Florida-Florida's Energy Office is involved in a number of efficiency and renewable energy activities. One of the most promising activities is in the area of building code development and upgrades. Primarily as a result of Hurricane Andrew, not to mention a number of relatively minor hurricanes since Andrew, the energy office has been working with members of the insurance and home building community to develop building codes that will enable new homes in Florida to withstand stronger winds and coastal flooding while reducing energy usage in the residential and commercial sector. These codes are near the implementation stage and a number of states are watching this process closely.

Oregon-The State of Oregon has some of the most progressive efficiency programs in the nation. One of the most successful efficiency programs is in fact a tax rebate program. The state allows tax rebates on specified commercial business investments in efficiency. Once again, this is a program that is being watched closely by other states, particularly, those with peak electricity capacity problems, which are paying attention to the demand side energy savings resulting from the implementation of tax incentives.

South Dakota-Electricity generated from wind turbines is proving to be a big winner in the Green Power arena. Cost-effective and environmentally sound, wind energy is expected to see tremendous growth over the next decade. South Dakota recently completed a wind farm project that is the subject of a great deal of national attention. The October 2000, conference on wind power in South Dakota was one of the most successful wind energy conferences to date.

Louisiana, Alaska, New Mexico, Oklahoma, Colorado, Wyoming, and Montana were all participants in a project undertaken by NASEO designed to increase the energy efficiency of marginal oil wells. I have several copies of NASEO's publication entitled, Dashboard Guide to Energy Efficiency in the Oil Field, which I will leave with the Committee.

Many scoffed when NASEO began to work on this project questioning why energy producers would want assistance in energy efficiency. Our efforts revealed that the highest cost of oil production is in removing it from the ground-higher than the associated equipment costs and labor costs. A producer with marginal wells needs every little bit of savings he or she can put their hands on. As a result of implementation of the recommendations contained in NASEO's guide, a marginal well can expect to cut its lifting or production costs by $1 per barrel with little or no investment of additional funds.

Idaho The State of Idaho has developed a CD that informs farmers, based upon soil and climate conditions, exactly when to apply irrigation to fields. Idaho also operates a successful low-interest loan program for residential, commercial, agricultural, government, and schools projects. To date, 1,973 loans totaling $13,338,371 have been issued. These loans generate $3,800,919 in annual savings.

Indiana and Kentucky-Like our colleagues in Hawaii, the State of Indiana and Commonwealth of Kentucky operate exemplary energy emergency programs. The states are recognized throughout the Midwest for their work with the propane industry at mitigating the impacts of supply disruptions. On July 25, they will be hosting a regional meeting for the propane industry and major consumers to discuss current and anticipated propane issues.

Illinois-Most recently, staff completed the oversight of the implementation of $20 million in energy-efficiency capital improvements through Energy Performance Contracting arrangements in seven state-owned facilities. This pilot initiative is demonstrating the cost effectiveness of utilizing energy performance contracts in state buildings. In the first two years after implementation the pilot initiative is producing energy savings averaging greater than 27 percent of the $9.4 million utility cost of the facilities and is generating over $2.6 million in annual savings at the seven participating state agency and university facilities.

Like Illinois, my own state of New Hampshire uses SEP funds to support an ambitious performance contracting program. În 1998, Governor Shaheen launched the Building Energy Conservation Initiative, which when completed will save the state $6-$8 million annually in energy costs. The program is surveying 500 state buildings for energy and resource conservation opportunities and then using guaranteed energy savings as the equity to secure financing for building upgrades. Over the next several years, the State of New Hampshire will reduce its energy consumption by as much as 33 million kWh annually and carbon dioxide greenhouse emissions by 132,300 tons each year without incurring any capital expenses. In this example, SEP funds support a program that leverages as much as $25 million in financing. In addition to the project identified above, New Hampshire, due to Governor Shaheen's leadership and the support of SEP funds, has also reached businesses, public housing projects, schools and municipalities through our Renewable Energy Technology Grants Program, which provided funding for renewable energy dem

onstration projects at 27 schools, science centers, museums and affordable housing developments across the state. SEP funds have also been instrumental in the success of our Rebuild New Hampshire Program enabling us to conduct public workshops on energy efficiency, and environmentally sound new technologies to more than 90 school districts, public housing agencies, cities and towns in the last two years.

