Utilities

Heating-assistance program on the bubble: Agency urges improvements, questions accounting

August 20, 2007

The Indiana Office of Utility Consumer Counselor has filed a lukewarm response to plans from a pair of local utilities to continue a program intended to reduce gas disconnections in the upcoming heating season.

The Indiana Utility Regulatory Commission is weighing whether to continue the 20-month-old "universal service" programs offered by locally based Citizens Gas & Coke Utility and Evansville-based Vectren Corp.

The programs are funded by the utilities and ratepayers. They amount to the secondlargest source of funds in Indiana to avoid gas disconnections in the dead of winter. The largest source is a pot of federal and state funds that totaled $55 million last season.

By some estimates, more than 50,000 delinquent gas customers statewide are disconnected each heating season.

Citizens previously filed testimony that its program cut January bills in arrears to an average of $42, versus an estimated $100 without the program. Delinquent customers in the program receive discounts of 9 percent to 24 percent.

During the last heating season, Citizens' program spent $2.05 million to assist 17,299 customers: Vectren's provided $4.57 million for 23,784 customers.

But the OUCC's director of economic and regulatory analysis, James Polito, said in an Aug. 15 filing that the utilities' method of assessing benefits was flawed.

While utilities "find a correlation between positive or improved bill-paying behaviors and participation in lowincome programs, they do not necessarily establish that participating in [them] actually causes positive or improved bill-paying behaviors," he said.

"This flaw undermines the extent to which [utilities'] analysis provides the commission with sufficient evidence to conclude that the ... low-income programs generate positive financial benefits to all ratepayers."

The OUCC also suggested that, should the commission find "implementing lowincome programs to be more a matter of income redistribution than a matter of minimizing the cost to serve utility customers," ratepayers should fund the program on a voluntary basis.

Currently, the average Citizens residential customer, with a monthly bill of $90.15, pays 37 cents toward the universal service plan.

Commercial customers pay a smaller percentage. USP fees charged to largevolume users are capped at $200 a month.

David Menzer, utility policy coordinator at Citizens Action Coalition, said he has issues with the OUCC's stance. While "it really gets into a philosophical debate," he said, "you have to have heat here in Indiana in the winter."

He said improvements to the universal service programs are needed. For example, utilities could make a greater contribution, given the benefits they enjoy from the programs, such as reduced debt and administrative costs.

But at the moment, "frankly, there's nothing to replace this," he said.

If it's not continued, "We're setting ourselves up for leaving a lot of people out in the cold this winter."

Disconnections sometimes result in fires, as delinquent customers use space heaters or other appliances to stay warm. One high-profile fire occurred early last year, when two Indianapolis girls died in a blaze caused by a space heater.

Dan Considine, spokesman for Citizens Gas, said the program "is an efficient way of providing assistance to the poor."

Menzer said federal heating assistance dollars have not kept up with inflation, "let alone rising natural gas prices."

Citizens Action Coalition says winter

heating assistance funds ultimately are

only a bandage: that the state should come up with more money to help the poor insulate houses, which could shave 40 percent

off bills and have long-lasting benefits.
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