[50 Pa.B. 1652]
[Saturday, March 21, 2020]

[Continued from previous Web Page]

Appendix A

Timeline

Universal Service Review and Energy Affordability Proceedings Timeline

In M-2017-2587711 & M-2017-2596907
(5/2017 to 5/2019)

 5/5/17—Opinion and Order entered entitled Energy Affordability for Low Income Customers (Docket No. M-2017-2587711) initiating a study regarding home energy burdens in Pennsylvania

 5/10/17—Opinion and Order entered entitled Review of Universal Service and Energy Conservation Programs (Docket No. M-2017-2596907) initiating a comprehensive review of the entire Universal Service and Energy Conservation model

 7/14/17—Law Bureau staff report issued in compliance with the May 10, 2017 Order (with assistance from BCS) discussing the history of universal service programs and the processes required to initiate changes

 8/8/17—Stakeholder comment period closed for Review of Universal Service and Energy Conservation Programs (Docket No. M-2017-2596907)

 9/13/17-9/14/17—BCS held stakeholder meetings to gather feedback on previously submitted comments/priorities/concerns/suggested changes pertaining to the universal service programs

 10/16/17—Stakeholder reply comment period closed for Docket No. M-2017-2596907

 10/16/17—Secretary Letter issued notifying the major jurisdictional energy distribution utilities of the intent to conduct an energy affordability study and requesting data from 2012-2016

 10/31/17—Secretary Letter issued granting an extension for providing requested energy affordability data from 11/17/17 to 12/1/17

 12/1/17—Secretary Letter issued granting an extension for providing requested energy affordability data from 12/1/17 to 12/8/17

 2/12/18—Secretary Letter issued extending data request clarification/validation process for three utilities by 2/13/18 and extending due date for BCS to submit the Energy Affordability Report (originally May 5, 2018)

 3/28/18—Sec Letter issued releasing the Staff Report Summarizing Public Comments, Feedback and Suggestions Regarding Universal Service and Energy Conservation Programs and establishing a Universal Service Working Group to further explore universal service policies and practices (press release issued)

 5/7/18—Universal Service Working Group Meeting held to discuss zero-income forms

 7/18/18—Universal Service Working Group Meeting held to discuss zero-income forms and possible revisions to the USECP filing schedule

 9/27/18—Universal Service Working Group meeting held to discuss possible revisions to the USECP filing schedule

 1/17/19—Order approved at Public Meeting releasing the Energy Affordability Report and requesting supplemental information from utilities (press release issued)

 2/2/19—PA Bulletin announcement publicizing release of Energy Affordability Report and announcing 2/6/19 Universal Service Working Group meeting

 2/6/19—Universal Service Working Group meeting held to discuss Energy Affordability Report and requested supplemental information

 3/7/19—Secretary Letter issued providing clarifications to requested supplemental information and establishing a 30-day comment period and 15-day reply comment period

 4/8/19—Energy Affordability supplemental information filed by utilities

 5/8/19—Energy Affordability comment period closed

 5/23/19—Energy Affordability reply comment period closed

Appendix B

Participants

List of Participants

Review of Universal Service and
Energy Conservation Programs
Docket No. M-2017-2596907

 On or before August 8, 2017, comments were filed at this docket by the following organizations:

 • Blair County Community Action Agency;

 • Commission on Economic Opportunity of Luzerne County (CEO Luzerne);

 • Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania (CAUSE-PA), Tenant Union Representative Network (TURN), and Action Alliance of Senior Citizens of Philadelphia (Action Alliance) (collectively Low Income Advocates or Advocates);

 • Columbia Gas of Pennsylvania, Inc. (Columbia);

 • Duquesne Light Company (Duquesne);

 • Energy Association of Pennsylvania (EAP);

 • Indiana County Community Action Program (ICCAP);

 • Keystone Energy Efficiency Alliance, Housing Alliance of Pennsylvania, Green and Healthy Homes Initiative, National Consumer Law Center, National Housing Trust, and Natural Resources Defense Council (collectively PA Energy Efficiency for All Coalition [PA-EEFA]);

 • Met-Ed Industrial Users Group, the Penelec Industrial Customer Alliance, the Philadelphia Area Industrial Energy Users Group, the PP&L Industrial Customer Alliance, and the West Penn Power Industrial Intervenors (collectively Industrial Customers or Industrials);

 • Metropolitan Edison Company (Met-Ed), Pennsylvania Electric Company (Penelec), Pennsylvania Power Company (Penn Power), and West Penn Power Company (West Penn) (collectively FirstEnergy or FirstEnergy utilities);

 • National Fuel Gas Distribution Corporation (NFG);

 • Office of Consumer Advocate (OCA);

 • PECO Energy Company (PECO);

 • Pennsylvania Energy Marketers Coalition (PEMC);

 • Peoples Natural Gas and Peoples-Equitable Gas Company (collectively Peoples);