The value of SEP throughout the nation is that it permits innovation over a wide variety of energy activities. The statutory language, which was substantially broadened in the State Energy Efficiency Programs Improvement Act of 1990, encourages states to take any action to improve efficiency, promote technology transfer and assist all types of energy consumers.

The approach the states are taking to energy is to encourage economic development, increase the deployment of new technology, while increasing affordability for homeowners and improving the work environment for employees. This involves helping businesses reduce operating costs, enhancing productivity and reducing energy demand, while providing significant environmental benefits. One of the many roles of state energy offices is to achieve these goals within the framework of SEP. The work of these offices includes installation of cost-effective energy efficient technologies in public school buildings, building code upgrades, implementation of tax credits for energy efficient retrofits, promotion of transportation efficiency (telecommuting, ridesharing), alternative transportation fuels, operation of public benefits programs through restructuring, etc. Our offices promote the use of energy service performance contracts that utilize private financing to conduct energy efficiency programs. This has become a $1-$1.5 billion/year business.

Another critical activity, which has become increasingly important, is the effort to coordinate energy and environmental programs, policies and regulations. A series of state pilot efforts are underway throughout the country. For example, in my region state and local energy and environmental officials are working to develop technical standards for distributed generation so that our environmental programs and our energy programs do not conflict. We have found that approaching these activities together, early on, tends to reduce cost and increase the ability of the private sector to implement energy projects.

Finally, a program not subject to this authorization hearing but one we urge continued support for is the SEP Special Projects. This program provides leveraged funds on a competitive basis for state energy office-initiated projects with business, industry and the public such as the highly successful Industries of the Future Program. I personally know that in my state of New Hampshire, Industries of the Future would not exist without SEP Special Project Funds. In the 18 months since New Hampshire launched our Industries of the Future program, the partnership between state and federal government and private industry has enabled 51 New Hampshire businesses to find high-tech ways to cut their energy use, saving them money on their energy bills and protecting our environment. One example is a paper mill in the southwestern part of the state that is investing in cutting-edge energy efficient technologies. This investment will save this company, which employs 260 people and produces 100 tons a day of specialty paper products, about $500,000 a year on its electricity bills.

We also urge the Committee to strongly endorse the schools energy efficiency program included in both Chairman Bingaman's (Section 1302) and Senator Murkowski's bill (Section 602). Representatives Mark Udall and Sherwood Boehlert first introduced H.R. 1129, which would initiate a new era in implementing energy efficiency projects for hard-pressed schools. This would be a good substitute for the Institutional Conservation Program (ICP) that is no longer is operation. It would encourage both public and private financing of school projects. We can all agree that not enough funding is going to our schools, and certainly wasteful, one-time energy costs do nothing to provide education to our children—we can and should implement this program. It will require authorization and we would urge that the program be implemented by the U.S. Department of Energy.

LOW-INCOME WEATHERIZATION PROGRAM

The Weatherization Program is vital to addressing the disproportionate energy burdens that low-income citizens face. In addition to the meaningful energy conservation measures that help reduce energy bills, the program also addresses important health and safety measures of many families and vulnerable elderly and disabled persons.

It has been an essential long-term program that complements the critical, shortterm assistance provided by the LIHEAP program. In general, households that are poor use a dramatically higher percentage of annual income on heating and cooling

than the average American family. While 4-5% of annual income is spent on all energy bills for the average American household, the households that are poor spend more than 20% on energy annually, depending upon the fuel source and location. The Weatherization Program has proven that it is effective and works for these low-income households. According to an Oak Ridge National Laboratory study conducted in the past few years, the average home saves over 20% on energy costs after Weatherization is completed. Obviously the recent increases in energy costs have created an even greater amount of energy savings. Keep in mind, too, that the work done by Weatherization specialists is permanent, providing a lasting savings over time, a savings that increases as energy costs increase. It is a gift that keeps on giving.

