STATE OF IOWA UTILITIES BOARD

Transcription

1 STATE OF IOWA DEPARTMENT OF COMMERCE UTILITIES BOARD In Re. Prepaid Meters DOCKET NO. NOI REPLY COMMENTS OF IOWA DEPARTMENT OF HUMAN RIGHTS BUREAU OF ENERGY ASSISTANCE COMES NOW, the Iowa Department of Human Rights, Bureau of Energy Assistance (BEA), Lucas Office Building, Des Moines, Iowa, 50319, and presents the reply comments set forth below to the Iowa Utilities Board (IUB) with respect to the proposed use of prepayment meters for utility bills. General Comments 1. BEA in its initial comments and in these reply comment does not address issues regarding the operational details of a prospective prepaid electric service program, but rather focuses at this juncture on the threshold question of whether approval of any such a program should be granted by the IUB. As stated and supported in our initial comments, BEA stands opposed to delivery of prepaid residential electricity and natural gas service in Iowa and respectfully urges that the IUB reject any proposal by a jurisdictional utility to implement such service. Service Disconnections Under Prepayment Are Not Voluntary Actions BEA Reply Comment Docket No. NOI Page 1

2 2. BEA supports the comments and evidence presented by Iowa Community Action Association and AARP refuting the assertion that all disconnections of service under prepaid meters or service are voluntary acts and should be considered such by regulators. In addition, BEA notes that prepayment service is marketed to and used primarily by low-income customers (Initial Comments of BEA, pp. 6, 8, 9.). Further, low-income customers using post-paid service are far more likely than their higherincome counterparts to experience payment difficulties, carry arrears and experience disconnection of utility service for non-payment. Charts below, based on data from the IUB s Moratorium Report show monthly energy assistance and non-assistance residential customer arrearage rates and account write-off rates in Iowa during (Iowa does not track energy assistance customer disconnections for nonpayment. Thus, a similar chart comparing energy assistance and non-assistance residential account disconnections cannot be generated.) Iowa Electric and Gas Utilities Accounts Written Off as Uncollectible Energy Assistance and Non-Energy Assistance Residential Customers: Jan - Dec % 4.0% 3.5% Percent of Customers 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Energy Assistance Accounts Non Energy Assistance Residential Accounts BEA Reply Comment Docket No. NOI Page 2

3 Iowa Electric and Gas Utilities Past Due Accounts Energy Assistance and Non-Energy Assistance Residential Customers: Jan - Dec % 35% 30% Percent of Customers 25% 20% 15% 10% 5% 0% Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Energy Assistance Accounts Non Energy Assistance Residential Accounts 3. Thus, low-income gas and electric utility customers that receive energy assistance are far more likely than general residential customers who do not receive assistance to experience utility payment difficulties. It may be presumed from the available Iowa data that energy assistance participants are also more likely to experience disconnections for non-payment, and that the resulting loss of service is by no means a voluntary outcome. 4. Disconnections under traditional, post-paid service are not considered voluntary, and they indicate that some customers simply cannot afford to pay for home energy service throughout the year. Since low-income customers lose post-paid service at times because they cannot afford to stay connected, it follows that higher- or equallypriced prepaid service will also result in disconnections because of affordability problems. In fact, given the remote disconnection capabilities of prepayment meters BEA Reply Comment Docket No. NOI Page 3

4 and advanced meters that accommodate prepaid service, rates of low-income disconnection are likely to increase as these technologies are deployed. 1 Characterization of loss of service under such circumstances as voluntary is a construct intended to absolve utility companies of responsibility for affordability issues, but it is also a distortion of the economic realities and harsh budgetary choices faced by low-income utility customers. Existing Prepaid Electric Service Programs 5. BEA notes that Iowa Association of Electric Cooperatives (IAEC) and other commenters have referenced various prepaid programs operating in the United States. BEA wishes to respond to and supplement these comments. As indicated in BEA s initial comment, prepaid electric utility service is concentrated in territories served by municipally- or cooperatively-owned systems. While customers using prepaid service often forego late payment charges and may face lower deposit charges, there are often other fees, charges and conditions that apply. There is also evidence that indicates prepayment customers make payments far more frequently than post-pay customers, raising concerns about accumulated fees over time. With respect to information regarding rates of service disconnection of prepayment customers, NCLC has not encountered a single prepayment program administrator willing to share such information publicly. In fact, little public information is available regarding many prepayment programs, particularly with respect to service disconnections. We do know, however, that many existing programs include a range of fees and charges that 1 See e.g., California Division of Ratepayer Advocate, Status of Energy Utility Service Disconnections in California, November 2009 for discussion of increased rates of low-income service disconnections after deployment of advanced meters. BEA Reply Comment Docket No. NOI Page 4

