How bad is New Jersey’s economy?
Here’s one clue: Nearly a quarter of a million households rely on state assistance to pay their gas and electric bills. That roughly translates into approximately 1 million people relying on government help to keep the lights and heat on, according to Board of Public Utilities (BPU) Commissioner Joseph Fiordaliso.
“It just gives us an idea of what is going on in the state,” said Fiordaliso, a few minutes before voting with other commissioners yesterday to approve a new budget that will provide help to low-income residents and others who have encountered unexpected layoffs, job losses, or illnesses that make paying utility bills difficult, if not impossible.
“I’m thankful we have a program like this in the state,” he said. If his projection is accurate, the programs now provide a safety net for one in nine New Jerseyans.
It isn’t cheap, though.
For the coming winter of 2011-2012, the state has budgeted $313 million for two funds designed to help homeowners, renters, and others pay their utility bills, a slight increase from the $287.5 million the programs cost the previous year.
That is nearly the amount the state has budgeted for clean energy programs, a total of $379 million for the coming fiscal year 2012. All three programs rely on the same source of funding — a surcharge on most customers’ gas and electric bills. The surcharge, dubbed the societal benefits charge (SBC), has come under increasing criticism in recent years, primarily over the amount of money used to subsidize clean energy programs.
Not much criticism has been leveled at the energy assistance programs, however, even though its costs have spiraled upward as the economy tumbled down.
The rise in the cost of the program is attributed to a change made several years ago, when the board decided certain low-income households should pay no more than 6 percent of their income to cover utility bills if they met a federal threshold. The cost of the program in the coming winter is projected to run $242 million, according to Kristi Izzo, secretary to the BPU. That is a slight bump up from the $214.9 million spent the previous year, she said.
The other component of the program funds the state’s Lifeline initiative at a cost of about $71 million. Lifeline provides a onetime $225 grant to eligible customers who have experienced problems paying utility bills for unforeseen circumstances, such as an unexpected illness or layoff.
While the total costs of the two programs seem large, when spread over the entire base of gas and electric consumers it will amount to about a $3.00 increase a year for the typical customer, according to Izzo. About 223,000 households are enrolled, which is slight drop from the previous year of 228,000, Izzo said.
The program is not without its backers. A few years ago, Izzo noted AARP described the program as one of the best in the nation.
Whether the program remains at those levels remains to be seen. The Christie administration has repeatedly talked about reducing the societal benefits charge, even eliminating it by creating a revolving loan program for clean energy programs. That idea, however, got a cool reception from a special panel that suggested revolving loan programs may not be a quick or inexpensive way to finance energy efficiency projects or to promote renewable enegy.
In any event, it seems unlikely utility customers will see a steep drop in the societal benefit surcharges, given the funding levels in the two biggest programs. Together they will raise $692 million from ratepayers in coming months.