State PBF/USF History, Legislation, Implementation
Last Updated: August 2012
In New York, the Public Service Commission (PSC) has spearheaded and directed the creation and expansion of low-income energy programs.
Because energy services are considered essential to the safety and well-being of all New Yorkers, the New York PSC since 1989 has approved targeted low-income rate assistance programs and since 1998 has overseen a broad-based, multi-utility system benefits charge (SBC) fund for energy efficiency, including low-income programs.
In its rate orders, the Commission has repeatedly recognized that rate discounts to qualified, income-eligible customers can be an efficient way to maintain economically distressed households on the system. Keeping them on the system provides benefits to all customers using the utility system by retaining these customers' contribution to fixed costs and avoiding the greater costs to society and to the utility system that would result from a customer's separation.
It is the State's and the Commission's policy that the "continued provision of gas, electric and steam service to residential customers without unreasonable qualifications or lengthy delays is necessary for the preservation of the health and general welfare and is in the public interest." [Public Service Law, §30]
Furthermore, the New York Constitution states: "The aid, care and support of the needy are public concerns and shall be provided by the state and by such of its subdivisions, and in such manner and by such means, as the legislature may from time to time determine."
As of mid-2012, the state's major electric and gas companies were providing about $100 million annually for low-income rate assistance programs that assisted over one million households. Significant increases were made to programs from 2008 through 2010 in order to reduce economic burdens on low-income households during the recession, according to PSC news releases.
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, Rochester Gas and Electric, Corning and St. Lawrence — 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. Funding is recovered from all customer classes.
Monthly discounts range from $2 to $24 off the monthly fixed customer charge. The largest program, totaling $38 million, is operated by Con Edison, and provides a $9 monthly discount to 375,000 electric customers. Some gas companies provide discounts on consumption up to a specified level, for example, Con Edison provides a 50 percent discount on the first 90 therms to 165,000 customers.
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.
In 1998 the New York PSC created a broad-based, multi-utility system benefits charge (SBC) fund for energy efficiency, including low-income energy efficiency programs. The SBC and the efficiency programs it funds were 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.
From 1998 through 2008, most low-income energy efficiency programs were funded through an SBC on electricity bills and administered by the New York State Energy Research and Development Authority (NYSERDA). With the adoption of an Energy Efficiency Portfolio Standard (EEPS) in 2008 and 2009, the PSC continued the SBC-funded programs, while authorizing the creation of new programs, expanding SBC surcharges and creating a natural gas SBC.
Low-income programs funded by the SBC include EmPower New York, which provides cost-effective electric efficiency measures, particularly lighting and refrigerator replacements, along with insulation, heating system repair and replacement, and air-sealing in situations where it offers the best means of improving energy affordability. Health and safety measures, such as carbon monoxide detectors and emergency repairs, are also implemented as the need arises.
The program services both owners and renters of one- to four-family homes and multifamily buildings with fewer than 100 units. Eligible are households earning less than 60 percent of the state median income and those enrolled in the above-mentioned utility low-income payment assistance programs. 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, provides free workshops on energy use and financial management to the general public, and 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.
In 2004, EmPower was 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 the PSC issued several orders establishing the EEPS, adopting efficiency targets through 2015, expanding efficiency programs administered by the state's electric utilities and NYSERDA and increasing the SBC from electric customers in order to fund programs, including expanded funding of EmPower and the low-income multi family programs. The expansions were designed to meet a state goal of a 15 percent reduction in electricity use by 2015. New and expanded programs began in 2009.
A year later the PSC issued an order establishing efficiency targets for gas utilities, with subsequent orders approving expanded efficiency programs and authorizing a gas SBC from natural gas customers in order to continue and expand existing natural gas programs, including EmPower. The latter program's budget for 2011, with SBC and EPPS expansion funding, was $14.3 million.
An order issued in October of 2011 set SBC/EEPS funding levels for 2012-2015. It provided EmPower New York with $73.7 million through the electric EEPS and $97.9 through the gas EEPS. This is a considerable increase for the low-income programs, amounting to 30 percent of SBC collections attributable to residential customers, compared to a pre-2011 level of about 19 percent. The Commission chose this level based upon recommendations from its staff and comments from key stakeholders, and in recognition of the fact that low-income customers represent approximately 30 percent of total residential customers.
According to NYSERDA's SBC programs evaluation and status report through 2011, EmPower served 35,206 households under the third SBC funding cycle, from July 2006 through December 2011. An additional 17,444 were helped with additional funding from the EPPS expansions. The evaluation found that the energy cost for the average low-income household served by the program has been reduced by $267 per year at an average cost of $1,421 per household.
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 was to receive about $7 million in RGGI funds, most of which are for efficiency programs targeting oil and propane heated single- and multi-family residences. Participants 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.
For more information:
NYPSC information page on the SBC: includes history, opinions, rulings, comments by interested parties, etc.
NYPSC information page on EPPS: incudes history, funding, opinions rulings
NYPSC Staff Program Review White Paper, details EEPS history, funding and suggestions for improvement