District of Columbia
Last updated: December 2015
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The Residential Aid Discount and (RAD) and Residential Essential Service (RES) discount have been applied to income-eligible customer accounts since the early to mid-1980s. On October 22, 2008, the "Clean and Affordable Energy Act of 2008" became effective and established an Energy Assistance Trust Fund (EATF) that increased funding for low-income rate assistance.
Potomac Electric Power Company (Pepco) RAD customers receive a 55 percent discount on the first 400 kWhs in the summer months (June - October) and a 41 percent discount on the first 400 kWhs in the winter months (November - May). For a typical RAD customer using 575 kWhs per month, this represents a savings of $30 per month in the summer and $25 in the winter. Eligible all-electric customers receive a 40 percent discount on the first 700 kilowatt-hours used in the winter months and a 50 percent discount on the first 700 kilowatt-hours used in the summer months. For a typical RAD customer with all-electric heating using 760 kWhs per month, this represents a bill reduction of $37 per month in the summer and $45 in the winter.
The annual funding level for the RAD surcharge is set at $5.75 million. Starting in 2011, Order No. 15986 directed Pepco to revise the RAD surcharge on an annual basis to account for any difference in the RAD subsidy provided to households and the amount collected, in addition to changes in participation level. In March 2014, a surcharge of 0.294 mills per kWh on Pepco customer bills funded the RAD. Effective December 2015, the RAD surcharge was adjusted from 0.294 mills per kWh to 0.159 mills per Kwh.
Over $7.1 million in discounts were provided to an average of 16,997 RAD participants in 2014. Participation in RAD is tied to the eligibility limit for LIHEAP.
The RES discount rate is available from November through April for qualified Washington Gas customers. Established in 1986, the discount is based on household size and income level. Participating households save an average $147 per year. For the 2014-2015 heating season, 7,150 LIHEAP-eligible households received credits that totaled $870,091.
Historically, the RES has been supported by $511,032 through Washington Gas base rates plus a varying amount through a Distribution Charge Adjustment (DCA) and the Energy Assistance Trust Fund (EATF) surcharge. Through Order No. 17132, dated May 15, 2013, the Commission removed the DCA as a source of funding for the RES. Subsequent to the issuance of the Order, the Residential Essential Service Subsidy Stabilization Emergency Amendment Act of 2014 removed the EATF as a source of funding for the RES. The Commission is reviewing the RES and its funding mechanism with the goal of having a revised RES in place for the 2015-2016 heating season.
The EATF is funded by an assessment on natural gas and electric sales amounting to $.0051 per therm for gas and $0.0000607/kWh from electric sales and collects about $2.3 million annually for existing low-income programs. The assessment is applied to the sale of every kilowatt hour and therm in the District, except sales to residents participating in RAD and RES programs.
The EATF provides continued funding for the following programs:
- LIHEAP Expansion and Energy Education is an addition to the current LIHEAP program and includes bill payment assistance and educates residents about other energy efficiency programs. Households that would otherwise not be served as a result of limited LIHEAP funding are granted benefits through this program. For FY 2014, $1.75 million provided services to 15,566 households.
- RAD Expansion is designed to provide expanded discount rates to eligible RAD customers. For FY 2014, $44,054 was used for RAD Expansion.
- RES Expansion and Awareness Program is a bill assistance program for gas customers with the goal of increasing RES participation by 30 percent. The program spent $105,689 in FY 2014 for 5,380 participating households.
The "Clean and Affordable Energy Act of 2008" also established a Sustainable Energy Trust Fund (SETF) that supports existing energy efficiency programs and a private company known as the DC Sustainable Energy Utility (SEU). The DC SEU is contracted by the Department of the Environment (DDOE), the LIHEAP grantee, and is required to "reduce the District's energy consumption and the growth of the District's peak electricity demand; increase the District's renewable energy generating capacity and the number of green-collar jobs in D.C.; and improve the energy efficiency of the District's low-income housing." An Advisory Board provides oversight of the SETF and SEU.
The SETF receives its revenue from a monthly surcharge assessed on Pepco and Washington Gas ratepayers. The surcharge for natural gas customers was assessed at $0.012 per therm in 2010; that increased to $0.014 in 2012 and each subsequent year. The surcharge for electric customers was assessed at $0.0015 per kWh in FY 2011 and each year after. This fund amounted to about $18 million in 2014 for residential and commercial programs.
The DC SEU provided services to 3,245 low-income multifamily households and 29 low-income single family households with an annual cost of $6.1 million in 2014. Programs included:
- Comprehensive Low-Income Multifamily Initiative — rehabilitation projects are provided custom technical and financial assistance for energy efficiency improvements.
- Low-Income Multifamily Direct Product Installation — low-income households received energy-saving lighting and hot water products.
- Low-Income Services — air and duct sealing, insulation and heating system improvements were provided to single family homeowners.
- Small Scale Solar — low-income homeowners received solar PV systems to heat water, and multifamily building owners received incentives to install solar thermal arrays for income-qualified residents.
- Food Banks — energy-efficient light bulbs were distributed to clients.
The District's "Retail Electric Competition and Consumer Protection Act of 1999" became effective on May 26, 2000. Since then, after approval of the "Retail and Consumer Protection Act," low-income electric customers have benefited from universal service, energy efficiency and renewable resources programs. Programs were established by Commission-issued Order No. 11876 on December 29, 2000 and funded through the Reliable Energy Trust Fund (RETF), a public benefit fund financed by a non-bypassable surcharge on residential Pepco bills.
Low-income natural gas customers also have benefited from energy efficiency and rate assistance programs that were approved and funded through the “Omnibus Utility Emergency Amendment Act of 2005” that established a Natural Gas Trust Fund (NGTF), a non-bypassable charge on natural gas residential customer bills.
The Sustainable Energy Trust Fund (SETF) and the Energy Assistance Trust Fund (EATF) that were established by the "Clean and Affordable Energy Act of 2008" replaced the RETF and NGTF that funded existing energy efficiency programs administered by the DDOE.
Since 2005, under a settlement with the Commission, Pepco has been the Standard Offer Service (SOS) provider to customers who have not chosen an alternative supplier. Each June supply rates are adjusted to reflect the cost of power that Pepco buys on behalf of its customers.
Clean and Affordable Energy Act of 2007 amends the Retail Electric Competition and Consumer Protection Act of 1999
More information about retail electric restructuring and customer choice is found on the District's Public Service Commission website.
Related PSC documents are available at the website listed above, or in the E-docket Section of the PSC website under Formal Case (FC) 945.