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Surveys of Low-Income Assistance

In the attempt to find a proper approach to the policy and capacity-building solution, as well as to address the issues of regulation, tariffs and governance as fitting to the local conditions, the Alliance conducted extensive surveys of the experiences of energy efficiency influences on affordability in the United States, Western Europe, Albania, Bulgaria, among others.

Survey of U.S. and Europe: The Alliance completed a report on lessons learned in the United States and Europe from low-income energy assistance programs and its applicability to SE Europe. In addition, analysis of the tariff and energy subsidy structure was conducted by RENEUER partners in Albania, Bulgaria, and Macedonia. Some of the main conclusions of the Alliance's analysis include:

  • USAID, the Alliance , and the RENEUER partners in each country should build the necessary political support and domestic constituency for low-income energy efficiency programs as was done in the U.S. and the U.K. This involves publicizing the benefits of residential energy efficiency - both energy and non-energy benefits. The benefits, including reductions in energy subsidies, could be very significant in SE Europe.
  • USAID and RENEUER need to identify the best providers of low-income energy efficiency services.
  • USAID and RENEUER need to explore existing social and employment programs to tap into. Bulgaria has the best example of employment programs. USAID can help to build the infrastructure - the consultants, contractors, engineers, etc. - who can do the work and ensure the materials are available on the local market.
  • Financing of such programs is limited, but public resources are available if carefully searched for. The key is to build political support to direct resources to address this problem. It necessary to attract the interest of the new regulatory authorities.
  • USAID should consider the development of small-scale pilot programs which depending on success should become institutionalized

Survey of Albania: Although poverty assessment in Albania have been ongoing since 1993, it is difficult to form a consistent conclusion on the poverty situation and to determine clear trends throughout the past 10 years. This is due to significant differences in the timeframe, methodologies, and geographical coverage of the studies. The common shortcoming of these surveys and studies is that they are not always based on the measure of consumption. The poverty definition used is often based on international poverty lines without identifying national poverty lines. Regardless of the methods used, all the studies conclude that income poverty in Albania is very high.

The attached paper Albania: Low Income developed by the Albanian EU Energy Efficiency Centre, summarizes a number of studies on topics relevant to low-income assistance in Albania that were conducted over the past decade, identifies the main challenges to improvement of assistance programs, and makes recommendations for overcoming these challenges. EEC collected information for this paper from the Ministry of Social Welfare, the Albanian Institute of Statistics, the Ministry of Industry and Energy, the Albanian Power Corporation (KESH), the Albanian National Social Service and the Albanian National Employment Office.

Survey of Bulgaria: EnEffect completed three reports which evaluate social safety net programs, including tariffs for heat, electricity, water and gas ; determine low-income groups ; and subsidy schemes. The Target Energy Social Protection of Low-Income People was introduced for the first time in 1995 as a mechanism for redistribution of the social burden of the increase in electricity and district heating tariffs. In 1997, key points from this study were included in the Regulation on Social Assistance as a type of monthly benefit. In 1998, all social rights of low-income persons and families, including assistance for use of energy, were included in the regulation for implementation of the Social Assistance Act (RISAA). Some of the key points from EnEffect's analysis follow:

  • Energy subsidy payments were paid in half by the cities and in half by the national government. As of 2003, all social payments to low-income consumers to help pay energy bills are from the national government. This should be seen as the main incentive to reduce energy costs for the poor.
  • In 2002-03, the estimated cost for social assistance for heat was approximately 110 million lev or about $50 million, which is 1/3 of the total social assistance provided by the government.
  • It appears that there is one case of social assistance being used to buy radiator valves, which would be the first known example where subsidies are used to pay for efficiency.
  • In 2003, there were more than 10 programs within the Ministry of Labor aimed at creating permanent or seasonal employment in Bulgaria. The most interesting and relevant program for RENEUER is called "From Social Help to Employment". Those unemployed (or "gray" economy workers), can receive money from the government for performing the following tasks:
    • Public works
    • Refurbishment of old municipal and state property
    • Reconstruction of schools, and kindergartens.

The details of the subsidy program, how they are disbursed and what formula is used to target assistance (which differs from district heat to gas to solid fuels) is available in the report.