The Joint Subcommittee created by Senate Joint Resolution 91 to study electric utility restructuring appointed a Consumer, Environment and Education Task Force. Co-chaired by Delegates Plum and Jones, the Task Force also included Senator Norment and Delegates Kilgore and Parrish. This Task Force addressed several issues related to restructuring, including worker protection, energy assistance for low-income families, energy efficiency and renewable energy sources.
The Drafting Group, at its December 29, 1998 meeting, recommended further study by the Legislative Transition Task Force of a number of issues, including low-income assistance programs. The areas to be studied by the 1999 Task Force are outlined in § 56-595 of the Virginia Electric Utility Restructuring Act. Currently, a number of utilities have voluntary programs such as Virginia Power’s EnergyShare and AEP Virginia’s Neighbor-to-Neighbor to provide emergency energy assistance to low-income households in need.
The Consumer, Environment and Education Task Force was asked to examine whether the Commonwealth should formally adopt legislation establishing energy assistance programs for low-income households. Respondents were asked about eligibility, funding, and administration criteria for such programs. Virtually all groups responded that if a program were in place, funding should be provided through a non-bypassable wires charge based on kilowatt-hour usage.
Consumer groups such as the Southern Environmental Law Center, the VCCC, VCAP and others expressed firm support for programs that would provide rate subsidies, crisis assistance, and weatherization assistance to low-income households. The eligibility standard currently used for both the Weatherization Assistance Program (WAP) and the Low Income Home Energy Assistance Program (LIHEAP) is a household income at or below 150% of the poverty level. The consumer groups suggested using this figure as a threshold for funding any Virginia statutory or regulatory program.
Virginia’s utilities and cooperatives provided wide-ranging opinions about the value and need for such programs. AEP said that mandating subsidies for service to low-income households is not appropriate. Allegheny Power, however, said that such assistance programs are both necessary and desirable—if adequate funding mechanisms exist. Allegheny Power also suggested that any low-income, energy assistance programs adopted by law be reviewed periodically to determine their efficiency and impact. Virginia’s cooperatives asked the Task Force to consider the impact such programs would have on restructuring in terms of cost and appropriateness.
The "consensus group," representing a group that included a utility and several consumer, labor and environmental organizations, expressed support for statewide low-income energy assistance programs and for home weatherization and energy conservation programs designed to assist low-income citizens. All groups suggested that the SCC should administer any statutory or regulatory programs to assist low-income households.
Most states implementing electric utility restructuring have addressed energy assistance for low-income households. The onset of competition has raised concerns about the ability of some consumers to pay for electric service in a competitive market. The majority of states with restructuring legislation have considered low-income assistance in the context of restructuring, and have either addressed the issue by statute or have appointed study committees to review potential methods for implementing such programs.
The first area of concern in implementing low-income assistance programs is funding. Some states have set statutory funding amounts to cover the cost of these programs. Other states have required system benefits charges to be imposed, based on kilowatt-hour usage. Some of these states have set a statutory rate; others require the state regulatory authority to determine the amount of the charge. A handful of states have left the entire administration of the assistance programs, including funding, to the appropriate regulatory authorities. Two states are in the same position as Virginia: they have passed a restructuring act but are still studying the issue of low-income assistance and have not yet made a determination on how to address the issue.
Statutory elements of low-income assistance programs vary widely from state to state. Most programs include bill payment assistance and weatherization, which will be discussed along with energy efficiency. One state allows municipal utilities and cooperatives to opt out of funding requirements for a universal service program, but customers of those utilities are not eligible to receive benefits under the program. A few states allow utilities to receive credits for their costs in implementing these programs. One state credits excess funding at the end of each year back to consumers, while another requires excess funds, interest earned and penalties assessed utilities to be placed in the fund.
Some statutes provide for implementation of assistance programs contemporaneous with restructuring, while others provide for a transition program to be in place for a few years until reviewed by the state legislature. A summary of the portions of restructuring legislation in each state addressing assistance for low-income households is attached as Appendix A.
Arkansas
The restructuring legislation requires the Arkansas Public Services Commission to establish rules to promote evaluation of the impact of competition on low-income assistance programs. To date, the Commission has not yet adopted such rules.
California
California’s restructuring law provides for a non-bypassable rate component of distribution service to fund state-run assistance programs. The programs shall be funded at no less than the levels prior to restructuring, and the Public Utilities Commission shall establish minimum funding levels for these programs.
Connecticut
The Department of Public Utility Control shall establish and each electric distribution company shall collect a systems benefits charge to be imposed on all end user customers to cover the cost of state hardship protection measures and other hardship protections, including but not limited to, electric service bill payment programs, funding and technical support for energy assistance, fuel bank and weatherization programs and weatherization services.
Delaware
Electric utilities shall charge an average of $0.000095/kWh each month (approx. $800,000 annually) to fund low-income fuel assistance and weatherization programs. The program is administered by Dept. of Health & Social Services' Division of State Service Centers (which currently administers similar federally-funded programs).
Illinois
Electric utilities engaged in the delivery of electric service shall assess each of their customer accounts a monthly energy assistance charge for the Supplemental Low-Income Energy Assistance Fund. The monthly charge shall be a fixed amount per account, varying based upon type of account, but set by statute. The Department of Revenue shall deposit into the Supplemental Low-Income Energy Assistance Fund all moneys remitted to it in accordance with law. If as of December 31, 2002, the program authorized by the restructuring act has not been replaced by a new energy assistance program which is in operation, then the General Assembly shall review the program; but electric utilities shall continue to charge the energy assistance charge. Municipal utilities and electric cooperatives may opt out of this charge, but then customers of those utilities may not benefit from the Fund.
