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Pennsylvania PUC Opens Review of Low-Income Energy Burden, Affordability; May Place More Customers in CAP Programs (Which Increasingly Have Restrictions on Shopping)

March 17, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Pennsylvania PUC yesterday approved a motion introduced by Vice Chairman Andrew Place and Commissioner David Sweet to initiate a study regarding affordable home energy burdens for low-income Pennsylvanians.

The Commission voted 3-2 to conduct the study, which will evaluate the affordability of current energy burden levels as outlined in the Commission’s 1992 Customer Assistance Program (CAP) Policy Statement. The PUC said that this study will serve as a starting point for evaluation of the effectiveness of CAP and other Universal Service programs by the Commission.

The CAP programs vary by utility, but generally, CAP customers pay a percentage of their household income for utility service (or receive credits intended to offset bills such that the customers payment will reflect such percentage). The CAP Policy Statement established percentages of household income that CAP customers at various income levels should pay (the energy burden).

Additionally, CAP customers generally must make routine bill payments to remain eligible for the CAP program. Bills, even with the CAP assistance, that exceed CAP customers' ability to pay have been cited as a reason customers lose their CAP eligibility status

In their motion, Place and Sweet suggested that the existing energy burden levels for certain low-income customers may be too high. For example, for electric heat customers in the 101%-150% of poverty level range, the 1992 CAP Policy Statement establishes an energy burden range of 15%-17% of household income

Place and Sweet cited a 2006 order from the PUC concerning energy affordability which had stated that, "our policy requiring a low-income household to pay 17% of their household income for home energy services compared with an average household who pays about 5% of their income may need to be revised."

Place and Sweet noted that, "The Commission routinely considers complaints involving residents enrolled in CAP programs failing to keep up with payments, accumulating arrearages, facing service disconnection and loss of program eligibility. This payment, assistance and arrearage cycle is a recurrent issue for many low-income customers."

Place and Sweet suggested that unaffordable energy burdens established by the PUC used to set payment requirements for CAP customers, which CAP customers may not be able to meet (and therefore are removed from the program for non-payment) may be one of the reasons CAP customer enrollment lags the number of eligible CAP customers.

"Additionally, only 30% of eligible Pennsylvania households are enrolled in a CAP program, and residents falling below 50% of the Federal Poverty Guidelines pay an average 30% of their income on home energy costs alone. While there are likely other barriers to participation, unaffordable energy bill payment arrangements may well be among them," Place and Sweet said

As the number of CAP enrollees is implicated, it is worth noting that CAP customer participation in customer choice is subject to increasing regulation, whether that be through a prohibition on early termination fees at PECO (pending implementation), or the prohibition on CAP customer shopping at PPL except through a CAP-specific standard offer customer referral program. More CAP enrollees would place more customers under such choice regulations

The energy burden study will be conducted by the PUC’s Bureau of Consumer Services, working in conjunction with other Bureaus within the Commission, resulting in recommendations concerning affordable energy burdens for low-income Pennsylvanians. A report detailing the findings of the study will be delivered to the Commission within one year.

Commissioners John Coleman, Jr. and Robert Powelson dissented from the motion, concerned that the motion does not envision a holistic approach to energy affordability and universal service issues, including the costs such programs place on other customers.

"We cannot support this Motion because we do not believe it is appropriate to examine the CAP energy burden levels as a stand-alone issue, without considering the other factors that impact the Commonwealth's universal service programs. The design, budgeting, and administration of universal service and energy conservation programs are a complex undertaking for our public utilities. It is also a serious and challenging obligation for the Commission to monitor, evaluate and, when necessary, make changes to the regulatory scheme or individual plans. When considering acting in this area in the past, the Commission has preferred to undertake a comprehensive review of the entire regulatory model for universal service, and we believe that is the appropriate course of action today," Coleman and Powelson said in a joint statement

"We believe that with the successful transition from rate caps and the significant, and apparently lasting, stabilization in wholesale energy prices, it is now an appropriate time to begin another review of the CAP program. However, the approach set forth in the Motion, with its singular focus on energy burdens, is very different than the comprehensive reviews that the Commission has undertaken in the past. Given the complexity of this matter, we would prefer that the Commission adhere to its past practice of taking a comprehensive approach in reviewing and considering changes to universal service policies, programs and procedures," Coleman and Powelson said

"While the Motion mentions balancing the interests of all customers, there is no definitive commitment to undertake a comprehensive review of all relevant issues, including the impact that revising energy burdens alone would have on those customers who do not participate in CAP, but fund the program. CAP program enrollments and budgets have significantly increased since their inception, and public utilities (with the limited exception of Philadelphia Gas Works) recover these costs solely from residential customers at the same charge per customer, regardless of income level. Our concern is that the Commission will take the easier path of simply addressing energy affordability levels in a vacuum, without considering other issues relevant to a well-designed approach to universal service and energy conservation," Coleman and Powelson said

"We believe it would be more appropriate to convene a collaborative of all interested stakeholders to examine the entirety of the CAP program. In this collaborative, participants could identify their priorities, concerns, and suggestions for improving CAP. This process would better inform the Commission about the scope of the work that needs to be done and the means of going about it. A collaborative would also have been an appropriate way to assure stakeholders that the Commission would address all relevant issues and make every effort to balance the sometimes conflicting objectives we wish to achieve through these very important programs," Coleman and Powelson said

Docket No.: M-2017-2587711

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