bill in Connecticut. Rather, the $505 million is the Affordability Gap, the dollar amount by which actual home energy bills exceed affordable home energy bills. The Affordability Gap differs by geographic region within the state. The aggregate Home Energy Affordability Gap will differ by factors that include the heating degree days (HDDs) and cooling degree days (CDDs); the number of low-income households and the poverty level at which those households live; the type and size of housing unit; the mix of heating fuels (e.g., natural gas, electricity, fuel oil); and other similar factors. The appendices attached to this report present Connecticut’s 2011 Home Energy Affordability Gap from three perspectives: Appendix A presents the Home Energy Affordability Gap for each state legislative district (House) in Connecticut; Appendix B presents the Home Energy Affordability Gap for each state legislative district (Senate) in Connecticut; and Appendix C presents the Home Energy Affordability Gap for each Congressional district in Connecticut. In contrast to these detailed statistics, the narrative discussion below highlights different aspects of the Home Energy Affordability Gap. The detailed statistics for each legislative district, however, can be obtained from the relevant appendices. While the Home Energy Affordability Gap varies somewhat based on geography within the state of Connecticut, there can be no question but that the Affordability Gap is a statewide phenomenon. This fact can be seen by comparing the aggregate Affordability Gap in each Congressional District in Connecticut. The 2011 statewide Affordability Gap of $505 million is split nearly evenly over each of Connecticut’s Congressional districts. While the distribution of the Affordability Gap is not identical over Connecticut’s Congressional districts, it ranges from a low of 18% of the statewide total in the Fourth District to a high of 21% in the First and Third Districts. Congressional District #4, with the smallest Affordability Gap in Connecticut, nonetheless faces a Gap of nearly $90 million. Connecticut Home Energy Affordability Gap: 2011 Page 2 Total Home Energy Affordability Gap by Congressional District (Connecticut 2011) Congressional Percentage of Congressional