Final Report of the TASK FORCE TO REDUCE THE BURDEN OF HOME HEATING COSTS ON LOW

Maine State Legislature
Office of Fiscal and Program Review
5 State House Station
Augusta, Maine 04333
Phone: (207) 287-1635
Fax: (207) 287-6469

^{The Task Force to Reduce the
Burden of Home Heating Costs on Low-income Households, hereinafter referred to
as “the Task Force,” was established in the Second Regular Session of the
119th Legislature by Resolve 1999, chapter 132.}

^{The Task Force is comprised of 16
members, including four Legislators. Other
members include representatives from the Maine State Housing Authority, the
Office of the Public Advocate, electric, natural gas, and oil industries as well
as Community Action Agencies and businesses that provide energy maintenance and
conservation services.}

^{The Task Force held four meetings
through the summer and fall of 2000 to learn first hand the needs facing
low-income households in the heating of their homes for the upcoming season.
All meetings were held in Room 228 of the State House.}

^{During the first two meetings, the
Task Force concentrated on the issues of fuel price and supply, timing of
Low-income Home Energy Assistance Program (LIHEAP) funding and the operation of
the energy assistance programs administered jointly by the Maine State Housing
Authority (MSHA) and the Community Action Program (CAP) agencies.
The Task Force was also presented with an introduction to Energy
Conservation and Demand Side Management programs coordinated by the State
Planning Office and participated in a panel discussion on the effects of
interruptible natural gas service on the demand for heating oil during a crisis
event.}

^{The third meeting was a joint
meeting with the Gasoline and Fuel Prices Study Committee.
Testimony on steps that the Clinton Administration has taken to address
home heating oil concerns for the upcoming winter season was provided by Mr.
Charles Pray, Special Assistant and Senior Advisor on Intergovernmental Affairs
in the Office of Congressional and Intergovernmental Affairs at the United
States Department of Energy. Mr.
Thomas Martin, Marketing Manager of the New York Mercantile Exchange provided an
interesting presentation on the role of the Commodity Exchange Industry and the
characteristics of the Futures Markets. Ms.
Laurie Lachance, State Economist, and Mr. Greg Nadeau, Senior Policy Advisor,
Office of the Governor, co-chairs of the Governor’s Interagency Home Heating
Oil “SWAT Team,” presented the interagency plan to prepare the State of
Maine for an exceptionally difficult winter heating season.
The meeting concluded with a brief discussion on preliminary findings and
recommendations.}

^{The fourth and final meeting was
used to finalize findings and recommendations as well as to approve the report
required pursuant to Resolve 1999, chapter 132.}

^{After careful consideration of all
the information provided, the Task Force urges the Governor, the Legislature and
other policy makers to implement the following recommendations:}

^{1.
The State of Maine should establish a summer “fill” program to
provide low-income households who are eligible for fuel assistance through the LIHEAP program with an initial supply of fuel for every winter heating season.}

^{2.
The Maine State Housing Authority should identify the most effective way
to provide adequate funding of the anticipated 25% non-federal share of the
weatherization program.}

^{3.
The State of Maine should establish a program to allow low-income and
middle-income citizens to obtain low-interest loans or grants for energy
conservation improvements.}

^{4.
The Maine State Housing Authority and the State Planning Office should
investigate the possibility of establishing a separate “Office of Energy
Conservation” within the Maine State Housing Authority to annually prepare the
State of Maine for difficult winter heating seasons.}

^{5.
The Maine State Housing Authority should annually investigate the
possibility of increasing the percentage of LIHEAP funds for weatherization
services.}

^{6.
The Maine Public Utilities Commission should continue to monitor the
effects of interruptible gas services on the supply and price of home heating
oil in the State of Maine.}

^{7.
The State Planning Office should conduct a study to determine whether the
State of Maine can reduce its per capita residential consumption by 25% by 2011.}

^{In conclusion, the Task Force’s
focus on energy conservation grew out of the pressing needs that resulted from
recent spikes in energy prices and the realization that these energy prices will
likely continue to be volatile over the foreseeable future.
The Task Force agrees that more money for weatherization services,
low-interest loans and tax incentives for conservation improvements are crucial
in mitigating significant energy costs facing Maine’s low-income citizens.
The State of Maine should also make better use of existing resources
through cost-effective, energy efficient investments to reduce the energy needs
of this population over the long run.}

^{The Task Force to Reduce the Burden of Home Heating Costs on Low-income
Households was established in the Second Regular Session of the 119th
Legislature by Resolve 1999, chapter 132. A
copy of Resolve 1999, chapter 132 is included as Appendix A.
The appointments to the Task Force were completed during the summer of
2000 and meetings were held on August 30, September 18, October 12 and October
24.}

^{Resolve 1999, chapter 132 required the Task Force to conduct a
comprehensive study of Maine’s low-income heating assistance program, to
assess the effectiveness of existing programs, and to consider the needs of the
programs’ recipients in preparation of winter.
The resolve also required the Task Force to consult with the Maine State
Housing Authority, State Planning Office, Maine Oil Dealers Association, and the
Maine Community Action Association to better understand the problems confronting
low-income households in the heating of their homes.}

