Mechanisms Dealing with the aftermath of COVID-19 and actions to - - PowerPoint PPT Presentation

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Mechanisms Dealing with the aftermath of COVID-19 and actions to - - PowerPoint PPT Presentation

Rate & Regulatory ry Mechanisms Dealing with the aftermath of COVID-19 and actions to protect customers Purpose of f This Presentation Present a broad range of potential rate and regulatory mechanisms for stakeholder consideration


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Rate & Regulatory ry Mechanisms

Dealing with the aftermath of COVID-19 and actions to protect customers

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Purpose of f This Presentation

  • Present a broad range of potential rate and

regulatory mechanisms for stakeholder consideration and discussion.

  • Based on stakeholder feedback in prior workshops,

results of the Staff survey provided to workshop participants, and a review of other states’ responses to COVID-19.

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Potential Rate and Regulatory Mechanisms

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Voluntary Roundups & Donations

Time Payment Agreements Deferred Payments Partial Arrears Forgiveness Arrears Management Programs Equal Pay Programs Delaying Rate Increases Public Purpose Charges Securitization Waiving Late Fees and Penalties Suspending Deposits Streamlining Customer Enrollment Cost Effectiveness Tests Community Solar Subsidization

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Lo Low In Income Rates

  • Currently, DOJ has advised that the Commission does

not have the authority to implement low income specific rates.

  • Though low income rates may be an important part of

long term solutions making rates more affordable, Staff believes they are currently outside the scope of this investigation, but is interested in views by participants.

  • Examples of programs the PUC does not currently have

authority to implement

  • Low Income Discounts
  • Percentage of Income Payment Plans (PIPP)

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SLIDE 5

Existing Authority on Collections

  • PUC ratemaking sets the level of uncollectables a

utility recovers in rates.

  • PUC can encourage customer protections at

collections agencies.

  • If a utility stops sending mostly paid bills to collections,

the PUC has discretion to allow the utility to increase its uncollectables level accordingly.

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Volu luntary ry Donations

  • Utilities could allow voluntary bill round ups as an
  • pt-in feature to customers when paying their bill
  • If bill is $108.35  $0.65 would be added to the bill to

round up to $109.00.

  • The $0.65 goes toward low-income assistance, debt

relief, etc.

  • Utilities to add a feature to website allowing

voluntary bill round ups as an opt-in feature to customers when paying their bill.

  • Could also include an option to include additional

donation beyond the round up to help COVID relief.

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Tim ime Payment Agreements

  • Time payment agreements are currently

administered subject to OAR 860-021-0415

  • Allows customer to sign up for a levelized payment plan
  • r equal-pay arrearage plan to avoid disconnection
  • Currently set at 12 months.
  • Introduce more flexibility into time payment

agreements

  • Allow up to 18-24 months for time payment agreements
  • Explore applying a payment discount (10%, 15%, other)

to the amount owed for certified low-income customers to the amount in the time payment agreement (would require law change).

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SLIDE 8

Survey: What duration should Tim ime Payment Agreements (TPA) be set at?

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12 months 33% 18 months 31% 24 months 26% Other 6% No Answer 4%

23 21 18 4 3 5 10 15 20 25 12 months 18 months 24 months Other No Answer

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Deferred Payments

  • Fully or partially postponing payments for financial

reasons, including COVID-19 hardships

  • Payments could be deferred to allow those who

have been impacted, but are expected to be able to pay at a later date may do so

  • Defer payments by up to 6-12 months
  • No interest accrual on deferred payments for customers
  • ~65 percent of survey respondents in favor of

establishing deferred payment programs

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Deferred Payments - Survey

10 33% 25% 7% 35% 0% 5% 10% 15% 20% 25% 30% 35% 40% 6 Months 12 Months Other No Answer

How Long Should Debt be Deferred?

19% 41% 7% 26% 4% 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 6 Months 12 Months 18 Months 24 Months Other No Answer

How Many Months Should a Customer be Allowed to Amortize the Debt Over?

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Equal Pay Programs

  • Utility equal pay programs

allow customers to have less uncertainty regarding their utility bill throughout the year

  • Evens out monthly bill so

the same payment is made each month, with an annual true-up/adjustment

  • Generally eligible only to

customers with no

  • utstanding balance

11 71% 9% 10% 9% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% Yes No Unsure Other No Answer

Should Utilities Open Equal Payment Plans to Customers that Currently Have Outstanding Balances

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Survey: Should utilities put in place a tariff that allows some level of debt forgiveness if customers maintain current monthly payments?

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39 18 9 3 5 10 15 20 25 30 35 40 45 Yes No Unsure No Answer

Yes 57% No 26% Unsure 13% No Answer 4%

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Part rtial Arr rrears Forgiveness

  • One time rate forgiveness due to COVID-19 impacts
  • n customer arrearages.
  • Each utility could designate a total amount of debt

relief, or a percentage of 2020 arrears to be forgiven, to be divided amongst eligible customers as a bill credit:

  • The debt relief could be amortized in a deferral
  • Each utility could propose their own program that works

best for their specific level of COVID related arrears

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Part rtial Arr rrears Forgiveness

  • Example from Illinois Settlement
  • Large utilities agreed to between $300-$500 dollars of

arrears forgiveness for customers

  • PGE’s and NWN’s recent 10% arrearage forgiveness

programs for residential customers

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SLIDE 15

Arrears Management Programs (A (AMP)

  • Debt forgiveness over time
  • 𝐵𝑁𝑄 𝑁𝑝𝑜𝑢ℎ𝑚𝑧 𝐶𝑗𝑚𝑚 = 𝐷𝑣𝑠𝑠𝑓𝑜𝑢 +

1 12 𝐵 − 1 12 𝐵 ∗ 𝑌

  • A = Arrearage Balance
  • X = Percentage of arrearage to be forgiven through the AMP
  • Note that if X = 100 percent the monthly bill is just the current bill
  • Each month 1/12 of the arrearage relief amount is forgiven,

after 12 months the full arrearage relief rate is forgiven.

