PULP News & Recent Developments

PUC and Widener Law School Pilot Program for Low-Income Consumers with Utility Complaints has been Expanded into Four Central PA Counties

Widener University School of Law in Harrisburg will be helping low-income residents of Cumberland, York, Lebanon and Lancaster counties, in addition to Dauphin County, with utility-related complaints before the Public Utility Commission. To apply for assistance, contact MidPenn Legal Services, 213-A North Front Street, Harrisburg, PA 17101-2240, (717)232-0581 or (800)932-0356. You can read or hear more about the pilot program, which was first announced by the PUC at a press conference on October 19, 2009.

PUC Reports Show Increases in Terminations and Indicate Concerns for Low-Income Customers

Three documents recently released by the Pennsylvania Public Utility Commission (“PUC” or “Commission”) point to significant areas of concern for low-income utility consumers. The documents include:

• The Second Biennial Report to the General Assembly and the Governor Pursuant to Section 1415;
• 4-year Average, 2007 & 2008 Cold Weather Survey Results – Electric & Gas; and
  
• Terminations and Reconnections – Year-to-Date: 2007 vs. 2008 Through December.

Second Biennial Report
Act 201 of 2004, known as Chapter 14, went into effect on December 14, 2004, amending the Public Utility Code. The PUC is required to monitor and evaluate the implementation of Chapter 14 and report its findings to the General Assembly and the Governor every two years. The Second Biennial Report was released December 14, 2008 and includes much that does not bode well for low-income utility customers:

• The Commission “is concerned that failure of utilities to fully implement Chapter 14 leads to unlawful or erroneous terminations, which present serious issues of health and safety for both the individuals directly involved and the surrounding community.”
• For the electric industry, the percentage of customers in debt has increased. The Report states: “It does not appear that the electric industry’s strategy of terminating a record high number of customers since the passage of Chapter 14 has been successful. Looking ahead, the Commission is quite concerned about the collections performance of the electric industry as rate caps are lifted for PPL on Dec. 31, 2009, and for Met-Ed, Penelec and Allegheny on Dec. 31, 2010. The early projections for rate increases are cause for concern when combined with diminishing purchasing power for customers in our current economic climate. These factors may make it more challenging and difficult for the electric industry to manage its collections performance and costs.”
• Chapter 14 prohibits the Commission from establishing a payment agreement for customers who have defaulted on CAP (Customer Assistance Program) payments. Through October 10, 2008, the PUC has turned away 24,144 CAP customers who wanted to have their payment arrangements reviewed. The Second Biennial Report specifically states that: “For CAP customers who fail to meet their obligations under CAP, there is no recourse other than to pay their arrearages and current balances in order to maintain utility service. This is arguably a losing proposition for them. In the Commission’s opinion, these customers are at the greatest risk because they are out of options.”
• There are low-income households who are payment-troubled and have not yet been placed into a CAP program. In fairness to the companies, this represents a diminishing, but still significant, number of such households since the passage of Chapter 14. Consequently, there is still room for CAP programs to grow.
• For non-CAP customers, Chapter 14 prohibits the Commission from establishing a second payment agreement if the customer has defaulted on the first. Since the passage of Chapter 14, the Commission has turned away over 47,000 non-CAP customers requesting a payment arrangement.
• In total, as a result of Chapter 14, the Commission has been unable to assist 71,516 customers (non-CAP and CAP customers) who were seeking payment arrangements.
• Since 2004, termination numbers for the electric industry have reached record levels, increasing 60.1 % during the period from 2004 to 2007. Terminations for the gas industry increased 21% from 2004 to 2007.
• Termination rates (calculated by dividing the number of terminations by the number of customers) for the electric industry have risen to record high levels since the passage of Chapter 14, increasing from 2.06 to 3.25 from 2004 to 2007. Overall, the termination rate has increased by 86% from 2002 to 2007.
• The declining economy is creating a “new poor” as diminishing purchasing power for consumers combines with higher utility costs. The Second Biennial Report concludes that: “It is likely that additional thousands of utility customers will face unaffordable utility bills in the years ahead. Given the continuing trend of higher levels of service terminations under Chapter 14, the economy and the prospect of higher utility prices, greater numbers of Pennsylvania households may be faced with the risk of losing essential utility services in the coming years. Additional funding and support for safety net program is critical to ensure that all Pennsylvania households receive essential utility services.”