^{A.
Who are Maine’s low-income households in need of home-heating
assistance?}

^{Currently, households with income
levels up to 150% of federal poverty guidelines are eligible for LIHEAP.
The income level is raised to up to 170% if the household contains
children age 2 and under, an elderly person, or a person otherwise vulnerable to
hypothermia.}

^{According to the 1990 Census
data, 93,767 households in Maine, or approximately 20% of Maine’s 465,729
total households had income at or below 150% of federal poverty guidelines.
The LIHEAP program, administered by the Maine State Housing Authority, is
a federally funded program aimed at helping low-income homeowners and renters
pay their home energy bills. For the 2000-01 winter heating season, the maximum income
limits for a family of four living in Maine is $25,575 (150%) or $28,985 (170%).}

^{Maine received approximately
$33.0 million in LIHEAP funds for the winter 1999-00 heating season.
Of that amount, approximately $17.2 million was in supplemental, or
emergency, awards. On average, Maine has received nearly $14.5 million in LIHEAP
Base Grant awards annually over the last six heating seasons.
According to data provided by the Maine State Housing Authority, 72% of
the funds received are allocated for fuel assistance benefits; 15% for
weatherization programs; 10% for administrative costs; 2% for other benefits,
and 1% for emergency crisis intervention.}

^{The LIHEAP program served 44,782
low-income households in Maine during the 1999-00 winter heating season, up from
36,000 in the prior year. Over the
last 5 years, Maine has helped an average of 38,500 low-income households per
year to heat their homes through the LIHEAP program. Of the households that received LIHEAP funds in the winter of
1999-00, 37.3% had income at or below 75% of federal poverty levels; 44.0% had
income between 75% and 125% of federal poverty levels; 13.0% had income between
125% and 150% of federal poverty levels; and 5.7% had income between 150% and
170% of federal poverty levels. Approximately
50.0% of the households receiving LIHEAP benefits in the winter of 1999-2000
were elderly versus 56.8% in the winter of 1998-99.}

^{The additional $17.2 million in
emergency funds were used in part to increase the average benefit paid to
eligible low-income households in the 1999-00 winter heating season to $491
compared to $260 per eligible household in the 1998-99 heating season.
The $491 average benefit paid to eligible households in the winter
1999-00 heating season was significantly above the average annual benefit paid
per year over the past five years.}

^{The average benefit paid in the
1999-00 winter heating season to households with income at or below 75% of
federal poverty levels was $484. Households
with children under the age of two within the same income level received an
average benefit of $503 and elderly households received $506.}

^{For households with income
ranging between 75% and 125% of federal poverty guidelines, the average benefit
paid in the 1999-00 winter heating season was $463 with families who had
children age two and under receiving $389 and elderly households receiving $470.}

^{As mentioned earlier, Maine
received additional emergency funds for the 1999-00 winter heating season, which
allowed the State to increase the average benefit as well as provide heating
assistance to households with income levels between 150% and 170% of federal
poverty guidelines. The average
benefit paid to those households was $295.
Families with children age two and under received an average benefit of
$176 while elderly households received $290.}

^{B. What programs are currently available for Maine’s low-income households
to help them heat their homes?}

^{The Low-income Home Energy
Assistance Program (LIHEAP) is the primary heating assistance program available
for Maine’s low-income residents. LIHEAP
is funded through the federal Department of Health and Human Services and
provides money to low-income homeowners and renters to help defray their energy
costs. In Maine, the funds are used
primarily to help pay winter heating bills for qualifying households.
The Maine State Housing Authority has been designated by the Legislature
to administer the Low-income Home Energy Assistance Program (LIHEAP) for Maine. MSHA contracts with Maine’s eleven Community Action
Agencies to administer the program on the local level.}

^{The LIHEAP program consists of
three major components: 1) Fuel Assistance; 2) Emergency Crisis Intervention
Program (ECIP); and 3) Weatherization and Central Heating Improvement Program
(CHIP).}

^{The Fuel Assistance program
provides funds to assist qualified low-income households by paying a portion of
their winter heating bills. The
local Community Action Agencies process applications, determine eligibility and
calculate how much assistance a household may qualify for.
The benefit that a qualified household receives is dependent on a number
of factors including the type of housing, the number of rooms to be heated, the
type and cost of the fuel, the expected degree days for the area, MSHA’s
estimate of how much money will be available and what the demand may be.}

^{The Emergency Crisis Intervention
Program (ECIP) provides emergency assistance to qualified households who are in
a crisis situation. Households can
receive up to $200 in funds for an emergency fuel delivery or home heating
system repairs. This emergency
assistance may be obtained in addition to a regular fuel assistance benefit.}