  • This could be amortized via an annual deferral.
  • If customers do not complete the program the arrearage amount

becomes uncollectible.

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Arrears Management Programs

  • Potential Benefits of AMP
  • Fewer write-offs for utilities, lower collection costs
  • Customer engagement
  • Creates good customer habits
  • Potential Issues
  • Bill Impacts:
  • Generally AMPs are funded through ratepayers, not shareholders
  • What level of bill impact would result from providing 100%

forgiveness? 50%, 25%, 10% etc.?

  • Customer Eligibility
  • Open to all customers or LIHEAP eligible (requires law change)?
  • One time eligibility?
  • Only open to customers whose arrears were developed in 2020?
  • Customer Incentives

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Survey: If utilities were to put in place a tariff that allows some level of debt forgiveness, how many times should a customer be allowed to miss a monthly payment before losing the benefit of debt forgiveness?

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22% 30% 29% 16% 3% 0% 5% 10% 15% 20% 25% 30% 35% None One Two Other No Answer

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Arrears Management Programs

  • Examples from other states:
  • Massachusetts
  • Bill impact, eligibility, etc.
  • Connecticut
  • Bill impact, eligibility, etc.
  • California
  • New program details

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SLIDE 19

Survey: What current tariff provisions are particularly difficult for low-income customers, and do you have suggested changes that should be made?

  • Reconnect Fees
  • Eligibility Requirements
  • Due Dates

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Securitization

  • Securitization would allow the utilities to issue

securities to cover costs associated with COVID-19

  • The purpose of securitization is largely to gain

capital at a low interest rates

  • Staff generally believes securitization is

unnecessary in this instance given the deferrals in place related to COVID-19 costs

  • Deferrals allow utilities to earn interest at the Modified

Blended Treasury Rate (MBT) before after amortization

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SLIDE 21

Waiving La Late Fees and Penalties

  • Late fees place a greater burden on low-income

customers.

  • Late fee amount versus costs incurred by the utility.
  • Tariff filings necessary to suspend these for an

extended period of time

  • Suspend through 2021?
  • Only suspend for Low-Income Customers (requires law

change)?

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Survey: Should utilities permanently suspend late payment fees, interest, and bank-card payment fees to customers certified as low income by Community Action agencies? (would require a change in law)

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49% 30% 19% 1% 0% 10% 20% 30% 40% 50% 60% Yes No Unsure No Answer

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Suspending Deposits

  • Suspend residential customer deposits for two

years (through June 2022).

  • All gas/electric utilities automatically apply deposits

for residential and commercial customers who are more than 60 or 90 days in arrears.

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Modify fy Public Purpose Charges

  • Reallocate a portion gas

monthly public-purpose charges toward bill assistance, low income weatherization, etc.

  • Potential Increases to

Public Purpose Charges

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Survey: Should Natural Gas Companies’ Public Purpose Charge (PPC) be increased to allow more funding for low income programs?

41% 29% 20% 4% 6% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Yes No Unsure Other No Answer

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SLIDE 25

Streamlining Customer Enrollment

  • Allow Customers to Self-Enroll in programs
  • Streamline enrollment into programs
  • Categorical eligibility: if you qualify for the another

program, you automatically qualify

  • People laid off due to COVID-19 may be entering

into these programs for the first time.

  • Encourage utilities to improve website customer

experience.

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SLIDE 26

Cost Effectiveness Tests

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  • Low-income weatherization helps that customer

regardless of who pays

  • Cost effectiveness test looks at whether other

ratepayers on the utility system are better off

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SLIDE 27

Survey: Should the Commission relax certain cost effectiveness tests to allow the Energy Trust to invest more heavily in low-income weatherization and other energy efficiency initiatives such as ductless heat pumps beyond what is cost-effective?

  • Other response: within reason

27 46% 16% 24% 10% 4% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Yes No Unsure Other No Answer

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Relax Certain Cost Effectiveness Tests

Continue projects underway and expand upon them.

  • Ongoing and new flexibility on DHPs to reduce

energy burden.

  • Expanding partnerships with CAP agencies on

weatherization.

  • Staff is working with Energy Trust on additional
  • ptions and expansions.

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Delaying Rate In Increases

  • Four Oregon utilities currently have decoupling mechanisms

in place (PGE, Avista, Cascade, Northwest Natural).

  • Given decreases in commercial load as a result of COVID-19,

there is the potential for surcharges to commercial customers.

  • To assist commercial customers during this time, decoupling surcharges could be

eliminated in 2021. Utilities could agree to collect interest at MBT.

  • Potential rate adders such as Purchase Gas Adjustment

(PGA) rate increases and could also be delayed.

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Community Solar Subscription Subsidization

  • Could CARES Act dollars be used to enroll low-income

customers in the Oregon Community Solar program by paying their first year subscription fee?

  • Piggybacks on Oregon community solar program provision

that low-income participants receive a 20% subscription discount.

  • Potential opportunity for participants to receive bill savings in

excess of their program subscription fees.

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