EAP Member Electric and Natural Gas Utilities’

AN OVERVIEW OF PA UTILITYCONSUMER SERVICES

ByDonna M. J. ClarkGeneral Counsel

Energy Association of Pennsylvania

PA PUC Advisory Council MeetingMarch 22, 2011

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• A trade association formed by the investor-owned electric and natural gas utilities in PA.

• The voice of PA’s energy utilities on policy issues before the General Assembly, the Public Utility Commission and other state agencies.

• Serves as a clearinghouse for information on best practices within the industries and sponsors educational conferences on operational and consumer issues.

Energy Association of Pennsylvania

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• Deliver electricity and natural gas to more than 8 million residential, commercial and industrial customers in Pennsylvania through complex infrastructures of wires and pipes.

• Sell the commodities of electricity and natural gas to customers who do not choose a competitive supplier.

• Help their customers to use energy wisely and lower their utility bills through conservation, energy efficiency, and weatherization.

EAP Member Companies

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• Own and operate either electric power plants or wells that produce natural gas.

EAP Member Companies Do NOT

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Heating by Fuel Type in PA

• 52% of PA households heat with natural gas.• 100% of these households need electricity to operate furnaces.

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Utility Residential Customers

• Most utility residential customers pay their bills.

• For some, utility service is simply not affordable.

The official U.S. poverty rate in 2009 (14.3%) was the highest poverty rate since 1994. One in seven Americans are living at or below the federal poverty level.

• For others, life circumstances (such as death or a family member or job loss) result in temporary bill payment problems.

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• Safe and reliable utility service• Just and reasonable rates.• Fair credit and security deposit

policies.• Ability to question and/or

dispute your bill’s accuracy or raise service complaints with the utility.

• Option to file a complaint with the PUC.

Utility Customers – Rights & Responsibilities

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• Pay bill on time.• Provide utility with access to

its meter.• Give at least seven days

advance notice before moving or discontinuing service

Utility Customers – Rights & Responsibilities

Utility service unlike other essential items (i.e., housing, gasoline, groceries) is billed and paid for AFTER its use.

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• While utilities are authorized to terminate service for failure to pay, termination is a last resort.

• There are numerous resources for customers to use when they have difficulties paying bills –some taxpayer-funded, some ratepayer-funded, some utility-funded.

• Low-income customers of regulated electric and natural gas utilities are protected from termination from Dec. 1 through March 31 each year.

Utility Service in PA – Regulated Electric & Gas

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Home Heating Assistance in PA - LIHEAP

FY 2011 LIHEAP open/close dates*

CASH COMPONENT:Open Nov. 1, 2010

Close March 31, 2011

CRISIS EXCEPTION:Open Nov. 1, 2010Close Jan. 2, 2011

CRISIS COMPONENT:Open Jan. 3, 2011

Close March 31, 2011

LIHEAP Grant Amounts*CASH:

Minimum $300Maximum $1,000

CRISIS:Minimum $25

Maximum $400

Program Eligibility*160% Federal Poverty Income

Guidelines

FY 2011 Budget – Approximately $312 Million (Includes $30 million remaining from FY 2010)

A federally-funded program, administered by PA’s Dept. of Public Welfare, that helps low-income people pay their heating bills through home heating energy assistance grants, crisis grants, and emergency weatherization/repair services.

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Energy Assistance in PA - Utilities Add More $$ for Citizens in Need

EAP member utilities’ resources and benefits to households with incomes less than 160% of FPIG are in addition to the funds provided by LIHEAP and help to maintain and increase energy assistance to low-income households:

• Weatherization (LIURP)• Customer Assistance Programs (CAP)

• Arrearage forgiveness• Reduced monthly payments

• Universal Service Programs• Supplemental payments for repair/replacement of

defective heating equipment or gas lines• Cash payments towards energy bills• Customer and employee donations towards cash

payments

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Utility Customers – Need for Partnership

Utility Universal Service

Programs and Services

DCED -Weatherization

Programs

DPW –LIHEAP and“Heat & Eat”

PA PUC –Balances needs

of utility and consumer

UTILITY CUSTOMER

Non-Utility Hardship Funds

– e.g. Dollar Energy

Social Service Agencies,

Churches, Etc.

Utility Customer

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Utility Universal Service Programs & Services

• Customer Assistance Programs (CAP) Reduced Bills, Arrearage Forgiveness

• Low Income Usage Reduction Program (LIURP) Weatherization, conservation, energy efficiency

• Act 129 Programs Weatherization, conservation, energy efficiency

• Utility Hardship Funds Emergency Cash Assistance

• CARES Extensive Network – referrals to qualifying agencies and services

• Annual Prepare Now Campaign• Payment Agreements• Budget Billing• Third Party Designee• Vast Outreach and Education

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Customer Assistance Programs

A reduced payment schedule based on customer’s ability to pay. Percent of income or reduced rate. Income eligibility: at or below 150% federal poverty level. Deposits and restoration charges generally reduced or waivedWith regular, on-time payments:

• Arrearages forgiven over a specified period of time• Protection against shutoff of service

Utility programs expanding, costs increasing. Cost for program paid by other residential ratepayers. Need to engage CAP customers regarding energy

efficiency and conservation.