^{The Weatherization Program and
Central Heating Improvement Program utilizes 15% of the LIHEAP funds, which is
the maximum allowed by the Federal government without a waiver, to complement
the federal Department of Energy Weatherization Program, also administered in
Maine by the Maine State Housing Authority.
The funds can be used for insulation, caulking, and weather stripping,
and to repair, upgrade, or replace central heating systems that have become
inoperable, inefficient, or that pose a threat to the health and safety of
household members. It may also be
used for other measures that conserve energy and reduce heating costs.}

^{The Task Force heard from several
sources concerning the outlook for fuel costs for the 2000-2001 winter heating
season. Although the messengers
were different, the message was the same: residential
consumers in Maine and throughout the United States can expect to pay more to
heat their homes this winter than they did last winter.
According to the October 2000 Short Term Energy Outlook prepared by the
Energy Information Administration within the Department of Energy, households
throughout the nation can expect to see their heating bills increase by $190 to
$240 over last winter, and that is assuming normal winter weather conditions.
Factors driving the increase in costs include: 1) an increase in the demand for space-heating fuels such as
oil, natural gas, and electricity due to a strong economy and a return to colder
winter temperatures; 2) supplies of home heating fuels, particularly heating
oil, which are not only significantly below last years levels, but well below
normal levels; and 3) prices for both natural gas and crude oil which are
starting out at higher levels than last year, with high crude oil prices driving
up the prices for all petroleum products.}

^{The following represents the
consensus findings and recommendations of the Task Force to Reduce the Burden of
Home Heating Costs on Low-income Households.}

