2024 Tax Preference Review:
Public Utility Tax Credit for Home Energy Assistance
November 2023
Pete van Moorsel, Team
Lead
Stephanie Hoffman,
Project Coordinator | Eric Thomas,
Legislative Auditor
Preference offers public utility tax credit to electric and gas utilities that give home energy assistance to low-income households
Electric and gas utilities may apply for a credit (RCW 82.16.0497) against their public utility tax (PUT) liability when they:
- Offer discounts that reduce energy costs for low-income households, or
- Contribute money to one of Washington's community action agencies established under RCW 43.63A.115.
Credit amounts are linked to a federal energy assistance program
A utility may claim a credit for 50% of the energy assistance they provide. Statute limits the total credit for all utilities to $2.5 million per fiscal year, so each utility's credit is capped. The cap is based on the federal Low Income Home Energy Assistance Program (LIHEAP) funds the utility received in the previous year.
How LIHEAP works: Community action agencies are local organizations that administer federal and state antipoverty programs in Washington. They receive LIHEAP funds and review the applications from households seeking assistance. To be eligible for LIHEAP assistance, a household's income may not be more than 150% of federal poverty guidelines. The agencies reduce the energy costs for eligible households by transferring LIHEAP funds to the utilities. The utilities then credit the accounts of low-income customers or reduce their bills.
Utilities may not claim the public utility tax credit for energy assistance funded with LIHEAP grants. The credit applies to additional funding the utilities provide beyond the federal program.
Preference intended to encourage utilities to provide additional home energy assistance
The Legislature did not state an objective for the preference.
JLARC staff infer that:
- The objective is to encourage electric and gas utilities to provide energy assistance to low-income households in addition to the amounts offered through LIHEAP.
-
Additional energy assistance is intended to reduce the households' energy burden. Energy burden is the percentage of gross income a household spends on residential energy bills.
This study will address the following questions
Study questions define the scope of the audit, based on the study mandate. They reflect preliminary outreach, research, and analysis of potential racial equity considerations per RCW 44.28.076.
- Have utilities that use the preference increased the amount of energy assistance they provide?
- How does the distribution of utility-funded energy assistance compare to distribution of LIHEAP funds?
- How does the amount of additional energy assistance offered by utilities
compare to the energy burden of Washington low-income households?
- What are the racial and ethnic characteristics of the households that received assistance?
What's next
- Preliminary Report: July 2024
- Proposed Final Report: December 2024
Study team
Pete van Moorsel, Team Lead, (360) 786-5185
Dana Lynn, Research Analyst, (360) 786-5281
Geoff Cunningham, Research
Analyst, (360) 786-5672
Stephanie Hoffman, Project
Coordinator, (360) 786-5297
Eric Thomas, Legislative Auditor,
(360) 786-5182
Washington Joint Legislative Audit & Review Committee   
|
106 11th Avenue SW, Suite 2500 |