Special Subcommittee on Energy


Minutes of the<MeetNo1> 1st Meeting

of the 2015 Interim


<MeetMDY1> June 19, 2015


Call to Order and Roll Call

The<MeetNo2> 1st meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> June 19, 2015, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Senator Jared Carpenter, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Jared Carpenter, Co-Chair; Senators Ernie Harris, Jimmy Higdon, Dorsey Ridley, Brandon Smith, and Robin L. Webb; Representatives Rocky Adkins, Hubert Collins, Leslie Combs, Tim Couch, Will Coursey, Jim Gooch Jr., Sannie Overly, Tom Riner, John Short, Kevin Sinnette, and Fitz Steele.


Guests: Virginia Carrington, Assistant Director, Division of Family Support, Department for Community Based Services, Todd Trapp, Branch Manager, Policy Development Branch, Division of Family Support, Department for Community Based Services, Cabinet for Health and Family Services; Robert Jones, Executive Director, Community Action Kentucky; Ron Willhite, Director of School Energy Managers Program, Kentucky School Boards Association; Jim McClanahan, Energy Manager for Woodford and Scott County Schools, and Ralph Slone, Head Custodian, Woodford County Schools.


LRC Staff: D. Todd Littlefield, Janine Coy-Geeslin, and Susan Spoonamore, Committee Assistant.


Virginia Carrington, Assistant Director, Division of Family Support, Department for Community Based Services, Cabinet for Health and Family Services; Todd Trapp, Branch Manager, Policy Development Branch, Division of Family Support, Department for Community Based Services, Cabinet for Health and Family Services, and Robert Jones, Executive Director, Community Action Kentucky, discussed the Low Income Home Energy Assistance Program (LIHEAP) Block Grant Application for Fiscal Year 2016.


Presentation and public hearing on the Low Income Home Energy Assistance Program (LIHEAP) Block Grant Application – FY16

Mr. Todd Trapp explained that the LIHEAP program offers low-income individuals with a safety net for their heating and cooling costs and energy conservation efforts. Assistance is targeted toward households with the lowest incomes. LIHEAP received $29.9 million of which ninety percent is used directly for Kentucky citizens. He said that $25,000 is reserved to assist families with an energy payment, if it results in the removal of a child from the family.


Mr. Trapp stated that there are 3 components to the program: subsidy, crisis and weatherization assistance. He said that in order to receive benefits, an application must be completed. Once eligibility is established, payment is made to the heating fuel provider or utility. The six primary heating fuels are natural gas, electric, fuel oil, propane, coal and wood. Based on the average cost per unit of fuel, he said that propane and fuel oil represent the highest cost of heating fuels. Benefit amounts are designed so that the highest level of assistance will be provided to households with the lowest incomes, relative to the federal poverty guidelines, and the highest heating season energy costs.


Mr. Trapp said that the crisis component is for those who have received a past-due or disconnect notice if natural gas or electric is the heat source. For those using propane, fuel oil, coal, wood or kerosene, they must be within four days of running out of fuel. The maximum amount of benefits that any household can receive is $250 for gas or electric or up to two tons of coal, two cords of wood, or 200 gallons of propane, fuel oil or kerosene. The Cabinet for Health and Family Services (CHS) may approve increases if program funding is enhanced through a federal or state award. Mr. Trapp said that each eligible household, except those in the 0 – 74 percent poverty level must pay a co-payment. Households residing in subsidized housing are responsible for a higher co-payment since they receive a utility allowance.


Mr. Trapp said that the weatherization assistance program gives priority to families residing in high energy consuming units, those families who have a high-energy burden, those families who have vulnerable members and families with children who are at risk of being removed from their homes.


In response to Senator Higdon, Robert Jones, Executive Director, Community Action Kentucky (CAK) said that ten percent of LIHEAP Block Grant funds are used for administration. Senator Higdon stated it would be better to have more money in the subsidy program rather than the crisis component. Mr. Jones said that any money that has not been expended in the subsidy program is rolled into the crisis component.