^{Finding #1}	^{When the Task Force examined the resources available to meet the basic home heating requirements of Maine’s low-income citizens it found that there is a need to establish an annual summer ” fill” program. Allowing for the dispensing of funds for low-income fuel assistance programs during the summer months beginning as early as July could allow LIHEAP recipients to take advantage of summer prices and summer pricing programs for oil, propane, kerosene, and wood or provide an initial supply of fuel for the upcoming winter heating season.}
^{Recommendation #1}	^{The Maine Legislature should authorize an annual working capital advance of $10 million dollars from the General Fund unappropriated surplus for the Low-Income Home Energy Assistance Program to be available as early as July. These funds should be transferred to the Fuel Assistance Reserve Fund established pursuant to 30-A MRSA, section 4992-A to ensure that fuel assistance benefits for the state’s eligible elderly and low-income residents would be available for applicant households prior to the beginning of the heating season. These funds would be repaid in full by a transfer of available resources from the federal fuel assistance funds of the Maine State Housing Authority to the General Fund on or before the end of each state fiscal year. The expenditure of these funds would be subject to the advance funding of the LIHEAP program by Congress. The Fuel Assistance Reserve Fund may not be used if the Maine State Housing Authority reasonably anticipates that no federal fuel assistance funds would be received. This recommendation would require concurrence by the federal government for the repayment of state funds used for a working capital advance in any year.}
*^{Finding #2}*	^{For the first time in the history of the Department of Energy’s Weatherization Program, the United States Congress has required states to provide a 25% non-federal cost sharing match for weatherization funding beginning in federal fiscal year 2001. The Task Force learned that failure to provide the 25% cost sharing could result in a reduction or termination of funding. States that are unable to provide the full 25% match will lose $4 of their weatherization grant for each $1 of state match they fail to provide. Maine is one of about 17 states, mostly small and rural, that are expected to have difficulty meeting this cost sharing requirement if imposed. Maine received $2 million in DOE Weatherization funds in the last program year, and would need $500,000 of non-federal match to obtain full funding in 2001.} ^{The State of Maine has not yet acted to provide for its sharing of the program costs. The current 15% transfer from the LIHEAP funds cannot be used towards the match. Also, MSHA cannot use the same matching funds to satisfy both the Department of Energy and the Department of Health and Human Services’ requirements. The State of Maine may be able to use the “CMP Lifeline program” towards the match. In addition to the “CMP Lifeline program,” the new Transmission and Distribution utility energy program may qualify toward the federal match requirement as well.} ^{An effort is under way in Congress to enact legislation to allow the Secretary to waive this cost sharing requirement for up to 2 years for states facing significant difficulties in meeting this amount, but recent reports from the National Community Action Foundation indicate that this waiver proposal is strongly opposed by the chair of the House subcommittee with jurisdiction over DOE and is unlikely to be passed before Congress adjourns in October. Maine’s DOE Weatherization grant is already inadequate to meet the needs of eligible households, and the loss of any portion of this grant due to the inability of Maine to provide its 25% match would be devastating.}
*^{Recommendation #2}*	^{The Maine State Housing Authority should identify the source (or sources) of the match necessary to meet this cost sharing requirement. It is anticipated that any non- federal cost-sharing requirement will be an ongoing federal provision so the Maine State Housing Authority’s response to the Legislature should recognize this fact and incorporate an appropriate long term funding solution. The Maine State Housing Authority should submit a report with accompanying legislation if necessary to the First Regular Session of the 120th Legislature by March 15, 2001.} ^{[Subsequent to the work of the Task Force, the Congress passed and the President signed a bill that provides for the elimination of the match requirement that is the basis of this Finding and Recommendation. This change will be addressed when the Legislature considers the bill resulting from the Task Force’s work.]} ^{The Task Force recommends that the Maine State Housing Authority in consultation with other affected state agencies report to the Joint Standing Committees on Utilities and Energy and Appropriations and Financial Affairs and identify the most cost-effective way to provide funding of any 25% non-federal share requirement for weatherization program costs.}
^{Finding # 3}	^{The Task Force finds that low-income households often live in housing that lacks adequate insulation, has inefficient or inadequate heating systems, and has building components (windows, doors, roofs and etc.) that do not retain heat within the living portions of the residence. These households often lack the financial resources to remedy these problems and become dependent on temporary and short-term “fixes” to enable them to survive through the winter without addressing the underlying problems with long-term solutions.} ^{In addition, the Task Force finds that the State of Maine does not appear to offer sufficient programs or resources to assist low and moderate-income citizens with obtaining low interest loans for energy conservation improvements.}
*^{Recommendation #3A}*	^{The Task Force recommends that the Maine State Housing Authority and the Finance Authority of Maine work cooperatively to establish a program that provides low interest loans or grants to Maine citizens for purchasing certain energy conservation improvements.} ^{The Task Force further directs the Maine State Housing Authority with the assistance of the Finance Authority of Maine to report to the Joint Standing Committees on Utilities and Energy and Appropriations and Financial Affairs to identify a program that would encourage Maine citizens to secure low interest loans or grants as part of this energy conservation initiative. The Maine State Housing Authority should submit a report with accompanying legislation to the First Regular Session of the 120th Legislature by March 15, 2001.}
*^{Recommendation #3B}*	^{In addition to the required report, the Maine Legislature should enact legislation authorizing the issuance of a General Fund Bond Issue in the amount of $8 million to be administered by the Maine State Housing Authority to capitalize an Energy Conservation Revolving Loan Fund. The fund should be non-lapsing and may be used for direct loans or grants for all or part of certain energy conservation projects. The intent of this legislation should be to identify conservation improvements that offer low and moderate-income households the highest paybacks. Components of this program may include:} ^{1. Certified home energy audits, partially subsidized by the state, to determine the cost effective conservation measures appropriate for a given residence;} ^{2. Conservation improvement grants (of up to $2,500) to households with incomes at or below 100% of the poverty level to allow for the installation of conservation improvements with payback periods of 5 years or less (as determined by a home energy audit);} ^{3. Low interest conservation loans (for up to $5,000) to households with incomes up to 200% of the poverty level to finance conservation improvements identified by the certified home energy audit as having a payback period of 7 years or less. Loan repayments should create a revolving loan fund to allow the program to become self-sustaining;} ^{4. Provisions for making audits, grants and loan programs available to renters as well as homeowners; and} ^{5. Provisions to require homeowners, to participate in this program and sell their homes within two years of the energy conservation measures being completed, to repay their loan in full within one year of the sale of the home.} ^{The Maine State Housing Authority and the Finance Authority of Maine should work cooperatively to develop guidelines for determining eligibility, feasibility, terms, conditions and security for the loans and grants.}
