SJR 91

Task Force on Consumer, Environment and Education

August 18, 1998, Richmond


The task force convened its first meeting to begin an examination of issues ranging from ensuring public readiness for restructuring to energy efficiency programs and environmental concerns. The task force used this meeting to focus on public benefits programs, a large issue that encompasses the future of energy assistance and weatherization programs for low-income households (and their funding) after electric utility restructuring. The Virginia State Corporation Commission (SCC) staff provided a brief overview of current programs—virtually all voluntary—and restructuring stakeholders and interested parties shared their concerns.

Assistance for Low-Income Households

An important issue before the joint subcommittee and this task force is low-income families' access to electric utility services (and their ability to pay for those services) if retail competition comes to Virginia. While electric distribution service will remain regulated under most restructuring schemes under discussion, ensuring that low-income Virginians can afford competitively priced generation services could be problematic. Of course, as the Virginia Citizens Consumer Council (VCCC) noted, some low-income households have difficulty affording electricity service on a bundled basis now. The VCCC supports an examination of lifeline, or basic service electricity rates, irrespective of whether retail competition comes to Virginia. The Office of the Attorney General's Division of Consumer Council expressed its support for affordable rates, but took no position on rate discounting.

Virginia currently has no mandated public benefits programs for low-income customers, although Virginia Council Against Poverty's (VCAP) president told that task force that a de facto subsidy for low-income electricity customers is embedded in utilities' rates now. Public utilities are obligated to serve all electricity customers within their service territories, including lower-income households. Public utilities often incur additional costs in serving lower-income customers due to bills that are unpaid, or paid slowly, and due to payment-related disconnections. Public regulators recognize these costs in rate cases and spread them over the entire rate base; hence, the subsidy.

An SCC representative told the task force that current utility-sponsored energy assistance programs are entirely voluntary. Moreover, programs such as Virginia Power's Energy Share and AEP-Virginia's Neighbor-to-Neighbor programs typically provide one-time crisis assistance to households unable to pay their current electric utility bills; they are not continuing subsidies. The Northern Virginia Association of Electric Cooperatives sponsors a similar program.

One publicly sponsored energy assistance program in Virginia is the federally funded Low Income Home Energy Assistance Program, or LIHEAP. This program, administered by the Department of Social Services, provides fuel assistance on a means-tested basis to low-income households. Some LIHEAP funds are also allocated to the Weatherization Assistance Program (discussed below). Washington Gas expressed its support for this program's continuation after restructuring.

The American Association of Retired Persons (AARP), VMH, Inc., the Virginia Citizens Consumer Council (VCCC), the Virginia Council Against Poverty (VCAP) and others believe that low-income Virginians should receive subsidized electricity service. A consultant to VMH, Inc., told the task force that the most direct means of providing energy assistance to Virginia's lower-income households is through a consumption-based wires charge, or surcharge on Virginians' electric bills. He estimated an annual need in Virginia of approximately $54 million for rate discounting, energy efficiency assistance and crisis assistance, a sum that could be generated by adding a 70-cent surcharge on each Virginia electric customer's monthly bill. Many states with restructuring plans in place have made some provision for low-income energy assistance.

Eligibility for the public benefits program, VMH, Inc., envisions, could be determined by establishing a formula linked to "energy burden." A local state agency, such as the Department of Social Services, could be assigned the role of determining eligibility for a public benefits program. The Virginia Poverty Law Center expressed support for this percent-of-income means-testing, suggesting that Virginia's low-income households should spend no more than 10 percent of their net household income on energy payments. The VCCC representative suggested that any such surcharge be levied on generation rather than on distribution since large industrial customers often by-pass the distribution system, connecting directly to the transmission grid.

A representative of AEP-Virginia questioned the necessity of energy assistance programs funded by public benefits surcharges; programs like Neighbor-to-Neighbor and Energy Share would, in all likelihood, continue after restructuring. Most utilities will continue to provide distribution service and thus be positioned to solicit contributions for these voluntary programs. The representative also suggested that SCC-directed pilot programs will help identify the needs of low-income customers during and after restructuring.

A Virginia Power official told the task force that Energy Share raises slightly more than $1 million annually in contributions from Virginia Power customers to help lower-income families pay their utility bills. She suggested that any public benefits charge fund program be directed at a defined low-income group, suggesting Virginia SSI recipients as a possibility.

Weatherization Assistance Programs

Virginia's Weatherization Assistance Program (WAP) was also addressed before the task force. WAP is a statewide weatherization program, providing assistance to low-income households. The Association of Energy Conservation Professionals (AECP) represents contractors who supply the services paid by WAP funding.

WAP's weatherization program furnishes long-term solutions for low-income energy needs. WAP receives funding from the U.S. Department of Energy, the LIHEAP program, and—recently—from General Assembly appropriations. However, federal funding is dwindling, and LIHEAP has been targeted for elimination in some quarters of Congress during recent budget discussions. Consequently, the AECP representative asked that any public benefit program adopted in Virginia include funding for low-income weatherization.

A Southern Environmental Law Center representative also expressed support for weatherization programs, noting that such programs result in a dual benefit by reducing the energy costs of low-income households and by reducing emissions associated with energy consumption.

Future Task Force Activities

The task force will hold its next meeting on September 17 at 10:00 a.m. in House Room 4 of the Capitol. That meeting will focus on residential and small business aggregation and on restructuring-related consumer education programs. The task force will look at consumer protection, energy efficiency programs and environmental concerns at its third meeting. A fourth meeting will be held to approve a final report for submission to the joint subcommittee in October or early November.

The Honorable Kenneth Plum, Co-Chairman
The Honorable Jerrauld Jones, Co-Chairman
Legislative Services contact: Arlen Bolstad