iepec_pathways to success in low income energy assistance payment programs_campbell

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

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

Limited Income Payment Assistance Program Design

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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

Research Objectives

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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


Evaluation Methods

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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


Defining Success

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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


Profile Analysis: A tool for the Utility

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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


A Snapshot of Characteristic Differences

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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 kWhEAP monthly payment amount $77 $75 $2 $78Average account balance $1,402 $512 $890 $953Gross monthly income $1,210 $1,294 -$84 $1,294Number 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


Successful Customer Characteristics

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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


Insights and Recommendations

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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

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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



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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



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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


Contact Information:

Megan CampbellProject Director

858 270 5010 tel858 270 5011 fax

[email protected] email

7590 Fay AveSuite 204BLa Jolla, CA 92037

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IEPEC Chicago 2013


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