Last Updated: September 2016
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Currently, Idaho statute forbids the Idaho Public Utilities Commission(PUC) from approving surcharges on ratepayers to fund low-income assistance programs. Statute 61-315 states utilities cannot "grant any preference or advantage" to any person or subject anyone to "prejudice or disadvantage." It also prohibits utilities from establishing different rates that are "unreasonable" between classes of service.
For years, community advocates have been interested in changing the statute, and the PUC has also explored the topic. In October 2008, PUC staff held workshops on energy affordability (Case # GNR-U-08-01), prefacing them by saying, "Energy affordability has become a central issue for many Idaho households and businesses." The PUC staff designed the workshops to "identify issues and discuss solutions pertaining to energy affordability and customers' ability to pay energy bills."
The PUC's staff issued its final report in January 2009. It discussed the energy burden faced by Idahoans, the current record level of unemployment facing the state, and the number of households living in poverty. It discussed how LIHEAP only assisted about one-third of the households that qualify due to inadequate funding. The staff determined that the resources available were "insufficient to meet the current and future need."
Among the PUC staff's proposals was suggesting that PUC commissioners support legislative attempts to amend statute 61-315. The PUC did go to the 2009 Idaho Legislature and try to change Idaho statute. Senate Bill 1119 wanted to add a section to statute 61-315 that allowed companies to voluntarily offer rate assistance programs.
During a committee hearing on the bill, PUC Commissioner Mark Redford said estimates projected that, if utilities collected just $0.01 per month through a surcharge, between $70,000 and $80,000 would be collected to assist low-income households. He also stressed the bill made such programs totally voluntary. Avista representatives supported the bill and discussed how their utility ran similar programs serving their "most financially stressed" customers in other states.
While SB 1119 made it out of committee, it faced opposition on the Senate floor. Some senators didn't like the idea that the programs subsidized low-income customers. SB 1119 died on the Senate floor by a 17-18 vote. No further legislative attempts have been made to change statute 61-315.
The PUC requires regulated electric and natural gas utilities to develop and pursue cost-effective Demand-Side Management (DSM) programs, which frequently feature low-income weatherization programs (LIWAPs). Some utilities have operated LIWAP programs since the 1980s and, with PUC approval, transferred them into their DSM portfolios.
The money for LIWAPs comes from surcharges on all customers. This money then goes to local community action agencies to administer the programs. For 2015, the three main utilities reported spending the following amounts for LIWAPs and energy-efficiency education: Idaho Power - $1.325 million; Avista Utilities - $700,000; and Rocky Mountain Power - $225,653. This totaled approximately $2.25 million.
During 2013, the PUC addressed some of the questions surrounding the cost effectiveness of LIWAPs by the three main utilities. Frequently, utilities had claimed during rate cases that LIWAPs were not cost effective. In Order 32788, the PUC largely adopted staff recommendations developed through workshops held in 2012 (see below for more information). It encouraged the utilities to include non-energy benefits of LIWAPs when calculating cost effectiveness, and it declined to construct a "specific cost-effectiveness test for low-income programs at this time [emphasis in original]." Instead, the PUC vowed to continue reviewing LIWAPs in a case-by-case basis. In one of those reviews, the PUC allowed Avista to suspend its low-income offerings to natural gas customers. In Decision 32650, the PUC affirmed the programs were not cost effective, due primarily to the low price of natural gas. However, the utility did continue its offerings to low-income households using electricity.
In its final report on energy affordability in January 2009, the PUC examined both low-income rates and energy efficiency. All the workshop participants supported LIWAP as an "excellent" way to reduce energy costs. The report said only 10 percent of houses eligible for weatherization under the state LIHEAP program were served due to limited funding.
The PUC staff recommended weatherization as the best efficiency program for low-income households, but it also said those programs "rarely have enough funding to meet the need." It also supported companies adopting tiered structures that would allow customers to save money by consuming less energy.
The utilities involved in the PUC's workshops supported weatherization programs, and many of them discussed their current programs and what they planned to do in the future. Advocates also supported weatherization. The Community Action Partnership of Idaho (CAPAI) pointed out that most, if not all, public utilities had conservation programs. The missing part, CAPAI said, were programs specifically targeting low-income customers.
The issue of LIWAP cost effectiveness has been an issue consistently raised by utilities. In April 2011, Rocky Mountain asked (PAC-E-11-13) the PUC to let it stop performing evaluations for its LIWAP, because the program wasn't cost effective. The company submitted an evaluation of its LIWAP between 2007 and 2009 to make its case. CAPAI responded by saying that Rocky Mountain's argument, if accepted, put every other LIWAP in "serious jeopardy." The association called the evaluation "fatally flawed" and "inaccurate and misleading." CAPAI submitted an analysis of Rocky Mountain's evaluation that claimed LIWAP was cost effective. In January 2012, the PUC denied the company's request.
In response to both Rocky Mountain's and Avista's claims that their LIWAPs weren't cost effective, the PUC opened Case No. GNR-E-12-01 in February 2012. During workshops held as part of the docket, utilities, PUC staff, and other interested parties explored issues related to the funding, implementation, and evaluation of utility LIWAPs and other conservation programs.
In October 2012, PUC staff issued its draft "Report on Low Income Weatherization and Energy Conservation Education Programs." In it, the staff suggested criteria for how to evaluate requests for more LIWAP funding. The staff also provided recommendations and comments on changes utilities could make regarding cost-effective calculations and procedures. In April 2013, the PUC largely adopted the staff's recommendations regarding methodology for evaluating LIWAP and the criteria for increased funding.
The LIWAPs' funding history shows no aversion by the PUC to increasing the money provided by utilities. However, it has resisted attempts by low-income advocates to create parity among the various LIWAPs, including having funding based on a fixed rate per customer. Instead, as detailed above, the PUC has favored ordering annual lump-sum contributions.
In a rate case decided (PAC-E-11-12) in January 2012, CAPAI sought a 26 percent annual increase in LIWAP funding from Rocky Mountain, which the association claimed would make the program comparable to the LIWAPs offered by Idaho Power and Avista Utilities. Both Rocky Mountain and PUC staff opposed the move. The PUC ruled against CAPAI, saying that additional funding was "not warranted at this time."
In 2011, CAPAI wanted Idaho Power to increase funding for LIWAP from $1.2 million to $2.7 million, arguing it would create parity between the utilities. CAPAI calculated annual per capita spending on LIWAPs as $6.69 per customer by Avista, $5.32 for Rocky Mountain Power, and $3.06 for Idaho Power. The PUC declined (Case No. IPC-E-11-08) the increase, citing concerns about LIWAP's cost effectiveness.
As mentioned above, a 2010 rate case (PAC-E-10-07) found CAPAI asking the PUC to increase Rocky Mountain's funding for LIWAP. Instead of a flat annual $150,000 amount, CAPAI asked that the company be required to charge $4.08 per residential customer. The PUC agreed more money was needed, but it increased annual funding to the lump sum of $300,000.
For more information:
Idaho Public Utilities Commission "Energy Affordability"report
Rocky Mountain Power's 2010-2012 LIWAP evaluation
Rocky Mountain Power’s 2015 "Idaho Energy Efficiency and Peak Reduction" Annual Report
Idaho Power's 2016 Demand-Side Management Annual Report
Avista Utility’s Biennial Conservation Plan