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State PBF/ USF History, Legislation, Implementation

New York
Last Updated: July 2010
Summary

New York is different from other states that created low-income energy funding sources through the process of utility restructuring. In New York the Public Service Commission (PSC) rather than the state legislature has spearheaded and directed the restructuring process. It is also different in that the PSC has created a broad-based, multi-utility system benefits fund for energy efficiency, including low-income programs, but rate assistance programs have been designed and implemented on a utility-by-utility basis as part of individual utility restructuring, merger or rate case settlements.

The PSC has stated its support for universal service and for adequate funding of low-income affordability programs, but it has largely left it up to individual utilities to set program design and funding levels. As of late 2009, restructuring plans and merger or rate case settlements filed by the major electric and gas companies include about $82 million annually for low-income rate assistance programs that assisted nearly 880,000 households. Significant increases were made to several programs during 2009 and early 2010 in order to reduce economic burdens on low-income households during the recession, according to the PSC.

All the of regulated utilities — Consolidated Edison, National Grid, (formerly Niagara Mohawk), New York State Electric and Gas, KeySpan Energy, National Fuel Gas, Central Hudson, Orange and Rockland (O&R), and Rochester Gas and Electric — have some form of rate assistance, most consisting of discounts off the basic monthly service charge for electricity and/or gas, funded through utility rates and administered by the utilities. Programs range from the largest, an electric discount of $8.50 per month offered by Con Edison for electric customers, which cost about $38.7 million in 2009 and helped about 375,000 households, to an electric discount from O&R funded at $430,000 and serving 4,800 households.

Some of these programs offer arrearage forgiveness and case management as well. For example, KeySpan's On Track program provides financial assistance, education, and energy and financial management to a limited number of low-income customers. Customers on the payment plan may receive credits on past due accounts.

Efficiency Programs

As a result of a 1998 order by the PSC, most low-income energy efficiency programs have been funded through a systems benefits charge (SBC) on electricity bills and administered by the New York State Energy Research and Development Authority (NYSERDA).

The SBC program, known as New York Energy $mart^SM, provides electric efficiency programs for all customer classes, including low-income renters and homeowners. The SBC program was created to ensure that certain public benefit energy efficiency and energy research programs were adequately maintained during the state’s transition toward a more competitive electric market. The programs are now in their third funding cycle, which runs from July 1, 2006 through June 30, 2011. Under the SBC, utilities collect the SBC revenues from electric customers of six regulated utilities and transfer the funds to NYSERDA.

Low-income programs funded by the SBC include EmPower New York^SM, which provides cost-effective electric reduction measures, particularly lighting and refrigerator replacements, as well as insulation, health and safety measures, and consumer education to households earning less than 60 percent of the state median income and those enrolled in utility low-income payment assistance programs. Customers who are referred to the program and are not targeted for electric reduction measures receive a package of information with educational materials, three CFL light bulbs, a water temperature thermometer, and a nightlight.

The program services both owners and renters of one- to four-family homes and multifamily buildings with fewer than 100 units. Whenever possible, services are coordinated and cost-shared with the state’s Weatherization Assistance Program.

The SBC also funds multifamily low-income energy efficiency programs and provides technical support to the state LIHEAP office for its heating oil buying program which began as a pilot and is now operating statewide. EmPower and most of the other low-income energy efficiency programs are administered by NYSERDA.

Since 2004, EmPower has been expanded to provide natural gas efficiency services to low-income customers of National Grid, National Fuel Gas, and Consolidated Edison using non-SBC funds. NYSERDA administers most of these as well.

According to NYSERDA’s SBC programs evaluation and status report through 2009, EmPower served 27,969 households under the third SBC funding cycle through December 2009. Energy costs for the average low-income household served by the program have been reduced by $270 per year at an average cost of $1,400 per household. In 2009 NYSERDA spent about $15 million for EmPower New York electricity customers. Gas utility low-income investment for EmPower customers totaled about $5.5 million that year, and this funding was administered through NYSERDA on behalf of the utilities.

In 2007, the American Council for an Energy Efficient Economy (ACEEE) in its second national review of energy efficiency programs, selected Empower as one of five exemplary low-income energy efficiency programs. In particular, ACEEE cited the program's requirements that all contractors be certified through the Building Performance Institute and that all refrigerators and lighting products installed be EnergyStar compliant.

In 2008, two additional funding sources for NYSERDA’s energy efficiency programs were created. On June 18, the PSC announced the start of what it called one of the most aggressive efficiency programs in the nation through the creation of an Energy Efficiency Portfolio Standard (EEPS). When fully funded, the EEPS program was projected to provide more than $4 billion in benefits to all customers through 2015, while creating thousands of jobs through retrofitting outdated, inefficient residential, commercial and industrial properties, installing new energy efficient equipment, and informing the public about the new opportunities for savings on energy bills.

