Use of LIHEAP Funds Coordinated with Vendor
Assistance Programs
THIS CONTAINS INFORMATION ISSUED BY THE U.S. ADMINISTRATION FOR
CHILDREN AND FAMILIES IN LIHEAP INFORMATION MEMORANDUM TRANSMITTAL
NO. LIHEAP-IM-2010-13, DATED 7/21/10
TO: LOW INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP)
GRANTEES AND OTHER INTERESTED PARTIES
GUIDANCE
INTENDED FOR: XX STATES
_______ TRIBES/TRIBAL ORGANIZATIONS
_______ TERRITORIES
SUBJECT: Use of LIHEAP Funds Coordinated with Vendor
Assistance Programs.
RELATED
REFERENCES: The Low-Income Home Energy Assistance Act,
Title XXVI of the Omnibus Budget
Reconciliation Act of 1981, (Public Law 97-
35), as amended; HHS Block Grant Regulations,
45 CFR Part 96; "Integrating Government-
Funded and Ratepayer-Funded Low-Income Fuel
Assistance Programs," HHS 2002.
PURPOSE: To advise grantees of the allowable uses of
LIHEAP funds when used in coordination with
Vendor Energy Assistance Programs, such as
PIPPs.
BACKGROUND: The deregulation of the gas and electric
industry over the past 20 years created a new
funding base to support public benefit
programs that assist low-income households
with their energy costs. One energy
assistance program supported by public
benefit funds is the Percentage of Income
Payment Plan or PIPP. This guidance is meant
for any LIHEAP program that is presently
coordinating or plans to coordinate LIHEAP
funds with vendor energy assistance programs,
such as PIPPs.
Usually the PIPP allows a low-income
household to pay a reduced amount on his
energy bill, usually a set percent of his
income, providing the customer an affordable
energy bill. The remainder of the bill, or
discounted amount, is funded through public
benefit funds or other funds.
As PIPPs are being established nationwide,
HHS is learning about the ways that LIHEAP
funds are being used to support PIPP programs.
PIPP programs are established to assist low-
income households in dealing with their
high energy burdens, and the LIHEAP statute
requires grantees to coordinate with similar
energy assistance programs. However, HHS is
concerned that LIHEAP funds used in PIPPs or
other vendor assistance programs may be
administered without regard to LIHEAP
statutory or regulatory requirements. Through
this IM, HHS wishes to clarify ways that
LIHEAP funds may be coordinated with vendor
energy assistance programs, such as PIPPs,
and continue to be governed by the LIHEAP
statute and regulations.
CONTENT: As required by the following sections of the
LIHEAP statute, any LIHEAP funds provided to
low-income households to meet their home
energy needs must be expended in accordance
with the LIHEAP statute, HHS block grant
regulations, State plan, and plan amendments.
Section 2605(a) requires grantees to:
Assist low-income households,
particularly those with the lowest
income, that pay a high proportion of
household income for home energy,
primarily in meeting their immediate
home energy needs.
Section 2605(b)(1)(D) requires grantees to:
Plan, develop and administer the State's
program under this title.and the State
agrees not to use such funds for any
purposes other than those specified in
this title.
Section 2605(d) requires grantees to:
Expend funds in accordance with the
State plan under this title or in
accordance with revisions applicable to
such State plan.
If a State wishes to coordinate its LIHEAP
funds with a vendor's energy assistance a
program, such as a PIPP, the State must
ensure that those LIHEAP funds continue to be
governed by the LIHEAP statute, regulations
and State plan.
If any LIHEAP funds coordinated with a vendor
assistance program, including a PIPP program,
are expended in a way that is different from
the use of LIHEAP funds as described in the
State's LIHEAP plan, the description for the
use of LIHEAP funds under the vendor program
must also be included in the LIHEAP plan.
LIHEAP funds used by vendors in ways that are
different than what is described in the
LIHEAP plan may constitute an improper use of
funds, and States may be held responsible for
the repayment to HHS for the use of such
funds.
We have provided below HHS guidance that
governs the use of LIHEAP funds coordinated
with PIPPs or other vendor energy assistance
programs, so that LIHEAP funds are used in
compliance with the LIHEAP statute,
regulations and State plan.
• When LIHEAP funds are provided to a
utility on behalf of a client to pay his
energy bill, the utility does not have
the independent authority to use those
funds for any other customer or for any
other purpose.
