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Slow and Steady Wins the Case for a Vermont Low-Income Electric Assistance Program

By Philene Taormina

Vermont’s utility regulator, the Public Service Electric meterBoard, approved, on July 22, 2011, a petition that AARP filed to establish the state’s first ratepayer-funded low-income electric assistance program in the service territories of the state’s two largest investor-owned utilities—Green Mountain Power and Central Vermont Public Service Corporation. Here I recount background information on the new program, the efforts to adopt a low-income payment assistance program, and the lessons learned from our successful advocacy efforts.

Under the new program, some 37,000 low-income customers will be eligible for the first time for a monthly 25 percent discount on their electric bills and can access a onetime arrearage-forgiveness program. This program came after decades of failed attempts in Vermont to obtain a low-income electric rate discount and, most recently, a seven-year advocacy campaign spearheaded by the Vermont office of AARP.

In approving AARP’s petition, the Public Service Board affirmed that

[e]lectricity is a necessity for a safe and healthy household. In 2009, there were 11,901 instances in Vermont of electric service disconnection. To lose electricity at a residence means to lose the light and heat of home. Increasingly in our modern society, to be without electricity also poses many social hardships, such as the loss of internet access and, with that, the disruption of connections with schools, health-care providers, employers and other community resources. Electricity is a necessity that many Vermonters cannot afford.

As necessary as electricity is to any person in our modern society, the battle to provide access to electricity for low-income people and seniors was hard-won, requiring a diverse array of advocacy tactics at both the state and regulatory level that may inform other advocates pursuing comprehensive reforms in this area.

Brief History

Over the past twenty years advocates have attempted several times to implement some form of ratepayer-funded electric assistance program to make electric services more affordable to low-income Vermonters.

In 1989, at the request of several of Vermont’s investor-owned and public electric utility companies and the Vermont Department of Public Service, the Public Service Board opened Docket No. 5308, “an investigation into the adoption and implementation of energy programs for low-income households.” The investigation was prompted in part by a 1987 report from the General Assembly recommending that the Public Service Board and other state agencies "develop a long-term program to address comprehensive energy needs of low-income persons." The Public Service Board’s final order agreed that there was a need to assist low-income Vermonters in carrying the burden of their high energy costs and recommended regulatory and legislative action to improve coordination of programs assisting low-income customers in their energy needs. The order rejected, however, the creation of a ratepayer-funded low-income electric program and cited a general utility ratemaking principle of not permitting cross-subsidization of one group of customers by another.

This initial attempt to establish a low-income electric rate failed. Four years later the Vermont Senate passed an electric-industry restructuring bill that provided for the creation of a ratepayer-funded statewide “electric energy affordability program.” The Vermont House, however, did not take up the legislation, and the issue of a low-income electric rate failed again, this time for seven more years.

AARP Vermont’s Fight

In the fall of 2004 the Vermont office of AARP and the Vermont Low-Income Advocacy Council released a report entitled “Vermont Energy Programs for Low-Income Electric and Gas Customers: Filling the Gap.” That report recommended that the state adopt several reforms, such as creating a low-income electric support program.

MetersThe 2005 Vermont legislative session conducted hearings on the AARP report, and legislation was introduced in both the House and the Senate. By the spring of 2006, however, the Democratic House leadership decided instead to follow a recommendation from the Vermont Electric Plan (the state’s policy document for the electric industry) to direct the Public Service Board to hold a series of low-income electric affordability workshops. Gov. James Douglas, a Republican, signed into law Act 208, a must-pass energy omnibus bill with a directive for the Public Service Board to form a collaborative to “design a proposed electricity affordability program in the form of draft legislation.”

The Public Service Board began the low-income electric affordability workshop in June 2006. During several days of workshops over the summer and fall, more than thirty diverse stakeholders participated. Early the next year, the Public Service Board submitted a report and draft legislation to the legislature. The Senate Economic Development, Housing and General Affairs Committee held hearings on the report and later passed a committee bill that would have created a statewide electric bill assistance program similar to the draft legislative proposal contained in the Public Service Board’s report. That bill then went to the Senate Finance Committee for further review.

