Background.pdf

HISTORY OF RESTRICTIONS ON WINTER DISCONNECTION
Case No. P-300-
Order No. 14123 was issued 08/31/78. It was initiated to consider promulgation of rules
and regulations to govern the deposit and termination practices of regulated gas, electric and
water utilities. Rules were adopted to be effective 12/01/78. (Rules previously adopted by the
Commission on 01/23/78 were stayed on 02/17/78 pending further proceedings.
Order No. 15025 , issued 10/26/79, considered whether the Commission s Deposit and
Termination Rules complied with certain federal standards concerning termination of service to
customers of gas and electric utilities as set forth in the Public Utility Regulatory Policies Act of
1978 (PURP A). Among the revisions adopted following this review was the first "moratorium
policy:
No gas or electric utility shall terminate service to any customer during the
months of December, January or February or at any time at which the
temperature is forecast to drop below 320 F before the' next business day,
without first having made contact, either in person or by telephone, with an
adult member of the customer s household and giving and explaining all of
the information required to be given in the written notice. During these
months or under these temperature conditions, service shall not be terminated
unless the utility first contacts the Public Utilities Commission and secures its
permission to terminate service. This contact must be made by one of no
more than three previously designated employees of the utility whose
responsibilities shall include informing the Commission of the utility'
intention to terminate service under these circumstances. (Attachment A-
This change was to have become effective 11/16/79. Order No. 15084, issued 11/15/79
delayed the effective date of the rules until 12/01/79. Order No. 15133 , issued 11/30/79, granted
rehearing. Order No. 15344, issued 02/22/80, amended the rules. The amended rules became
effective 03/01/80.
Several changes were made pursuant to Order No. 15344, including elimination of the
temperature-sensitive provision as well as the requirement to obtain Commission approval prior
to termination. Notification requirements were modified so that actual contact with an adult
member of the household or the customer s designated third party was sufficient to satisfy the
obligation to notify the customer prior to termination. If unable to contact anyone, the utility was
required to certify that no children, elderly or infirm were in the household.
Utilities were required to make reasonable payment arrangements, and, for the first time
utilities were authorized to charge interest on unpaid bills. The Commission stated
In summary, we have adopted the proposal that during the three winter months the
service of the customer who agrees to a reasonable payment arrangement cannot be
terminated, but have added the additional condition that service cannot be terminated if
there are minors, elderly or infirm in the household. This leaves open the possibility that
laggards who are capable of paying their utility bills or entering payment arrangements
will refuse to do so by holding hostage their minor children, their elderly or their infirm.
But the customer s ability to do this is limited: on March 1 , the company may pull the
plug; furthermore, the company will not be uncompensated from people who can pay-
pursuant to this order we will allow the company to charge interest on the bills of
delinquent customers. With these two points of leverage the utilities will in most cases
be protected in the long run from people who can pay their bills, but refuse to, while the
hostages of these laggards-their children, their elderly and their infirm-will be
protected in the short-run." (pp. 6 & 7)
Case No. P-300-
Order No. 21495, issued 10/07/87, announced a comprehensive review of rules now
known as the Customer Relations Rules for gas, electric and water utilities. The Commission
stated its intention to modify its moratorium policy, with the following four goals in mind: the
preservation of public health and safety by limiting the circumstances under which service may
be terminated during winter months; encouraging the development of good payment habits by
customers; providing relief from impossible financial obligations; and facilitating collection of
problem accounts.
Proposed rule changes included elimination of the "blanket" moratorium, linked
protection from disconnection during the months of December through February with
participation in a Winter Payment Plan (mandatory payment equal to1/2 oflevel pay amount),
and partial arrearage forgiveness for customers with past due bill amounts exceeding $600.
In Order No. 177, issued 03/01/88 , the Commission decided not to eliminate the winter
moratorium. The Commission found that
the better balance of our four goals is to preserve the basic protections of the current
moratorium rules-that neither gas nor electric service will be terminated during the three
winter months in households that contain children, elderly or infirm-and that additional
incentives should be given to customers who can maintain partial payment of their bills
during the winter." (p. 3)
The Commission noted that "the moratorium is a safety net, but it has no incentives for
the affected customers to pay utility bills during the winter." (p. 5) A modified version of the
originally proposed Winter Payment Plan was adopted to encourage customers to continue
paying through the winter. The new Winter Payment Plan covered the months of November
through March and allowed customers to pay one half of their level pay amount. Plan
participants were obligated to make payment arrangements on the balance owing at the end of
the five months. The original arrearage forgiveness proposal was not adopted. The rule change
had an effective date of 07/01/88.
General Order No. 177 A, issued 04/27/88 , adjusted the terms of eligibility for the Winter
Payment Plan by changing the amount of arrears (originally $150) that could be carried over into
the plan to $75 or the customer s utility bill for the previous 30 days, whichever was greater.
General Order No. 177B, issued 06/08/88 clarified how bulk payments such as LlliEAP benefits
would be applied to Winter Payment Plans. With this modification, the Winter Payment Plan
provisions became effective 07/01/88. There have been no substantive changes to the rules or
the Commission s moratorium policy since that time.
