Customer Charge Resolution- 2015-1

[1] in fact, show that a substantial portion of utility delivery service costs are usage-related, and therefore, subject to variation based on customer usage of utility service; and

 

Whereas, increasing the fixed, customer charge through the imposition of SFV rates or other high customer charge structures creates disproportionate impacts on low-volume consumers within a rate class, such that the lowest users of gas and electric service shoulder the highest percentage of rate increases, and the highest users of utility service experience lower-than-average rate increases, and even rate decreases,[2] in some instances; and

 

Whereas, nationally recognized utility rate design principles call for the structuring of delivery service rates that are equitable, fair and cost-based; and

 

Whereas, SFV and other high customer charge rate design proposals, in which low-use customers would see greater than average increases, while high-use customers would experience lower-than-average increases and even decreases in their total distribution bill, are unjust and inconsistent with sound rate design principles; and

 

Whereas, data collected by the U.S. Energy Information Administration show that in a vast majority of regions called “reportable domains,”[3] low-income customers (with incomes at or below 150% of the federal poverty level) on average use less electricity than the statewide residential average and less than their higher-income counterparts;[4] and

 

Whereas, these data also show that in every reportable domain but one, elderly residential customers (65 years of age or older) use less electricity on average than the statewide residential average and less than their younger counterparts;[5] and

 

Whereas, these data also show that in a vast majority of reportable domains, minority (African American, Asian and Hispanic) utility customers on average use less electricity than the statewide residential average and less than their Caucasian counterparts;[6] and

 

Whereas, data from the U.S. Department of Energy’s Residential Energy Consumption Survey for the Midwest Census region, show that natural gas consumption increases as income increases, and that higher incomes lead to occupation of larger sizes of housing units,[7] thereby increasing the likelihood of higher gas utility usage, and that natural gas usage increases as income increases in the vast majority of reportable domains throughout the U.S;[8] and

 

Whereas, given these documented usage patterns, the imposition of high customer charge or SFV rates unjustly shifts costs and disproportionately harms low-income, elderly, and minority ratepayers, in addition to low-users of gas and electric utility service in general; and

 

Whereas, because the imposition of high customer charge or SFV rates results in a smaller percentage of a customer’s utility bill consisting of variable usage charges, customers’ incentive to engage in conservation as well as federal and state energy efficiency programs is significantly reduced; and

 

Whereas, NASUCA supports the adoption of cost-effective energy efficiency programs as a means to reduce customer utility bills, help mitigate the need for new utility infrastructure, and provide important environmental benefits; and

 

Whereas, given that the imposition of high customer charge or SFV rates means that a smaller percentage of a customer’s utility bill is derived from variable usage charges, the imposition of SFV-type rates reduces the ability of utility customers to manage and control the size of their utility bills;

 

Now, therefore, be it resolved, that NASUCA continues its long tradition of support for the universal provision of least-cost, essential residential gas and electric service for all customers;

 

Be it further resolved, that NASUCA opposes proposals by utility companies that seek to increase the percentage of revenues recovered through the flat, monthly customer charges on residential customer utility bills and the imposition of SFV rates;

 

Be it further resolved, that NASUCA urges state public service commissions to reject gas and electric utility rate design proposals that seek to substantially increase the percentage of revenues recovered through the flat, monthly customer charges on residential customer utility bills – proposals that disproportionately and inequitably increase the rates of low usage customers, a group that often includes low-income, elderly and minority customers, throughout the United States;

 

Be it further resolved, that state public service commissions should promote and adopt gas and electric rate design policy that minimizes monthly customer charges of residential gas and electric utility customers in order to ensure that delivery service rates are equitable, cost-based, least-cost, and encourage customer adoption of conservation and federal and state energy efficiency programs.

 

Be it further resolved that NASUCA authorizes its Executive Committee to develop specific positions and to take appropriate actions consistent with the terms of this resolution.

 

 

 

Submitted by Consumer Protection Committee

 

Approved June 9, 2015

Philadelphia, Pennsylvania

No Vote: Wyoming
Abstention: Vermont

 

 

 

[1]See, e.g., Illinois Commerce Commission Docket No. 14-0244/0225, Peoples Gas Light & Coke Co. – Proposed Increase in Delivery Service Rates, PGL Ex. 14.2, p. 1, lines 8, 14, 38 and 42, col. D; Illinois Commerce Commission Docket No. 13-0384, Commonwealth Edison Company, AG Ex. 1.0 at 12-13, citing ComEd Ex. 3.01, Sch. 2A, p. 13, col. Tot. ICC, line 248.

 

[2]ICC Docket No. 14-0224/0225, AG Ex. AG/ELPC Ex. 3.0 at 15, 25.

 

[3]The U.S. Energy Information Administration’s Residential Energy Consumption Survey provides detailed household energy usage and demographic data for 27 states or regions of the U.S. referred to as “reportable domains.”

 

[4]See Wis. Pub. Serv. Com’n Docket No. 3270-UR-120, Application of Madison Gas and Electric Co. for Authority to Adjust Electric and Natur4al Gas Rates, Public Comments of John Howat, National Consumer Law Center, October 3, 2014, citing 2009 U.S. EIA Residential Energy Consumption Survey data by “Reportable Domain” at 5-6.

 

[5]Id. at 7-8.

 

[6]U.S. Energy Information Administration, 2009 Residential Energy Consumption Survey.

 

[7]See ICC Docket No. 14-0224/0225, North Shore Gas, Peoples Gas Light & Coke Company – Proposed Increase in Gas Rates, AG Ex. 4.0 at 11-12; AG Ex. 4.1, RDC-5, p.1-3.

 

[8]U.S. Energy Information Administration, 2009 Residential Energy Consumption Survey.