The Department of Public Service under Governor Douglas opposed legislation to create a statewide ratepayer-funded electric assistance program for low-income families and elders, in spite of its statutory duty to represent the interests of the people of Vermont before the Public Service Board. Over the next few weeks the Democratic Senate leadership abandoned the legislation and decided that the need for low-income electric customers could be met with a utility-by-utility program rather than a statewide program. Several factors contributed to the shift in the Vermont Senate from supporting a statewide solution to a utility-based one: Governor Douglas and the Department of Public Service opposed a low-income electric assistance program; there were political concerns around raising the electric rates of all customers and cross-subsidizing from other classes of electric customers—mainly commercial and industrial—for the benefit of low-income residential electric customers; and designing a large-scale statewide program was too complex for the relatively short five-month legislative session in Vermont. In the end Senate leadership decided that, because many other states already had utility-based ratepayer-funded programs that help low-income customers solely in their utility service area, Vermont would follow their lead rather than try to design a whole new program. The Senate drafted language to change the Public Service Board’s authorizing statute to allow it to set a utility-based and ratepayer-funded low-income electric rate. The Senate based this language on a recent law passed in Colorado by a Republican legislative majority (see Colo. Rev. Stat. § 40-3-106(d) (2012)). The Senate added this language to House Bill 520: “The Vermont energy efficiency and affordability act”; Governor Douglas vetoed the bill in June 2007.

Simultaneously, in late 2006, AARP intervened in the proposed merger of Green Mountain Power with Northern New England Energy Corporation and Northstars Merger Subsidiary Corporation. As part of a merger settlement, AARP entered negotiations with Green Mountain Power for a $1 million low-income energy assistance pilot program. AARP and Green Mountain Power settled, and in January 2007 they submitted a proposal to the Public Service Board for what became the pilot program. This two-year pilot program helped AARP test how a low-income ratepayer-funded electric assistance program could work in Vermont.

Then in 2008 AARP pushed again for the Public Service Board’s low-income authority language to be added to an omnibus energy bill in the Senate. This time Senate Bill 209, now Act 92, was signed into law by Governor Douglas in March 2008. The electric affordability language contained in Act 92 finally gave the Public Service Board the authority to approve a low-income electric rate in Vermont, two decades after it was first proposed. The statute now reads:

Notwithstanding any other provisions of this section, the board, on its own motion or upon petition of any person, may issue an order approving a rate schedule, tariff, agreement, contract, or settlement that provides reduced rates for low income electric utility consumers better to assure affordability. For the purposes of this subsection, “low income electric utility consumer” means a customer who has a household income at or below 150 percent of the current federal poverty level. When considering whether to approve a rate schedule, tariff, agreement, contract, or settlement for low income electric utility consumers, the board shall take into account the potential impact on, and cost-shifting to, other utility customers

AARP’s Petition to Establish a Low-Income Electric Rate

AARP Vermont petitioned, in May 2009, the MeterPublic Service Board to establish a low-income electric rate in Vermont’s two largest service territories, those of Green Mountain Power and Central Vermont Public Service Corporation. The decision to file only for these two large investor-owned utilities was strategic; there were nineteen electric utilities in the state at the time, and most of them were very small. To have an expert witness calculate the economic impact of a ratepayer-funded, low-income electric assistance program for each utility in Vermont would have been overwhelming and costly. Also, AARP would have had trouble managing a process involving nineteen fairly hostile utilities, plus the opposition of the state’s largest private employer, IBM, and the state’s Department of Public Service. Since 70 percent of all ratepayers in Vermont reside in the service territories of these two largest investor-owned utilities, we decided to focus our attention and resources on getting the biggest bang for the buck.