COMPARISON OF
EXISTING MORATORIUM POLICY AND
PROPOSED PilOT PROGRAM
Existing Policy Proposed Pilot Program
Time Period December through February December through February
Eligibility Residential customers with
children, elderly or infirm in
household and declared inability
to pay in full
Low income residential
customers who meet LlHEAP
eligibility criteria (currently 150%
of Federal Poverty Guidelines)
Special Provisions for
Children & Elderly
Customers with children or
elderly in household cannot
be disconnected from
December through February
No special provisions
Special Provisions for
Medical Problems
Infirm customers cannot
be disconnected from
December through February
30 day exemption from discon-
nection if medical certificate
received by utility; additional
30 day extension possible
Payment Required Yes, but no particular amount
specified
One-half of Level Pay Amount
Disconnection for
Nonpayment
No disconnection of eligible
customers from December
through February regardless
of amount paid or failure to pay
Disconnection for failure to
make required payment
Alternative Payment
Plans Available
Regular Level Pay Plan or
special payment plan tailored
to individual circumstances
Regular Level Pay Plan or
special payment plan tailored to
individual circumstances
CURRENT MORATORIUM POLICY AND PROPOSED PILOT
CUSTOMER IMPACT
Scenario. On December 1 , the customer declares inability to pay and has children under
18 in the household. The customer has a past due balance of $1 00. The customer is billed $75 in
December, $100 in January, and $125 in February for energy usage. For simplicity, interest
charges, which would normally apply, are not included in these examples.
Outcomes Under Existing Moratorium - Rule 306
Example 1
Customer eligible for LIHEAP The customer makes no payment from personal funds for
the months of December through February. The utility receives an Energy Assistance benefit
amount of$250 in January, which is applied to the customer s past due balance of $275 ($100
balance carried forward plus $75 bill for December and $100 bill for January.) The utility is
prohibited from disconnecting the customer s service from December through February. On
March 1 , the customer has a past due balance of $150 ($25 remaining from January bill plus
$125 February bill) and is disconnected. To restore service, the customer must pay the past due
balance (or make other acceptable payment arrangements) plus a reconnection fee and a deposit.
Example 2
Customer not eligible for LIHEAP The customer makes no payment for the months of
December through February. The utility is prohibited from disconnecting the customer s service
from December through February. On March 1 , the customer has a past due balance of $400 and
is disconnected. To restore service, the customer must pay the past due balance (or make other
acceptable payment arrangements) plus a reconnection fee and a deposit.
Outcomes under proposed Winter Protection Program (WPP)
Example 3
Customer eligible for LIHEAP.The customer s regular level pay amount (based on
estimated annual usage plus the past due balance of$100 divided into 12 monthly installments)
is $90. The customer s monthly payment amount under the Winter Protection Program for
December, January and February is $45 , one-half the regular level payment amount. The
customer pays $45 in December as agreed. The utility receives an Energy Assistance benefit
amount of$250 in January, which is applied to the customer s actual balance of$230 ($100
balance carried forward plus $75 bill for December and $100 bill for January minus the $45
payment made in December.)* A $20 credit balance remains after applying the LlliEAP benefit
amount to the actual balance owing. Because the customer has a credit balance, the customer
does not have to make a WPP payment of $45 in January. In February, the customer makes the
$45 WPP payment, leaving a balance owing of $60 ($125 February bill minus $20 credit balance
minus $45 payment). On or after March 1 , the customer must renegotiate payment
arrangements. Options available include calculating a new regular level payment amount
making special payment arrangements to payoff the $60 balance owing over a prescribed length
of time, or paying the balance in full and paying future bills as they become due.
* At the customer s request, the utility may recalculate the monthly payment amount
following receipt of a LIHEAP or other "bulk" financial assistance payment.
Example 4
Customer eli)!ible for LIHEAP but fails to make pavment The customer s regular level
pay amount (based on estimated annual usage plus the past due balance of$100 divided into 12
monthly installments) is $90. The customer s monthly payment amount under the Winter
Protection Program for December, January and February is $45, one-half the regular level
payment amount. The customer fails to make the initial $45 payment in December as agreed and
the utility has not yet received Energy Assistance benefit payment on behalf of the customer.
The customer fails to respond to 7 day and 24 hour notices from the utility and is disconnected.
The customer pays the $45 owing under the WPP agreement and service is restored. The utility
includes the reconnection fee on the January bill. PacifiCorp will request a deposit, payable with
the January bill. Intermountain Gas will also request a deposit, but will bill it separately after
February. The utility receives an Energy Assistance benefit amount of $250 in January, which is
applied to the customer s actual balance of$250 ($100 balance carried forward plus $75 bill for
December, the $100 bill for January, and a $20 reconnection fee minus the $45 payment made in
December.) * In the case ofPacifiCorp, the deposit amount would also be carried forward on the
customer s account. The customer pays $45 in February. On or after March 1 , the customer
must renegotiate payment arrangements. Options available include calculating a new regular
level payment amount, making special payment arrangements to pay off the balance owing over
a prescribed length of time, or paying the balance of$80 ($125 February bill minus $45
payment) and paying future bills as they become due. In the case ofPacifiCorp, the customer
would also owe the deposit.
* At the customer s request, the utility may recalculate the monthly payment amount
following receipt of a LIHEAP or other "bulk" financial assistance payment.
Example 5
Customer not eligible for LIHEAP.The customer does not qualify for the WPP and must
pay bills as they become due. Other payment arrangement options are available. The customer
regular level pay amount (based on estimated annual usage plus the past due balance of $100
divided into 12 monthly installments) is $90. Alternatively, the customer may negotiate a special
payment arrangement tailored to his or her particular circumstances. The utility may disconnect
service if the customer fails to pay bills as they become due or to keep a payment arrangement.
If disconnection occurs, the customer must pay the past due balance plus a reconnection fee and
a deposit.