• When a LIHEAP benefit is provided to a
utility vendor to support a PIPP
discount, and the vendor applies that
benefit to the client's bill differently
than it would to a non-PIPP LIHEAP
client, that payment process must be
described in the LIHEAP plan. For
example, a LIHEAP benefit provided to
support a PIPP discount may be applied
to the client's bill incrementally, over
a period of time, and be represented to
the client as the "PIPP" discount. It
may not be provided immediately to cover
a customer's full monthly bill as
provided to other LIHEAP customers.
This difference must be described in the
LIHEAP plan, since this may affect the
timely issuance of benefits as required
by Assurance 5 (Section 2605(b)(5) of
the LIHEAP statute.)
• The LIHEAP client should be informed of
how his LIHEAP benefit will be applied
to his bill under the PIPP program.
This is especially important for those
LIHEAP grantees that rely on LIHEAP
clients to ensure the vendor is in
compliance with its vendor agreement and
applying LIHEAP benefits properly.
• When LIHEAP funds are applied to a
LIHEAP client's utility arrearage amount
under the PIPP program, this use of
LIHEAP funds must be described in the
LIHEAP plan.
• HHS has determined that the process of
subtracting the LIHEAP benefit from the
client's energy bill and to then calculate
the PIPP discount and/or the client's
payment amount appears to be using
LIHEAP as a resource and creates an
inequity or adverse treatment for LIHEAP
clients participating in the PIPP. Such
use of LIHEAP funds appears to be out of
compliance with Sections 2605(b)(7) of
the LIHEAP statute, which in part states:
"...no household receiving assistance
under this title will be treated
adversely because of such assistance
under applicable provisions of State law
or public regulatory requirements..."
and Section 2605(f) which states "...home
energy assistance payments or allowances
provided directly to, or indirectly for
the benefit of, an eligible household
under this title shall not be considered
income or resources of such household
(or any member thereof) for any purpose
under any Federal or State law..." HHS
will question any such practice and ask
for a grantee's legal opinion supporting
this practice and its compliance with
the LIHEAP statute.
• In accordance with Section 2605(b)(10)
of the LIHEAP statute, States must
monitor the use of LIHEAP funds
coordinated with PIPP programs to ensure
the proper disbursal of and accounting
for LIHEAP funds.
Descriptions in State LIHEAP Plans
The State may find it appropriate to describe
its coordination and different processes for
LIHEAP clients receiving LIHEAP benefits
through the PIPP program as an attachment to
its LIHEAP plan, or it may decide to only
highlight those different PIPP activities
within its LIHEAP plan descriptions under
applicable assurances. Those LIHEAP plan
descriptions that may need to be expanded to
include PIPP activities may include
descriptions for Assurances 2, 3, 4, 5, 6, 7,
10 and 13 (Sections 2605(b)(2), (3), (4), (5),
(6), (7), (10) and (13) of the LIHEAP
statute.)
However the State chooses to describe the
uses of LIHEAP funds coordinated with PIPP
programs, there should be a clear
understanding of these different uses to
facilitate (a) review by the public during
the State's public participation and public
hearing processes and (b) HHS' annual review
of LIHEAP State plan applications for
completeness and compliance with the LIHEAP
statute and regulations. If descriptions for
the use of LIHEAP funds for PIPP activities
are not clearly identified, HHS may request
additional information, which will delay the
review of the State's annual application and
issuance of the first quarter grant award.
If changes to your FY 2011 plan to include
PIPP activities are made after the State's
public hearing process for the FY 2011 LIHEAP
plan, the State must include the changes in
its FY 2012 plan, even if the plan is an
abbreviated plan. Additionally, please note
that any substantial revision to a LIHEAP
plan must receive timely and meaningful
public review.
To ensure that the State's use of LIHEAP
funds coordinated with vendor assistance
programs, such as PIPPs, is in compliance
with the LIHEAP statute and HHS block grant
regulations, the State may wish to seek
guidance from its legal counsel.
INQUIRIES TO: Charlotte Abney
Branch Chief for Energy Policy and Evaluation
Division of Energy Assistance
Office of Community Services, ACF, HHS
370 L'Enfant Promenade, S.W.
Washington, D.C. 20447
Telephone: (202) 401-5334
Fax: (202) 401-5661
charlotte.abney@acf.hhs.gov
______________/s_____________
Nick St. Angelo
Director
Division of Energy Assistance
Office of Community Services