 • AARP Pennsylvania; ACTION Housing, Inc.; Community Justice Project; Disability Rights Pennsylvania; Health, Education, and Legal Assistance Project: A Medical-Legal Partnership; Homeless Advocacy Project; Interim House, Inc.; Just Harvest; Laurel Legal Services; Legal Aid of Southeastern Pennsylvania; MidPenn Legal Services; Neighborhood Legal Services Association; North Penn Legal Services; Pennsylvania Coalition Against Domestic Violence; Pennsylvania Council of Churches; Pennsylvania Institutional Law Project; Pennsylvania Legal Aid Network; Philadelphia Legal Assistance; Regional Housing Services; SeniorLAW; Southwestern Pennsylvania Legal Services, Inc.; The Women's Center, Inc.; The Women's Resource Center; Stephen R. Krone; and Medna D. Makhlouf (collectively Pennsylvania Service Providers);

 • PA Departments of Aging (Aging), Community and Economic Development (DCED), Environmental Protection (DEP), and Health and Human Services (HHS);

 • PA Energy Marketers Coalition (PEMC);

 • PA Weatherization Providers Taskforce;

 • Philadelphia Department of Human Services (PDHS);

 • Philadelphia Gas Works (PGW);

 • PPL Electric Utilities Corporation (PPL);

 • UGI Utilities, Inc.—Gas Division (UGI-GD), UGI Utilities, Inc.—Electric Division (UGI-ED), UGI Penn Natural Gas, Inc. (UGI-PNG), and UGI Central Penn Gas, Inc. (UGI-CPG) (collectively UGI or UGI utilities);

 • United Way of Pennsylvania (United Way); and

 • Weatherization and Conservation Collaborative (WCC);

 On October 16, 2017, reply comments in this proceeding were filed at this docket by the following organizations:

 • Commission on Economic Opportunity of Hazelton, PA (CEO Hazelton);

 • Commission on Economic Opportunity of Wyoming County (CEO Wyoming);

 • CEO Luzerne;

 • Low Income Advocates;

 • Columbia;

 • DLC;

 • Industrial Customers;

 • FirstEnergy;

 • Housing Authority of the County of Beaver;

 • Housing Development Corporation of NEPA (HDC);

 • NFG;

 • OCA;

 • Office of Small Business Advocate (OSBA);

 • PA Chamber of Business and Industry;

 • PA Weatherization Providers Taskforce;

 • PECO;

 • PEMC;

 • Peoples;

 • PDHS;

 • PGW;

 • PPL;

 • Scranton-Lackawanna Human Development Agency, Inc. (SLHDA);

 • UGI;

 • United Way; and

 • WCC.

 The following organizations attended the Commission's Stakeholder meeting, in person or via teleconference, on September 13 and 14, 2017:

 • Burke Vullo Reilly Roberts (representing CEO Luzerne);

 • CMC Energy;

 • Columbia;

 • Community Legal Services (CLS) (representing TURN);

 • Department of Human Services;

 • Dollar Energy Fund (DEF);

 • DLC;

 • EAP;

 • Energy Coordinating Agency (ECA);

 • FirstEnergy;

 • Keystone Energy Efficiency Alliance;

 • McNees, Wallace, & Nurick LLC (representing Industrial Customers);

 • NFG;

 • OCA;

 • OSBA;

 • PECO;

 • Pennsylvania Utility Law Project (PULP) (representing CAUSE-PA);

 • Peoples;

 • P.R. Quinlan;

 • PGW;

 • PPL;

 • SFE Energy;

 • UGI; and

 • United Way.

Energy Affordability for Low-Income Customers
Docket No. M-2017-2587711

 On April 8, 2019, supplemental information in this proceeding were filed at this docket by the following organizations:

 • Columbia;

 • Duquesne;

 • FirstEnergy;

 • NFG;

 • PECO;

 • Peoples;

 • PGW;

 • PPL; and

 • UGI.

 On May 8, 2019, comments were filed at this docket by the following organizations:

 • Columbia;

 • Duquesne;

 • EAP;

 • FirstEnergy;

 • Low Income Advocates;

 • NFG;

 • OCA;

 • PECO;

 • Peoples;

 • PGW;

 • PPL; and

 • The Pennsylvania State University (PSU).

 On May 23, 2019, reply comments in this proceeding were filed at this docket by the following organizations:

 • Duquesne;

 • EAP;

 • Industrial Customers;

 • Low Income Advocates;

 • OCA;

 • OSBA;

 • PECO;

 • PPL; and

 • PSU.

Appendix C

Statement of Vice Chairperson David W. Sweet

 I would like to once again acknowledge and personally thank the parties and Commission staff that have worked extensively on what has culminated in a final action today to approve an amended CAP Policy Statement. It needs to be stated that Pennsylvania universal service programs are among the most robust in the nation. Of this we can be proud, but more needs to be done.

