This article was originally published in the November/December 1996 issue of Home Energy Magazine. Some formatting inconsistencies may be evident in older archive content.
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Home Energy Magazine Online November/December 1996
by Joel Eisenberg
To keep low-income weatherization and other energy efficiency programs alive, weatherization advocates must get involved in the utility restructuring debates.
Electric utility restructuring is currently under way at the state, not the federal, level (see What Is Electricity Restructuring?). The public utility commissions of California, Massachusetts, and New York have already called for competitive retail electric markets beginning in 1998, and many other jurisdictions are likely to follow. The weatherization community's involvement in these decisions could determine how the outcome affects low-income consumers and low-income energy efficiency programs.
This drop in the overall financial commitment to low-income energy efficiency means that utilities have been providing an even greater proportion of the investment than the 27% they provided in 1992. But a more competitive restructured electric industry may be reluctant to expand or even continue financing for these social benefit programs, because they can't recover the cost of the investments through assured, regulated rates. The same problem confronts low-income payment assistance and discount programs, research and development investments, and other energy efficiency programs.
Industry restructuring could also raise rates for low-income consumers. Right now about $160 billion in strandable assets are being paid for by all classes of electricity consumers in current rates. These are assets, such as aging nuclear plants, that will be too costly to be competitive in a deregulated market. As large industrial customers get lower rates from their energy suppliers, less powerful customers may be forced to assume the costs of maintaining these plants.
Small consumers, and low-income consumers in particular, may never share in the benefits of a more competitive marketplace. Since they have relatively low energy needs, high marketing costs, and high metering costs, they offer suppliers lower potential for profit than larger consumers.
Many of the protections that now ensure fair treatment for low-income households are part of the same regulatory structure that utilities and large consumers would like to eliminate. These include such time-tested measures as fair and established deposit procedures, protection from service termination under life-threatening circumstances, budget billing programs, and reasonable terms for service connection and reconnection. In a more competitive electric industry, with an emphasis on short-term prices, utilities may not maintain these traditional offerings.
These two examples differ from the present electric utility restructuring in the political jurisdiction where the action will take place. For telecommunications and petroleum, the changes, and remedies for low-income households, came from the federal government. For electricity, the changes are much more likely to come from state utility commissions and legislators who have direct responsibility for retail electricity markets. The creation of energy efficiency and energy payment assistance programs for low-income consumers will be the responsibility of these state authorities.
Community Steps In Low-income consumers will have to be represented by state and local networks working in each jurisdiction. Some state regulators and legislators are legitimately concerned that restructuring could reduce assured, affordable access to basic electric service. This concern creates an opportunity for low-income advocates to consolidate and build support for remedial programs, including low-income weatherization.
As restructuring gathers momentum, the structure of low-income energy efficiency and assistance programs will be determined largely by who is at the table. At a time when resources are shrinking and weatherization programs are downsizing, it may be difficult to devote human resources to meetings and working groups. However, intervention by weatherization advocates is necessary to ensure the survival of low-income energy efficiency programs.
In California, the state community action association, CalNeva, has been representing low-income consumers' interests in the ongoing proceedings on restructuring. Working groups set up by the California Public Utilities Commission to design a new industry structure give interested parties a chance to participate in the restructuring process. The Low-Income Working Group has representatives from the state's energy vendors, public utility commission staff, and major consumer groups, as well as the community action network. CalNeva (represented by Katy Olds) has been a driving force in the working group, and has focused on consolidating support behind continued funding for the state's extensive low-income energy efficiency and discount rate programs.
In Massachusetts, the Community Action Association (CAA) and the National Consumer Law Center (NCLC) have been trying to expand support not only for the existing rate discounts, but also for expanded energy efficiency efforts in the soon-to-be-restructured utility industry. Elliott Jacobson of CAA and Nancy Brockway of NCLC first became active in a large group of interested parties called the Electric Industry Restructuring Roundtable, which recommended a set of principles to the Massachusetts Department of Public Utilities (DPU). The principles adopted by the DPU consequently recognized the needs and interests of low-income consumers.
When the DPU issued its restructuring order, it required the state's major utilities to file restructuring plans in October of 1996. Jacobson and Brockway are working with the utilities to help build low-income energy efficiency programs, rate reductions, and consumer rights into the individual utility restructuring plans. The energy efficiency programs they propose would be operated by the existing weatherization network.
The nature of the weatherization community's involvement in the restructuring process varies from state to state. California and Massachusetts have taken the lead in electric industry reorganization, and the opportunity for low-income representation emerged very quickly. In some states, such as Illinois, Arizona, and New York, the restructuring process is not as clearly defined. Yet advocates for low-income consumers have been at the table as the debates and negotiations occur. In other states the issue of restructuring has been slower to develop and the forums for participation by the weatherization network have yet to emerge.Support for the Weatherization Network Several groups have formed to help people who work in weatherization get involved. The National Association for State Community Services Programs, made up of state WAP program managers, has formed an ad hoc committee to encourage information sharing and mutual support for weatherization programs active in the restructuring debate. The Low-Income Energy Advocates Peer Exchange, coordinated by the Energy Project in Bellingham, Washington, is open to any professional concerned with utility and low-income issues. The Peer Exchange has been meeting periodically to develop principles for the restructuring debate, to evaluate the changing utility environment, and to exchange information and ideas.
Finally, the Weatherization Assistance Project at Oak Ridge National Laboratory (ORNL) has research and background materials for weatherization professionals and others who are participating in restructuring activities at the state level. ORNL staff can help members of the network to evaluate the status of the restructuring process in their own states, and to determine where the opportunities for their involvement may lie.
Joel Eisenberg is senior analyst for public policy at Oak Ridge National Laboratory.
National Consumer Law Center, 18 Tremont St., Boston, MA 02108. Tel: (617)523-8010; Fax:(617)523-7398.
Low-Income Energy Advocates Peer Exchange-The Energy Project, 314 E. Holly St., Bellingham, WA 99225. Tel: (360)734-5121, Ext 332; Fax:(360) 676-2142.
Weatherization Assistance Project, Oak Ridge National Laboratory, 600 Maryland Ave., SW, Suite 305, Washington, DC 20024. Tel:(202)479-0439; Fax:(202)479-0575.
Power for the People: A Public Interest Blueprint for Electricity Restructuring. Published by Citizen Action, Environmental Action, Public Citizen, and the U.S. Public Interest Research Group. To order, call (202)588-1000.
Can We Get There From Here? Utility Consumer Action Network, 1717 Kettner Blvd, Suite 105, San Diego, CA 92101. Tel:(619)696-6966; Fax:(619)696-7477. Cost: $20 non-profit, $295 for-profit.
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