On behalf of the Toronto Environmental Alliance (TEA), IndEco developed a report which provides recommendations for an overall model for low income energy programs in Ontario. This report was commissioned by the Toronto Environmental Alliance (TEA) in response to a request by the Minister of Energy.
Low income energy burden
In 2000, 14.4% of Ontario residents were living at or below the poverty line. Low income residential utility customers face a much higher ‘energy burden’ (i.e. percent of household income devoted to energy costs) than median and higher income households. In 2002, the lowest earning 20% of Ontario households spent, on average, 11.6% of their household income on water, fuel and electricity whereas the highest earning 20% of Ontario households spent, on average, only 2.0%. Electricity rates rose in Ontario on April 1, 2004 and will likely to continue to rise over time, exacerbating the energy burden problem for low income households.
Low income energy programs
A literature review of energy programs currently in place in various jurisdictions within the United States and Canada revealed that there are four main types of low income energy programs:
- Emergency assistance programs, which provide financial assistance due to emergencies such as an impending energy service cut-off;
- Bill assistance programs, which strive to make it easier for low income consumers to pay their energy bills on an ongoing basis;
- Energy efficiency programs, which reduce energy burden by reducing the amount of energy being used by low income households; and
- Consumer protection and education initiatives, which indirectly reduce energy burden and/or protect low income consumers from the risks associated with high energy burdens.
Based on the literature review, and taking into account Ontario’s existing electricity framework, the report included recommendations on:
- Principles for low income strategy design;
- Program development approach;
- Consumer protection policies;
- An energy rebate program; and
- A comprehensive set of energy efficiency programs.
Recommendations on principles for low income strategy design
TEA recommends that the government of Ontario develop a low income energy assistance strategy based on the following principles:
- Energy for the safe preparation and storage of food, home heating, and cooling (for vulnerable groups such as seniors and infants) is a basic necessity of life.
- The strategy should meet the immediate needs of low income households, but should focus on the development of preventative measures over the long term.
- The strategy should be developed in consultation with low income consumer and advocacy groups.
- There needs to be a clear, simple, and easily accessible screening process for identifying eligible program participants.
- All low income households should receive direct energy assistance, including those that pay utilities in their rent.
- Any direct assistance monies (emergency assistance or bill assistance) that low income customers receive should not be deducted from monies received from other sources.
- No capital outlay should be required for low income participation in energy efficiency upgrade programs. Programs should be paid either as a direct subsidy to low income consumers or through energy savings on their utility bills. In the latter case, the upfront cost is covered by the energy efficiency program and then recovered by the utility through savings on the participant’ utility bill. This ensures that no financial costs are borne by the participant.
- Energy efficiency and conservation programs should be comprehensive, addressing appliances, building envelopes, heating systems (efficiency & fuel switching to more efficient equipment), and cooling systems Assistance for cooling systems would apply to the most vulnerable low income groups such as the elderly, the infirm, the disabled or families with very young children.
- Electric and gas utilities should be encouraged to cooperate in determining the design of DSM programs for low income households. The delivery channels for these programs should include local community groups that supply services to low income households and non-profit groups with experience in delivering energy efficiency programs, such as the members of the Green Communities Association.
Recommendations for program development approach
TEA supports full cost energy pricing. TEA believes that special assistance is required to help low income consumers deal with higher prices, including direct financial assistance to keep their energy burden at a manageable level and energy efficiency programs which assist them with meeting their needs while using less energy and thus reducing their bills and the associated environmental impacts.
- TEA recommends that the program development approach for the low income energy strategy should:
- Focus first on initiatives with broad coverage, and easy implementation with quick start-up and delivery, so that as many low income people as possible can be helped to some degree in the first year or two of program implementation.
- Based on experience, modify (e.g., roll out in year three) the initiatives so that the highest level of assistance is provided to those with the greatest need.
Recommendations for consumer protection policies
In line with need to recognize electricity and heat as a basic necessity and to ensure universal, non-discriminatory access to these services, TEA recommends that the government of Ontario develop the following policies:
- A no-cut off policy for heating and electricity service for low income consumers during the heating season as well as for seniors and other vulnerable households during the cooling season.