^{Finding #4}	^{The Task Force learned that the State Planning Office coordinated an effort in mid-September to pull together a SWAT team of 22 state employees from 13 agencies to create a plan and marshal the resources to fully prepare the State of Maine for what may be an exceptionally difficult winter heating season. Although the Task Force acknowledges the efforts of the ad hoc Heating Fuel SWAT Team, the Task Force would like to take the next necessary step and examine the feasibility of establishing a separate “Office of Energy Conservation” within the Maine State Housing Authority to effectively address energy conservation issues on an ongoing basis. It is the Task Force’s belief that heating fuel shortages and significant price volatility for all energy supplies are likely going to continue and proper planning should take place.}
*^{Recommendation #4}*	^{The Task Force recommends that the Maine State Housing Authority, with assistance from the State Planning Office, report to the Joint Standing Committees on Utilities and Energy and Appropriations and Financial Affairs on the feasibility of establishing an Office of Energy Conservation within the Maine State Housing Authority. The new Office of Energy Conservation would be established with existing personnel performing similar functions elsewhere in State government along with two new positions and would be charged with the following:} ^{· Producing a new Comprehensive Energy Conservation Plan for the State of Maine and updating it every two years;} ^{· Coordinating all State and federal energy conservation programs;} ^{· Encouraging conservation of energy and development of Maine’s energy resources to assist Maine citizens during the winter heating season; and} ^{· Soliciting and incorporating advice and comment from affected stakeholders including representatives of the energy industry, utilities, conservation service providers, the low-income households and environmental agencies.} ^{This report should be submitted with any necessary legislation to the First Regular Session of the 120th Legislature by March 15, 2001.}
*^{Finding #5}*	^{The Task Force learned that the Maine State Housing Authority has two sources of funding to support their energy conservation programs: funds received from the U.S. Department of Energy’s Weatherization Program and funds received from a 15% transfer from the federal Low-income Home Energy Assistance Program (LIHEAP) grant. Federal guidelines allow up to 15% of LIHEAP funds (and up to 25% with a waiver) to be used for energy conservation investments. The Task Force also learned that many eligible low-income households remain on waiting lists for several years prior to obtaining assistance.} ^{The Task Force finds that the current level of funding for energy conservation investments is inadequate to provide weatherization services for the thousands of Maine citizens who are eligible for assistance.} ^{The Task Force also finds that additional funds for the weatherization program would be beneficial to low-income residents by increasing the life of their homes, creating a safer indoor environment, increasing comfort and, most important, saving money and energy.}
*^{Recommendation #5}*	^{The Task Force recommends that the Maine State Housing Authority investigate, during the month of April 2001 through 2003, the possibility of increasing the percentage of LIHEAP funds that can be transferred from 15% up to as high as 25% to provide additional resources for the Weatherization Program.}
*^{Finding #6}*	^{While discussing the effects of interruptible natural gas services on the supply and price of home heating oil in the State of Maine, the Task Force learned that the Maine Oil Dealers Association requested the Public Utilities Commission investigate this issue. As the Task Force learned during its deliberations, interruptible customers elect service under the stipulation that during times of peak demand, they must switch to an alternate fuel source. For example, during periods of extreme cold weather, interruptible customers can be called on to switch to alternate fuel sources in order for utilities to meet the peak demand of their firm customers.} ^{Northern Utilities currently asks its interruptible customers to leave the system on December 1st of each year and not come back to the natural gas service until April 1st. Northern Utilities has the authority to interrupt service within a 2 to 3 hour period. There is a penalty for unauthorized use.} ^{Some interruptible customers have asked to come back onto the system during the winter months. If their request is approved, they are charged the regular tariff rate. Since Northern Utilities interruptible customers know that they will be off the system, they make arrangements with alternative fuel suppliers. Only four Northern Utilities interruptible customers use #2 home heating oil as an alternative fuel source. The majority of interruptible customers contract for oil during April through July.} ^{At the present time, New York is a much heavier user of natural gas than Maine (25% vs. 0.1%). Only 0.1% of Maine’s natural gas customers are on the interruptible program versus 37% in New York. Only four of Northern Utilities twelve interruptible natural gas customers use #2 home heating oil as an alternative fuel. Finally, the interruption in Maine is considered predictable versus unpredictable in New York.} ^{The Maine Public Utilities Commission has studied the impact that Maine’s interruptible natural gas customers have on oil supplies and concluded that it is not clear that any action is necessary at this time. Interruptible programs in Maine are very well established and help to balance the system. Maine could lose cost benefits if barriers to interruptible programs are set up.}
*^{Recommendation #6}*	^{That the Maine Public Utilities Commission continue to monitor the effects of interruptible gas services on the supply and price of home heating oil in the State of Maine.}
^{Finding #7}	^{The Task Force learned that Maine has faced energy “crises” several times in the past 25 years, and may well again in the foreseeable future. Although Maine has little ability to influence actions by foreign energy suppliers, the State does have the ability to reduce our demand for these fuels from outside our borders. Even after several energy crises in our lifetimes, a substantial number of Maine living units lack adequate insulation. Also, many of the energy-using appliances (furnaces, water heaters, stoves, refrigerators, lights, etc.) in homes throughout the state are inefficient in their consumption of energy. While these problems fall most heavily on low-income households, no segment of Maine society is immune to the problem. The State cannot be totally isolated from outside forces, but can take concerted action to assure that future energy supply and price problems have substantially less effect on our citizens. It will require an aggressive set of conservation goals and a long term commitment on the part of State government, in cooperation with energy conservation goods and services suppliers, to reduce Maine’s per capita residential energy consumption in the next ten years.}
^{Recommendation #7}	^{The State Planning Office should conduct a study to determine whether the State of Maine can reduce its per capita residential energy consumption in Maine by at least 25% by 2011. Particular attention should be paid to those segments of society (low to moderate-income households) who often lack the financial and technical resources to identify energy conservation opportunities and to acquire the conservation goods and services needed to achieve significant savings. The State Planning Office should also analyze the possibility of requiring higher efficiency ratings for heating systems, appliances and energy building standards.} ^{The State Planning Office should investigate the value of tax incentives for implementing measures identified in energy audits for energy improvements for Maine citizens. The State Planning Office should report to the Joint Standing Committee on Taxation, the Joint Standing Committee on Utilities and Energy and the Joint Standing Committee on Appropriations and Financial Affairs on establishing Maine energy independence programs and financing mechanisms to achieve this goal. The State Planning Office should submit a report with accompanying legislation to the First Regular Session of the 120th Legislature by March 15, 2001.}

