Based in one of eastern Connecticut’s poorest communities, Matthew Butler long has taken pride that his fuel distribution business participates in the state’s winter heating assistance program.
But complications in the program, coupled with a fuel market thrown into chaos by the Russian invasion of Ukraine, have forced Butler and many other distributors of home heating oil to choose between assisting their neighbors and absorbing losses winter after winter.
And unless state officials reform the program soon, distributors say, a program vital to keeping vulnerable citizens warm is at risk of collapse.
“It was among the hardest business decisions I’ve had to make,” Butler, 55, vice president of Ives Brothers Inc. in Willimantic, said of his decision to limit his participation in the Connecticut Energy Assistance Program [CEAP] over the past two winters. “But I couldn’t risk going out of business. If you’re out of business, you’re not going to be help anybody.”
Butler distributed kerosene, but not home heating oil, through the CEAP program during the past two winters. He said he hopes to restore home heating service to CEAP customers this year, though he may have to limit the number of communities served.
Catherine Erasmus, CEO of the Granby-based Taylor energy, serves between 6,000 and 7,000 customers annually in north-central and northwestern Connecticut, and — like Butler — has tried to remain a CEAP participant.
“I find it a struggle, ethically and morally, every single year,” she said. “I feel that I have an obligation to my communities, and I feel that I should be a partner to the people who are in need.”
Erasmus has managed to stay with the program in recent years and expects to do so again this winter, but she added it is becoming increasingly difficult to do so and not lose money.
“The way they are reimbursing us for the deliveries is a nightmare,” she said.
The state-run service, which primarily distributes federal Low Income Home Energy Assistance Program or LIHEAP grants, helped nearly 99,000 vulnerable households — at or below 60% of the state median income — cover their fuel or electric heating bills last winter.
But CEAP relies on a complex system that limits how much participating businesses can charge program-eligible households. And that retail price isn’t set at the same time a fuel distributor purchases home heating oil at one of the terminals spread across Connecticut.
In other words, the wholesale price for fuel purchased by a distributor on Monday might be equal to the retail price that same distributor could charge when delivering it to a CEAP customer on Tuesday. And once transportation expenses are considered, said Chris Herb, president of the Connecticut Energy Marketers Association, businesses are losing money.
“The program continues to be broken,” Herb told three state legislative committees during a public hearing last month, adding, it’s “not a story that we should be proud of.”
Prices historically don’t fluctuate that rapidly, but Herb said that degree of volatility became more common after Russian forces invaded Ukraine in February 2022.
The price that CEAP customers must pay to their local fuel distributors also is calculated based only on the average wholesale price at New Haven harbor, the single-largest fuel terminal in Connecticut, even if distributors acquired the home heating oil elsewhere.
There are dozens of terminals available to Connecticut retailers, including major facilities in Bridgeport, Rocky Hill, Wethersfield, New London, Groton, Providence and Springfield.
And on any given day, there can be a considerable difference between the price in New Haven and at any of these alternative sites.
Vendors participate in the assistance program “because they consider it being part of their communities,” Herb added. “But the numbers of suppliers have gotten so tight, it’s at a breaking point.”
According to the state Department of Social Services, which oversees CEAP, the number of overall vendors participating dropped just 8% from winter of 2018-19 to last winter, falling from 438 to 403.
But among vendors that deliver just home heating oil, the tally has fallen 24%, from 206 to 156. Among those who deliver multiple fuel types, it’s almost cut in half, from 106 to 59.
And vendors accepting new CEAP customers are down almost 27%, from 272 to 199.
The Department of Social Services “strongly feels that we have had an adequate supply of vendors for years and believe that we will continue to do so,” said spokesman Jalmar De Dios. “We believe that there are both adequate existing options around the state and fallback alternatives if some vendors choose not to participate.”
De Dios added that “DSS must strike the balance between ensuring an adequate supply of vendors and maximizing the amount of our fixed federal funds for the families in need of assistance. If we directly increase the reimbursement rate to vendors within the same model, the net result will be less fuel delivered to families and more funds given to vendors.”
A state working group has been examining this dilemma, and Sen. Norm Needleman, D-Essex, co-chairman of the Energy and Technology Committee, said his panel has been and will continue to review the issue.
“We certainly do not want the oil dealers to be locked out of providing fuel to low-income customers,” he said. But Needleman also expressed similar concerns raised by the social services department. Any rate adjustment not done properly could weaken benefits for needy households, a problem that’s already generating complaints both within the legislature and from without.
Federal LIHEAP assistance to Connecticut dropped dramatically last winter and have only partially rebounded this year. But while federal funding basically has returned to pre-pandemic levels, demand is much higher than it was before COVID first struck Connecticut in March 2020.
The maximum grant per household last winter was $1,350. And while it is projected to rise to $1,760 per household this winter, that’s well below the $2,320 maximum of 2022-23.
The $4,825 peak provided in the 2021-22 program was an outlier. State officials augmented the program with federal pandemic grants to help families adjusting to the expiration of enhanced federal unemployment benefits and tax credits, also ordered during the worst of the coronavirus outbreak.
But the top grant per household in 2020-21 was $2,980. That means the most households can receive this winter is $1,220 less than the ceiling four years ago.
Rep. Jaime Foster, D-Ellington, also a member of the Energy and Technology Committee, agreed that CEAP has limited funds, especially given how aid to households has dropped. But she noted that her district now has only two distributors participating in the CEAP program, down from five just a few years ago.
Foster also said lawmakers must look deeper into the system, adding that Connecticut can’t expect the program to function if participating businesses are expected to lose money in the process.
It “shouldn’t be a philanthropic endeavor,” she added.