2009 CAP Programs - Over $400,000,000

From 2004 to 2009, CAP

program costs have increased 80% for electric

utilities and 108% for gas

utilities

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Low-Income Usage Reduction

A PUC-mandated residential usage reduction/weatherization program to help low-income customers reduce energy bills through conservation, making bills more affordable.

• Targeted to customers at or below 150% federal poverty level.

• Up to 20% of funds used for customers between150-200% of federal poverty level.

• Available to homeowners and renters, single family homes, mobile homes, small and large multi-family residences.

2009 LIURP Programs - Over $37,000,000

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Act 129 Programs

Mandated reduction of consumer electricity usage and peak demand through EDC Energy Efficiency and Conservation Programs.

• Enacted October 15, 2008. • Electric utilities with 100,000 customers• Sets goals for reducing energy consumption and demand

Reduce energy consumption and demand 1% by May 2011 and 3% by May 2013; and Reduce peak demand 4.5% by May 2013.

• Requires implementation of Energy Efficiency and Conservation (EE&C) Plans

• EE&C plans must include specific energy efficiency measures for households at or below 150% of FPIG. The number of measures must be proportionate to those households’ share of the total energy usage in the service territory and in addition to existing LIURP.

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Utility Hardship Funds

Utility company hardship funds provide critical-need cash assistance to help pay utility bills when all other resources have been exhausted.

Ratepayer Contributions.

Utility & Shareholder Contributions.

2009 Ratepayer Contributions - Over $3,000,0002009 Utility/Shareholder Contributions – Over $3,900,000

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CARES

Services to help payment-troubled customers maximize their ability to pay utility bills.

Case Management.

Network of service providers.

Referrals to other agencies.

2009 – Over $3,000,000

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Other Programs and Services

Utilities employ an array of other services to assist their low-income and payment troubled customers.

Key – CONTACT YOUR UTILITY

• Payment agreements.• Energy efficiency and conservation.• Budget billing.• Third-party designees.• Assistance in completing LIHEAP applications.• Educational events and fairs/Partner with Community

Organizations.

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Empowering the Consumer through Energy Conservation

• Improved and safer living conditions.

• Cleaner and healthier environment.

• Greater control over fluctuating energy prices.

• Saves money.

• Reduces dependency on foreign oil.

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Empowering the Consumer through Energy Conservation

• Low-income households with high energy bill arrearages and high energy consumption are targeted for weatherization and conservation services by utility LIURP programs and government-administered programs such as DCED’s Weatherization Assistance Program.

• Low-income housing often has a higher potential for energy efficiency improvements because of age and condition of homes.

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Empowering the Consumer through Energy Conservation

Safer, Healthier, More Comfortable Homes

• Safer heating systems - reduced use of unsafe and inefficient heating sources.

• Homes warmer in winter, cooler in summer, less drafty.

• Reduced illness and absenteeism from school and work.

• Dollars freed-up through conservation can be used for other purposes and, in the case of assistance dollars, other households in need.

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Empowering the Consumer through Energy Conservation

Reduced Energy Bills

• Families receiving weatherization services see their annual energy bills reduced by an average of about $437, depending on fuel prices.

• Because the energy improvements that make up weatherization services are long lived, the savings add up over time to substantial benefits for weatherization clients and their communities, and the nation as a whole. (U.S. Dept. of Energy)

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Empowering the Consumer through Energy Conservation

Reduced Arrearages

• Of those households with energy bill arrearages, 40% reduce their arrearage following weatherization services.

(Long Term Study of Pennsylvania’s Low Income Usage Reduction Program – January 2009, prepared by Consumer Services Information Systems Project – Penn State University)

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Empowering the Consumer through Energy Conservation

Reduced Consumption• 69% of LIURP households reduce their energy consumption following weatherization treatments, with an average reduction of 16.5%.

• 31% of LIURP households experience no change in energy consumption or increase energy consumption following weatherization. Known as “rebound” or “take-back effect”, increases may be attributable to increased comfort level in home following repair, particularly for electric base-load repair or furnace maintenance (rather than replacement). (Long Term Study of Pennsylvania’s Low Income Usage Reduction Program – January 2009, prepared by Consumer Services Information Systems Project – Penn State University)

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Assistance Dollars = $100 Un-weatherized homes not

practicing conservation

Assistance Dollars = $100 Homes weatherized and practicing conservation

Empowering the Consumer through Energy Conservation

Weatherization and conservation helps-t-r-e-t-c-h limited assistance funding

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Thank you.

Energy Association of Pennsylvania800 North 3rd Street, Suite 205

Harrisburg, PA 17102(717) 901-0600

www.energypa.org