Basic Utility Needs Simply Unaffordable For Some Families: From the Legal Intelligencer

The ability to connect and maintain utility service is essential for a household’s health, safety and wellbeing. Lack of service results in eviction, loss or denial of public housing, chronic health problems, the risk of removal of one’s children from the home, and a host of other equally horrific outcomes. Low-income individuals are particularly at risk of termination, and often choose between utility service and other critical needs like food, health care, medicine, transportation and child care. Unfortunately, for too many Pennsylvanians, essential utility service—electricity, water and a heating source—are simply unaffordable. Across the state, more than 1 million households have total household income of less than 150 percent of the federal poverty guidelines, which for a family of four, is no more than $36,450 per year. These households pay between 9 and 30 percent of their income toward energy costs. By contrast, energy burdens for median to high-income households are between 3 and 5 percent.

However, unlike some other goods and services, there are no ready substitutes for a lack of affordable electricity and natural gas for home heating, refrigeration and cooling, or water for bathing and drinking. When families cannot pay, they are forced to go without service. In 2015, 153,275 low-income Pennsylvania households had their gas or electric service terminated for some period of time. Many of these households were not able to restore their service before winter. In fact, as of December 2016, more than 20,500 households entered this winter without heat and more than 1,500 households are using an “unsafe” heating source. These households are literally left out in the cold.

For more than 36 years, the Pennsylvania Utility Law Project (PULP), a specialized project of Regional Housing Legal Services (RHLS), has worked to address the issue of utility and energy affordability for low-income households. PULP’s attorneys represent individuals, organizations and group clients before state agencies on all aspects of utility affordability, including bill and rate assistance programs, energy efficiency and weatherization and federal grant programs. In addition, PULP attorneys are involved in crafting policies that create sustainable solutions to the challenges of utility affordability. Recently, PULP has worked in two related areas to achieve significant progress: utility bill affordability and energy efficiency.

PULP staff have worked to preserve electric utility bill affordability in the face of challenges which have occurred because of the unregulated electric generation market. In 1996, Pennsylvania’s wholesale and retail electricity markets were deregulated, and, beginning in 2010, all residential utility customers have had access to competitive electric generation suppliers. This means that households have the ability to choose who supplies their energy—although not the distribution system—and that households can “shop” for different prices with different attributes for their generation supply. While the results of this experiment have been mixed for residential customers as a whole, for low-income households, the results of competitive electric shopping have been disastrous.

Recent cases before the Pennsylvania Public Utility Commission (PUC), have shown that low-income customers who are enrolled in utility customer assistance plans (CAPs) who have switched to a competitive supplier have paid significantly more—on net—for service than they would have paid had they remained on default service. This is significant for several reasons. First, customers enrolled in CAPs all have household income at or below 150 percent of the federal poverty guidelines, have demonstrated an inability to afford their utility bills without assistance. These households also have taken the step to request assistance through the CAP program, which is a program that provides reduced bills and forgiveness of certain accumulated arrears. Second, because these households have a portion of their bill paid by other residential ratepayers through CAP, anytime they pay more than the utility’s price means that the cost of the program to others increases—all without any material benefit to low-income households. The data shows significant costs.

For all five of the electric utilities in the state that currently allow CAP customers to switch to a competitive supplier, the data shows that it has cost, on average, approximately $7 million more per year than it would have had all CAP customers remained on a default service. Because low-income households have no budget elasticity they face extreme hardship and significant financial harm when they pay more for electricity, even for a short period of time. This additional cost is often the difference between remaining current on their bills or falling behind. This is the reason PULP has advocated for rules to ensure continued affordability.

On behalf of its clients, PULP works to prevent further harm from occurring in each of these utilities and has been actively working to prevent the harm from spreading to the other two utilities that currently don’t allow CAP shopping. As a result of PULP’s advocacy, the PUC recently recognized its ongoing obligation to ensure that CAP programs remain affordable and adopted PULP’s expert’s program design to ensure that CAP customers in one of these utility service territories are reasonably protected from the possibility of paying more than the utilities’ price. Although more work remains to ensure that these protections are adequate and expanded across the state, PULP is hopeful that this issue will continue to gain traction and protections will be put into place for economically vulnerable households.

In addition, PULP staff have sought to ensure that households receive appropriate energy efficiency opportunities. This is significant because energy efficiency is one way to both provide continued bill affordability and improve quality of the health and safety of low-income households. Through its advocacy on behalf of its clients, PULP intervened in energy efficiency cases filed by each of the electric utilities. These plans set energy efficiency programs rules and targets for the five-year period beginning June 1, 2016, through May 31, 2021. Each of the cases resulted in significant settlements approved by the PUC and will provide enhanced programs for low-income families. Specifically, through its advocacy, PULP was able to encourage the utilities to shift more than $6 million to programs that provide for the direct installation of energy efficiency measures in low-income customers’ homes and dedicate more than $20 million to projected targeting residents of low-income, multifamily housing, which is a segment of the utilities’ customer base that has been historically underserved. In addition to these significant dollar increases, PULP’s advocacy has resulted in enhanced coordination of existing programs, including programs offered by natural gas companies, and the inclusion of underserved housing segments such as manufactured homes.

While these recent successes are insufficient to completely mitigate energy poverty, they are each steps in the right direction. In 2017 and beyond, PULP looks forward to continuing to partner with others so as to ensure that the state’s most vulnerable households have access to affordable and reliable utility service. •

View the article on the Legal Intelligencer’s website.