Maine
The commission shall receive funds for low-income assistance programs collected by all transmission and distribution utilities in the state at a rate set by the commission in periodic rate cases. The commission shall also set initial funding for programs based on an assessment of aggregate customer need in periodic rate cases. To the extent possible, assistance must be provided in the manner most likely to prevent the loss of other federal assistance. Transmission and distribution utilities may offer a special rate or program for low-income customers. If the legislature appropriates from the general fund financial support for households and individuals receiving assistance under this section, the commission may not terminate the assistance provided by transmission and distribution utilities unless the general fund source has completely replaced such assistance, but may adjust the assistance provided pursuant to this section based on the amount of any financial support from the general fund.
Maryland
The Public Utilities Commission shall establish a universal service program to assist electric customers with annual incomes at or below 150 percent of the federal poverty level. The Commission shall have oversight responsibility for the universal service program, but the Department of Human Resources shall administer the program. The components of the universal service program shall include: (i) bill assistance, at a minimum of 50 percent of the determined need; (ii) low-income weatherization; and (iii) the retirement of arrearages that were incurred prior to the initial implementation date. All customers will contribute to the funding of the universal service program through a charge collected by each electric company. In the first six months after the implementation date, the Commission shall consider adjustments to the charges collected for the universal service program for persons that are not eligible for customer choice. Any unexpended universal service program funds returned to customers under shall be returned to customer classes in the same proportions as they were collected. An electric company shall recover universal service program costs. The Commission shall determine the allocation of the universal service charge among the generation, transmission, and distribution rate components of all classes. The Commission may not assess the universal surcharge on a per kilowatt-hour basis. The Commission shall control the fund for four years from implementation; then the terms for continuing assistance to low-income families will be handled by the legislature.
Massachusetts
The restructuring legislation requires the Department of Public Utilities to establish rules to promote evaluation of the impact of competition on low-income assistance programs. Currently, the Department is still looking into this issue and has not yet adopted such rules.
Montana
Universal system benefits programs include cost-effective local energy conservation, low-income customer weatherization, renewables and low-income energy assistance. Programs are paid for by a non-bypassable universal system benefits charge assessed at the meter. The minimum annual funding level is based on a percentage of each utility’s 1995 annual revenue. Utilities receive credit for internal programs or activities that support renewables, conservation, or low-income energy assistance. The utility’s transition plan must describe proposals for benefit programs, including methodologies such as cost effectiveness and need determination used to measure the utility’s level of contribution to each program. The restructuring statute does establish a system benefits charge. Co-ops may collectively pool statewide credits to satisfy annual funding requirements. On or before 7/1/02, a transition advisory committee and the Public Services Commission shall reevaluate system benefits programs and make recommendations to the legislature regarding future need for such programs.
New Hampshire
Each distribution utility has an obligation to connect all customers and to maintain minimum residential service safeguards, including low-income assistance. A non-bypassable, competitively neutral system benefits charge applied to distribution may be used to fund low-income programs.
New Jersey
There is established in the Board of Public Utilities a nonlapsing fund to be known as the "Universal Service Fund." The board shall determine: the level of funding and the appropriate administration of the fund; the purposes and programs to be funded with monies from the fund; which social programs shall be provided by an electric public utility as part of the provision of its regulated services which provide a public benefit; whether the funds appropriated to fund state programs, the funds received pursuant to the federal Low Income Home Energy Assistance Program, and funds collected by electric and natural gas utilities, as authorized by the board, to offset uncollectible electricity and natural gas bills should be deposited in the fund; and whether new charges should be imposed to fund new or expanded social programs.
New Mexico
The "system benefits fund" is created in the state treasury. The money collected from the system benefits charge paid by each utility customer and collected monthly by the utility shall be paid quarterly to the state treasurer for credit to the system benefits fund. Interest or other earnings from investment or deposit of the fund shall be credited to the fund. Penalty assessments imposed by the Commission for failure by a competitive power supplier to meet the renewable portfolio standards shall be credited to the fund. Any unexpended or unencumbered balance remaining in the fund at the end of any fiscal year shall be retained for future expenditure from the fund. Money in the system benefits fund is appropriated to the Department of Environment solely for the purpose of distributing money to authorized recipients for no less than $500,000, or more than 20 percent annually, for low-income energy assistance through the federal low-income housing energy assistance project or for other low-income energy assistance authorized and administered by the state.
Oklahoma
"Public benefit programs" means all social, economic, and environmental programs currently funded through rates charged to consumers. Minimum residential consumer service safeguards and protections shall be insured, including programs and mechanisms that enable residential consumers with limited incomes to obtain affordable essential electric service and the establishment of a default provider for any distribution customer who has not chosen an alternative supplier. The Commission shall consider establishing a distribution access fee assessed to all consumers to cover social costs, capital costs, and operating costs. The Commission is currently considering funding and administration of low-income assistance programs.
Pennsylvania
The state must, at a minimum, continue current protections and policies to assist low-income customers. The PUC shall ensure that universal service is appropriately funded in each distribution territory and shall encourage the use of community-based organizations with necessary experience to be direct providers of programs to assist low-income customers. The PUC shall establish an appropriate cost recovery mechanism for each utility to fully recover universal service costs. Distribution company remains provider of last resort unless the PUC approves alternative. After the transition period, the PUC shall adopt regulations defining obligation to serve.
Rhode Island
Current special rates and protections for low-income households shall continue. The company shall periodically solicit bids for power at market prices plus a fixed contribution from the company, subject to PUC approval. The company’s fixed contribution to low-income funding is recoverable in rates charged all other customers. The company can terminate customers for nonpayment pursuant to PUC regulations. Authorized performance-based rate increases for distribution companies between 1/1/97 to 12/31/98 cannot be applied to low-income customers.