One of the reasons the program has been so effective is that these specialists, the local delivery network responsible for implementing the cost-saving weatherization measures, are highly skilled. In addition, Weatherization Program energy auditors play a key role in helping low-income individuals respond to our present energy crisis while addressing the long-term needs as well. In addition to the energy savings produced, the Weatherization Program also positively impacts the health and safety of the numerous lives that are affected by the program, helping to keep families warmer, dryer, and healthier.

So the issue is not whether the program is producing meaningful results. The issue is that the program does not have sufficient funding to meet the demands of our most vulnerable residents. For instance in New Hampshire, using both DOE funds and available LIHEAP funds last year, out of the approximate 7,493 New Hampshire Fuel Assistance recipients who requested weatherization services, New Hampshire was able to complete 526 weatherization jobs, only 7% of the requests.

BUDGET/APPROPRIATIONS ISSUES

While we strongly support the authorization provided in Chairman Bingaman's bill (S. 352) and Senator Murkowski's bill (Section 603-604), we are aware that an authorization does not mean appropriators will listen. The House Interior and Related Agencies Appropriations Subcommittee provided a $24 million increase for SEP to $62 million and a $96 million increase for Weatherization to $249 million. These funding levels were included in the House-passed bill. Unfortunately, on June 28, the Senate Appropriations Committee provided only a $60 million increase for Weatherization to $213 million and a $0 increase for SEP. These are well below the proposed authorized levels and inadequate for the need. If we were serious about dealing with our energy problems, substantially increased funding for SEP and Weatherization would enable states to plan for energy emergencies and, when possible, take preemptive action to help avoid an energy crisis by promoting energy efficiencies.

The President, during the campaign proposed a doubling of Weatherization and SEP to $306 million and $76 million respectively: "Double the funding for the Weatherization Program and State Energy Program." (See Energy Issues, at 11). By the time of the Budget submission, the proposed SEP doubling was wiped out and Weatherization was proposed to increase by $120 million. I would point out that while other DOE energy efficiency programs have increased since the early 1980's, the combined SEP/ICP program peaked at $178 million in FY81, while Weatherization peaked at $245 million in FY83. These are in nominal dollars. These programs need to be substantially funded to enable states to continue to serve our communities while building upon meaningful public/private partnerships particularly during a time of fluctuating energy costs and volatile markets.

NASEO urges the Committee to move forward not only on the authorized funding levels, but also to support a funding level at least equal to the House-passed Interior Appropriations bill during conference.

CONCLUSION

Today, I have restricted my testimony to the State Energy and Weatherization Programs. However, I would like to note that we strongly support LIHEAP and recognize it has a critical, life-saving role to play. For the LIHEAP program, approximately one-half of the states are either out of funds or have very low balances. I also know that New Hampshire is not unique and that many states experienced a significant increase in the number of LIHEAP households served this past program year. In New Hampshire, the number of households served on the program increased by 18% from the prior year. At level funding, my office is confronted with the harsh reality of having to deny assistance to more than 11,000 elderly, disabled and working poor households in the upcoming winter season. Consequently, we desperately need a base funding of $3.4 billion for LIHEAP.

While we are available to discuss other programs, we urge the Committee to support: 1) expanded appliance energy efficiency standards; 2) expanded use and increased funding for the EPA/DOE Energy Star Program; 3) Rebuild America, a DOE program that works with the states to promote energy efficiency in buildings; and 4) increased funding for international market development. We can certainly support targeted tax credits in the energy area, including energy efficiency tax credits for new and existing homes of the type recommended by Chairman Bingaman, Senators Feinstein/Bob Smith and Representative Weller. While each approach is slightly different we should work hard to develop a reasonable compromise.

We look forward to working with the Committee. Thank you for the opportunity to appear before you today.

The CHAIRMAN. Thank you very much.

Ms. Choate, why don't you go right ahead.

