Press Release

PUC Ends Review of Customer Assistance Programs that Help Low-Income Families, Provides Direction for New Rules, Guidelines

Published on 10/19/2006

Filed under: Electric Gas Water and Wastewater Telecommunications Transportation and Safety

HARRISBURG - The Public Utility Commission (PUC) today concluded its review of Customer Assistance Programs (CAPs), under which low-income customers pay discounted bills and provided direction on creating new program guidelines.

"It is critically important that the Commission move toward a comprehensive, integrated consideration of CAP designs and CAP cost recovery," said Commissioners Terrance J. Fitzpatrick and Kim Pizzingrilli in a motion. "The total statewide cost of CAP programs has increased dramatically over the past several years (249 percent since 2000). If energy costs continue to increase, so will the cost of these programs. In order to balance the interests of beneficiaries of the CAP programs with the interests of the paying customers, the Commission must begin to consider CAP designs and recovery of CAP costs at the same time."

"As more and more CAP programs become part of the social safety net for low-income seniors and families, we will continue to move forward to improve these programs," said Commission Chairman Wendell F. Holland "We must take the necessary steps to ensure that eligible consumers are being made aware of these programs and adequate funding is provided."

The Commission voted 4-0 to conclude its review of CAPs, which began Nov. 10, 2005. While the state's electric and natural gas competition laws require that every electric utility and major natural gas utility establish a CAP, the funding levels and program designs varied from company to company.

Much of the direction provided by the Commission today addressed concerns about funding mechanisms and program design. The Commission's Law Bureau will now prepare a proposed rulemaking and amend the CAP policy statement based on today's action for further consideration by the Commission.

The following is a summary of the direction provided by the Commission:

• The Commission is committed to making certain the CAPs are adequately funded.
• As energy prices increase, so will the cost of universal service programs.  Going forward, allowing company's the option to recover costs through a surcharge rather than a base rate would establish a charge which tracks the actual amount spent and allow customer rates to be adjusted on a regular basis to recover the actual costs in a transparent, efficient and fair manner.
• Universal service programs are mandatory and the General Assembly required "full recovery" of the related costs.  This differs from base rate recovery which does not have an assurance of full recovery because a utility is only allowed a reasonable opportunity to recover the costs incurred in providing the service.
• For a utility that files a surcharge, the most streamlined, transparent and equitable process to consider CAP issues is to require that:

o A utility's CAP rules are placed in its tariff;
o The triennial update filing take the form of a tariff filing; and
o Adjustments to a CAP surcharge arising from the triennial update be addressed in the same filing.

• A deficiency in the Commission's current handling of CAP issues is that there is ambiguity and disconnect between decisions on funding levels/program design and the process in which utilities recover CAP costs.
• CAP costs should be borne by the only customer class whose members are eligible for the program - residential customers.  The Commission should not initiate a policy change that could have a detrimental impact on economic development and the climate for business and jobs within the Commonwealth.
• The Commission will review these issues to make sure that all CAP costs are prudently incurred.

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities to ensure safe and reliable utility service at reasonable rates; protect the public interest; educate consumers to make independent and informed utility choices; further economic development; and foster new technologies and competitive markets in an environmentally sound manner.

For recent new releases, audio of select Commission proceedings or more information about the PUC, visit our website at www.puc.state.pa.us.

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Docket No. M-00051923, L-00060181

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