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LIHEAP IM 2010-13 Use of LIHEAP Funds Coordinated with Vendor Assistance Programs

Special Topics

Published: July 21, 2010
Low Income Home Energy Assistance Program (LIHEAP)
Guidance, Policies, Procedures, Information Memorandums (IM)


                                                          TRIBES/TRIBAL ORGANIZATIONS

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




Nick St. Angelo
Division of Energy Assistance
Office of Community Services


Last Reviewed: June 14, 2019