OREGON ENERGY PARTNERSHIP/204
COLTON APPENDIX A

STATUS OF STATE ELECTRIC RESTRUCTURING ACTIVITIES ON LOW-INCOME ASSISTANCE

Roger D. Colton
Fisher, Sheehan & Colton,
Public Finance and General Economics
34 Warwick Road, Belmont, MA 02178
617-484-0597 *** 617-484-0594 (FAX) *** rcolton101@aol.com (E-MAIL)

May 1998

Table 1: Low-Income Protections in Electric Restructuring (Legislation/Final PUC Decision)
System Benefits Charge 
California  Statute provides that "programs provided to low-income electricity customers, including but not limited to targeted energy efficiency services and the California [rate discount] shall be funded at not less than 1996 authorized levels based on an assessment of customer need." This funding will be collected as a nonbypassable rate component of local distribution service collected on the basis of usage. Favors moving away from having low-income assistance administered at utility-level. Low-income energy efficiency services and the rate discount should be administered separately, but in close coordination with each other. Once transition period complete, gas and electric utilities will be treated consistently with each other. Will consider implementation of nonbypassable gas surcharge. No specific cap on rate discount funding. Recognize that past assistance levels may be insufficient to meet current needs. 
Connecticut  "The Department of Public Utility Control shall establish a system benefits charge to be imposed against all end-use customers of an electric distribution company. . .The system benefits charge shall be used to fund. . .the cost of hardship protection measures. . .[and]low-income conservation programs approved by the Department of Public Utility Control. . ." (amongst other things--ms). 
Illinois  ". . .each public utility, electric cooperative. . .and municipal utility. . .that is engaged in the delivery of electricity or the distribution of natural gas within the State of Illinois shall. . .assess each of its customer accounts a monthly Energy Assistance Charge for the Supplemental Low-Income Energy Assistance Fund. . .The Energy Assistance Charge assessed by electric and gas public utilities shall be considered a charge for public utility service." 
Maine  Retail competition should not itself reduce the availability of low income assistance. Restructuring should not diminish low-income assistance. Continue existing funding (0.5%). "If the Legislature does not fund low income assistance, the Commission would investigate whether ratepayer funded low income programs should exist in all service territories, and whether the means by which utilities distribute such funds should be amended. 
Massachusetts  Restructuring must assure continuation of universal service, providing a level of protection for low-income customers equivalent to that provided within the current industry structure. Continue to require each distribution company to offer a low-income tariff with the same eligibility criteria as are currently in place. The low-income discount will apply o the distribution charge, and during the transition period, the discount will also apply to the stranded cost charge. Applied to distribution portion of the bill such that the total dollar discount identical to what is offered without restructuring. 
Montana  Statute declares that "the public interest requires the continued protection of consumers through:. . .continued funding for public purpose programs for:. . .low-income weatherization [and] low-income energy assistance." Provides for a "universal system benefits charge" which means a nonbypassable rate or charge to be imposed on a customer to pay the customer's share of universal system benefits program costs. Universal system benefits programs include "public purpose programs" for, amongst other things: low­income customer weatherization and low­income energy assistance. 

Universal system benefits programs are established for the state of Montana to ensure continued funding of and new expenditures for energy conservation, renewable resource projects and applications, and low­income energy assistance during the transition period and into the future. Beginning January 1, 1999, 2.4% of each utility's annual retail sales revenue in Montana for the calendar year ending December 31, 1995, is established as the annual funding level for universal system benefits programs. Unless modified as provided in subsection (7), this funding level remains in effect until July 1, 2003. The recovery of all universal system benefits programs costs imposed pursuant to this section is authorized through the imposition of a universal system benefits charge assessed at the meter for each local utility system customer. Utilities must receive credit toward annual funding requirements for a utility's internal programs or activities that qualify as universal system benefits programs, including those portions of expenditures for the purchase of power that are for the acquisition or support of renewable energy, conservation­related activities, or low­income energy assistance. 

