INDEPENDENT REGULATORY REVIEW COMMISSION
Notice of Comments Issued
[38 Pa.B. 2537]
[Saturday, May 31, 2008]
Section 5(g) of the Regulatory Review Act (71 P. S. § 745.5(g)) provides that the Independent Regulatory Review Commission (Commission) may issue comments within 30 days of the close of the public comment period. The Commission comments are based upon the criteria contained in section 5.2 of the Regulatory Review Act (71 P. S. § 645.5b).
The Commission has issued comments on the following proposed regulations. The agency must consider these comments in preparing the final-form regulation. The final-form regulation must be submitted within 2 years of the close of the public comment period or it will be deemed withdrawn.
Reg. No. Agency/Title Close of the Public
57-257 Pennsylvania Public Utility Commission
Universal Services and Energy Conservation Reporting
Requirements and Customer Assistance Programs
38 Pa.B. 776 (February 9, 2008)
Pennsylvania Public Utility Commission
Regulation #57-257 (IRRC #2674)
Universal Services and Energy Conservation Reporting Requirements and Customer Assistance Programs
May 19, 2008
We submit for your consideration the following comments on the proposed rulemaking published in the February 9, 2008 Pennsylvania Bulletin. Our comments are based on criteria in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b). Section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)) directs the Pennsylvania Public Utility Commission (PUC) to respond to all comments received from us or any other source.
1. General Issues--Fiscal impact; Consistency with statute and other administrative documents; Implementation procedures; Clarity.
The proposed regulation amends two existing chapters and creates a new chapter. This first portion of our comments relates to general issues. Following this first portion, our comments will focus on specific provisions within the proposed regulation. Comments on two or more similar provisions from different chapters are combined under the same heading that identifies in bold type the specific sections of the proposed regulation that are being reviewed.
Residential customers, fiscal impact and cost recovery
Several provisions of the proposed regulation establish that the costs of universal service and energy conservation programs will be recovered by distribution companies from only their residential ratepayers. See §§ 54.71, 54.74 (a)(5), 54.74(b)(4)(iv), 62.1, 62.4(a)(5), 62.4(b)(4)(iv), and 76.4(1). In particular, three subsections specifically state that the surcharge is ''applicable only to residential customers'' and ''costs shall be recoverable only from residential customers.'' See §§ 54.74(b)(4)(iv), 62.4(b)(4)(iv) and 76.4(1).
Although some commentators supported this new language in the proposed regulation, others questioned incorporating this policy into a regulation.
The Public Utility Code (Code) indicates that ''programs for low-income assistance, energy conservation'' are ''public purpose costs'' and adds:. . . The public purpose is to be promoted by continuing universal service and energy conservation policies, protections and services, and full recovery of such costs is to be permitted through a nonbypassable rate mechanism.
66 Pa.C.S. § 2802(17). The question arises as to why non-residential customers will be allowed to ''bypass'' paying their share of the costs for this ''public purpose.''
Another section of the Code states that these programs will be funded ''by nonbypassable, competitively neutral cost-recovery mechanisms that fully recover the costs of universal service and energy conservation services.'' (Emphasis added.) 66 Pa.C.S. § 2804(9). The PUC needs to explain how these mechanisms are ''competitively neutral'' if whole classes of ratepayers are exempt.
Commentators expressed concerns with the fiscal impact of the regulation on residential ratepayers. As energy costs continue to rise and rate caps for residential services expire, household energy costs will escalate substantially. At the same time, the costs of programs established by this regulation are rising. In its comments dated April 18, 2008, the Energy Association of Pennsylvania asserts that these costs increased by over 249 percent from 2000 to 2005.
The PUC needs to fully review the potential fiscal impact of these programs on residential ratepayers. If the final-form regulation places the program costs solely on residential ratepayers, the PUC will need to provide a thorough analysis and explanation of the fiscal impact of this policy, including: 1) the average cost per household; 2) the justifications for applying this cost to residential ratepayers only; 3) the impact of increasing energy and program costs on residential ratepayers' ability to pay; and 4) the future ability of residential ratepayers to bear the costs of the program after rate caps expire.
