SJR 91
The Joint Subcommittee Studying
Electric Utility Restructuring
Richmond
August 18, 1998
Overview
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 staff provided a brief overview of current programs—virtually all voluntary—and restructuring stakeholders and interested parties shared their concerns.
Affordability assistance for low-income households.
An important issue before the joint subcommittee and this task force is low-income households' 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 Jean Ann Fox from 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's adoption in 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 (VCAP) President, Rob Goldsmith 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. Goldsmith said that 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.
Virginia State Corporation Commission representative Tom Lamm 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 LIHEAP's continuation after restructuring.
The Association of American 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. Roger Colton, 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. Colton estimated an annual need in Virginia of approximately $54 million for rate discounting, energy efficiency assistance and crisis assistance. He added that this sum could be generated by adding a 70 cent surcharge on each Virginia electric customer's monthly bill, and that many states with restructuring plans in place have made some provision for low-income energy assistance.
Eligibility for the public benefits program he envisions, Colton said, could be linked to a low income household's "energy burden" relative to net income. David Rubenstein from 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. VCAP's Rob Goldsmith added that a local state agency, such as the Department of Social Services could be assigned the role of determining eligibility for a public benefits program. VCCC representative Jean Ann Fox indicated support for a public benefits charge, but suggested that any such surcharge be levied on generation rather than on distribution. Otherwise, she said, funding could be reduced by large industrial customers who by-pass the distribution system, connecting directly to the transmission grid.
Barry Thomas, representing 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, Thomas said, will continue to provide distribution service and thus be positioned to continue their solicitation for customer contributions to these voluntary programs. Thomas also suggested that SCC-directed pilot programs will help identify the needs of low-income customers during and after restructuring.
Virginia Power's Eva Teig 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. Teig 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.
The Weatherization Assistance Program (WAP) was also reviewed by the task force. Billy Weitzenfeld, representing the Association of Energy Conservation Professionals (AECP), furnished information about this program. WAP is a state-wide weatherization program, providing assistance to low-income households. AECP represents contractors who supply the services paid by WAP funding.
Weitzenfeld told the task force that WAP furnishes long-term solutions for low-income energy needs by increasing the energy efficiency of the homes of low-income individuals and families in Virginia. 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, Weitzenfeld suggested that future funding for low-income weatherization could depend on systems benefits charges, such as those adopted in other states.
Trip Pollard, representing the Southern Environmental Law Center also expressed support for weatherization programs. Such programs, he noted, 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 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.