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IEPEC_Pathways to Success in Low Income Energy Assistance Payment Programs_Campbell

Opinion Dynamics
Opinion Dynamics

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.

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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 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
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
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
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
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
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
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
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
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
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
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
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

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IEPEC_Pathways to Success in Low Income Energy Assistance Payment Programs_Campbell

  • 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