Last Updated: May 2016
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Rate Assistance and Arrearage Forgiveness
Since 1998, Connecticut has had a system benefits charge (SBC), which has provided, among other things, a mechanism to cover some of the two largest electric utilities' expenses in assisting low-income households, particularly in complying with the state's consumer protection statutes (Conn. Gen. Stat. § 16-2451).
Connecticut has some of strongest consumer protection measures in the country, including a strict winter disconnect moratorium that, subject to conditions, protects low-income "hardship" customers from having their gas heat and electric service turned off between November 1 and May 1.
To support low-income assistance and energy conservation and efficiency, Connecticut's 1998 restructuring law imposed three separate charges: the above-mentioned SBC, a conservation surcharge (Conn. Gen. Stat. § 16-245m) and a renewable surcharge (Conn. Gen. Stat. § 16-245n).
The SBC, the conservation charge and the renewable energy charge were combined for billing purposes into the Combined Public Benefits (CPB) charge in 2006. The CPB charge, 3 mills per kWh, is imposed on all customer classes of the state's two investor-owned utilities — Connecticut Light & Power (CL&P) and United Illuminating (UI).
The electric utilities are allowed to use CPB funds to recover their costs in implementing programs they operate to assist low-income households and to forgive arrearages and uncollectibles incurred by hardship customers. Arrearage forgiveness is mandated by statute for utility heating customers who are eligible for energy assistance (income at or below 60 percent of the state median income) regardless of whether they heat with electricity or gas.
State statute [Conn. Gen. Stat. § 16-262c(b)(4)-(5)] mandates arrearage forgiveness programs, known as Matching Payment Plans (MPP). Eligible customers must, among other things, (1) comply with an agreement they enter into with the company to amortize their arrearage and (2) apply for energy assistance benefits. Gas and electric companies must match both the payments participating customers make towards their arrearages and benefits they receive under energy assistance programs.
During the 2014 program year, 6,526 electric heating customers received matching payments through MPPs. The amount of uncollectibles, which all or part of were written off for these customers, was over $12.7 million. During that same program year, MPPs provided matching payments to 8,328 gas customers. Uncollectibles for gas customers which all or part were written off were almost $13.6 million.
Conn. Gen. Stat. §16-24a required the Department of Energy and Environmental Protection (DEEP) to conduct a proceeding regarding the development of a Low Income Discount Rate (LIDR) for gas and electric customers. The Bureau of Energy and Technology Policy (BETP) conducted the "Low Income Discount Rate Review" and submitted its report to the Public Utilities Regulatory Authority (PURA) in July 2013 with the following recommendation - "currently available programs already provide benefits equal to, or greater than, the value of benefits low-income households would receive through a 10 percent low-income discount rate."
A November 2013 decision from the PURA accepted the recommendation in the BETP's report and determined that the existing rate assistance and energy efficiency programs are more beneficial to Connecticut's low-income residents than replacing them with a low-income discount rate.
The CPB collects the money used to support an energy efficiency fund and a renewable fund: the Connecticut Energy Efficiency Fund (CEEF) and the Connecticut Clean Energy Fund (CCEF).
The CEEF is also supported by the three regulated natural gas utilities through a conservation charge, the Conservation Adjustment Mechanism (CAM), included in their rates. In May 2014, the PURA approved an expanded CAM increasing the charge on the distribution portion of natural gas bills from $0.017 to $0.046 per hundred cubic feet.
The CEEF supports a variety of energy efficiency programs that provide financial incentives to help home and business owners reduce their energy consumption. Efficiency programs are reviewed by the Energy Efficiency Board and approved annually by the PURA. CEEF funded programs are administered by the electric and natural gas utilities.
The Efficiency Board is an appointed group of 15 members representing public and private entities or interest groups. Its original purpose was to advise and assist the two major electric utilities in developing and implementing efficiency programs. In 2005, the Board's oversight was expanded to include the energy programs of the Connecticut Municipal Electric Energy Cooperative and the natural gas utilities — Connecticut Natural Gas Corporation, Southern Connecticut Gas Company and Yankee Gas Services.
In 2014, CEEF programs served several customer sectors: limited-income (up to 60 percent of Connecticut median income), municipal, non-profit, residential, small business, state government, and large commercial and industrial customers.
Limited-income households are served under the Home Energy Solutions Income Eligible program (HES-IE). Its 2014 proposed program expenditures totaled almost $20.5 million for 19,291 electric customers and $8.9 million for 10,551 natural gas customers.
The electric and gas companies submitted a multi-year Conservation & Load Management Plan to PURA that describes two plans with different levels of funding and energy savings for 2013-2015. The Base Plan reflects the standard three-year budgets and energy savings that are consistent with the traditional funding. The primary funding source for 2014 HES-IE programs continues to be the three-mill charge on customers' electric bills and the contributions from natural gas customers through the monthly CAM. The 2014 annual update of the Plan projected funding for 2015 programs at $20.5 million from the electric companies for about 19,175 households and $8.5 million from the gas companies for about 7,700 households.
An Expanded Plan describes the programs and increased funding levels necessary to achieve the state's increased savings goals. To partially fund the bigger budget required for the increased savings goals, the electric companies began the process to implement a conservation adjustment mechanism (CAM).
On December 23, 2013, the PURA issued an interim ruling which authorized CP&L and UI to implement a CAM to supplement funding from its base three mill conservation charge. In a 2014 decision (link, CAM), the PURA approved continued collection of the CAM.
The HES-IE programs offer a full range of energy conservation measures to address inefficient lighting, water heating, inefficient heating equipment, refrigeration and insufficient insulation. In 2014, the electric distribution companies and Community Action Agencies worked together to increase HES-IE participation and to consider opportunities for integrating HES-IE and the federal Weatherization Assistance Program.
The Plan takes a "fuel blind" approach to energy efficiency in the residential sector and will utilize Regional Greenhouse Gas Initiative (RGGI) dollars for homes that heat with fuel oil. After the RGGI funds expire, the cost for fuel oil measures will be split 50/50 between the electric and natural gas companies.
The Department of Economic and Community Development operates the Energy Conservation Loan (ECL) program for low- and moderate-income households based on Department of Housing and Urban Development area median income standards up to 200 percent.
Loans for energy efficiency improvements and furnace replacement have zero percent interest for a family with median income of 50 percent or less and are subsidized by the state's major utilities. Other improvements that may be funded include: replacement doors and windows, siding, insulation, heat pumps and solar systems and passive solar additions.
In 2013, according to its annual report, the program provided 279 loans totaling $2.6 million under the ECL and Multifamily Energy Loan programs.
Utility restructuring legislation, HB 5005, PA 98-28 (4/98)
PURA decisions on utility programs
Connecticut Program Savings Document, 8th edition.
Annual reports from the Connecticut Energy Efficiency Board about energy efficiency programs, including low-income
Docket No. 12-07-01, PURA Investigation into the Establishment of Low-Income Discounted Rates for Electric and Gas Services, November 21, 2013
Docket No. 13-11-14, Application of CP&L and UI for Approval of a Conservation Adjustment Mechanism, November 15, 2013
Docket No. 14-03-01, PURA Investigation of the Annual Conservation Adjustment Mechanisms Filed by: Connecticut Natural Gas Corporation, The Southern Connecticut Gas Company and Yankee Gas Services Company, May 20, 2014