STATEMENT OF JOANNE CHOATE, LIHEAP MANAGER, MAINE STATE HOUSING AUTHORITY, ENERGY AND HOUSING SERVICES, AUGUSTA, ME, ON BEHALF OF THE NATIONAL ENERGY ASSISTANCE DIRECTOR'S ASSOCIATION

Ms. CHOATE. Thank you. My name is Joanne Choate. I serve as manager of the LIHEAP program for low-income home energy assistance for the Maine State Housing Authority, as well as the vice chair of NEADA, the National Energy Assistant Directors Association. I am honored, at the request of the committee, to testify today on behalf of NEADA, which represents the State Directors of LIHEAP. We support the development and implementation of programs to help low income households afford the cost of home energy.

Maine is a small New England State with long, cold winters, and we are one of the poorest States in New England. During the last winter heating season, heating oil prices rose sharply to $1.56 per gallon, bringing the average cost per household to $1,000 or more. While the average household spends about 4 to 5 percent of their income on home energy cost, for the low income the total can reach as high as 20 percent.

Without LIHEAP assistance, many of Maine's poorest households would have had to choose between staying warm and other vital household necessities such as food or medicine. Fortunately, LIHEAP was there this year to help over 60,000 households in the State of Maine during the winter months. Many letters come across my desk, and I have brought a few to share with you today that I will leave after my testimony.

From grateful recipients, an elderly recipient of northern Maine, wrote, "thank you very much for fuel assistance. It is, indeed, a much-needed help. I am 82 years old, in poor health, and nearly desperate, with so many bills pushing for payment." A mother wrote, "I want to take this opportunity to sincerely and humbly thank you for your assistance that you approved for my children and I. Things had been looking very bleak. Thank you for the ray of sunshine.

The elderly and the family with small children represent two of the most vulnerable groups in the rising energy costs. About 73 percent of LIHEAP funds in Maine are allocated to assist these groups. In light of the recent rise in energy prices, we have to ask, is LIHEAP funding adequate? Unfortunately, the answer is no. In spite of the fact that Federal funding was increased from $1.1 bil

lion to $1.4 billion, in addition to $855 million in emergency funds, it is still not enough to meet the need.

The total number of households receiving assistance this year totaled 4.9 million, an increase of almost 1.1 million from the previous year. Still, on average the States were only serving about 17 percent of the eligible households. In my home State of Maine the total households receiving assistance increased by 32 percent this year, while the additional funds went a long way to helping address the needs this winter, unfortunately it was not enough.

As a result of the rising prices, energy bills for the average households increased at least $400 to $500. Many households, not only in Maine but throughout the Nation, were not able to pay these bills. As a result, the States reported significant increases in arrears and shut-offs.

A key indicator for the need for additional assistance is the number of households applying for emergency assistance. Since last year, the number has increased by 400 percent. These are households that exhausted all of their resources as well as their regular LIHEAP benefits and could not afford to purchase any additional fuel.

The average annual income for a LIHEAP recipient in Maine is $10,262, and for an elderly household that applied this year the annual income was $7,200. The average cost of home heating was around $1,000 or more. About 30 percent of the average recipient's annual income is spent on home energy.

We are also experiencing an increase in the number of households that have not applied for assistance before. 67 percent of these households in Maine are frail, elderly households that applied this year. These are proud people who have always paid their taxes, and have never before asked for government assistance.

NEADA did a survey of many utilities across the country and found that they are experiencing significant increases in bad debt. For example, the District of Columbia reported $6.6 million in natural gas arrearages by over 14,000 households. Georgia reported approximately $147 million in arrearages owed by 479,000 households, and Louisiana reported $32.9 million in arrearages owed by about 76,000 households.

We can expect that the problem of arrearages and shutoffs will get worse as the summer cooling season progresses, especially in Southern and Western States, and to a lesser degree in the Northeast. 28 States and the District of Columbia are now out of funds and no longer able to provide households with assistance to cover summer cooling bills and avert shutoffs.

S. 352 would play a significant role in helping to address the needs for additional funds. By increasing the authorization to LIHEAP to $3.4 billion, it would send a signal to the Appropriations Committee that additional funding is necessary to address the needs that low income households face with their winter heating and summer cooling bills.

With the additional money, we would increase outreach efforts to provide funds to underserved populations, take advantage of prepurchase and other payment arrangements to reduce the cost of home energy, and provide higher grant levels to offset the impact of higher prices on poor families.