Cold Weather Survey
The Cold Weather Survey, mandated by PUC regulations, is undertaken each fall; it involves a survey by all PUC-regulated natural gas and electric utilities of residences where service has been terminated throughout the year and not reconnected. Utilities attempt to contact these terminated households via certified letters, phone calls, and personal visits.

• A total of 14,372 households normally using electric or gas heat were without service after completion of the survey (excluding vacant residences and households using potentially unsafe heating source or other central heating sources) – an increase of 4% from 2007 to 2008.
• 20,037 residences that were terminated now appear to be vacant, a 16% increase from 2007 to 2008.
• 3,373 households are using potentially unsafe heating sources, a 9% increase from 2007 to 2008.
  

Terminations and Reconnections – Monthly Report
The regulated utilities are also mandated by Chapter 56 of Title 52 of the Pennsylvania Code to report terminations and reconnections on a monthly basis. The latest report shows that the number of terminations by electric utilities in 2008 increased 26% compared to 2007. The number of service terminations by gas utilities increased by 10% over the same time period. A total of 331,220 utility customers had their electric, gas or water service terminated in 2008.

Summary and Necessary Actions for the Future

• Since the passage of Chapter 14 in late 2004, both the rate and number of utility terminations have increased, jeopardizing the health and safety of those households without utility service, particularly in the cold winter months; and thousands of consumers have been denied payment arrangements because of restrictions placed on the PUC.
• Spending for CAP and other low-income utility programs, including LIURP (Low-Income Usage Reduction Program), CARES (Customer Assistance and Referral Evaluation Services) and Hardship Funds must be increased and outreach to low-income consumers must be improved in order to enroll all those who are eligible, especially as the economy worsens and rate caps on electric generation prices are lifted.

PULP is advocating the following essential protections for low-income consumers:

• The Commission should make it its policy and the policy of utilities to avoid service terminations wherever possible.
• CAP payments should be required to be affordable.
• Because low-income consumers have certain protections from service terminations during the winter months, the Commission should obligate the utilities to ask about household income at every opportunity so that incorrect terminations do not occur.
• Utilities should be required to report to the Commission anytime they become aware of a death or serious injury at a residence without utility service.

Winter Shut-off Protection Begins December 1

Low-income utility customers who are unable to pay their bills are protected from service terminations from December 1 through March 31. Household income must be at or below 250% of the Federal Poverty Income Guidelines. Alternate rules apply to customers of PGW - Philadelphia Gas Works. They may not be terminated during the winter months if income level is below 150% of the Federal Poverty Income Guidelines. Those whose incomes are between 150% and 250% of the guidelines may not be terminated if the household includes anyone 65 years of age or older, or 12 years of age or younger; if a medical certification has been obtained; or if PGW has been paid an amount equal to at least 15% of monthly household income for each of the last two months. To view Federal Poverty Income Guidelines, click here. Customers should alert their utility company if they fall within the protected income levels and should notify their company immediately if they receive a termination notice.

Customers who receive termination notices after February 1 and meet income guidelines may be eligible for a LIHEAP Crisis grant to stop the termination. If permission is given by the customer, the utility will notify DPW of the potential termination and will receive the grant on behalf of the customer.

Electric Utility Education Plans To Mitigate Rate Increases

The PUC provided final approval of the rate mitigation education plans of PPL, PECO, UGI Electric, Citizens’ Electric, Wellsboro, West Penn Power, Pike County Light & Power, Duquesne Light Co., and the FirstEnergy Companies of Met-Ed, Penelec and Penn Power.
These plans are in response to the May 17, 2007 Commission Order, at Docket No. M-00061957, which directed all electric distribution companies (EDCs) to prepare and file a consumer education plan to mitigate potential electricity price increases that could follow the expiration of generation rate caps. The intention is to prepare Pennsylvanians for removal of electric rate caps and to enable consumers to make informed decisions regarding their levels of electric use.

