By Gene Meyer | Kansas Reporter

Low-income energy help funnels millions to utilities, but consumers benefit too, advocates say

FAIRWAY – Nearly 54,000 low-income families in Kansas are getting some federal help to pay for cooling costs incurred during the summer’s withering heat wave.

Most of the estimated $18 million in federal money will go straight to the utility companies.

The Kansas Department for Children and Families, formerly Social and Rehabilitation Services, announced last week the federally funded but Kansas-run Low Income Energy Assistance Program, or LEAP, will help the same families who received an estimated $9.8 million for heating bills last winter.

The money, an average $122 in winter heating help and $340 in the summer for each qualifying household, comes from a U.S. Department of Health and Human Services program designed to help families, generally with incomes below 150 percent of the federal poverty line, or about $33,000 a year for a family of four.

The program is a good deal for qualifying families, who otherwise would spend much larger shares of their incomes for heating and cooling than the rest of us, said John Rich, executive director of the Mid America Assistance Coalition, an advocate for low-income energy consumers in Kansas and Missouri.

It’s also a good deal for energy companies, Rich said.

“LEAP takes care of a lot of bad debt for utilities,” he said.

In reducing the amount of bad debt that power companies hold when customers don’t pay, LEAP helps hold down costs for utilities that borrow to build and maintain power plants and other infrastructure.

The situation has more than a touch of irony, Rich said.

“We’re helping low-income families by putting money right into the pockets of utilities.”

The funding for LEAP programs comes to Kansas Children and Families from the federal Health and Human Services department’s federal Administration for Children and Families. The federal grants also include money to administer the program and money for federal home-weatherization programs, also related to LEAP. Kansas Department for Children and Families then distributes the money to the utilities.

Kansas Children and Families paid 667 energy providers nearly $27.9 million to ease the utility burden for 54,000 low-income clients during the fiscal year that ended June 30, said Angela DeRocha, the department’s chief spokeswoman.

But how much of that was profit for those companies?

“We have no way of knowing,” DeRocha said.

Westar Energy Inc., Kansas’ largest electric power producer, estimates it will use about $7.9 million in LEAP money this year to reduce the bills of  26,000 of its poorest customers, spokesman Leonard Allen said.

Again, no calculation of  how that $7.9 million total might affect the Topeka utility’s profit could be found. But in comparison, Westar officials think that warm weather through June added at least $6.3 million to the company’s profits as of June 30, Chief Financial Officer Tony Somma told securities analysts in a recent conference call.  But that was before a sweltering heatwave later in the summer.

No one at industry trade groups such as the Edison Electric Institute or trade publications such as industry-leading IBISWorld Reports could offer an estimate regarding how LEAP programs affect profits. The programs, nationally, are funded with about $3.1 billion.

IBISWorld says some 1,224 power companies in the U.S. filling a $352 billion demand for electricity.

“The perception is that LEAP is a handout for utilities, but nothing could be further from the truth,” said David Fox, executive director of the National Low Income Energy Consortium, a Washington, D.C., advocate for residential energy cost relief. “The costs (of providing service to customers who cannot pay) would simply be passed on to the rest of us, in the form of higher rates.”

Energy costs consume nearly 26 percent of families’ taxable income at the high end of that range, and as much as 71 percent in homes with incomes below $10,000, according to the American Coalition for Clean Coal Electricity, an industry group advocating lower energy costs.

Contact Gene Meyer at gene.meyer@kansasreporter.org