A Percentage of Income Payment Plan (also known as a PIPP Plan) can help you afford your utilities if you are a low income resident of a participating state. This is a system designed to help eligible individuals manage their energy costs.
This article will explore what a PIPP plan is, how it functions, its benefits and drawbacks, and how to apply for help.
What is a Percentage of Income Payment Plan (PIPP)?
The Percentage of Income Payment Plan, known as PIPP Plan, is a special billing plan that helps eligible households manage their energy costs. Under this plan, payments are based on a percentage of the household income instead of what you actually owe for your utility usage.
According to the United States Department of Health and Human Services, PIPP Plans can make utilities more affordable for low income customers by lowering their utility rates year-round.
However, it depends on where you live. Not all states offer a Percentage of Income Payment Plan. Those that do can choose how the program operates, so it’s a little different in every state.
We have confirmed that Percentage of Income Payment Plans currently exist (or have previously existed) in the following states:
- New Hampshire
- New Jersey
How Does the PIPP Plan Work?
The PIPP plan operates on a simple principle: it tailors your utility bills based on your gross household income. If you don’t make very much, you won’t pay very much. If you make more, you will pay more. The amount you pay under a Percentage of Income Payment Plan is a percentage of your income, so the amount goes up and down depending on how much money your household is bringing in.
However, each state manages this program a little differently.
Utility companies that are regulated by the Colorado Public Utilities Commission may offer a PIPP Plan. This plan allows low income customers to pay up to 6% of their income toward their electric and natural gas bills. The
In order to be eligible, you must meet LEAP guidelines. That means your income must be 185% of the Federal Poverty Level or 60% of the state’s Area Median Income. You must apply for help from LEAP before you can benefit from a PIPP plan.
In Illinois, the PIPP Program is an option under the state’s LIHEAP program. You can choose to either receive the usual LIHEAP benefits or participate in a PIPP plan but you cannot do both in the same year.
This option is available for residents of the state’s major utility companies, such as Ameren, ComEd and Nicor Gas. This program basically enrolls you in a special budget billing program where the state pays a portion of your monthly bill. You have to always pay your portion on time or you will be removed from the program.
Maine has a Percentage of Income Payment Plan but instead they call it the Low Income Assistance Program (LIAP). This benefit is available to low income residents who qualify for LIHEAP, another means-tested program, or who have a household income that is at or below 75% of the Federal Poverty Level.
In order to apply for LIAP, you must apply with your local Community Action Agency.
Nevada handles their Percentage of Income Payment Plan differently. Every year, the state calculates how much most Nevada households spend on their gas and electricity bills compared to their income. The goal is to find out what percentage of income most households are spending on their utilities.
Once that percentage is established, the state offers a Fixed Annual Credit (FAC) to low income households who are spending more than the usual percentage on utilities. The goal is to make sure that low income households aren’t overly burdened by their utility payments.
In order to receive the Fixed Annual Credit, you must apply with the Nevada Division of Welfare and Supportive Services.
New Hampshire’s Electric Assistance Program (EAP) is a percentage of income payment plan. This program can discount your electric bill by up to 76% depending on your household income and size.
In order to be eligible, you must receive your service from a regulated electric utility and meet income guidelines. You can apply with your local Community Action Council.
New Jersey calls their program the “Universal Service Fund.” This fund provides credits on your bill if you meet the income guidelines and spent more than 4% on your utilities. The goal of this program is to make sure that you aren’t paying more than 4% of your income on your utilities.
If you rely only on electricity for heat, you may be eligible if you spend more than 4% of your monthly income on electricity. If you have both electric and gas service, you may be eligible if you spend more than 2% of your income on electricity or more than 2% of your income on natural gas.
The income guidelines for the Universal Service Fund are very generous. You may be eligible if you earn at or below 400% of the Federal Poverty Level. That’s four times the Federal Poverty Level!
Ohio has the largest PIPP program in the country, according to the US Department of Health and Human Services.