5 over time could offset the benefit of reduced security deposits and late fees. Following is information from some electric cooperatives and municipal utility prepayment programs currently operating in the U.S. 6. In Alabama, the Cullman Electric Cooperative launched a prepayment program in February, Customers face an $8 monthly fee to participate in the prepayment program, after paying an initial $30 startup fee to connect the meter and a $5 co-op membership fee In Florida, the Choctawhatchee Electric Cooperative charges prepayment customers a $25 cash deposit for new equipment plus $ annually for higher fixed costs built in rate. 3 In addition, the West Florida Electric Cooperative charges EZ Pay Power customers an initial $50 cash deposit, plus a $5 monthly meter leasing fee, plus a $2 transaction fee each time electricity is purchased. NCLC was unable to obtain information regarding the average number of monthly purchases made by customers participating in this program In Georgia, many electric co-ops implement prepayment programs. NCLC was unable to obtain substantive information about many of these programs. However, the Okefenoke Rural Electric Cooperative program includes a $0.60 e-check payment fee, 2.45% of transaction as a credit card processing fee, and the requirement that customers establish a minimum $50 credit to restore service following a disconnection. Customers who enroll on prepay are locked into the service for 90 days. After 90 2 Cullman Electric Cooperative, Prepaid Metering now available to Cullman EC members, February 1, 2011, 3 Florida Public Service Commission, Docket No EC- Request for approval for new prepaid metering rates and changes to net metering rates and miscellaneous charges by Choctawhatchee Electric Cooperative, Inc., May 6, West Florida Electric, EZ Pay Power, BEA Reply Comment Docket No. NOI Page 5

6 days, customers may switch back to the credit-based system. 5 In addition, Tri-county Electric Membership Corporation prepay and credit-based customers pay the same rate per kwh, monthly minimum charge varies. The minimum charge for prepayment customers is $35 compared to a $25 minimum postpay accounts. Prepayment customers must establish a $50 credit balance to begin service In Kentucky, City of Mayfield SmartPay customers pay an $8 monthly prepayment fee. In addition, they pay a $5 fee if they receive more than 4 low balance notices in one month. Further, if a SmartPay customer s service is disconnected, the customer must a $25 reconnection fee and establish a $50 credit to restore service In Mississippi, the Delta Electric Power Association charges prepayment customers $8 per month to be enrolled in the program. There is also a $5 reconnection charge if billing credits are exhausted and service is disconnected In North Carolina, Brunswick EMC charges prepayment customers a $3 fee for each transaction made using a bill paying terminal (BPT). Over 59% of transactions occur at BPTs. The average number of purchases per month per customer is 3.9 and the average electricity prepayment amount is $25. 9 Thus, for customers reliant on BPTs to make frequent payments, about 11% of the amount used to purchase credit goes to the transaction fee and customers will pay $11.70 a month just to load their meter. 5 Okefenoke Rural Electric Cooperative, The Power of Prepay, 6 Tri-County EMC, pay.your.way, 7 Mayfield Electric & Water Systems, SmartPay: Pre-Paid Utility Service "Putting the Power in YOUR Hands!" 8 Ronnie Robertson Delta Electric Power Association, Personal Communication, August 9, Exhibit I, Iowa Association of Electric Cooperatives, and Brunswick Electric Membership Corporation, Prepaid Metering at Brunswick EMC: Today and Tomorrow, Slide 25; Brunswick Electric Membership Corporation, Rates, ttp:// BEA Reply Comment Docket No. NOI Page 6

7 Over the course of a year, this balloons to prepay customers paying $ to purchase electricity at BPTs. 12. In Oklahoma, Northwestern Electric Cooperative charges prepayment customers a $50 activation fee. 10 In addition, the Central Rural Electric Cooperative states that for prepayment customers, disconnections can occur anytime Monday through Thursday, and that medical conditions and or inclement weather will not postpone disconnection. 11 The Kiamichi Electric Cooperative charges prepayment customers a $75 reconnection fee In Oregon, Lane Electric Cooperative charges prepayment customers a $25 fee to begin service. It should be noted that this co-op also implements the MyView Program, which provides customers with an in-home display to encourage energy reductions but without the punitive features of prepaid In South Carolina, the Horry Electric Cooperative charges prepayment customers a $12 monthly equipment charge plus $5 application fee and a $20 connection fee In Tennessee, Southwest Tennessee Electric Membership requires prepayment customers to establish a $100 credit to begin service. In addition, prepayment 10 Northwestern Electric Cooperative, Inc., Select Pay, 11 Central Rural Electric Cooperative, Save money with CREC s Pre-pay Option!, 12 Personal communication, Charlie, Kiamichi Electric Cooperative, Personal Communication, August 12, Lane Electric, myusage: Putting you in the driver's seat, 14 Horry Electric Cooperative, Inc., Advance Pay Agreement/Terms and Conditions, Horry Electric Cooperative, Charges during regular office hours, BEA Reply Comment Docket No. NOI Page 7

8 customers pay $8 monthly for prepaid service and $25 reconnections fees if billing credits are depleted and service is disconnected In summary, for reasons stated above and by other commenters, disconnections of service of customers participating in any prepaid program should not be considered or characterized as voluntary. In addition, prepayment programs implemented by cooperatively- or municipally-owned utilities in the U.S. often include fees and conditions that detract from touted benefits of the service. Finally, BEA again respectfully urges the Board to reject any proposal from a jurisdictional utility to implement prepaid electric or natural gas service. We appreciate this opportunity to comment. 15 Southwest Tennessee Electric Membership Corporation, Flexpay, Southwest Tennessee EMC Becomes First Utility to Offer Prepaid Electric Service in Tennessee, March 9, 2009, BEA Reply Comment Docket No. NOI Page 8

9 Respectfully submitted: John G. Howat Sr. Policy Analyst National Consumer Law Center 7 Winthrop Square Boston, MA ; Mobile: jhowat@nclc.org ON BEHALF OF: IOWA BUREAU OF ENERGY ASSISTANCE BEA Reply Comment Docket No. NOI Page 9