 Since joining the Commission in 2016, my analysis of universal service programs was: (1) that low-income customers, particularly those living at or below 50% of the Federal Poverty Income Guideline (FPIG), consistently pay an extremely high percentage of their income on electric and gas service; (2) that overall participation in customer assistance programs (CAPs) was considerably low, stagnant around 30%;¹⁵⁴ (3) that the Commission was not adequately monitoring utility compliance with the 1992 CAP Policy Statement; and (4) that CAP costs were disproportionately varied across utility service territories, which unfortunately meant that residential ratepayers in certain parts of the state paid more for energy assistance than others. My fundamental goal throughout both the Energy Affordability and Comprehensive Review of Universal Service and Energy Conservation proceedings was to confront these matters holistically, and to find policy and regulatory solutions that would correct what I saw as major deficiencies in what is an important, beneficial service available to the nearly 2 million low-income customers living in Pennsylvania.¹⁵⁵

 I believe the revised Policy Statement will significantly address the majority of my concerns given the reduction in the maximum, combined CAP energy burden from 17% to 6% for the lowest income households, as well as the establishment of consumer education and outreach plan criteria as a way to improve upon stagnant participation levels in CAP. Given the renewed attention to these important matters, I have no doubt that the Commission will be committed to ensuring compliance with these goals.

 Regarding costs, The Energy Affordability Study, published by Commission staff and released in January 2019, provided a rough estimate of what these policy changes could cost non-CAP, residential ratepayers. Staff estimated that on average, CAP costs would increase annually by $15, or $1.25 per month¹⁵⁶ —a perceivably nominal difference to what is a tremendous savings for customers who otherwise struggle to pay for a basic household necessity.

 However, admittedly several important variables were not considered in this estimate; and so, the cost of our final proposed policy changes cannot yet be precisely identified. The onus will be on each electric distribution company (EDC) and natural gas distribution company (NGDC) to either adopt these policies in Universal Service and Energy Conservation Plan (USECP) proceedings, or fully demonstrate why adoption cannot be met, especially considering the policy amendment that CAP costs can be recovered from all rate classes—not just from residential customers.

 Yet, none of this solves the unequal nature of how customers in different utility service territories are charged varying universal service costs. This becomes particularly apparent for the roughly 500,000 customers receiving natural gas distribution service from Philadelphia Gas Works (PGW). The average non-CAP PGW ratepayer pays $81.26 annually to support these programs—nearly seven times the amount of a National Fuel Gas customer.¹⁵⁷ This anomaly occurs because CAP and other universal service programs¹⁵⁸ are not funded through a statewide pool, but rather utility by utility based on service area.

 Philadelphia is home to a much larger number of citizens in poverty than any other jurisdiction, and these residents would benefit the most from the proposed reductions to the energy burden thresholds. However, understanding that our action today will likely further increase costs to PGW's non-CAP ratepayers, I encourage the utility to speak to this dilemma in its next USECP filing, noting that any attempt to forgo inclusion of the proposed CAP policies for rate impact reasons, while reasonable, also denies Philadelphia's poor from fully benefiting from greater CAP benefits.

 PGW's unique situation goes beyond matters of universal service. The Company annually pays $18 million to the City of Philadelphia, and nearly $1 million to the Philadelphia Gas Commission¹⁵⁹ —ironically roughly the same estimated value if a 6% energy burden was adopted.^{160, 161} I urge the City to forgo these payments and devote the money instead to a full-scale effort by PGW to significantly reduce the heating bills of its low-income residents. Moreover, the General Assembly should consider developing a statewide pool to support energy assistance in areas of high poverty, urban and rural.

 Today, the Commission took the necessary steps to improve upon utility-sponsored energy assistance programs, and it is my expectation that as a result, utilities will heed Commission guidance on these issues. For the remainder of my term, I will be paying close attention to utility adherence to these polices both in USCEP proceedings and rate case filings, and encourage my colleagues to do so, as well.

DAVID W. SWEET, 
Vice Chairperson

Statement of Commissioner Norman J. Kennard

 Before the Pennsylvania Public Utility Commission (Commission or PUC) for consideration and disposition is a Final Policy Statement Order (Final Policy Statement) amending the Commission's existing customer assistance program (CAP) Policy Statement (Existing Policy Statement). These changes are largely based on the Commission's staff report titled Home Energy Affordability for Low-Income Customers in Pennsylvania (Energy Affordability Report).¹⁶²

Maximum Energy Burdens

 Under the Commission's Existing Policy Statement, the combined electric and natural gas expenses (also known as the ''energy burden'') of a customer are not to exceed 15—17% of household income where the household income is at or below 150% of the Federal Poverty Income Guidelines (FPIG). The CAP program provides discounted bills to qualifying low-income customers. The electric distribution companies (EDCs) and natural gas distribution companies (NGDCs) currently collect over $330 million per year from other customers (residential non-CAP) to fund these low-income CAP programs.

