Success Is a Relative Term for National Grid’s “Affordability Program”

National Grid released the first quarter 2009 results of its revised AffordAbility Program in its Niagara Mohawk service area on April 10th and the results are, optimistically, mixed.

The AffordAbility Program is a PSC-approved “arrears forgiveness” program designed by National Grid for customers with arrears, to encourage regular and larger payments. A major component is the application of a participant’s Home Energy Assistance Program (“HEAP”) benefit to the customer’s arrears. As a result, the HEAP grant does not help the participating customer meet obligations for current utility service. In addition, $20 of a customer’s arrears are forgiven each month that bills are paid, but the bills are $16 higher. See PSC Approves Grid “Affordability” Program in Which HEAP Payments Do Not Reduce Current Winter Bills. Other program components include referral of customers with arrears to ratepayer funded NYSERDA energy efficiency programs.

The PSC, in a June 2008 order, approved program modifications to provide a monthly, instead of annual, arrears forgiveness credit, to eliminate the portion of the deferral to arrears balances attributable to energy efficiency measures, and to limit participation to 24 months. Even with these modifications, PULP still has significant concerns with the design and operation of this program. See National Grid Misses Point with its Low Income Program.

The quarterly results indicate that 5,400 customers participated in the program. Of this total, only about eight percent, or 439 customers, successfully completed the program by eliminating their arrears. On the positive side, over $678,000 was forgiven by National Grid in 2008, but the vast majority of that amount was a result of the HEAP payments that were used to pay back arrears from seasons past and not to assist customers in meeting their current heating season obligations.

In addition, more people defaulted off of the program in 2008 than were added, 4,049 to 3,943. As a percentage, the number of customers defaulting off the program jumped in the first quarter of 2009 (924 defaulted to 609 new participants). The large number of defaulting customers could be directly attributable to the fact that participant’s bills went up by $16 a month for those customers transitioning to the new (improved?) AffordAbility Program. That is a significant amount of money to come up with every month, especially for a struggling family.

PULP supports innovative solutions to avoid termination of service and to reduce arrears, but using a low income customer’s HEAP payment – designed to keep their home warm during the winter months – to reduce money owed from seasons past, is not consistent with the principle that HEAP funds should be used primarily to defray costs of home heating for the current winter season. That, combined with the small number of participants in the program and the fact that little more than eight percent of participants “graduate,” equates to less than a stellar success.

Meanwhile, in 2008 National Grid terminated service to 60,617 customers as a bill collection measure. Last year, service to nearly 11,000 customers was interrupted for collection purposes in the month of May alone. With worsening unemployment in 2009, service is likely to be terminated to more households unable to afford their National Grid bills. However success is defined for participants in the “arrears forgiveness” program, it is not reaching even 10% of customers whose service is shut off due to arrears.

Time for the PSC to go back to the rate design drawing board to make service more affordable to the poor?

Lou Manuta

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