For Ohio residents, if your home uses gas for heating, your monthly payment will be 10% of your income. If you use only electricity, you’ll pay 10% of your income to your electricity provider. If you use both electricity and natural gas, you’ll pay 5% to your natural gas bill and another 5% to your electric bill. Either way, it comes out to 10% of your income per month (or $10 per month, whichever is greater). The remaining balance of your utility bill is subsidized by the state.
You can apply for the PIPP Program by contacting your utility company or reaching out to your local Community Action Agency.
In Pennsylvania, the Customer Assistance Program benefits offered by the major regulated utilities are usually percentage of income payment plans. These plans can reduce the amount you owe and help lower your monthly bill to ensure that you aren’t overburdened by your utility bills.
To learn more about the Customer Assistance Programs, you can reach out to your local utility company or call The Pennsylvania Public Utility Commission or details.
Who is Eligible for the PIPP Plan?
Each state sets their own criteria for eligibility, as explained above. However, you generally have to meet the income limits of your state’s LIHEAP program in order to qualify.
To quickly recap eligibility, here’s the state-by-state breakdown:
- In Colorado, you must meet LEAP guidelines and apply for LEAP first.
- In Illinois, you must meet LIHEAP guidelines and choose between LIHEAP and PIPP.
- In Maine, you must qualify for either LIHEAP, another means-tested program, or have an income at or below 75% of the Federal Poverty Level.
- In Nevada, you must be eligible for EAP (which is what Nevada calls their LIHEAP program).
- In New Hampshire, you must have a household income that is at or below 60% of the Area Median Income.
- In New Jersey, you must have an income that is at or below 400% of the Federal Poverty Level.
- In Ohio, you must have an income that is at or below 175% of the Federal Poverty Level.
- In Pennsylvania, you have to reach to your utility provider for eligibility requirements.
When applying for PIPP, you will most likely be required to report the total gross household income for the past 30 days (12 months preferred) for all members, excluding wage or salary income earned by dependent minors under 18 years old. Both homeowners and renters can apply for assistance.
Benefits and Drawbacks of PIPP Plans
Although there are many clear benefits to enrolling in a Percentage of Income Payment Plan, there are also some definite drawbacks. It’s important to weigh your options carefully, especially in Illinois because you have to choose between two different assistance programs there.
Advantages of PIPP Plans
On the plus side, it offers manageable, consistent payments that are based on income, easing the financial stress of utility bills. This can be a huge relief for households that suffer with extremely high utility bills!
Percentage of Income Payment Plans usually also include a feature to reduce your outstanding balance with your utility company. In most states, your outstanding balance can be eliminated entirely if you make a certain number of on-time payments under your PIPP Plan agreement.
Downsides of PIPP Plans
On the downside, the program requires strict adherence to payment schedules and annual income verification. Failure to meet these criteria can lead to removal from the program. If you are removed, the company may demand that you pay any outstanding balances that accrued before you enrolled in PIPP or that built up while you were on the plan. This could create a financial crisis for your household.
Once enrolled, you must re-verify your income each year and ensure that all your payments are made on time. If you don’t want to commit to these requirements, this may not be the best option for you.
How to Sign Up for a PIPP Plan
If you’re eligible and interested in signing up for a PIPP plan, you can apply through your state’s designated department or agency. In Ohio, for instance, you can apply through the Ohio Department of Development’s website or local Community Action Agencies.
Make sure to have all necessary documents ready, including proof of income and household size. You will usually need to attend an appointment to enroll in this program and the process goes much faster if you show up prepared for that appointment.
The Percentage of Income Payment Plan is a valuable resource for low-income households struggling with energy costs. By offering manageable and consistent payments, it can provide significant relief and stability. However, it’s crucial to stay compliant with the program’s requirements to continue enjoying its benefits.
If you’re struggling with utility bills, consider exploring if a PIPP plan is available and right for you in your state. The journey towards financial stability and peace of mind could be just a few clicks away.