 The Final Policy Statement presented by the Staff before us today would reduce the current energy burden down to a maximum of 10%. The Joint Motion proposes to go even further by creating a ''tiered'' energy burden structure with a maximum energy burden level of 6% for customers within 0—50% of the FPIG, 10% for customers within 51—100% of the FPIG, and 10% for customers within 101—150% of the FPIG.

 The Energy Affordability Report estimated that a combined 10% energy burden for electric and natural gas would cost non-CAP ratepayers an additional $102 million per year, not accounting for inflation. This represents an approximate 30% increase from the current over $330 million ratepayer CAP spending. The Energy Affordability Report did not analyze or address the cost impact of establishing a 6% energy burden as proposed in the Joint Motion. Accordingly, we do not know what the additional cost impact of further reducing the energy burden will be for Pennsylvania ratepayers.

 I disagree with both the Staff recommendation and the Joint Motion for several reasons. But first, let me say that I have always supported our efforts to make energy affordable for those less fortunate. However, we cannot simply open the ratepayers' checkbooks to pay for others' bills. Our efforts should be supplemental to the social service programs devised by the General Assembly and the Governor's Administration. There is nothing in the Public Utility Code that gives us a significant role in fighting poverty. While we should help, we cannot solve the difficulty of low-income families in meeting their household budgets. Programs should be designed to meet a specifically demonstrated need and parameters should be put in place to avoid excess spending.

 We already maintain one of the most generous programs in the nation. It is true that other states¹⁶³ have maximum energy burdens that are lower than in Pennsylvania, but there are significant program differences in those states as compared to Pennsylvania. For example, other states limit participation to Low-Income Home Energy Assistance Program (LIHEAP) recipients, incorporate LIHEAP grants into program discounts, have differing electric and natural gas usage, lower housing costs, and lower annual budgets and spending.¹⁶⁴ As we do not limit our programs to LIHEAP recipients, the participating population in CAPs is larger in the Commonwealth.

 Much is made of the comparison to New York that uses a 6% energy burden. However, New York limits the total budget for each utility's universal service programs at 2% of total electric or natural gas revenues.¹⁶⁵ As a point of reference, in 2017, Pennsylvania's EDCs spent an average of 2.5% of gross income on universal service programs and the NGDCs an average of 2.2% of gross revenue. So we already exceed New York's spending. Based on the robust universal service programs offered in the Commonwealth, I do not believe that it is appropriate to reduce our maximum energy burden levels at this time.

 Nor do I see a demonstrated need for expanded CAP contributions at a time when the nation's economy is thriving with unemployment levels at an all-time low. The total estimated $430 million CAP spending resulting from the energy burden redesign is based upon today's income levels and energy costs. Should the country go into a recession and the labor market deteriorate or should energy prices rise, CAP spending costs will be larger than estimated and uncontained. Neither the Staff recommendation nor the Joint Motion agree to place a limit on overall spending like New York does.

 For this reason, among others, I do not agree with the tiered energy burden levels proposed by the Joint Motion. Moving forward without any data regarding the potential cost impact of a 6% energy burden for the lowest low-income customers is not only reckless, but also exposes Pennsylvania ratepayers to unknown, increased costs that could be significant. This exposure could result in pressuring low-income, non-CAP customers into no longer being able to afford their utility bills and lead to an even higher percentage of uncollectibles than we currently have.

 We are blindly changing the CAPs with no idea of the cost, no metric to evaluate the effectiveness of the programs, and no cap on program budgets. Although the CAPs have some cost containment features such as minimum bill requirements and individual CAP credit limits, we currently do not have, nor do has there been a proposal to implement, any test or metric to evaluate if these programs are effective and accomplishing their goals. We also have no spending threshold for the budget of the CAPs and therefore, no limit to the costs that non-CAP ratepayers will bear. I struggle to see any of the principles of ratemaking that have stood the test of time in providing fair, nondiscriminatory, and just rates included in the reasoning for the changes to the CAPs.

 One of the fundamental principles of ratemaking is cost causation—the cost to serve each customer should be reflected in the price of the product they are purchasing. Although there are times when we make exceptions, the exceptions should not be designed to provide a permanent discounted rate based on the income of a household or on any other metric other than the cost of serving that customer.

 The original CAPs were designed to reduce the number of payment-troubled customers by serving as an alternative to traditional collection methods. It was anticipated that the major cost for a CAP would be administrative costs since the programs were to be cost-effective and designed so that if ''properly implemented, many of the problems associated with other CAP programs should be diminished or entirely eliminated.''¹⁶⁶ We have strayed far from the original goal of temporarily assisting customers in an efficient manner that does not create a burden on non-CAP customers.