- There should be a mandatory exemption for low income households from consumer security deposit requirements which can adversely impact, or even exclude, these households from accessing electric service Currently, local distribution companies have the discretionary authority to waive security deposit requirements for a customer or future customer. Under clause z.4 in section 88(1) of the Ontario Energy Board Act, 1998, the government has regulation-making authority with respect to the amount charged by distributors for consumer security deposits and can require distributors to refund all or part of security deposits charged after November 25, 2002.
Recommendations for energy rebate program
TEA recommends that the government of Ontario immediately develop an energy rebate program for low income consumers in Ontario with the following features:
- The program should be implemented by Fall 2004, so that households can receive the rebates in advance of the winter season when heating bills are the highest.
- Statistics Canada’s pre-tax, post-transfer Low Income Cut Off (LICO) values should be used to define low income households.
- All low income households should be eligible for the rebate, regardless of whether they receive social assistance, live in subsidized housing and/or pay utility costs in their rent.
- The rebate should be annual, linked to household size and of an amount significant enough to reduce the energy burden for households at or below pre-tax, post-transfer LICO. The exact structure of the rebate should be developed in the consultation process described below.
- Eligible households should be identified based on tax returns filed in the previous year. Rebates should be annual and automatically sent to eligible households by the Ontario Ministry of Finance. A rebate application process should also be made available to ensure that those eligible households that may be missed as a result of this process, such as those that did not file a tax return the previous year, or those who may have moved, can still receive a rebate.
- The program should include a comprehensive awareness campaign to inform potential low income participants of the rebate program and how to apply, if they do not automatically receive the rebate.
- In order to ensure that all eligible households are aware of the rebate and that there is no claw-back on other social assistance programs associated with the rebate, TEA recommends that the government develop an aggressive public education and outreach campaign which includes, but is not limited to, the following:
- Outreach and education about the program through local distribution companies Any costs to utilities for bill inserts should be recovered in utility rates. , e.g. bill inserts.
- Outreach and education about the program through municipal social services agencies which administer Ontario Works and Ontario Disability Support Program, with a particular focus on ensuring that eligible households are aware that there are no claw-backs on other social assistance programs associated with the energy rebate.
- Outreach and education about the program through charitable organizations, community and advocacy groups (e.g. Green Communities Association, Share the Warmth, Toronto Environmental Alliance, Advocacy Centre for Tenants Ontario, Income Security Advocacy Centre).
- Outreach and education targeted at special needs of New Canadians (e.g. mulit-lingual communication materials).
- Media advertisements (television, print & radio) and information on ministry websites, including, but not limited to, the Ministry of Energy, the Ministry of Community and Social Services and the Ministry of Finance. This outreach and education should focus not only on the energy rebate program itself, but also on the broader issue of low income energy burden, in order to raise awareness and support for low income energy programs among all Ontarians.
Over the next two years based on experience with implementation, the energy rebate program should be modified to target the most vulnerable households more effectively and to provide assistance to them commensurate with the level of need.
Recommendations for comprehensive set of energy efficiency programs
Programs targeted specifically to low income household are needed to reduce their energy expenditures on a sustained basis. A comprehensive set of energy efficiency and conservation programs needs to be developed immediately based on the following:
- Electric and natural gas utilities should be accountable for energy efficiency and conservation and encouraged to do so aggressively and cost-effectively As with existing energy efficiency programs of the natural gas utilities in Ontario, the cost of programs specifically targeted at low income customers, including related public education and outreach, should be recovered in utility rates. Similarly, the cost of low income programs of the electric utilities should also be recovered in rates. . Utilities should be encouraged to use local community groups that supply services to low income households and non-profit groups with experience in delivering energy efficiency programs (e.g. members of the Green Communities Association) as delivery channels for their energy efficiency and conservation programs.
- The programs should address appliances, building envelopes, heating systems (efficiency & fuel switching to more efficient equipment), and cooling systems.
- The government should initiate a comprehensive consultation process beginning in April 2004 to identify an initial set of low income energy efficiency programs for implementation in the fall of 2004 in time for the 2004-2005 heating season.
- The consultation would identify an additional set of low income energy efficiency programs for implementation in time for the 2005-2006 heating season.
- Stakeholders in the consultation should include, but not be limited to, natural gas and electric utilities, customer and advocacy organizations.
- The government should provide financial assistance to groups who require funds to participate effectively in the consultation.