^{IV.
RECOMMENDED LEGISLATION}

^{An Act
to Implement the Recommendations of the Task Force to Reduce the Burden of Home
Heating Costs on Low-income Households}

^{1. Fuel Assistance Reserve
Fund. If
funds are appropriated pursuant to this section, the authority shall use the
funds to establish and capitalize the Fuel Assistance Reserve Fund.
The authority shall keep the Fuel Assistance Reserve Fund, referred to in
this section as the “fund,” separate from all other funds managed by the
authority and use the fund only under the conditions set forth in this section. The authority shall use the Fuel Assistance Reserve Fund to
ensure that fuel assistance benefits for the State’s eligible elderly and
low-income residents are available prior to the beginning of the heating season.}

^{2. Timely distribution of benefits. The authority shall make
available to local program operators and municipal administrators of the fuel
assistance program, at the beginning by October 1st of
each state fiscal year, funds sufficient to cover anticipated fuel
assistance payments and program administrative costs for the months of July,
August, and September. October, November and December.}

^{3. Conditional use of the
fund. The
authority’s use of the fund is subject to the following conditions and
limitations.}

^{A. If the authority
reasonably anticipates that federal fuel assistance block grant funds are not
available for distribution to the local program operators and municipal
administrators by July October 1st of each year, the
authority shall withdraw and distribute sufficient money from the fund as is
necessary for the purposes set forth in this section.
The authority may withdraw funds prior to October 1st,
provided that those funds are used only for costs incurred on or after July
October 1st.}

^{Money may not be withdrawn from the fund if sufficient block grant funds
are available by July October 1st to pay reasonably
anticipated fuel assistance program and administrative costs for the months of July,
August, and September. October, November and December.}

^{B. Money withdrawn from the
fund must be sufficient to cover anticipated fuel assistance payments and fuel
assistanceprogram administrative costs for all local program operators and
municipal administrators for the months of July, August and
September. October, November and December. [1991, c. 858, §1 (new).]}

^{C. The fund may not be used
if the authority reasonably anticipates that no federal fuel assistance money
will be received. [1991, c. 858, §1 (new).]}

^{D. The Maine State
Housing Authority must receive prior written approval from the federal
government that confirms that state funds withdrawn during a period from July
1st to September 30th may be reimbursed with federal fuel assistance funds
received for the federal program year beginning in October of that same year.}

^{4.
Recapitalization. If
money is withdrawn from the fund for the purposes of this section, the authority
shall ensure that the fund is fully recapitalized before the end of the fiscal
year in which the funds were appropriated.
Recapitalization does not apply in any state fiscal year in which
a working capital advance is provided.}

^{The State Controller may advance $10,000,000 from the General Fund
unappropriated surplus to the Fuel Assistance Reserve Fund during any state
fiscal year, if requested in writing by the Director of the Maine State Housing
Authority, to be used to provide cash necessary to ensure that fuel assistance
benefits for the state’s eligible elderly and low-income applicant households
will be available prior to the beginning of the heating season.
These funds must be allotted by financial order upon recommendation of
the State Budget Officer and approval of the Governor.
These funds must be returned to the General Fund before the close of the
state fiscal year in which the advance was made.
The State Controller shall report to the joint standing committee of the
Legislature having jurisdiction over appropriations and financial affairs within
30 days of making any working capital advance for this purpose.}

^{Sec. B-1. Maine State Housing Authority shall identify funding for
non-federal share of weatherization costs.}

^{The Maine State Housing Authority in consultation with other affected
state agencies that receive federal Department of Energy funding shall report to
the joint standing committee of the legislature having jurisdiction over
utilities and energy and the joint standing committee of the legislature having
jurisdiction over appropriations and financial affairs on identifying the most
effective way to provide adequate funding of the 25% non-federal share of
weatherization program costs.}

^{The Maine State Housing Authority shall identify the source or sources of
the match necessary to meet this cost sharing requirement. The Maine State Housing Authority shall identify an
appropriate long-term funding solution. The
Maine State Housing Authority shall submit a report with accompanying
legislation if necessary to the First Regular Session of the 120th
Legislature by March 15, 2001.}

^{Sec. C-1. Maine State Housing Authority and the Finance Authority of
Maine shall establish a program that provides low interest loans or grants for
conservation improvements.}

^{The Maine State Housing Authority
and the Finance Authority of Maine shall work cooperatively to establish a
program that provides low interest loans or grants to Maine citizens for
purchasing certain energy conservation improvements. The Maine State Housing Authority with the assistance of the
Finance Authority of Maine shall report to the joint standing committee of the
legislature having jurisdiction over utilities and energy and the joint standing
committee of the legislature having jurisdiction over appropriations and
financial affairs on identifying a program that would encourage citizens of this
state to secure low interest loans or grants as part of this energy conservation
initiative. The Maine State Housing
Authority shall submit a report with accompanying legislation to the First
Regular Session of the 120th Legislature by March 15, 2001.}

^{Sec. D-1. Authorization
of bonds to provide low interest loans or grants for energy conservation
improvements to low and moderate-income citizens.}

^{The Treasurer of State is authorized,
under the direction of the Governor, to issue bonds in the name and on behalf of
the State in an amount not exceeding $8,000,000 to raise funds for low and
moderate-income citizens to obtain low interest loans or grants for energy
conservation improvements. The
bonds are a pledge of the full faith and credit of the State.
The bonds may not run for a period longer than 20 years from the date of
the original issue of the bonds. At
the discretion of the Treasurer of State, with the approval of the Governor, any
issuance of bonds may contain a call feature.}