Despite our efforts to limit our petition to Green Mountain Power and Central Vermont Public Service Corporation, the Public Service Board decided to allow all the other state utilities to join the case. In doing so, the Public Service Board agreed with a Department of Public Service motion arguing that if creating a low-income rate program were deemed appropriate as a matter of public policy in Vermont, then "all the consumers in the state should potentially be allowed to share in the benefits and costs." The Public Service Board reasoned that if any program arrived upon through the proceeding could be applied to other utilities, “it makes sense to include the other utilities up front in the interest of judicial economy,” and the board noted that the other utilities could contribute to the proceeding. As a result of the board’s decision, AARP’s two experts had to answer hundreds of discovery questions from all twenty-one parties. Discovery was overwhelming at times, but we stayed focused on the ultimate goal of building a ratepayer-funded, low-income electric assistance program.

The other parties in the case were unanimously opposed to AARP’s petition. They argued that the Public Service Board should “defer to the Legislature and other state agencies on the issue of requiring Vermont’s electric utilities to offer low-income rate relief because those policymakers are better situated and qualified to design and execute the social policy judgments inherent in crafting low-income assistance programs.” They also argued that the Public Service Board should not approve the AARP petition because it required “an unjustified cross-subsidization of low-income rates by the remaining other ratepayer classes—a result that directly contravenes the Board’s long-established practice of favoring rate designs that are cost-based and therefore do not include cross-subsidies.”

It took two years from when AARP filed the petition in 2009 for the case to wind its way through the Public Service Board to reach a final order. In the final order the board disagreed with the opposing parties that it lacked the competency to review and approve a low-income rate program as directed by the legislature. Moreover, the board found that, in the language authorizing it to approve a low-income electric rate, the legislature also granted the board the authority to approve the cross-subsidies embedded in low-income rates as long as the “cost-shift or impact is reasonable.” The order further stated that the rate impact proposed on ratepayers in all customer classes in the AARP petition was “modest—and therefore a reasonable—price to pay for realizing the Legislature’s goal of rendering the benefits of electric service—health, safety, heat and light—more affordable for ratepayers who subsist on incomes at or below 150% of [the Federal Poverty Level].” Note, however, that cross-subsidization is a real and challenging issue, especially when regulators refuse to meet the electric needs of low-income customers because of this general principle against cross-subsidization. Legislative authority or a directive may be required to move the issue forward, as it was in Vermont.

Lessons Learned and Aftermath

As more low-income families and seniors struggle with the rising costs of electricity, advocates must focus on creating better, affordable access to this essential service. Vermont advocates learned that the fight for a low-income electric rate is more like a marathon than a sprint, and we had to maintain flexibility to keep the issue moving toward success.

Forum-Shop. Do not restrict advocacy campaigns to just one forum at a time, such as state legislatures. Many citizen state legislatures, such as Vermont’s General Assembly, operate part-time and do not have substantive committee staff. These smaller legislatures simply lack the capacity to take on several complex issues during one legislative session. Trying to get the creation of any new low-income program to the top of the political and policy agenda of a state is difficult. While getting legislative support is crucial on any policy reform issue, it is not necessarily the only or even the best forum to achieve the policy goals of low-income advocates. It pays to be strategic about which forum is best suited for success and to be nimble enough to work in both forums if necessary.

For Vermont advocates, the Public Service Board was a better forum to work out the complex issues related to implementing a low-income electric assistance program. First, we needed a definitive acceptance that electricity is an essential service and that assuring access to it benefits all ratepayers. Second, we needed an organized way to present the facts about low-income electric customers and their needs and the different methods of filling those needs. And we needed a binding decision on the utilities to create a low-income electric rate. The process before the board is more like litigation than lobbying, and there are pros and cons to each process. While AARP used both forums to win the case for a low-income electric assistance program, the board process proved to be a more organized and effective way of presenting and analyzing the evidence and debating utility economic ratemaking theory. Moreover, unlike the legislature, the board has specialized knowledge of electric rate setting and could delve into the issues in a much deeper and more informed way.

