State PBF/ USF History, Legislation, Implementation

New York
Last Updated: March 2009
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 2008, restructuring plans and merger or rate case settlements filed by the major electric and gas companies include about $55 million annually for low-income rate assistance programs.

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, and Rochester Gas and Electric — have some form of rate assistance, mostly 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 offered by Con Edison for electric customers, which was funded at about $17.4 million in 2008 and helped about 240,000 low income 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 with a funding level of $175 million annually. 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.

The program targets 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, www.heapoil.org, 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. In 2008 NYSERDA spent $41.3 million on SBC-funded low income programs, including about $10 million for EmPower New York. Gas utility low-income investment totaled $21.8 million and about $13 million of this was administered through NYSERDA on behalf of the utilities.

According to NYSERDA’s 2007 report on its SBC programs, EmPower serves about 8,330 households per year, the average cost per household is $1,227 and savings average $231 per year. NYSERDA’s goal is to serve 31,500 households during the five years of the current funding cycle.

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 is expected 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 an additional $172 million annually in SBCs funding for what it termed “fast track” electric efficiency programs. About $7.2 million yearly is expected to go to EmPower starting in 2009. The EEPS will also develop an efficiency target for natural gas and $13 million annually through 2011 of new SBC funding will be for natural gas customers' energy programs, including low income. Funding amounts will be finalized later in 2009.

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 CO 2 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.

In September 2008, the states held the first auction of CO 2 emissions allowances. So far, three auctions have been conducted, raising about $145 million. All of the states plan to invest their auction proceeds in a variety of energy efficiency, renewable energy and climate change projects. Some states passed laws allocating a specific percentage of RGGI proceeds for low-income energy.

With proceeds from the first two auctions, New York allocated $11.2 million to supplement current SBC funded low-income energy efficiency programs, including $3.6 million for EmPower New York and $4 million for the low-income multi-family program. The RGGI funds will target oil and propane heated single- and multi-family residences. This is an initial determination, subject to change as plans are finalized later this year.

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)

Case 00-M-0504: Recommended Decision (summary regarding low income programs and universal service)

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: January 27, 2010