In its order announcing the EEPS, the Commission directed utilities to start collecting in October 2008 an additional $172 million annually in SBC funding for what it termed “fast track” electric efficiency programs until the EEPS was fully funded, and it later approved funding for natural gas efficiency programs. The fast track programs, combined with funding allocations for the EEPS that were finalized in late 2009 and early 2010, have resulted in additional funding for EmPower and other programs for 2009 through 2011, most to be administered through NYSERDA. The EEPS charge to electric and gas distribution customers is combined with the SBC charge on utility bills.

New York is also one of ten Northeast and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI), a coalition working to limit carbon dioxide pollution through a cap and trade system, whereby the participating states limit the amount CO₂ that can be emitted by their power plants. The participating states have agreed to implement RGGI quarterly auctions where they will sell the region’s annual emissions “budget” of approximately 188 million allowances. Auctions began in September 2008.

For the period from 2010 through 2012, EmPower New York is slated to receive about $7 million in RGGI funds, most of which would be for efficiency programs targeting oil and propane heated single- and multi-family residences. Participants will receive efficiency measures such as insulation, blower-door assisted air sealing, and heating systems repair and replacements. All households meeting the income eligibility requirements, regardless of electric service provider, will be eligible to apply for heating efficiency assistance and the program will coordinate closely with the WAP.

History

An exhaustive state-level review of low-income energy programs that went through a collaborative process, followed by two administrative law judges’ recommendations on the matter, and a PSC policy statement, has resulted in little change to the structure of New York’s non-SBC low-income energy programs. In March 2000, the PSC opened the collaborative proceeding (Case00-M-0504) to address issues still outstanding in the process of moving New York to a fully competitive market and to identify and remove obstacles to its achievement.

The collaborative, consisting of about 50 representatives of utilities, energy service companies, governmental entities and consumer advocacy groups, reviewed low-income programs and attempted to reach a consensus on program design during the transition to competition as well as once competition had arrived. In July 2001, two Administrative Law Judges assigned to the issue reviewed the collaborative's work and issued a recommended decision (RD), which the PSC did not act upon until January 27, 2004, when it issued a Notice Seeking Comments, essentially reopening the issue for further comment from interested parties.

The Commission’s most recent statement in Case 00-M-0504 was issued in August 2004. The PSC declined to implement any specific programmatic recommendations made by the collaborative or the administrative law judges, except to support low-income aggregation. While stating that it would not make any sweeping policy pronouncements on low-income energy programs, the PSC added, “It is enough to reaffirm that low-income programs require adequate funding and that we must continually reassess the sources of that funding.” Since then most utility rate affordability programs have been reviewed and expanded.

The legislature's involvement in utility restructuring has been limited, except for its passage of legislation to change how residential consumers would be treated by unregulated gas and electric suppliers, also known as energy service companies (ESCOs) or marketers. In June of 2002, the legislature unanimously passed the Energy Consumer Protection Act (ECPA) of 2002, which extends to ESCO customers those consumer protections available to regulated utility customers under existing legislation, the Home Energy Fair Practices Act or HEFPA. Considered the New York utility consumer's bill of rights, HEFPA had been in existence since 1981, but the PSC had ruled in 1996 that ESCOs did not have to comply with it. On December 20, 2002, the ECPA was signed into law.

According to the Public Utility Law Project, which supported the ECPA, along with the AARP, other consumer groups and a coalition of marketers, it does the following:

Under ECPA, all of the protections defined by HEFPA are made applicable to the transactions between the competitive suppliers and residential consumers. With respect to the commencement and continuation of service, these include rules with respect to deposits, budget billing, estimated bills, plain language bills, third-party notices, deferred payment agreements and other protections found in HEFPA for households experiencing medical emergencies, for households with elderly, blind or disabled customers, and for households that might experience a loss of service in a cold weather season. Finally, this bill allows the residential customer taking service from a competitive supplier who has a billing or service dispute with that supplier under HEFPA to take that complaint for hearing and written determination to the Public Service Commission.

For more information:

NYPSC information page on the SBC: includes history, opinions, rulings, comments by interested parties, etc.

New York Energy $mart SM Program, Evaluation and Status Report (all reports)

Case 00-M-0504: Recommended Decision By Administrative Law Judges Jeffrey E. Stockholm, Joel A. Linsider, and Michael Corso, Chief Of Residential Advocacy (full decision)

03-M-0117: Implementation of Chapter 686 of the Laws of 2002 (HEFPA proceeding), Memorandum and Resolution Adopting Amendments to 16 NYCRR Parts 11 and 12.

The Public Utility Law Project has consumer-oriented utility program information on its website.

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Page last updated: February 8, 2012