Status of Statement of Policy
Several commentators have suggested that various provisions in the proposed regulation conflict with the PUC's existing policy statement concerning this program. See 52 Pa. Code Chapter 69. The existence of two conflicting documents concerning the same subject matter can result in unnecessary confusion. In order to improve clarity, the PUC needs to address and eliminate conflicts between the policy statement and final-form regulation.
2. Sections 54.72, 62.2 and 76.2--Definitions.--Implementation procedures; Clarity.
Confirmed low income residential account
The definition for ''confirmed low income residential account'', in Sections 54.72 and 62.2, indicates that one of the factors that can be used to designate a customer as ''low-income'' is ''self-certification by the customer.'' Several commentators expressed concern that this designation may be subject to fraud and is an unreliable means of verifying income. The final-form regulation should explain the need for this designation and establish methods for verification of income levels. If the term ''self-certification'' is retained in the final-form regulation, the criteria and procedures for ''self-certification'' and verification should be delineated in the substantive provisions of the regulation relating to eligibility.
Customer assistance program (CAP)
These sections provide a definition for ''customer assistance program.'' However, this term is already defined by statute. 66 Pa.C.S. § 1403. To improve clarity, the final-form regulation should include a cross-reference to this statutory provision rather than include a definition.
We note that the statutory definition does not include the phrase ''payment troubled.'' If the PUC intends to include ''payment troubled'' as a condition for CAP eligibility, then this requirement should be addressed in the substantive provisions of the regulation.
For example, Subsections 54.74(b)(1)(ix) and 62.4(b)(1)(ix) require plans to describe outreach and intake efforts for ''low income customers with arrears.'' In addition, Sections 54.74(b)(2)(i) and 62.4(b)(2)(i) require that tariff filings include rules for ''program eligibility.'' These subsections could be amended in the final-form regulation to address CAP eligibility for ''payment troubled low income customers.'' A list of ''eligibility criteria'' for CAP customers was published in a notice of proposed changes to the policy statement in the Pennsylvania Bulletin on November 10, 2007 (37 Pa.B. 6028). If the PUC intends these eligibility criteria to be binding on distribution companies and CAP customers, then the provisions should be incorporated into the final-form regulation.
EDC--Electric distribution company
Chapter 62 references the statutory definition for the term ''NGDC--Natural gas distribution company.'' Statutory references are also used for the definitions of ''universal service and energy conservation'' in both Chapters 54 and 62. Chapter 54 should reference the statutory definition for ''electric distribution company'' found in 66 Pa.C.S. § 2803.
Commentators have suggested the addition of a definition for ''hardship funds'' in the regulation, as this term is used in Section 54.75(2)(ii)(D). The final-form regulation should define this term.
LIHEAP--Low Income Home Energy Assistance Program
Unlike the definition for ''LIURP'' (Low Income Usage Reduction Program), the definition for ''LIHEAP'' does not include a reference to the state regulations for this program. The final-form regulation should include in the definition a cross-reference to 55 Pa. Code Chapter 601.
The term ''LIHEAP grants'' is used in the regulation, in Sections 54.74(b)(2)(iv) and 62.4(b)(2)(iv), but it is not defined. To improve clarity, the final-form regulation should define this term.
Some commentators encouraged the PUC to add substantive provisions to definitions in this section. If the PUC opts to add substantive provisions recommended by commentators, those substantive requirements should be placed in the appropriate sections of the body of the regulation, not in the definitions section.
3. Sections 54.74 and 62.4--Review of universal service and energy conservation plans, funding and cost recovery.--Implementation procedures.
These sections provide information concerning the submittal of universal service and energy conservation plans by distribution companies. However, the regulation does not provide deadlines for review by the PUC. The final-form regulation should specify an amount of time for the PUC to review NGDCs and EDCs plans. In addition, the final-form regulation should include provisions that the public will be provided adequate notice of these tariff filings, similar to what is currently provided in Section 53.31 of the PUC's existing regulations.
Subsection (a)(4) states that an EDC or NGDC shall ''consult with the BCS [PUC Bureau of Consumer Services] for advice regarding the design and implementation of its plan at least 30 days prior to submission of the plan to the Commission [PUC] for approval.'' It is our understanding that the intent of this provision is to give BCS an opportunity to review a distribution company's plan. If this is the case, then the provision should state that a distribution company must submit its plan to BCS for review. It could also state that the BCS will be given 30 days to review the plan. This clarification should be made in the final-form regulation.