^{Sec. D-2. Records of
bonds issued to be kept by the Treasurer of State.
The Treasurer of State shall keep an account of each bond showing the
number of the bond, the name of the successful bidder to whom sold, the amount
received for the bond, the date of sale and the date when payable.}

^{Sec. D-3. Sale; how
negotiated; proceeds appropriated. The
Treasurer of State may negotiate the sale of the bonds by direction of the
Governor, but no bond may be loaned, pledged or hypothecated on behalf of the
State. The proceeds of the sale of
the bonds, which must be held by the Treasurer of State, and paid by the
Treasurer of State, upon warrants drawn by the State Controller, are
appropriated solely for the purposes set forth in this Part.
Any unencumbered balances remaining at the completion of the project in
section 6 of this Part lapse to the debt service account established for the
retirement of these bonds.}

^{Sec. D-4. Interest and
debt retirement. The Treasurer of State shall pay interest due or accruing on
any bonds issued under this Part and all sums coming due for payment of bonds at
maturity.}

^{Sec. D-5. Disbursement of
bond proceeds. The
proceeds of the bonds must be expended as set out in section 6 of this Part
under the direction and supervision of the Maine State Housing Authority.}

^{Sec. D-6. Allocation from
General Fund bond issue; low interest loans or grants for energy conservation
improvements for low and moderate-income citizens.
The
proceeds of the sale of bonds must be expended as designated in the following
schedule.}

^{Sec. D-7. Contingent upon
ratification of bond issue. Sections
1 to 6 of this Part do not become effective unless the people of the State have
ratified the issuance of bonds as set forth in this Part.}

^{Sec. D-8. Appropriation
balances at year end. At the end of each fiscal
year, all unencumbered appropriation balances representing state money carry
forward. Bond proceeds that have
not been expended within 10 years after the date of the sale of the bonds lapse
to General Fund debt service.}

^{Sec. D-9. Bonds authorized
but not issued. Any
bonds authorized but not issued, or for which bond anticipation notes are not
issued within 5 years of ratification of this Part, are deauthorized and may not
be issued; except that the Legislature may, within 2 years after the expiration
of that 5-year period, extend the period for issuing any remaining unissued
bonds or bond anticipation notes for an additional amount of time not to exceed
5 years.}

^{Sec. D-10. Referendum for
ratification; submission at statewide election; form of question; effective
date. This
Part must be submitted to the legal voters of the State of Maine at a statewide
election held on the Tuesday following the first Monday of November following
passage of this Part. The municipal
officers of this State shall notify the inhabitants of their respective cities,
towns and plantations to meet, in the manner prescribed by law for holding a
statewide election, to vote on the acceptance or rejection of this Part by
voting on the following question:}

^{“Do
you favor an $8,000,000 bond issue for direct loans or grants to Maine citizens
for energy conservation improvements?”}

^{The legal voters of each city, town and plantation shall vote by ballot
on this question and designate their choice by a cross or check mark placed
within a corresponding square below the word “Yes” or No.” The ballots must be received, sorted, counted and declared in
open ward, town and plantation meetings and returns made to the Secretary of
State in the same manner as votes for members of the Legislature.
The Governor shall review the returns and, if a majority of the legal
votes are cast in favor of this Part, the Governor shall proclaim the result
without delay, and the Part becomes effective 30 days after the date of the
proclamation.}

^{The Secretary of State shall prepare and furnish to each city, town and
plantation all ballots, returns and copies of this Part necessary to carry out
the purpose of this referendum.}

^{1. Fund established. The
Energy Conservation Revolving Loan Fund, referred to in this section as the
“fund,” is established as a nonlapsing fund administered by the Maine State
Housing Authority. The fund
consists of loan repayments of principal and interest made by eligible
applicants to the fund and other money available to the fund including eligible
investment earnings from fund assets. The
fund must be held separate from all other money, funds and accounts, and all
eligible investments earnings from fund assets must be credited to the fund.}

^{2. Fund purposes.
The Maine State Housing Authority shall administer the fund to provide
direct loans or grants for all or part of certain energy conservation projects
on an annual basis. The Maine State
Housing Authority shall identify conservation improvements that offer low and
moderate-income households the highest paybacks.}

^{3. Application
process. The Maine State
Housing Authority with assistance from the Finance Authority of Maine shall
adopt rules establishing an application process for conservation improvement
grants and low interest conservation loans.}

^{4. Rules. The Maine State Housing Authority shall adopt rules necessary
to administer the fund. Rules
adopted pursuant to this section are routine technical rules pursuant to Title
5, chapter 375, subchapter II-A.}

^{5. Report. The Maine State Housing Authority shall submit to the joint
standing committee of the legislature having jurisdiction over business and
economic development matters and the joint standing committee of the Legislature
having jurisdiction over appropriations and financial affairs an update on the
fund by January 1, 2003 and every year thereafter.}

