1. Track C – 2:00 – 3:15 PM
Thursday, June 19, 2014
2014 NEUAC
Kansas City, MO
Presenter: Akm Rahman
Massachusetts Department of Housing &
Community Development
www.mass.gov/dhcd
akm.rahman@state.ma.us
Unique Challenges
of Deliverable Fuels
2. “Many parts of the country serve households that use propane or fuel oil for home
heating. About 6.5% of U.S. households heat their home with heating oil.”
“This workshop will address some of the unique challenges associated with these
fuel sources and how stakeholders working together can collaborate to address these
challenges.” - 2014 NEUAC, session description.
Approximately 80% of those households are in the Northeast region of the country.
Problem & Goal Statements
3. Understand regional effects of Home Heating Oil (HHO).
Discuss Health and Safety issues.
Discus Supply and Demand - price volatility.
Know more about regulatory barriers or lack there of.
Demonstrate the role of LIHEAP in reducing Energy Burden.
Explain program management challenges and offer solutions.
Suggest policy/operational changes.
The Objectives are to:
4. • About 6.5% of U.S. households heat their home with oil.
• 80% of those households are located in the Northeast region
(Vermont, Maine, New Hampshire, Massachusetts, Rhode Island,
Connecticut, New York, New Jersey and Pennsylvania).
• Fuel oil consumption ranges between 20% and 70% in the
Northeast.
• Regional cold temperature can pose many challenges.
• Supply and Demand fundamentals often don’t work.
• Northeast Oil customers have a very high residential energy
burden.
Regional Effects of Home Heating Oil
7. -42%
266%
400%
-100% 0% 100% 200% 300% 400% 500%
Demand for Heating Oil (% Changed)
Residential Prices Per Gallon (% Changed)
Crude Oil Acquision Cost - $ Per Barrel (%
Changed)
Non-functioning Demand & Supply
Northeast, 2000 – 2013
Analysis based on Congressional Research Service (CRS) Report
8. • The correlation between older housing stock and heating oil
use.
• Elderly and vulnerable population’s reliance on heating oil.
• Heating emergencies –high likelihood of imminent or total loss
of heat during winter months.
• Unaffordable home energy > severe health conditions.*
• Unsafe practices – Stay Warm, Be Safe.
*”Unhealthy Consequences: Energy Costs and Child Health”, Child Health Impact Working Group, April 2007, Boston, MA
“Heat or Eat: The Low Income Home Energy Assistance Program and Nutritional and Health Risks Among Children Less Than 3 Years of Age”, Pediatrics,
April 2007H. Casey, Maureen M. Black and Carol Berkowitz, Wilson, Suzette Levenson, Alan F. Meyers, Timothy Heeren, Diana B. Cutts, Patrick, Deborah A.
Frank, Nicole B. Neault, Anne Skalicky, John T. Cook, Jacqueline D.
What are the Health and Safety issues involved?
9. • Home Heating Oil is considered a Hazardous Material.
• Distribution is highly regulated.
• Lacks price controls and consumer protection.
• Subject to Weight and Measures and other state
requirements.
• Why heating oil companies are called “Unregulated”
vendors?
Regulatory Barriers or Lack There of…
10. • Vendor Authentication Process.
• Vendor Contracting Provisions – non-discrimination, proper
credit, current usage, non-disclosure, accurate billing,
delivery slips or computer printouts, reporting of cost,
consumption, and performance measures (selected vendors).
• Price Controls – MOR or Retail, whichever is lower (allows
suspension of this provision).
• Vendor Management – vendor level reporting to state,
payment reviews, and post audit.
LIHEAP Program Management Process
11. Vendor Authentication and Payment Process
Vendor Agreement
templates &
authentication standards
are released
Comments are received
through the public
hearing process
Clarifications are given
during the Annual
Training Conference
Vendors are activated in
the LIHEAP software
Signed Agreements are
received, authenticated,
and executed by LAAs
Agreements are released
to vendors
Client eligibility
information is shared
with active vendors
Deliveries are ordered
and billing files are
shared
Oil tickets/payment files
are received and
payments are made
Vendor Monitoring & Payment Controls, Akm Rahman, presented, June 2013, San Diego, CA
Vendor Refunds
12. • Cost of heat vs. Energy Burden reduction.
• Average annual oil heat cost of $2,800 vs. average annual utility heat
cost of $1,200 – how can we reduce the energy burden?
• Two-tiered benefit levels (1) deliverable fuel; (2) utilities.
• Additional benefit for High Energy Consumption households.
LIHEAP Program Management Process
13. • Not enough LIHEAP funds to support price increases.
• Number and mix of Heating Oil vendors.
• Access to credit vis-à-vis 30 days payable period.
• Vendor complaints – pricing, credit vs. cash, reimbursement delays.
• Differences between OPIS reported and actual terminal prices.
• Complaints from clients and Local Administering Agencies.
• Compromise between Vendor Monitoring and Vendor
Management process.
• LIHEAP performance measures tracking.
Program Management Challenges
14. • Heating Oil is not as efficient as natural gas or electricity, but there are
new technologies out there.
• Heating Oil burners can contribute up to 15% of SO2 emission in
certain areas.
• Low Sulfur (ls) fuel is better than High Sulfur (hs) fuel. Consider bio-
fuel mix.
• The oil tank, lines, sleeves can be prone to environmental risks, but
many states like MA have strict regulatory guidelines.
• Transportation is regulated therefore > an optimum distribution
distance may help reduce cost.
Environmental Consideration
15. • Continue the National conversation about oil heat reserve, supply, demand,
pricing, efficiency, distribution issues, health and safety issues.
• Drive the conversation based on evidences from the Northeast, Midwest and other
states.
• Review LIHEAP allocation and its role in reducing energy burden for oil
customers.
• Take a regional approach to oil heat issues > consistency in LIHEAP rules.
> multi-state oil wholesale & retail companies.
• LIHEAP Program Management Suggestions:
(1) Benefit Targeting > To reduce Energy Burden.
(2) Discount Pricing > To maximize the value of LIHEAP benefits.
(3) Vendor Management > To maintain Program Integrity.
Suggested Policy & Operational Changes
16. National Oil Heat Alliance
National Oil Heat Vision?
Regional Solutions –
Northeast, Midwest & others
Governors working together -
GHG/oil industry
State and Local Level Solutions – LIHEAP, WAP
heating programs, and stakeholders partnerships
Solutions (all of the above)?
18. For further information, please contact:
Akm Rahman
Senior Program Coordinator
Division of Community Services
Massachusetts Department of Housing &
Community Development
100 Cambridge Street, Suite 300
Boston, MA 02114
(617) 573 - 1413
Akm.rahman@state.ma.us
www.mass.gov/dhcd
Contact Information