Subsection (b) establishes requirements for the contents of tariff filings for a utility's universal service and energy conservation plans. The final-form regulation should also include public notice requirements concerning these tariff filings.
The language in Subsection (b)(1)(viii) is confusing. There are references to the ''approved plan'' and a comparison with its actual implementation. Is the PUC asking for information about the implementation of a previously approved plan? This needs to be explained or deleted from the final-form regulation.
4. Sections 54.75 and 62.5--Annual residential collection and universal service and energy conservation program reporting requirements.--Clarity.
The term ''source of intake'' in Subsection 54.75(2)(i)(D) is unclear. It should be explained or defined in the final-form regulation. In addition, the first paragraph of Section 62.5 is labeled as Subsection (a). This is unnecessary since there is no Subsection (b).
5. Sections 54.76 and 62.6--Evaluation reporting requirements.--Clarity.
Subsection (a) indicates that both EDCs and NGDCs shall conduct impact evaluations of their programs after ''conferring'' with BCS. (Emphasis added.) Based on the language in these sections, however, it is unclear what is involved with this process. The final-form regulation should clarify whether the PUC intends for BCS to approve the selection of the independent third-party to conduct an impact evaluation, or if it is the role of BCS simply to provide a list of evaluators that should receive a request for proposal.
6. Section 76.1. Purpose.--Clarity.
This section references ''compliance with statutory requirements'' but it does not list the statutory requirements. The final-form regulation should include a cross-reference to specific statutory provisions.
7. Section 76.3. Approval process.--Implementation procedures; Clarity.
Subsection (b) refers to an ''immediate temporary modification'' of an existing CAP plan. This term is vague and should be clarified in the final-form regulation.
8. Section 76.4. Recovery of costs of customer assistance programs.--Implementation procedures; Clarity.
Paragraph (2) indicates that: ''the following CAP costs are eligible for recovery, if prudently incurred and reasonable in amount.'' (Emphasis added). The final-form regulation should specify how the determination is made that costs are ''prudently incurred.''
In addition, in Section 76.4(4), the final-form regulation should clarify how the PUC would determine the ''timeliness of a distribution company's collection activities.''
9. Section 76.5. Default provisions for failure to comply with program rules.--Implementation procedures.
Several commentators have expressed concern that dismissal from CAP is not an appropriate option for violations of the CAP program, including failure to pay. Has the PUC considered the feasibility of applying other alternatives before dismissing a customer from CAP?
In addition, several commentators have questioned why, as mentioned in subsection (a)(1), failure to apply for LIHEAP is a factor for consideration when determining lack of compliance with the CAP program. What happens when LIHEAP assistance is terminated due to lack of funding? The PUC should review the impact of including this factor in the final-form regulation.
In subsection (a)(5), what is the definition of ''usage reduction services''? Could there be instances where a customer is prohibited from accepting usage reduction services due to lease restrictions?
10. Section 76.6. Restoration of service after termination for nonpayment of CAP bills.--Possible conflict with statute.
This section would apply 66 Pa.C.S. § 1407 and applicable PUC regulations and orders to restoration of service when a CAP customer's service is terminated. A commentator stated that this would be in direct conflict with 66 Pa.C.S. § 1405(c). The PUC should amend the final-form regulation to alleviate any conflict with the statute.
11. Miscellaneous Clarity.
In certain provisions of Chapters 54, 62 and 76, there is new language which indicates that conditions or situations will be governed by, or consistent with, ''applicable Commission [PUC] regulations and orders'' or ''the code, applicable Commission [PUC] regulations, orders and other applicable law.'' See Sections 54.74(b)(1), (b)(2), and 62.4(b)(1), (b)(2), and 76.6. These provisions do not reference specific regulations or statutes.
In contrast, Sections 56.74(a)(3) and 62.4(a)(3) include this sentence: ''The filing must conform to applicable regulations in Chapters 53 and 76. . . .'' (Emphasis added.) This is helpful since the sentence references the applicable chapters. The other provisions that refer broadly to other applicable regulations or applicable laws should also reference specific titles, chapters or sections of existing regulations and statutes.
[Pa.B. Doc. No. 08-1029. Filed for public inspection May 30, 2008, 9:00 a.m.]
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