The PUC wants to ease burden of high costs

Timothy Barmann
Providence Journal (RI)
July 25, 2003


State regulators are gearing up to tackle a vexing problem that affects thousands of low-income Rhode Islanders: the inability to afford natural gas and electricity for heating and cooking.

The Public Utilities Commission is considering a plan that would give discounts to qualified residents, and also forgive their past debts to the gas and electric companies.

The PUC has scheduled five public hearings around the state in which it will take testimony from the public, from utility companies and from any other interested parties. The first hearing is set for next Thursday at 7 p.m. at the Pawtucket City Hall Council Chambers.

The problem of utility costs that are out of reach for some low-income families shows no sign of going away. The number of households that have lost utility service for not paying their bills so far this year is the highest in five years. The spike this year is likely the result of the unusually cold winter, combined with rising energy prices.

The disparity between last year and this year can be partly attributed to New England Gas's labor problems last year, which cut down on the number of shutoffs the company was able to perform. Shutoffs are running 12 percent higher than they were at this time in 2001.

The last time shutoffs were this high was 1998, when 10,513 households lost utility service through June of that year.

"Several thousand people in Rhode Island are in over their heads with their gas and electric bills," said Henry Shelton, of the George Wiley Center of Pawtucket.

To help address the shutoff problem, some 18 months ago the PUC directed a group of consumer-advocacy organizations, state agencies and utility companies to come up with possible solutions.
 
The group includes staffers and volunteers from community organizations such as the George Wiley Center and ACORN; utility companies, including Narragansett Electric and New England Gas; state agencies, including the PUC, the Division of Public Utilities and Carriers and the Energy Office; and the Boston-based National Consumer Law Center.

In May, the group submitted its plan, which is based on the tenet that people who are in low-income brackets should pay only a certain percentage of their income for heating.

That percentage, which the group called a household's "energy burden," would be based on monthly income.

An affordable energy burden for a low-income household that uses natural gas for heat should be 7 percent of the household's income, the group said, and 6 percent for electric-heat customers.

By contrast, a family with the state-median income pays about 3.5 percent of its income for energy, according to the group.

The other major component of the plan would be a one-time forgiveness of past debts to the utility companies. That would allow qualified families to essentially start off on the affordability plan with a clean slate, making it more likely they'll be able to keep up with the discounted utility payments.

The total cost of the plan is unclear. The PUC said it would be at least $15.5 million, plus the amount of customer debts that would be forgiven. The PUC said it expects to receive an updated account of the amounts owed next week from the utility companies.

The group that devised the affordability plan did not come to a consensus on how it would be paid for.

Part of the money could come from Rhode Island's allocation of federal Low-Income Heating Assistance Plan money, although that wouldn't be enough to cover the entire cost. The state received about $11.5 million in LIHEAP funds in 2002.

Shelton and some members of the group submitted an addendum to the plan, recommending that it be paid for through a surcharge on the bills of all gas and electricity customers in the state, based on the amount of energy used.

Under that scenario, Narragansett Electric estimated that its customers' portion of the plan would be about $8.5 million in the first year, and $5.3 million in the second year.

To raise that amount, electricity rates would have to rise 0.8 percent to 1.3 percent, the company estimated. A typical customer that uses 500 kilowatts of electricity a month would see an increase of about 58 cents a month, Narragansett Electric said.

New England Gas customers would see their bills rise by about 1 percent. The proposed surcharge for those who do not use gas to heat their homes would range from 18 cents to 21 cents a month, according to the PUC. A heating customer would pay 82 cents to 96 cents per month.

The proposal also calls for commercial and industrial customers to pay a surcharge as well.
However, it's unclear whether the PUC has the authority to impose a surcharge. That is one of the issues it intends to study through the hearing process.

Neither Narragansett Electric nor New England Gas say they support a surcharge to pay for the plan.

In a filing with the PUC, New England Gas said: "At this time, the company is reluctant to support an increase in rates to its customers in order to achieve the subsidies and forgiveness goals set forth in the plan."

The Division of Public Utilities and Carriers, the state agency that represents ratepayers, has also come out against adding a surcharge based on a customer's energy use.

In a filing last month, the Division said that a surcharge would mean that almost 50 percent of the forgiveness program costs would be subsidized by businesses, which will not benefit from the plan.

Such a surcharge would have an "adverse impact" on various classes of utility ratepayers, the filing said.