Regulators approved a sweeping policy overhaul intended to make energy bills more affordable for the state’s poorest households.
The five-member Public Utility Commission split 3-2 in a vote on Thursday to reduce the cap on household gas and electric for lower-income customers. In a similarly divided vote, the commission directed agency staff to begin drafting new rules for the state’s utility customer assistance program.
“This is a significant improvement in terms of utility affordability for households,” said Patrick Cicero, executive director of the Pennsylvania Utility Law Project in Harrisburg. “There’s a lot of work to do, but our hope is this is a good step toward implementing utility affordability, household stability, and familial stability for some of Pennsylvania’s most vulnerable households.”
The move – which directs utility companies to implement changes in their customer assistance programs by the start of 2021 – is intended to help those customers, who often face service disconnections, late fees and a tough juggling act between keeping their lights on and other household expenses.
The policy change drew on a two-year study on how energy bills affect low-income Pennsylvanians.
“There’s a lot of data behind this,” said PUC spokesman Nils Hagen-Frederiksen.
Under the existing policies dating back to the 1990s, poorer households – those making up to 150 percent of the federal poverty level, or $32,000 for three people under on roof – that participate in customer assistance programs could be charged up to 17% of their income for their energy bills.
Hagen-Frederiksen said the changes are aimed at bringing poorer customers’ energy burdens closer to the average household in Pennsylvania, which spends about 4% of its income on energy bills.
The PUC study suggested that those who make less than 50% of the federal poverty cutoff, or about $10,000 for three people, often spent more than 20% of their income on their gas and electric bills, even with the existing cap.
For customers in that income tier, the new PUC policy will cap heat and electric bills at 6% of their total income, and at 10% for those between that bracket and 150% of the federal level.
Cicero said his organization, which is part of the statewide legal aid network, encounters low-income households who spend more than 30% of their income on energy bills “all the time.”
Crucially, he said, the new policy clarifies that customers in the program should be exempt from late fees. Under the current rules, that question comes down to individual companies’ PUC-approved plans.
One of the two commissioners who dissented, Norman Kennard, argued his colleagues were making the changes while “we don’t know what the additional cost impact of further reducing the energy burden will be for Pennsylvania ratepayers.”
Duquesne Light Co., one of a number of utilities that submitted comments, made a similar argument to the commission: “Controlling program costs is especially important when considering that many ratepayers not enrolled in CAP have income that is barely above the cut-off for low-income eligibility.”
But Commissioner Andrew Place, a trained economist who led the effort to amend the policy, and his commission Vice Chairman David Sweet argued their agency must make utilities “universally affordable” under the law.
Only about 30% of those eligible participate in the existing assistance program, Hagen-Frederiksen said. Customers can enroll by contacting their utility providers, even before the changes take effect.
“If we know that the current participation rate is 30%, that means there’s 70% out there who could be (participating),” he added.