The plans are required to include specific education elements which inform consumers that:

• Rate caps of their electric providers have or will expire on a certain date;
  
• When rates change there may be significant increases;
  
• Customers may be able to take steps to control the size of their electric bills;
  
• Customers may benefit from utilizing energy efficiency, conservation and demand side response measures;
• Information about these measures is readily available;
• Customers may reduce the size of their electric bills, or receive service options more suited to their needs, by purchasing generation service from an alternative electric generation supplier;
  
• Current information that will allow customers to make informed choices about competitive generation alternatives is readily available; and
  
• Programs exist to help low income customers maintain their utility service, and information about them is readily available.

Governor Signs into Law the Alternative Energy Investment Act

Governor Rendell signed into law the Alternative Energy Investment Act (AEIA), Pa. H. Bill No. 1, Printer’s No. 86 on July 9, 2008. The law provides a $650 million package of loans, grants, and tax credits to spur residential and business investment in alternative energy, energy efficiency, and energy conservation. It also includes $40 million for an Emergency Energy Assistance Fund.

The AEIA creates a series of different funds targeted to different constituencies and to different types of alternative energy approaches including:

• The Alternative Energy Development Program will make available $500 million in loans and grants to residential and business customers to spur investment in, development of, and use of alternative energy sources.
  
• The Consumer Energy Program will make available $100 million for conservation and fuel efficiency projects.
• The Alternative Energy Production Tax Credit Program will make available $50 million in tax credits for qualifying projects related to energy efficiency.
• The Emergency Energy Assistance Fund will receive $10 million annually for fiscal years 2008 through 2012 for emergency energy assistance to be administered by the Department of Public Welfare in the event that the Governor declares an energy emergency due to weather conditions or energy costs or a combination of both.

Several agencies and authorities have been charged with promulgating regulations and implementing programs as a result of the AEIA, including the Commonwealth Financing Authority, Department of Public Welfare, Department of Environmental Protection, and Pennsylvania Housing Finance Authority.

Changes at the PUC

On August 19, 2008, Governor Edward G. Rendell announced the appointment of James H. Cawley as chairman of the Public Utility Commission (PUC). After serving as a member of the PUC from 1979 to 1985, Cawley returned to the Commission in April, 2005. His term ends March 31, 2010. As a private practice lawyer, his clients included a wide array of public utilities and competitive telephone, electric and natural gas providers. He currently serves as Adjunct Professor of Administrative Law at Widener University School of Law. Upon being appointed chairman, Cawley stated, “I look forward to working with the administration to protect consumers, especially through expanded energy conservation and efficiency programs and programs that aid low-income families.”

On August 21, 2008, Tyrone J. Christy was elected vice-chairman of the Commission by his fellow commissioners. Having first worked at the Commission in the mid 1980s, Christy began his current term, which expires March 31, 2011, in June 2007. He has served in executive positions with various private and public companies, as well as regulated utilities and unregulated utility affiliates. He also served as the treasurer of the Pennsylvania Energy Development Authority from 2004 until 2007.

On July 1, 2008, two new commissioners were confirmed by the Pennsylvania State Senate to serve on the PUC. Robert F. Powelson will serve through April 1, 2009, completing the term of Terrance Fitzpatrick, who resigned. Wayne E. Gardner will serve through April 1, 2013, succeeding Wendell Holland, whose term expired. Powelson has served as president and CEO of the Chester County Chamber of Business and Industry since 1995. Gardner has most recently been involved as a development and management consultant and entrepreneur in the fields of power generation and renewable and clean energy technologies, following a 22-year career with PECO Energy. Governor Rendell, who nominated both men, stated: “The Public Utility Commission’s decisions affect every Pennsylvania resident – from protecting consumers from skyrocketing rates and insisting instead on the lowest possible prices for utility service, increasing energy conservation, and regulating utilities to shift energy production to renewable sources. I am confident that Wayne Gardner and Robert Powelson will serve the best interest of Pennsylvania consumers in their new roles on the PUC.”

The fifth member of the PUC is Kim Pizzingrilli who was sworn in as a commissioner on February 6, 2002. Her second five-year term will expire April 1, 2012. In her Senate confirmation hearings, Pizzingrilli pledged to be an independent voice for Pennsylvania’s consumers and to continue her long-term commitment to public protection and responsible regulation. Before joining the Commission, she served as Secretary of the Commonwealth.