A utility's minimum annual funding requirement for low­income energy and weatherization assistance is established at 17% of the utility's annual universal system benefits funding level and is inclusive within the overall universal system benefits funding level. A utility must receive credit toward the utility's low­income energy assistance annual funding requirement for the utility's internal low­income energy assistance programs or activities. If a utility's credit for internal activities does not satisfy its annual funding requirement, then the utility shall make a payment for any difference to the universal energy assistance fund. 
New Hampshire  Authorize "system benefits charge" to accomplish three goals: (1) to bring electric bills into the "range of affordability"; (2) to encourage conservation and the use of energy efficiency mechanisms to make electric bills manageable; and (3) to make the most effective use of limited funding. Cost of "no more than $13.2 million" (as proposed by various parties). Not limited to residential customers, but to all. Not limited to distribution rates. Flat per kWh charge. 
New York  Responsibilities of the provider of last resort include to "provide any programs to assist low-income customers that the Commission determines are appropriate." Funding of SBC should be set equal to one mil per kWh for all SBC programs, including energy efficiency, research and development, low-income programs, and other programs not expected to be provided by a competitive market. 
Oklahoma  Commission "shall consider the establishment of a distribution access fee to be assessed on all consumers in the State of Oklahoma connected to electric distribution systems regulated by the Commission. This fee shall be charged to cover social costs. . ." "Minimum residential consumer service safeguards and protections shall be ensured including programs and mechanisms that enable residential customers with limited incomes to obtain affordable essential electric service." 
Pennsylvania  Commonwealth must, at a minimum, continue the protections, policies and services that now assist customers who are low-income to afford electric service. "There are certain public purpose costs, including programs for low-income assistance, energy conservation and others, which have been implemented and supported by public utilities' bundled rates. The public purpose is to be promoted by continuing universal service and energy conservation policies, protections and services, and full recovery of such costs is to be permitted through a nonbypassable rate mechanism." 
Rhode Island  In a restructured electrical industry, the same protections currently afforded to low income customers shall continue. ". . .recognition that electricity is an essential service. . ." Exempt low-income consumers from rate increases due to performance based ratemaking incentives.All fixed contributions and any reasonable costs incurred in arranging a last resort power supply shall be included in the distribution rates charged to all other customers. 
Virginia  Does not address universal service issues. 
 
