Heating program assists the poor

A bill would create a new state agency with the power to set surcharges on utility bills to pay for the plan.

Wednesday, June 15, 2005, BY TIMOTHY C. BARMANN, Journal Staff Writer

A major heating-assistance bill being considered by the Rhode Island Senate would help low-income families pay their heating bills and provide emergency funds to help get service restored.

The bill, introduced by Sen. William A. Walaska, D-Warwick, would create a new state agency with the power to establish surcharges on utility bills to pay for the program.

The Committee on Financial Services, Technology and Regulatory Issues, chaired by Walaska, held a hearing on the bill yesterday.

The legislation would create the Energy Affordability Fund Corporation, a government agency charged with establishing and overseeing the assistance program.

The plan would be designed to limit the amount that eligible low-income households have to pay for heat to 4 percent of household income.

The bill calls the heating-assistance plan a pilot program that would run for three years. At that point, legislators and the governor would evaluate the plan's effectiveness.

The legislation places limits on the utility-bill surcharges that would pay for the program.

Gas customers would pay up to $2 each month, or $24 a year.

Oil dealers would pay a tax of up to 1.25 percent of the wholesale price of heating oil. At a wholesale price of $1.50 a gallon, that would add about 1.9 cents per gallon to the retail price of fuel oil. A customer that uses 1,000 gallons of oil annually could pay up to $18.75 more a year.

The bill for electricity customers would not be affected. Some funds now being collected for energy conservation and renewable energy projects would be diverted to the energy-assistance program.

The surcharges would begin Jan. 1.

All told, the fees would total about $7 million to $8 million each year, according to Kenneth F. Payne, senior policy adviser for the Senate, who helped draft the legislation.

There would be two criteria to be eligible: a household income less than 125 percent of the federal poverty level; and participation in the federal Low Income Home Energy Assistance Program, or LIHEAP.

The number of Rhode Island households that would meet those requirements is expected to be 6,000 to 7,000, according to the Rev. John E. Holt, executive minister of the Rhode Island State Council of Churches, and chairman of the committee. At the request of Governor Carcieri, Holt chaired an ad hoc committee that made recommendations for a statewide energy-assistance plan.

Another main component of the assistance plan is a one-time forgiveness of part of a customer's past-due balance. A customer would have to pay $10 a month for three years, and the plan would contribute up to 50 percent of what's owed. If there is more owed, the utility company could declare the amount as "bad debt" which would then be passed on to all rate payers.

Finally, the plan calls for the creation of an emergency fund to help restore heat to people who have lost service for not paying their utility bills.

If the heating-assistance legislation passes, a plan won't be put in place until the winter of 2006-2007. However, emergency funds would be available this fall. (The bill does not explain where this funding will come from since the surcharges won't begin until next year.)

Community activists, legislators and regulators have tried for several years to create a heating-assistance program. Their proposals haven't been successful, mainly because the proponents couldn't reach a consensus on the scope and cost of a plan, as well as who would pay for it.

But this year the bill has garnered support from powerful members of the Senate, where previous legislation has died. Among the bill's cosponsors is Senate President Joseph A. Montalbano, D-North Providence.

Pushing the issue to the forefront has been record-high home heating-oil prices, and near-record highs for natural gas. In addition, the number of households that were disconnected from utility service for nonpayment last year was 21,494 -- the highest since 1997.

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