 Nor do we have any evidence that reducing energy burdens levels will decrease utility uncollectibles. In fact, since the establishment of CAPs in Pennsylvania, uncollectibles have increased. When CAPs were implemented state-wide in 1992, the Commission found that uncollectibles in the electric industry averaged between about 1% to 1.5% between 1987 and 1990. In 2000, the electric industry's gross write-off ratio grew to an average of 2.17% and most recently, 2017 averaged a gross write-off ratio of 2.2%. These uncollectible costs are borne by all ratepayers and are felt the most by non-CAP low-income. This illustrates that there may be other factors at play beyond discounted utility bills when determining affordability.

 CAPs were not meant to solve poverty, but, rather, were established at a time when inflation in utility bills was growing much faster than customers' incomes causing a disparity that was particularly acute for low-income customers. LIHEAP grants did not grow at the same pace as the increasing proportional cost of energy and the CAPs were created because the utilities were carrying out collections for a stable number of customers who were falling further and further behind in paying bills. The CAPs were created to decrease uncollectibles and to assist low-income customers in maintaining their utility service.

 Overall, I agree with the OCA's comments which maintained that Pennsylvania CAPs, as currently designed, are working reasonably well. Based on the data that is available, the OCA stated that it cannot conclude that a 10% maximum energy burden is appropriate for the Commonwealth. Rather than changing the maximum energy burdens, the OCA suggests making other modifications to CAPs, including revising minimum payment requirements and pursuing budget billing.¹⁶⁷ While I agree with many of the changes set forth in the Final Policy Statement, I agree with the OCA and question whether changing our maximum energy burdens levels is appropriate at this time.

 As a last point, I believe due process mandates that, if such changes are to be made, we must issue the revised policy statement as a proposal with a 30-day comment period and not as a final order. This would allow us to receive data from the EDCs and NGDCs regarding the cost impact of reducing the energy burden to 6% for the lowest low-income customers. Additionally, stakeholders will have the opportunity, for the first time, to comment on the comprehensive set of changes before us. Prior to the Final Policy Statement, stakeholders have only had the opportunity to comment on various piecemeal parts of the changes to the Existing CAP Policy Statement. To alleviate all due process concerns, stakeholders should be provided the opportunity to comment on the ''entire package'' of changes, many of which are so intricately intertwined.

Cost Recovery

 Currently, almost all universal service costs are recovered from the residential rate classes, because this is a program that benefits residential customers exclusively.¹⁶⁸ However, the Final Policy Statement provides that utilities may address recovery of CAP costs and other universal service costs from any ratepayer class in their individual rate case filing. While we are not making a final decision regarding cost recovery in this matter, the Final Policy Statement expressly authorizes utilities to propose cross-class subsidization in their next rate case filing.

 I strongly oppose the expansion of CAP and universal service cost recovery to commercial and industrial rate classes. Large commercial and industrial entities neither benefit from nor are they eligible for these programs. Again, principals of cost causation dictate that costs should be attributed to the customers causing the costs to be incurred.¹⁶⁹ Additionally, Sections 2804(7) and 2203(5) of the electric and natural gas competition acts prohibit discriminating ''against one customer class to the benefit of the other.''¹⁷⁰

 To a restate a point made earlier, we are wandering into the arena of tax policy where general taxes, like personal income or corporate net income taxes, are used for the general public good. We are not the General Assembly and do not have the discretion to impose a tax for the public benefit.

 Further, passing universal service costs onto commercial and industrial ratepayers can force these ratepayers to procure energy services elsewhere with negative effects on the utilities and customers. Commercial and industrial ratepayers of NGDCs are often sensitive to changes in rates as energy costs are a large expense of their businesses and price increases can push them to find alternatives to natural gas. In some locations, customers have the ability to bypass the distribution system and connect directly to the interstate pipeline system.

 The loss of industrial and commercial customers not only weakens the revenue base of the utility but also has the potential to harm all ratepayers. Although in rate cases, the goal is to move each rate class towards its cost of service, for many utilities the residential rate class pays less than its cost of service and is subsidized by the other classes, including commercial and industrial. Since many of the costs of providing service are fixed and do not vary with the loss or addition of a few customers, the loss of revenue from commercial and industrial customers will mean other rate classes, including residential customers, would see rate increases.

 Although I oppose permitting utilities to cross-subsidize CAP and universal service costs among rate classes, I recognize that there are credible legal arguments on both sides of the issue. With that in mind, it is very likely that any future utility rate case filing proposing to pass CAP and/or universal service costs onto commercial and industrial customers will be challenged in court. I caution that should cross-class subsidization be prohibited by the courts, all the increased CAP costs related to a reduced energy burden will be borne by non-CAP residential customers. This is particularly of issue because we do not know the cost impacts of using a 6% maximum energy burden for the lowest low-income customers. Once again, we are exposing non-CAP residential customers to unknown increased costs which could be significant. Unfortunately adding these increased costs to non-CAP residential bills could result in unaffordable utility bills for non-CAP low-income customers.