Table 2: Low-Income Protections in Electric Restructuring Commission Decisions Preceding Legislation 
and Statements by Regulatory Staff and Working Groups
State 
Comment
Source
Delaware  "Low-income customers should have an equal opportunity to participate in competitive generation markets, and their participation in such markets should not in any way interfere with their ability to have access to low-income assistance programs. In general, the major tools available for assisting low-income consumers in securing competitive generation services under reasonable terms and conditions are: (a) low-income usage reduction programs. . .; (b) low-income bill assistance / percentage of income payment plans; (c) a standard offer during the transition period and a reliable default provider after the transition period; (d) strong customer service protections. . .; and (e) effective consumer education."  Delaware Public Service Commission, "Restructuring the Electric Utility Industry in Delaware: A Report to the House of Representatives of the 139th General Assembly from the Delaware Public Service Commission," PSC Docket No. 97-229 (January 27, 1998). 
Georgia  "Virtually every person has electric power in Georgia. . .Universal Service must be maintained so that electric service is available to all customers. . .To the extent that the state mandates programs designed to accomplish public policy objectives, such as low-income assistance,. . .a system of financing should be used whereby all providers and users of electricity contribute equitably."  Staff Report on Electric Industry Restructuring, Docket No. 7313-U (Jan. 23, 1998). 
Louisiana  "Universal service refers o the ability of all Louisiana citizens to obtain essential electricity, which is a necessity of modern life. . .Provisions for universal service should be an integral part of a retail electric choice scheme, at least until it can be determined that competitive retailers will voluntarily achieve acceptable levels of universal service. Accordingly, any restructured electric utility industry should provide adequate safeguards to assure universal service. . .Programs and mechanisms that enable residential customers with low incomes to manage and afford essential electricity requirements should be included as a part of industry restructuring."  PSC Staff Report on Electric Restructuring in Louisiana, Docket No. U-21453 (December 17, 1997). 
Michigan  "Historically, public policy makers in Michigan have adopted programs designed to assure access to affordable electric service for all customers, including low-income and senior citizens. . .However, the Commission or the Legislature may wish to consider whether more needs to be done in this area. Low-income advocates commenting in response to the Staff's customer focus inquiry have suggested that low-income consumers may be more vulnerable in a restructured utility environment than they were under traditional utility regulation. . .California, Pennsylvania, New Hampshire, Rhode Island, Vermont, Massachusetts, New York, Maine and Montana have all adopted and/or implemented electric restructuring legislation, Commission orders, or both. Each has maintained or enhanced low-income energy assistance programs or low-income energy management programs. . .Nearly every state is proposing to collect the revenues and operate the programs through distribution companies. . .Staff believes that the continued availability of affordable electric service to low-income customers should be assured."  Michigan PSC Staff, "Customer Focus Issues and Recommendations," Case No. U-11290 (October 13, 1997). 
Missouri  ". . .the Public Interest Working Group supports the implementation of a cost effective low-income program and we recommend that the PSC have authority to implement a percentage of income plan coupled with an arrearage forgiveness program and weatherization plan to be funded by a non-bypassable distribution charge."  Public Interest Working Group, "Consumer Protection for Retail Electric Competition: A Report to the Missouri Public Service Commission's Task Force on Retail Electric Competition," (March 1998). 
New Jersey  Transition to competition "should not result in the elimination or diminution of [social] programs. "While we propose protecting existing programs. . .any new social program initiatives identified should be considered and adopted, where deemed necessary and appropriate, through separate legislative or Board action."  Restructuring the Electric Power Industry in New Jersey: Findings and Recommendations, New Jersey Bd. of Public Utilities, Docket EX94120585Y (April 30, 1997). 
Ohio  ". . .the five assistance programs currently available to low-income electric consumers--the Percentage of Income Payment Plan (PIPP), Home Energy Assistance Program (HEAP), Home Weatherization Assistance Program (HWAP), Emergency Assistance Program (EAP), and Energy Credits Program (ECP)-- should be fully maintained during and after Ohio's transition to a competitive generation market as to funding and customer eligibility."  Joint Committee on Electric Utility Deregulation, "Competition--Ohio's Choice" (Draft: January 6, 1998). 
Vermont  Public Service Board supports "all fuels, broad-based" funding mechanism for support the energy needs of low-income consumers. "All fuels"means to assure assistance in a manner that does not discriminate among low-income consumers according to their principal home-fuel types. "Broad based" means a program that is funded through the state's broad general taxes or, at a minimum, through a competitively neutral charge on all major fuel types. In the absence of a broad-based low-income assistance program, Legislature should target assistance for some portion of the electric bills of low-income households through a sustainable, non-discriminatory charge on all electric customers. Should be administered independent of utilities or other energy service providers. Should be structured to encourage efficient use of energy resources. Should be administered through centralized and statewide means.  Vermont Public Service Board, The Power to Choose: A Plan to Provide Customer Choice of Electricity Suppliers, Docket No. 5854, Report and Order (Dec. 30, 1996). 
Wisconsin  "These Public Benefits have been important parts of electric and natural gas utility operations and regulation. As these industries are restructured and deregulated, these Public Benefits are at risk if an effort is not made to preserve or enhance them within the new industry and regulatory structures. The Commission recognizes these Public Benefits as an integral part of public utility regulation. It has now made a special commitment to preserve these benefits as utility regulation undergoes dramatic changes. . .The Commission finds that the most appropriate approach to preserve or enhance the levels of the four Public Benefit programs in the transition to new energy industry structures is to create a funding proposal that treats all energy suppliers equitably and that ensures continued support of these Public Benefits. . .[T]he two efforts would administer $212 million in programming and services, of which $166 would need to come from state Public Benefits funding."  Wisconsin PSC, Docket No. 05-BU-100, I/M/O Appropriate Measures to Maintain or Enhance Existing Levels of energy Efficiency, Services to Low-Income Customers, Renewable Resources, and Research and Development ("Public Benefits") in Restructured Electric and Natural Gas Industries. Enunciation of Policy and Principles (December 18, 1997).