20021025Decision Memo.doc

DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
BILL EASTLAKE
LOU ANN WESTERFIELD
RANDY LOBB
DON HOWELL
NANCY HARMAN
BEV BARKER
TONYA CLARK
GENE FADNESS
WORKING FILE

FROM: LISA NORDSTROM

DATE: OCTOBER 25, 2002

RE: IN THE MATTER OF A TWO-YEAR PILOT WINTER PROTECTION PROGRAM THAT ESTABLISHES MINIMUM MONTHLY PAYMENTS DURING THE WINTER MORATORIUM, CASE NO. GNR-U-02-1.

On October 11, 2002, the Commission received a joint Application from Avista, Intermountain Gas and PacifiCorp (Applicants) seeking authorization to implement a two-year pilot Winter Protection Program that establishes minimum monthly payments during the period of the winter moratorium. Since February 2002, the regulated utilities, Commission Staff, Department of Health and Welfare, and Community Action Agencies have sought to address payment arrangement issues that culminated in this joint Application. Given their desire to implement the pilot program prior to this winter’s heating season, the Applicants request this Application be processed under Modified Procedure and be effective December 1, 2002 through November 30, 2004.
THE JOINT APPLICATION
Purpose. The Application stated “the purpose of this filing was to minimize the impact winter bills have on customers least able to pay the accumulated winter use at the end of the winter moratorium.” Application at 2. Under Utility Customer Relations Rule 306 (i.e., the winter moratorium rule), the utility service of certain customers cannot be terminated from December 1 through February 28 if they fail to make payment for energy service. IDAPA 31.21.01.306. However, these customers must pay what are frequently large bills March 1 or face disconnection of service when the prohibition on disconnection is lifted on that date. According to the Application, this pilot program would allow customers, agencies and companies to provide assistance for customers to maintain uninterrupted service. The pilot program would also aid in establishing a pattern of consistent monthly customer payments, allowing participating customers to avoid disconnection and having to pay the balance owing in full in order to reconnect.
Program Eligibility and Requirements. The Applicants propose allowing low-income customers to establish minimal monthly payments, equal to one-half (1/2) the Level Payment Plan amount as described and calculated in Utility Customer Relations Rule 313.06. Opportunity to participate in the Winter Protection Program would be available to any residential customer who declares that he or she is unable to pay for service and applies for and meets eligibility requirements for receiving energy assistance benefits under the Low-Income Heating Energy Assistance Program (LIHEAP). Except as provided elsewhere in the Customer Relations Rules, no gas or electric utility may terminate service during the months of December through February to any customer who participates in the Winter Protection Program. However, termination of service may occur if customers do not participate in the Winter Protection Program with the exception customers who qualify for a postponement under Rule 308 with a serious illness or medical emergency. IDAPA 31.21.01.308. Customers who participate in the Winter Protection Program may avoid termination of service by making up a missed monthly payment. Customers must be current on prior winter payments to be eligible to participate in the Winter Protection Pilot in the following year. The customer may use any source of funds/grants to satisfy the payment requirements of the Winter Protection Program and are encouraged or required to apply for energy assistance programs like LIHEAP and Project Share.
How it Works. For example, a current customer on the Level Payment Plan may incur winter monthly bills of $150 per month from December through February and have an existing balance of $100. Rule 306.01 currently allows any customer who is infirm or has children or senior citizens living in the household to make no payment until March 1. At that time the customer would need to pay their total “moratorium bill” of $550. Under the Winter Protection Program, this customer’s monthly payments for December, January and February (including a balance of $100) would be $90 per month. The balance owing on March 1 would be $280.
Authorization Sought. To facilitate implementation of the pilot program, the Applicants request that:
Applicants be exempted from the provisions of Rule 306.01-.06 during the two-year pilot program;

Winter Protection Program eligibility be defined as “any residential customer who declares that he or she is unable to pay for utility service during the specific months of December, January and February and whose household qualifies for energy assistance (LIHEAP) from a local Community Action Agency; and

The three-month winter moratorium from December 1 through February 28 be replaced with a minimal monthly payment plan equal to one-half (1/2) of the Level Pay Plan amount. The Level Payment Plan amount will be calculated according to Utility Customer Relations Rule 313.06.

STAFF RECOMMENDATION
Staff recommends that the Commission accept the Applicants’ request to use Modified Procedure. Although Staff anticipated the Application would include supporting customer data from past moratoriums, no such documentation was provided. Staff requests the opportunity to conduct discovery in order to seek this data and clarify some items in the Application that were vaguely worded or appear to differ from Staff’s understanding of what was agreed to by the working group. Staff is prepared to immediately issue its production request.
Staff recommends that the Commission allow ample opportunity for the public to learn about and comment on the proposed pilot. Over 100,000 residential customers whose households included children, elderly, or infirm persons declared that they were unable to pay in full for energy service during the winter of 2001-02. This means that a substantial number of customers will be directly affected by this proposal. Staff also notes that a number of entities, e.g., AARP, Project Share and other public and private groups that provide financial assistance, were not involved in the working group but will, at a minimum, be interested in learning how it will impact their constituencies.
Staff recommends that the Commission hold workshops in the affected areas to provide customers with information about the proposed pilot. Staff proposes that at least one public hearing be held to allow customers an opportunity to orally comment on the proposal. Staff recommends that Avista, Intermountain Gas and PacifiCorp be required to either do a separate mailing or include a Notice of Application in its bills that advises customers of workshop and hearing schedules and how they may file written comments. The utilities should be directed to work with Staff in preparing the text of the notice.
Staff recommends that the Commission suspend the Application for 30 days to allow adequate time for discovery, workshops and hearings. Staff believes that review of the Application must be completed prior to January 1, 2003 to have a meaningful pilot this season. In the Notice of Application, the Commission may wish to seek comment on how to implement the pilot after the existing moratorium period has already started.
If the Commission wishes to implement a pilot on or shortly after December 1, 2002, Staff recommends that the scope of the pilot be limited to Intermountain Gas for the first year. Intermountain Gas had the highest number of moratorium participants (107,000 residential customers) last year. Although Staff believes that the number of participants was inflated due to the Company’s expansive definition of eligibility, there are a number of reasons why Intermountain Gas can be singled out. For example, the Company’s rates have been reduced recently, making energy more affordable. With a significant number of space heating only customers, the Company is particularly vulnerable to customers who do not pay their bills during the heating season and are not motivated to pay by the threat of disconnection after the heating season ends. Since Intermountain Gas serves southern Idaho, it is also more likely that customers will appeal to the Commission if problems result from implementation of the pilot.
COMMISSION DECISION
Does the Commission wish to limit utility participation in number or by type of service (i.e., gas or electric)?
Does the Commission wish to process this case under Modified Procedure?
Does the Commission wish to schedule public workshops and/or public hearings?
Is a Notice of Application and Commission press release sufficient to notify the public of this proceeding? Does the Commission want to require the Applicants to use bill stuffers or other means of direct customer notification?
Does the Commission wish to suspend the effective date of the Application to allow for discovery, workshops/hearings, and a reply comment period?
If not, does the Commission wish to provisionally implement the pilot program pending a final order?
If so, does the Commission wish to specifically seek public comment regarding whether the pilot program should be implemented during the months that would remain in this winter heating season, or whether it should be postponed until the pilot program can be fully implemented next winter?

Lisa D. Nordstrom

M:GNRU0201_ln
DECISION MEMORANDUM 5