The Demand Side Management Program is a grant, which is part of the Low-Income Home Energy Assistance Program, offiering unique services. It allows Community Action Kentucky to provide technical assistance to ongoing utility funded partnerships and to work toward the creation of new utility, energy conservation or assistance programs.  CAK also receives a grant from the Department for Community Based Services of the Kentucky Cabinet for Families and Children to provide technical assistance to the three ongoing DSM pilot projects in the state.  The DSM programs are designed to help lower the utility bills of low-income customers by installing conservation measures that reduce their usage.  These measures help the utilities by reducing demand for power at peak times.  

Conservation Programs

Presently the DSM Program works with three utility companies, Union Light Heat and Power (UHL&P), American Electric Power (AEP), and Western Kentucky Gas (WKG), and is pumping about $2 million annually into low-income conservation programs in their service territories.  The programs are overseen and approved by the Public Service Commission (PSC), which regulates utilities in Kentucky.  The PSC looks at a variety of tests evaluations to see if the programs are cost effective before the PSC then grants rate recovery to the utilities for the cost of the programs.  For example, Community Action Kentucky has begun a new partnership with Kentucky Power that can provide an ongoing benefit to some low-income customers through the coldest winter months and the hottest summer months .

These programs are operated by 11 Community Action Agencies and two community based non-profits in 67 counties across the state. The Programs operated by the Community Action Agencies are operated in conjunction with (or "piggybacked" onto) the Weatherization Assistance Program (WAP). It is an excellent cost-saving arrangement because Weatherization can pay for the cost of intake, client screening, and health and safety measures, while DSM dollars can be targeted directly to measures.

Percentage of Income Program (PIP)

Currently, there are two Percentage of Income Programs (PIP) in the state. The theory behind a PIP program is that low-income people have to pay a much greater percentage of their income to cover home heating expenses than do middle income households. Research has shown that low-income households spend up to 15% of their income on heating, while middle-income households spend about 5% of their income for home heating costs. A PIP program tries to limit the percentage of income a low-income household will have to pay for home heating.

Because home heating takes such a high percentage of their income, low-income households are more likely to fall behind in making payments, build up large arrears, and have their service shut off. The rest of the ratepayers also suffer in these cases because the utility incurs high collection costs and typically faces a large amount of bad debt that must be written off.  That cost is borne by the other ratepayers. PIP programs try to reduce the bad debt of the utilities by helping low-income customers pay their bills.  If these customers pay their bills on time for a specified period of time (usually 24-36 months), their arrearages are usually forgiven.

Community Action Kentucky also represents Community Action Agencies and low-income customers before proceedings at the Public Service Commission (PSC), reviews documents and rulings of the PSC, and tracks legislative development trends on the federal state levels that affect utility industry restructuring.  Additionally, Community Action Kentucky frequently intervenes in utility rate cases and other proceedings at the Public Service Commission on behalf of low-income consumers.

In Kentucky over 50% of the Community Action Agencies are involved in the operation of utility funded energy assistance or conservation programs.