Use All the Tools in the Box. In states such as Vermont where there are no ratepayer-funded, utility-based low-income payment assistance programs, expect that the process of planning, organizing, and implementing an advocacy strategy will take years.

Before winning the Public Service Board affordability statutory language change that allowed for a low-income electric rate, AARP Vermont kept the issue of low-income electric affordability alive for years by using every advocacy tool available. We submitted editorials, held press conferences, and conducted a statewide poll. We hired different low-income energy experts for specific purposes—John Howat from the National Consumer Law Center for his ongoing expertise on varying design models for electric discount programs and their potential rate impact and Roger Colton for customizing his annual “Energy Affordability Gap” data by Vermont’s legislative districts. We worked with grassroots advocates and AARP members in Vermont to testify at hearings, talk to their local legislators, and attend a statewide public hearing before the Public Service Board. We partnered with Vermont Legal Aid, the Community of Vermont Elders, the Vermont Public Interest Research Group, the Vermont Low-Income Advocacy Council, and the Area Agencies on Aging from around the state. At different times each of these groups helped by lending support to the campaign for a low-income electric rate.

AARP, however, managed all aspects of the campaign and, more important, resourced it. That organizational and financial resources are critical to maintaining long-term and successful policy campaigns cannot be undervalued or overstated. While several advocacy tactics do not require a lot of financial or organizational resources, such as earned and social media, other effective advocacy tactics require capacity and financing. The reality, not just in Vermont, is that many low-income advocacy groups do not have the financial resources to mount credible long-term policy campaigns, especially when they are using all of their organizational capacity to challenge deep budget cuts in programs and services at both the state and federal levels. Moreover, filing a petition before a regulatory commission such as the Vermont Public Service Board requires lawyers and expert witnesses and entails a great deal of uncertainty as to how long the case will take or how much it will cost. To succeed, advocates must have a strategic plan for how to secure financial resources and manage the organization’s expectation over a long-term campaign. A considerable amount of advocacy was done internally at AARP to keep the campaign moving toward success over a seven-year period.

AARP was able to employ the fairly untraditional advocacy tool of intervening in a separate rate case in order to advocate a utility-based, low-income electric pilot program. In Vermont the only ratepayer-funded assistance program so far has been the Green Mountain Power pilot program that AARP negotiated as part of the settlement in the 2006 sale of Green Mountain Power. The two-year pilot program had a $1 million funding cap and a participation rate of about 3,300 eligible customers. The pilot program gave AARP the opportunity to work with Green Mountain Power to test different enrollment tactics and discount rates and to show that a utility could run a successful low-income electric assistance program. The Green Mountain Power pilot program proved to be a crucial step toward obtaining Public Service Board approval of an expanded and permanent low-income electric assistance program.

Monitor the Program and Solve Unforeseen Problems. In the months since the order became final, AARP has participated in several collaborative meetings with the Department of Public Service, Green Mountain Power, and Central Vermont Public Service Corporation to negotiate the details of program implementation. The goal is for the utilities to have their low-income electric rate assistance programs in place by this spring. The two utilities had to file low-income electric rate tariffs to the Public Service Board in February 2012. After the programs are up and running, AARP and other advocates will need to monitor outreach and enrollment of eligible customers and work collaboratively to solve any unforeseen problems. Every three years the utilities must prepare and file an assessment of the low-income rate programs for review by the Public Service Board.

By keeping our “eye on the prize” and being persistent, we were able to fight a long battle that will result in millions of dollars of meaningful benefits to the most vulnerable Vermonters. The victory before the Public Service Board to establish a low-income electric rate was in many ways just another step in advocating the rights of low-income people because the job of keeping antipoverty programs going never really ends. Only by cultivating new generations of social justice advocates can we keep changing policy and making gains.

Philene Taomina

Philene Taormina
Director of Advocacy
AARP Vermont
199 Main St. Suite 225
Burlington, VT 05602

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