This document summarizes a study of a low-income energy assistance payment program that was underperforming compared to similar programs. The study found that customers with certain characteristics were more likely to successfully pay their bills on time, including having a lower pre-program debt balance, receiving weatherization services, and having non-electric heat. The study recommends program design changes like removing a double default requirement, improving communication with LIHEAP recipients, targeting high-risk customers for weatherization, and encouraging energy conservation to help improve customer payment rates.

1. PATHWAYS TO SUCCESS IN LOW-INCOME ENERGY
ASSISTANCE PAYMENT PROGRAMS: THE DIFFERENTIAL
EFFECTS OF CUSTOMER CHARACTERISTICS AND PROGRAM
DESIGN ON PAYMENT RATES
Presented at the International Energy Program
Evaluation Conference – Chicago 2013
August

2. Overview
Pathways to Success in Low-Income Energy Assistance Payment Programs 2
 A unique evaluation for a
large N.E. Electric Utility
 Program design overview
 Research objectives
 Evaluation methods
 Results and insights
IEPEC Chicago 2013

3. Limited Income Payment Assistance Program Design
3
 Bill payment assistance program to limited income customers
 Not an energy efficiency program
 Public service to customers
 Eligibility Requirements
 150% of federal poverty line; must apply for LIHEAP
 Double-default requirement: traditional bill then payment agreement
 Payment model
 Income-based payment (fixed payment for the customer)
 Customer Receives
 Reduced monthly bill; Debt (arrearage) forgiveness over time
 Capped usage amount
 i.e. $2,160 in annual utility coverage for electric heat and $850 for non-
electric heat customers
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

4. Research Objectives
4
 Underperforming program in
comparison
 Worse than other similar
programs in the state on
almost every metric; e.g.
program cost/participant
 Profile successful
customers to understand
what is correlated with
higher on-time payment
rates?

IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

5. Evaluation Methods
5
 Qualitative
 Staff interviews and observations
 Program material review
 Literature review: compared to 10
similar programs
 Quantitative
 Program database analysis
 >33K customers
 Defined success and compared
customers across multiple
characteristics
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

6. Defining Success
6
 An on-time payment rate, calculated for each customer
 Normalized metric by which all customers, who had
been in the program for different rates of time, could be
compared
 On-Time Payment Rate = Total # of On-Time
Payments/Total Number of Bill Months
 Broke on-time payment rates up into deciles
 Unsuccessful customers = have an on-time payment
rate in the bottom two deciles, which translates into an
on-time payment rate less than 25%, meaning that less
than 25% of payments were made on time
 Successful customers = have an on-time payment rate
in the top two deciles, which translates into an on-time
payment rate greater than 82%, meaning that more
than 82% of payments were made on time
Group Payment Rate Decile On-Time Payment Rate Number of Customers
Unsuccessful Bottom two Less than 25% 17,023
Successful Top two More than 82% 16,106
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

7. Profile Analysis: A tool for the Utility
7
Research Question Variable
Are customers who receive federal LIHEAP funds more successful than
those who do not?
LIHEAP recipient
Does customer's pre-program arrearage balance have an impact on their
success in the program?
Pre-program arrearage
balance
What effect does receiving weatherization services have on a customer's
success in the program?
Weatherization recipient
Are customers more successful with non-electric heat? Heating type
Do successful customers consume less energy than unsuccessful customers? Average daily electricity usage
Are the monthly payment amounts priced appropriately? EAP monthly payment amount
What effect does a customer's average account balance have on their success in the
program?
Average account balance
What impact does a customer's income have on their success in the program? Income
Are customers who receive paperless bills more successful in the program? Paperless billing participant
What impact does a customer's poverty level have on their success in the program? Poverty level
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

8. A Snapshot of Characteristic Differences
8
Customer characteristic Unsuccessful Successful Difference^ All Customers
LIHEAP recipient 38% 12% 26% 27%
Pre-program arrearage
balance
$1,560 $813 $747 $1,217
Weatherization recipient 0.3% 0.6% -0.3% 0.5%
Electric heat 51% 31% 20% 41%
Average daily electricity usage 41 kWh 39 kWh 2 kWh 41 kWh
EAP monthly payment amount $77 $75 $2 $78
Average account balance $1,402 $512 $890 $953
Gross monthly income $1,210 $1,294 -$84 $1,294
Number of months in the
program
7 months 15 months -8 months 12 months
Paperless billing participant 3% 5% -2% 4%
Poverty level 2.09 2.31 -0.22 2.23
^All differences are statistically significant at a 99% level of confidence
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

9. Successful Customer Characteristics
9
 A successful customer (who pays 82% of their bills on-time)
is, on average:
 Likely to have a pre-program arrearage balance $400 less
than the average
 Not likely to have received federal LIHEAP funds
 Twice as likely to have received weatherization services than
an unsuccessful customer
 Likely to have non-electric heat
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

10. Insights and Recommendations
10
 Limiting pre-program arrearage amounts helps drive down
program costs
 Customers with high arrearage amounts and average account
balances are less successful in the program
 Double default requirement in design may be a factor
 Remove second default requirement
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

11. Insights and Recommendations
11
 LIHEAP funds correlate with low payment rates
 LIHEAP recipients fail to pay on-time in the program more than non-
LIHEAP recipients
 Correlation; not causation
 How LIHEAP funds are distributed could explain difference (applied to
monthly amount, not arrearages)
 Lack of communication with LIHEAP customers could also explain difference
(no notice when LIHEAP funds run out)
 Special communication with LIHEAP recipients
 Customer confusion as to when they should start paying the bill
 Send customers special notification when LIHEAP is about to run out
Pathways to Success in Low-Income Energy Assistance Payment Programs

12. Insights and Recommendations
12
 Weatherization services correlate
with high payment rates
 Consider targeting high-risk
customers for weatherization
services, including customers
with higher than average pre-
program arrearage and account
balances
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

13. Insights and Recommendations
13
 Limiting energy usage helps control program costs
 Program design does not encourage energy conservation
 Annual benefit amount is poorly communicated; customers
unaware or did not understand
 Consider design changes that encourage energy conservation
 Monthly usage caps
 Variable customer payment
 Warning letters when customer usage increases by 125%
while in the program
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs

14. Contact Information:
Megan Campbell
Project Director
858 270 5010 tel
858 270 5011 fax
mcampbell@opiniondynamics.com email
7590 Fay Ave
Suite 204B
La Jolla, CA 92037
14
IEPEC Chicago 2013
Pathways to Success in Low-Income Energy Assistance Payment Programs