Conclusion

 I agree with many of the changes set forth in the Final Policy Statement and believe that cleaning up our CAP processes is a great idea and a step forward in assisting low-income customers in maintaining their utility service. However, I do not see a need to: (1) decrease the maximum CAP energy burdens levels or (2) authorize drastic cost recovery mechanisms for the significant increases in CAP spending that will result. Therefore, I respectfully dissent.

NORMAN J. KENNARD, 
Commissioner

Statement of Commissioner Andrew G. Place

 In addition to the Joint Motion on this matter, I would like to comment on two issues—consideration of households above 150% of Federal Poverty Income Guidelines (FPIG) and cost recovery. While the Commission's action today does not include households above 150% of FPIG nor requires cost recovery for USECPs from all rate classes, I would encourage utilities to consider these options.

 In undertaking any review of Universal Service Programs in their entirety, the Commission must continue to balance the costs¹⁷¹ and benefits of these programs, as the changes just approved will inevitably impact program delivery and the costs of that delivery. In my review of the cost issue I note that most restructured states provide for a competitively neutral funding mechanism for low-income programs—assessed on all energy customers. Currently, in Pennsylvania, only residential ratepayers fund the current Universal Service Programs with the exception of customers of Philadelphia Gas Works (PGW).

 Pursuant to its Commission-approved Tariff, PGW recovers all costs associated with its Customer Responsibility Program (CRP), including general discounts and arrearage forgiveness, the Senior Citizen Discount and the costs of the Home Comfort Program through a Universal Service and Energy Conservation Surcharge.¹⁷² All customers pay this volumetric Universal Service and Energy Conservation Surcharge—currently $0.13014/Ccf.¹⁷³

 I would encourage utilities to propose a similarly constructed volumetric charge assessed to all rate classes for funding universal service programs as energy poverty is a societal issue, not solely weighted on a single rate class. This position is echoed by the Pennsylvania Departments of Aging, Community Development, Environmental Protection, Health and Human Services, in which they argue that expanding recovery of universal service costs to other rate classes would allow for increased efficacy of programming.¹⁷⁴ This position was further bolstered by the Office of Consumer Advocate and the Low Income Advocates in their comments at these dockets. Of particular note, the Low Income Advocates highlighted that all ratepayers benefit whether directly or indirectly from these programs and, as such, it is proper to recover the costs from all ratepayers.¹⁷⁵ I echo this reasoning and encourage utilities to broaden recovery of USECP costs beyond residential ratepayers.

 While the Commission was studying energy affordability, the United Way was also examining these topics from the broader vantage point of financial stability for Pennsylvania households. During 2018 and 2019 the United Way of Pennsylvania conducted a Financial Hardship Study for Pennsylvania¹⁷⁶ to raise awareness of the challenges faced by, what they refer to as, ALICE¹⁷⁷ households (Asset Limited, Income Constrained, Employed), the working poor, and to mobilize support strategies and policies that move ALICE households toward financial stability. ALICE represents a growing number of households in Pennsylvania that are above the poverty line, but do not earn enough to afford the basic necessities such as housing, childcare, food, transportation health care, and technology.

 The United Way ALICE report argues that the absolute basic cost of living, a ''survival budget,'' in Pennsylvania, is $59,340 for a family of four and $20,760 for a single adult.¹⁷⁸ This family of four survival budget is more than double the Federal Poverty Level of $24,600 per year for a family of that size and yet still leaves families financially vulnerable and unable to cover basic costs.¹⁷⁹ In 2017, of Pennsylvania's approximately 5 million households, 640,349 earned below the federal poverty level (13 percent) and another 1.2 million (24 percent) were ALICE households¹⁸⁰ —a combined 37% of Pennsylvania households struggling financially.

 Commission regulations at 52 Pa. Code § 54.72 define a low-income customer as, ''[a] residential utility customer whose household income is at or below 150 percent of the Federal poverty guidelines.'' While I am not recommending a change to the definition of low-income customer, I am encouraging utilities to increase their universal service offerings to those just above the low-income threshold to include ALICE households who may need assistance to maintain essential utility services.

 This suggestion is not novel as other states and the Commission's own LIURP regulations allow for some households up to 200% of FPIG to qualify for these assistance programs. I would further encourage utilities to consider the inclusion of ALICE households in Customer Assistance Programs as appropriate. At this juncture, select utilities have extended CAP (eCAP) programs for which this group of customers qualifies. Some eCAPs offer extended but limited benefits such as arrearage forgiveness. These customers may well pay full tariff rates but receive the benefit of arrearage forgiveness with each in-full and on-time payment. Although the survival budget in Pennsylvania is above the Federal Poverty Line, assistance for these households would be impactful.

ANDREW G. PLACE, 
Commissioner

Statement of Commissioner John F. Coleman, Jr.

