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State PBF/ USF History, Legislation, ImplementationDistrict
of Columbia Low-income electric customers have benefited from universal service, energy efficiency and renewable resources programs since 2000 when the District’s “Retail and Consumer Protection Act” was approved by Congress. 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 that was financed by a non-bypassable surcharge on residential Potomac Electric Power Company (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. On October 22, 2008, the “Clean and Affordable Energy Act of 2008” (CAEA) became effective. This law establishes a Sustainable Energy Trust Fund (SETF) that replaces the RETF and will fund existing energy efficiency programs administered by the District Department of the Environment (DDOE) up to $6.5 million per year for FY 2009 – FY 2011 . The Weatherization Plus, Low-Income Appliance Program and Weatherization/Rehabilitation programs will receive $3.5 million each year from the SETF. The combined Weatherization Plus and Appliance Program expands DDOE’s weatherization programs by adding electricity-saving measures in homes and replaces inefficient air conditioners in high-use homes when it’s found to be cost effective. The Weatherization/ Rehabilitation program funds non-profit and community development corporations that are providing or will provide improvements to the homes of low-income District residents. Another $3 million from the SETF will fund replacement or repair of natural gas heating systems in low-income homes, an energy awareness campaign that increases low-income participation in natural gas financial assistance programs, residential weatherization and the Saving Energy in DC Schools program. The SETF receives its revenue from a monthly surcharge assessed on Pepco and Washington Gas ratepayers. In 2009 the average annual SETF surcharge paid by residential consumers is estimated to be $18.50. That amount will increase to $21.20 in 2010; $24.50 in 2011; and will remain $24.50 beginning in 2012. This fund is projected to amount to about $20 million a year. Like the RETF that it replaced, unused SETF funding will carry over to the following year. The 2008 CAEA establishes another nonlapsing fund, the Energy Assistance Trust Fund (EATF) that will ensure the continuation of funding for programs that were funded by the RETF and NGTF. The EATF will fund the RAD subsidy at $3 million annually and the following four programs at $3.3 million annually:
The EATF is funded by an assessment on natural gas and electric sales amounting to $.006 per therm and .0004 per-kilowatt. The assessment is applied to the sale of every kilowatt hour and therm in the District, except sales to residents participating in the RAD and RES programs operated by DDOE. One-half of the funds remaining in the RETF and the NGTF will be transferred to the SETF; the other half of the funds will be transferred to the EATF. The SETF surcharge will also fund a private company known as the Sustainable Energy Utility (SEU). The SEU will be contracted by DDOE 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.” The SEU will be funded at a maximum $7.5 million the first year, $15 million in year two, $17.5 million in year three, and $20 million in the following years. The bill also creates an Advisory Board to provide oversight of the SETF and SEU. Even though all residential and commercial electricity customers have been able to choose an alternative electricity generation supplier since January 1, 2001, as of December 2008 only 2.6 percent of residential customers have chosen an electric supplier while the rest remain with the Pepco Standard Offer of Services (SOS). The Commission approved Pepco’s proposed SOS retail rates, effective June 2006, for its customers in the District. Each year in June supply rates are adjusted to reflect the cost of power that Pepco buys on behalf of its customers who do not contract with an alternative supplier. Funding in the Clean and Affordable Act of 2008 does not take into account several changes that will occur in FY 2009—likely higher generation rates that will go into effect in June 2009 and the expiration of the cap on RAD distribution rates in August 2009. Background The RETF initially supported two low-income programs approved by the Commission: the expanded RAD program and a weatherization program. On March 7, 2005, the PSC approved $20 million to expand existing programs and support new two-year energy efficiency, renewable and affordability programs. The funding supplemented $2.2 million that PEPCO had spent each year on energy efficiency, renewable energy and affordability programs. On December 27, 2007, in PSC Order No. 14689, the Commission approved the extension of low-income programs funded by the RETF. The programs were extended through September 30, 2008 with funding of over $3.7 million. Households eligible for RAD could also participate in the RETF low-income weatherization programs that are now funded by the SETF and described above. The DC Public Service Commission, in a January 2006 decision, Order No.13857, approved four programs to be funded under the NGTF. The programs were proposed by DDOE and were approved on a pilot basis that ended March 31, 2006. In Order No. 14608, dated October 23, 2007, the PSC approved extending the following programs: RES and RES expansion, Heating System Repair Replacement and Tune-Up and Energy Awareness Campaign. On February 8, 2005, the generation and transmission rate caps for non-RAD customers were lifted. The cap on the generation rates for RAD customers was lifted on February 8, 2007. On December 13, 2006, the Commission approved Order No. 14139 that provided an increase of 7.5 percent to be applied to all RAD customers, effective February 8, 2007. This amounts to about $3 - $4 more per month on a customer’s bill. Based on the Commission’s Order in the Pepco/Conectiv Merger case (F.C. No. 1002), Pepco’s distribution rates are capped through August 31, 2009 for RAD customers. For more information Clean and Affordable Energy Act of 2008 Clean and Affordable Energy Act of 2007 amends the Retail Electric Competition and Consumer Protection Act of 1999 Omnibus Utility Emergency Amendment Act of 2005 PSC Order No. 13857 approves NGTF pilot programs, January 19, 2006 PSC Order No. 13507 adopts the amended RETF surcharge, February 17, 2005 PSC Order No. 13475 approves in part, and denies in part, the RETF Long-Term Plan filed by the DC Energy Office, March 7, 2005. PSC Order No. 12778 designated DCEO the administrator of the RETF energy efficiency and renewable resources programs, July 9, 2003. More information about retail electric restructuring and customer choice is found on the District's Public Service Commission website. Page Last Updated: January 27, 2010 |
