With Warmer Weather, NJ Spends Less on Energy Bills for Low-Income Families

Tom Johnson | September 14, 2012 | Energy & Environment
Budget falls even as more enroll in state programs to help the needy pay utility bills

For the first time in several years, the state’s spending to help low-income families pay their energy bills is dropping.

The state Board of Public Utilities yesterday approved new budgets for the Universal Service Fund and Lifeline programs, both of which dipped slightly after steadily rising in past years as the economy weakened.

The USF, which ensures low-income households pay no more than 6 percent of household income on utility bills, fell to $230 million, down from $242.4 million the previous year, according to Kristi Izzo, secretary to the BPU. At the same time, it adopted a $65.7 million budget for the Lifeline program, which offers senior citizens and the disabled with a $225 energy benefit. It cost $71 million the previous year.

Even with a drop in the budget, the state managed to have more people enrolled in the programs than the previous year, according to the BPU. The USF had 221,451 people enrolled as of August 2011, up slightly from 220,462 the previous August. The two programs are immensely popular, with more than 630,000 applications received as of August 2012.

The biggest factors in the drop in spending have been the warm weather New Jersey has experienced in the past year and the huge drop in natural gas prices, which have helped lower utility bills, according to BPU officials. With warmer weather, too, the volume of natural gas delivered by the state’s four gas utilities also has dropped, another factor in the drop in spending for low-energy income assistance, according to BPU officials.

“The winter before last year was brutal,” said BPU Commissioner Jeanne Fox, who noted last year’s winter was among the warmest on record.

Still the drop is somewhat surprising given the state’s 9.8 percent unemployment rate and New Jersey’s electricity rates, which typically rank among the top 10 highest in the nation.

Both programs are financed by a contentious surcharge on all utility customers’ gas and electric bills, which has come under growing criticism from business and industry for increasing already steep energy costs in New Jersey.

For the typical gas and electrical residential customer, the surcharge, dubbed the societal benefits charge, amounts to $45.90 a year, Izzo said. The drop in the annual budget will decrease the surcharge for the average residential customer $1.51 over the year.

Businesses, however, bear the biggest brunt of the surcharge, accounting for more than 60 percent of the funds raised by the surcharge. Some businesses pay as much as $1 million or more a year just for the societal benefit charge, particularly institutions and manufacturers that use a lot of electricity and natural gas.

The BPU also adopted an administrative budget for the Department of Community Affairs, which administers energy assistance program. Its budget is $7.9 million, an 18 percent increase over the previous year.

Besides the low-income energy assistance program, the surcharge also finances other state programs, most notably New Jersey’s clean energy program. Its original budget for the current year was $651 million, but the budget has been sliced to $339 million because the Legislature and Christie administration diverted some of the fund to help plug a hole in the state budget.

The costs of the program has spurred the agency to begin considering whether to phase out grants for clean energy initiatives and replace them with a revolving loan program, a step advocates say could reduce the steep societal benefits charges.