Representative Gooch stated that the proposed Environmental Protection Agency (EPA) regulations could cause utility rates to go up which will increase the number of applicants applying for LIHEAP.


In response to Representative Collins, Mr. Trapp said that an eligible applicant will only receive one payment for utility bills. He also agreed that some people who need help will be left out because the funds have been depleted.


In response to Senator Carpenter, Mr. Trapp said that a portion of LIHEAP funds are transferred to the weatherization program which helps with energy efficiency. He also said that payments from LIHEAP are paid directly to the vendor.


In response to Representative Riner, Mr. Trapp said the Cabinet would review the recommendations contained in a letter from the Metropolitan Housing Coalition.


In response to Representative Coursey, Mr. Jones explained that an energy efficiency audit is performed on a residence and the information from that audit details what type of weatherization is needed. He said that some types of weatherization can include water heaters, insulation, windows and doors. Roofing is expensive and an eligible household can only receive up to $6,500 for weatherization. Contractors can get on a vendor list at the Community Action Kentucky. Mr. Jones said it was hard to find contractors to do the necessary work because reimbursements were low.


In response to questions from Senator Higdon, Mr. Trapp said that programs in other states are probably structured differently than Kentucky’s. He said that the Cabinet is mandated to run a crisis program. Ms. Carrington said that there are opportunities for program changes if necessary. She also said that the Cabinet does not have direct dialogue with the Metropolitan Housing Corporation.


In response to Senator Webb, Mr. Jones said that on an operational level, Community Action Kentucky oversees the program through a distribution formula. He said that the Cabinet does an audit to ensure that CAK complies with the funding requirements. He also described three primary factors in the distribution formula: prior usage, poverty rate and population. The formula does a good job balancing between usage and population but some areas will run out of funding and other areas may not use all their funds. Mr. Jones stated that Kentucky faces challenges especially in the areas that use more deliverable fuel which increases the cost. He said that he would provide a map showing the distribution of funds, surplus of funds and funds that were depleted before the heating season was done.


In response to Representative Collins, Ms. Carrington stated that the maximum benefit for a household is $250 unless the Cabinet approves an increase to the benefit amount. This may occur if program funding is enhanced through a federal or state award. Mr. Jones said that so far CAK has not encountered any issues with partially filling up a propane tank.


Cathy Hinko, Director, Metropolitan Housing Coalition (MHC), explained that the Coalition is based in Louisville, Kentucky, and is a non-profit organization focusing on fair and affordable housing in the Louisville Metropolitan Statistical area. She stated that MHC is concerned about the policies relating to the crisis component of LIHEAP. She said that an analysis of the policies showed a deliberate and systemic bias to siphon off funds for urban areas so extra funds may be redistributed to non-urban areas which undermine the distribution mandated by federal law. The bias masks itself as policies applied to households in an area with metered utilities and policies applied to areas where heating is through the purchase of bulk fuel. The inequity is increased by apportioning part of the crisis funds based on the prior year’s expenditure.


She stated that Jefferson County was home to 43.39 percent of all African Americans living in Kentucky and they are disproportionately lower-income compared to whites. She said that in Louisville 11 percent of whites lived in poverty compared to 26 percent of African Americans. Additionally, African Americans in Louisville live in extreme segregation and those areas have the oldest housing. Both by poverty level and neighborhood, there is disproportionate need for energy assistance by the African American population. Ms. Hinko stated that this is a racially disparate impact that violates Section VI of the Civil Rights Act and the policies should be reviewed for compliance with all federal laws.


 Ms. Hinko noted the following proposed solutions for changes at the state level which would allow low-income households in Jefferson County to fully benefit from energy assistance as intended by the federal program. They are as follows:

·        Make LIHEAP a year-round program using best practice of states using the funds year round;

·        Review the disbursement to make sure that urban areas are not still being punished for failing to spend all monies in prior years (part of the distribution formula);

·        Allow for self-declaration of need in metered areas in the crisis component;

·        Use a fixed allocation for crisis that would reflect dollars spent per person in non-metered areas and make any increase equitable;

·        Allow any unspent funds from the heating season to be held by the local Community Action agencies until the cooling season and/or be used for energy efficient modifications to residences; and

·        Review the allocation to spend more funds on energy efficient rehabilitation.