 Before us today are revisions to the Commission's existing customer assistance program (CAP) policy statement.¹⁸¹ I would like to thank the stakeholders for their comments, responses to requests for information, and participation in stakeholder meetings. I would also like to thank staff in the Bureau of Consumer Services (BCS) and the Law Bureau for their work on this assignment.

 Two years ago, I voted for a joint motion to undertake a comprehensive review of Pennsylvania's universal service programs.¹⁸² I did so because the Commission has an important obligation to monitor, evaluate and, when necessary, make changes to universal service programs. In general, I am pleased with the information we collected and the conclusions I was able to draw from it. To summarize, I think the data shows that the Commission and public utilities are meeting their respective obligations regarding universal service and that the programs are adequately funded. While there is no underlying crisis with respect to universal service, I do recognize that there is room for improvement, and our staff and stakeholders have provided many good suggestions for us to consider.

Overview

 Pennsylvania has a very robust universal service program, and according to comments we received, was second among states in the total assistance provided as recently as a few years ago.¹⁸³ Unlike other states, Pennsylvania does not limit the amount spent on energy assistance programs or the number of participants, nor do we require participants to enroll in other state or federal programs, such as the Low Income Home Energy Assistance Program (LIHEAP).¹⁸⁴ In 2017, Pennsylvania's low-income, payment-troubled customers received almost half a billion dollars in financial and other assistance to help with their energy bills. This amount includes almost $94 million in LIHEAP grants and approximately $385 million in universal service program assistance. Of the $385 million spent on universal service programs, over $330 million was spent on CAPs.¹⁸⁵

 Pennsylvania's CAPs, as currently designed, are working to help customers maintain their service. CAP customers pay most of their discounted energy utility bills. In 2017, CAP customers paid 82.8% of their electric bills and 72.5% of their natural gas bills. For many customers, CAPs have ended the cycle of non-payment and disconnection by moving these customers to more regular bill payment.¹⁸⁶

 It is also important to note that low-income customers do not necessarily need or want to participate in CAPs. There are other components to universal service which may meet a customer's needs, and most low-income customers do not require any financial assistance to pay their energy utility bills. In 2017, approximately 89% of confirmed low-income electric customers in Pennsylvania were not payment-troubled, while approximately 84% of confirmed low-income natural gas customers in Pennsylvania were not payment-troubled.¹⁸⁷

 For this reason, enrollment or budget levels cannot be the metric of success or failure for CAPs. CAP enrollments and budgets will rise and fall in response to changes in utility rates and underlying economic conditions. For example, over the last ten years, CAP enrollments for natural gas distribution companies (NGDCs) have declined significantly, most likely in response to persistently low natural gas prices, steady economic growth and good employment opportunities. In 2009, approximately 192,000 customers were enrolled in NGDC CAPs. By 2017, enrollment had decreased to 146,000 customers. NGDC CAP spending shows a corresponding decrease from $198 million in 2009 to $91 million in 2017. I think it is good news that more natural gas customers, than ten years ago, are able to pay their own bills without requiring other customers, many of whom are also low-income, to subsidize their service.

Opportunities for Improvement

 I am open to improving the design and operation of CAPs. I agree with many of the recommendations proposed by staff which clarify and simplify CAPs. I generally support: (1) allowing CAP households to retain CAP enrollment when they transfer service within the utility's service territory, (2) directing utilities to accept income documentation of at least the last 30 days or 12 months, (3) eliminating the provision that a customer should designate a LIHEAP grant to the utility sponsoring the CAP or be penalized, (4) exempting CAP customers from late payment charges, (5) providing CAP customers with retroactive pre-program arrearage forgiveness, (6) allowing utilities to request but not require social security numbers, (7) setting minimum CAP payment requirements and maximum CAP credit limits in universal service plan proceedings, (8) establishing online CAP applications with electronic submission of documents, (9) directing utilities to use a standardized zero-income form and to develop industry-wide standardized forms, (10) initiating collection activity for CAP accounts after no more than two missed payments, and (11) evaluating household CAP bills quarterly. I also agree with the Joint Motion's directive related to consumer education and outreach plans.

Procedural and Substantive Concerns

 But, as I stated two years ago, the design, budgeting, and administration of universal service programs are a complex undertaking for our public utilities. By moving forward today with a final Revised CAP Policy Statement, the Commission disregards this complexity. The final Revised CAP Policy Statement includes a combination of energy burdens (6%-10%-10%) and other changes which have not been put forth for comment.¹⁸⁸ I am disappointed that we are skipping the important step of presenting all of our recommendations to the stakeholders for their review. We normally have a public comment period when we revise our regulations and policy statements. No pressing legal or practical reason has been identified for deviating from our standard practice.

 I agree with the comments of the Office of Consumer Advocate (OCA) in that,

[a]ny changes to the energy burdens would need to be thoroughly analyzed to determine the costs that would have [to] be borne by any non-participant ratepayers as well as the impact on any payments by CAP customers.

