Idaho Public Utilities Commission

February 4, 2009

Case No. GNR-U-08-01, Order No. 30724

Contact: Gene Fadness (208) 334-0339, 890-2712

Commission makes recommendations following affordability study

The Idaho Public Utilities Commission is endorsing legislation that would allow utilities to propose “programs, policies and rates” that may assist low-income customers in their effort to pay energy bills.

It is one of several recommendations made by the commission in response to energy affordability workshops recently conducted by commission staff, the utilities and several consumer groups. The commission directed the state’s major utilities to participate in the workshops in response to a “variety of factors contributing to significant upward pressure on electric and natural gas rates in Idaho.” Energy affordability has become a central issue for many Idaho residents and businesses, the commission said.

A report summarizing the recommendations and conclusions from the workshops, as well as the positions of all the participating parties, is available on the commission’s Web site at www.puc.idaho.gov. Click on “Energy Affordability Final Report” under the “Hot” items in the upper-right hand corner. Parties who participated include commission staff, Idaho Power Company, Rocky Mountain Power, Avista Utilities, Intermountain Gas, the Northwest Industrial Gas Users, the Community Action Partnership Association of Idaho, AARP, the Idaho Community Action Network and the Snake River Alliance.

The legislation the commission is recommending would change current statute, Idaho Code 61-315, that prevents public utilities from granting “any preference or advantage” to persons or corporations when it establishes rates.

The commission said the change in the legislation should not compel Idaho utilities to offer low-income financial assistance programs, but should allow them to do so without violating current Idaho statute. “The legislation should allow the utilities flexibility in the programs to be proposed,” the commission said.

The commission specifically pointed to a program offered by Avista Utilities, which operates in northern Idaho, but also has customers in Washington and Oregon. Avista’s Low-Income Rate Assistance Program, or LIRAP, provides funds to help low-income residents in Washington and Oregon pay their energy bills. In Washington, the money for the program is collected through a rider on all customer bills. In Oregon, LIRAP is funded by an assessment on natural gas bills.

Offering more low-income programs at a state level may qualify Idaho for more federal funding under the federal Low-Income Home Energy Assistance Program or LIHEAP. Last year, 101,000 Idaho households qualified for LIHEAP assistance, but only 32,843 of those households received assistance due to the lack of federal LIHEAP funding.

LIHEAP’s Idaho allocation can be increased through a process called “leveraging”. The federal government withholds a percentage of LIHEAP money allocated to each state as an incentive for that state to first acquire non-federal funds for assistance to low-income households. Grants are awarded states that can provide more local funding.

Other steps the commission is encouraging:

-- Utilities should engage in greater education efforts to make more customers aware of the programs already available to help with paying energy bills and to offer weatherization and conservation steps that can be taken to decrease energy bills. “Education and funding regarding weatherization and conservation can be administered in conjunction with LIHEAP and LIRAP-type programs,” the commission said.

-- Weatherization programs should be extended beyond single-family residential homes to also include apartment and condominium complexes, manufactured homes and rental housing.

-- Utilities should advocate for the adoption of greater energy efficiency standards for new construction.

-- Utilities should work with local lenders to provide opportunities for customers, including low-income customers, to move to higher-efficiency appliances. Several utilities offer rebates to customers who switch to higher-efficiency appliances. “Unfortunately, upgrading an appliance is a luxury that low-income customers cannot generally afford,” the commission said.

-- The commission will continue to support the use of tiered-rates as a means to encourage greater energy efficiency and conservation. The recently concluded Idaho Power rate case implements a three-tiered rate structure with gradual increases to rates as use increases.

-- The commission is encouraging utilities to be flexible in making payment arrangements “that are based on the customer’s unique circumstances and ability to pay.” However, the commission said, “Flexibility by the utility should not be mistaken for abandonment of debt.”

-- Most Idaho utilities require customers they consider to be high-risk to pay deposits before they can receive electric or gas service. The utilities should periodically evaluate whether requiring some customers to pay connection deposits is cost-effective, the commission said. Idaho Power Co., for example, determined that administrative costs associated with a deposit mechanism did not justify continuing the program.

-- The commission commended Avista Utilities for its “case management program” which assigns a case worker to provide individual, specialized attention to customers having problems paying their bills. Intermountain Gas is in the process of developing such a program. The commission said it won’t require all utilities to have a case management program, but encouraged utilities to be “flexible in responding to their customers’ needs.”