The proposed findings of fact regarding the LIHEAP Block Grant were approved by roll call vote, upon motion made by Senator Webb and a second by Representative Short.


Successes in School Energy Efficiency

Mr. Ron Willhite, Director of School Energy Mangers Program, Kentucky School Boards Association, Jim McClanahan, Energy Manger for Woodford and Scott County Schools and Ralph Slone, Head Custodian, Woodford County Schools discussed successes in school energy efficiency.


Mr. Willhite said that pursuant to House Bill 2 (2008) schools were directed to develop, implement and monitor an Energy Management Plan. The Kentucky School Boards Association (KBA) collects annual reports and sends the results to the local Department of Education and the Legislative Research Commission.


He said that the average school district in Kentucky, K-12 (excluding Jefferson and Fayette), spends approximately $843,000 per year on energy costs. He stated that school culture is very different compared to businesses. A teacher can bring portable heaters, refrigerators, additional lights, and microwaves. Some teachers even have control over the temperature in their rooms.


Mr. Willhite said there is a funding challenge in school districts where the districts do not have cash or bonding capacity to invest in energy efficiency. It is even a challenge to find an energy manager in a teaching position or otherwise. Because energy technology is becoming more sophisticated it is important to have an energy manager in the school.


Mr. Willhite said that Kentucky’s School energy efficiency average was 60 compared to the national level of 73. In Kentucky’s best district, the energy star level was 35 compared to the national level of 50.


In response to Representative Collins, Mr. Willhite said the numbers of 75 and 60 reflect the amount of energy used per square foot, with a lower number reflecting a more energy efficient building.


Mr. Willhite said more schools were becoming Energy Star buildings. He said that Kentucky went from being number 4 in the nation as Energy Star Certified to being number 2. From 2008 to 2014 school districts have saved $48 million by focusing on energy management.


Mr. McClanahan stated that energy management has changed the culture and lifestyles of teachers and students at school and at home. He said that the School Energy Management (SEMP) program was initiated in 2009 by conducting a utility study at Scott County. He explained that Woodford County was not a growing district but once money was obtained the school personnel asked Mr. McClanahan for assistance.


Mr. McClanahan explained that Scott County was the largest district with all schools meeting the Energy Star standards. He said Scott County went from number 25 in the nation to number 5. The cumulative cost saved was $2,200,000. He said that Woodford County came onboard in 2014 and so far there have been four schools to reach Energy Star level. The cumulative cost avoided in Woodford County has been $470,000.


In conclusion, Mr. McClanahan said that there were several key factors for having a successful energy management program; the program must be supported by the school board, superintendent, principals, faculty, staff and students by educating all individuals on saving energy. It was also important to recognize the achievements and hard work of each improving school.


Mr. Ralph Slone, head custodian and energy efficiency practitioner, Woodford County School District, said that when he was first approached about the Energy Savings Program he was skeptical. As time went on and he started doing small things like cutting off lights, turning the heat and air off when rooms were not in use. When the results came back and showed the decrease in the amount of energy used then he got on board with the program and became a believer. He stated that energy costs were going to increase and it was important to keep on with the momentum, funding and training. He also said that all school districts do not have an energy manager because of the lack of funding or being able to hire the right people with proper training. He said if every school in the state was part of the program, the annual savings potential could reach $62,000,000.


Mr. Slone stated that it would be important to consider approving the Energy Cabinet’s budget expansion of $750,000 next biennium to fund continuation of KSBA and SEMP Core Leadership Group. He also emphasized the importance of an Energy Manager and the need for funding. In closing, he asked that consideration be given to creating a mechanism to fund energy improvement projects up to $1,000,000.


In response to Representative Collins, Mr. McClanahan said that Woodford County saved approximately $70,000 in electricity costs last year. If all the schools across the state reached Energy Star level, there could be an annual savings of $39 million.


There being no further business, the meeting was adjourned.