^{Sec. E-2. Application:
contingent on bond issue. This
Part takes effect only if an $8,000,000 general revenue bond issue for low
interest loans or grants for energy conservation improvements for low and
moderate-income citizens is approved by the voters of this State.}

^{Sec. F-1. The Maine State Housing Authority shall report on the
feasibility of establishing an Office of Energy Conservation.}

^{The Maine State Housing Authority, with assistance from the State
Planning Office, shall report to the joint standing committee of the legislature
having jurisdiction over utilities and energy and the joint standing committee
of the legislature having jurisdiction over appropriations and financial affairs
on the feasibility of establishing an Office of Energy Conservation within the
Maine State Housing Authority. The
new Office of Energy Conservation would be established with existing personnel
performing similar functions elsewhere in State government along with two new
positions and would be charged with the following:}

^{This report must be submitted with accompanying legislation if necessary
to the First Regular Session of the 120th Legislature by March 15,
2001.}

^{Sec. G-1. Maine State Housing Authority shall annually study the
percentage of Low-income Home Energy Assistance Program funds used for
weatherization services.}

^{The Maine State Housing Authority shall in April of 2001, 2002, and 2003
investigate the possibility of increasing the percentage of Low-income Home
Energy Assistance Program funds from 15% up to as high as 25% for weatherization
services.}

^{§ 121 Effects of interruptible gas services.
The Maine Public Utilities
Commission shall monitor the effects of interruptible gas services on the supply
and price of home heating oil in the State of Maine.}

^{Sec. I-1. The State Planning Office shall conduct a study regarding
reduction of energy consumption.}

The State Planning Office shall conduct a study to determine whether this State can reduce its per capita residential energy consumption by 25% by 2011. Particular attention must be paid to low to moderate-income households that lack the financial and technical resources to identify energy conservation opportunities and to acquire the conservation goods and services needed to achieve significant savings. The State Planning Office shall report on requiring higher efficiency ratings for heating systems, appliances and energy building standards. The State Planning Office shall also analyze the possibility of requiring higher efficiency ratings for heating systems, appliances and energy building standards. The State Planning Office shall investigate the value of tax incentives for implementing measures identified in energy audits for energy improvements for Maine citizens. The State Planning Office shall report to the joint standing committee of the legislature having jurisdiction over taxation, the joint standing committee of the legislature having jurisdiction over utilities and energy and the joint standing committee of the legislature having jurisdiction over appropriations and financial affairs on establishing Maine energy independence programs and financing mechanisms to achieve this goal. The State Planning Office shall submit a report with accompanying legislation to the First Regular Session of the 120th Legislature by March 15, 2001.

^{Emergency Clause:
This Act takes effect when approved except as otherwise indicated.}

^{This bill implements the recommendations of the Task Force to Reduce the
Burden of Home Heating Costs on Low-income Households established in the Second
Regular Session of the 119th Legislature by Resolve 1999, chapter
132. The bill does the following:}

^{1)
Short-term Energy Outlook, Energy Information Administration,
Office of Energy Markets and End Use, U.S. Department of Energy, October 2000.}

^{2)
Low-income Home Energy Assistance Program:
Annual Report to the Joint Standing Committee on Appropriations and
Financial Affairs, Maine State Housing Authority, June 30, 2000.}

^{Appendix
A - Legislation Authorizing The Task Force Resolve 1999, Chapter 132}

^{Sen. Richard J. Carey}	^{State Senator}	^Belgrade
^{Rep. Randall L. Berry}	^{State Representative}	^Livermore

^{Sen. Norman K. Ferguson, Jr.}	^{State Senator}	^Hanover
^{Rep. Donald P. Berry, Sr.}	^{State Representative}	^Belmont

^{Stephen Ward}	^{Office of the Public Advocate}	^Augusta
^{Peter Merrill}	^{Maine State Housing Authority}	^Augusta
^{Eleanor West}	^{Washington Hancock CAP}	^Milbridge
^{Thomas Nelson}	^{York County CAC}	^Sanford
^{Pat Averill}	^{Representing low-income citizens}	^Glenburn
^{Jim Peary}	^{Eastern Maine Tech. College}	^Bangor
^{Dennis Lajoie}	^{Community Concepts}	^{South Paris}

^{Donn Gifford}	^Wadleigh’s	^Hallowell
^{Geoffrey Green}	^{Central Maine Power Co.}	^Augusta
^{Patricia Dyer}	^{Northern Utilities}	^Portland
^{Stephen Wood}	^{S.J. Wood Construction Co.}	^Winthrop
^{Patricia Aho}	^{Maine Petroleum Association}	^Augusta

IV. RECOMMENDED LEGISLATION

An Act to Implement the Recommendations of the Task Force to Reduce the Burden of Home Heating Costs on Low-income Households

^{IV.
RECOMMENDED LEGISLATION}

^{An Act
to Implement the Recommendations of the Task Force to Reduce the Burden of Home
Heating Costs on Low-income Households}