Friday, June 06, 2008

National Grid Misses Point with its Low Income Program

National Grid recently proposed modifications to its low income “AffordAbility Program,” which provides assistance to certain residential consumers with arrears owed to the company. PULP reviewed the proposals, along with the Department of Public Service Staff and the NYS Consumer Protection Board, and filed Comments with the Commission on June 2nd expressing our concerns with National Grid’s band-aid approach to helping low income consumers.

The AffordAbility Program
Under the current iteration of the AffordAbility Program, a low income customer with arrears and otherwise subject to termination of service is placed on an initial 12 month payment agreement. Under the terms of the agreement, the customer is responsible to pay a percentage of their total average monthly bill (95 percent for electric-only customers and 92.5 percent electric and gas customers). The remaining incremental bill amounts are deferred -- and added -- to the customer’s total arrears.

Customers completing 12 monthly payments and who receive a federal Home Energy Assistance Program (“HEAP”) grant, which is applied to their National Grid arrears, receive forgiveness of 50 percent of their total arrears, up to $250.

The company also refers all participating customers to NYSERDA’s Empower NY Program for energy saving education tips and energy efficient light bulbs. NYSERDA then works with the customer on weatherization and possible appliance replacement. A second reduction is applied to a customer’s monthly bills for weatherization services and the amount of that reduction is deferred and added to the customer’s total arrears. The Weatherization Deferral is intended to “frontload” the expected energy savings associated with the efficiency services provided by NYSERDA.

National Grid’s Proposals
The Program, which serves about 3,780 customers annually, has about a 50 percent default rate. As a result, National Grid decided it is time to revisit the program design. Generally, the proposed changes would convert the Program’s current annual arrears forgiveness credit to a monthly credit, eliminate the Weatherization Deferral to participants’ arrears balances, and limit participation in the Program to 24 months.

These changes will improve the Program and will provide additional benefits to the company’s low income customers who participate in it. For example, under the proposals, customers would receive $20 in arrears forgiveness for every month they participate in the Program (as opposed to the $250 benefit currently awarded only to participants who are able to make every monthly payment over a 12 month time period). Considering the current high default rate, PULP believes the changes, which would provide benefits contemporaneously with the monthly bills, might encourage or assist some participants to remain with the Program.

PULP’s Concerns with the AffordAbility Program
That said, PULP remains concerned that the Program offers little in the way of real bill reduction and, in order to participate, customers must agree to provide the full amount of every HEAP dollar they receive to National Grid during their time in the Program and for these payments to be used exclusively to pay down arrears.

The intent of the HEAP program is primarily to assist qualifying energy users in meeting current household energy needs, not to retire a portion of arrears that may have accrued from past years. The express purpose of the federal Low Income Home Energy Assistance Act is to assist eligible low income households “primarily in meeting their immediate home energy needs.”

Using HEAP payments for the current heating season is also contemplated in the Vendor Agreements reached between the utilities (including National Grid) and the New York State Office of Temporary and Disability Assistance, which specifically state “HEAP benefits will be credited to the customer’s current account.” PULP urged the Commission to examine more closely the appropriateness of having HEAP payments applied in this manner.

PULP also noted that the price of natural gas is rising and energy burdens for low income National Grid gas customers may increase substantially in the next heating season. See High Natural Gas Prices Signal Trouble Next Winter for Low Income Customers. The design, scope, and scale of the AffordAbility Program and its benefits simply are not adequate to address current energy burdens of National Grid's low-income customers, much less increased burdens.

In future rate proceedings, such as National Grid’s recent request to boost its natural gas delivery rates by 33 percent, National Grid’s low income programs will need to be revised to address more fully the growing energy burdens of its low income customers, to make service affordable, and to avoid additional hardship. The AffordAbility Program, even with the modifications proposed by National Grid, does not even begin to address the larger picture.
Lou Manuta

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