*  *  *  *  *

. . .an analysis of energy affordability burdens must also consider the impact on residential ratepayers that pay the costs of the program. Changes to the energy affordability burdens can have a significant impact on the total costs of the CAP program.''¹⁸⁹

 Without further information from the stakeholders, I cannot conclude that the final Revised CAP Policy Statement balances the interests of the residential customers who benefit from CAPs and the residential customers who pay for CAPs. I am particularly concerned with the cost impact on customers between 151—250% of the Federal Poverty Income Guidelines, those households with low or moderate incomes who are just beyond the eligibility requirements for CAP. Again, I highlight the comments of the OCA, that ''[t]he Commission must consider the impact that paying for the programs will have on non-participants. The impact of the program costs disproportionately affects low-income customers who do not participate in the program and the near-poor whose incomes are too high to qualify for CAP, but who may also have trouble making their bill payments.''¹⁹⁰

 The Commission must ensure that universal service programs are operated in a cost-effective manner.¹⁹¹ The final Revised CAP Policy Statement maintains certain cost control measures but also expands the benefits associated with CAP. This expansion will impact both the size and cost of the programs in ways which have not been sufficiently quantified. I would have preferred to receive feedback from the stakeholders on the combined effect of these program changes. Without this feedback, I cannot support: (1) reducing the CAP energy burdens, (2) eliminating the payment-troubled qualification for CAPs, (3) establishing new recertification timeframes, (4) allowing customers to remain in CAP despite non-payment, (5) directing utilities to be prepared to address recovery of CAP costs from any ratepayer classes, and (6) the Joint Motion's adoption of the definition of income contained in Chapter 14 of the Public Utility Code.¹⁹² CAP was designed as an alternative to traditional collection methods for low income, payment-troubled customers. We must not lose sight of this objective.

 Additionally, I am troubled by the declaration in the Joint Motion that public utility service must be ''universally affordable.'' While that is an admirable sentiment, it is not an accurate statement of the law. The Public Utility Code provides that rates must be ''just and reasonable,'' and importantly, that no person be given an ''unreasonable preference or advantage in rates.''¹⁹³ The Electric and Gas Competition Acts required that the universal service programs in existence at the time of their respective enactments be continued, and that they be ''appropriately funded and available'' in each territory.¹⁹⁴ The General Assembly further provided that such programs are intended to ''assist low-income'' retail customers in maintaining their electric and gas service. Universal service programs were further defined as programs intended to ''help'' electric and gas customers maintain service.¹⁹⁵ There is a significant difference between making reasonable efforts to assist customers, as opposed to guaranteeing that customers with zero or little income be maintained in their service at the expense of other customers. CAPs can assist but cannot guarantee that every customer will be able to afford service at every location in all circumstances. It is beyond the scope of the Commission's jurisdiction and authority to implement or otherwise convert public utility service into an entitlement program.

 For the reasons stated above, I cannot support the Joint Motion. While I agree with many of the recommendations put forth today, I am troubled by the absence of public comment. Without these comments, it is not clear that the final Revised Policy Statement does enough to balance the interests of participating versus non-participating customers.

JOHN F. COLEMAN, Jr., 
Commissioner

Annex A

TITLE 52. PUBLIC UTILITIES

PART I. PUBLIC UTILITY COMMISSION

Subpart C. FIXED SERVICE UTILITIES

CHAPTER 69. GENERAL ORDERS, POLICY STATEMENTS AND GUIDELINES ON FIXED UTILITIES

POLICY STATEMENT ON CUSTOMER ASSISTANCE PROGRAMS

§ 69.261. General.

 CAPs are designed as alternatives to traditional collection methods for low-income customers. Customers participating in CAPs agree to make monthly payments based on household size and gross household income. CAP customers make regular monthly payments, which may be for an amount that is less than the current tariff bill for utility service including pre-CAP arrearages, in exchange for continued provision of the service. Class A electric utilities and natural gas utilities with gross intrastate annual operating revenue in excess of $40 million should adopt the guidelines in §§ 69.263—69.265 (relating to CAP development; scope of CAPs; and CAP design elements) implementing residential CAPs.

§ 69.262. Definitions.

 The following words and terms, when used in §§ 69.261, 69.263—69.267 and this section, have the following meanings, unless the context clearly indicates otherwise:

 Alternative program designs—Program designs which include traditional utility collection methods, alternative collection approaches that do not include a CAP and CAP designs which substantially deviate from this chapter.

 CAP—Customer Assistance Program.

 CBO—Community-based organization.

 EDC—Electric distribution company—An electric distribution company as defined in 66 Pa.C.S. § 2803 (relating to definitions).

 FPIG—Federal Poverty Income Guidelines—The income levels published annually in the Federal Register by the United States Department of Health and Human Services.

 Household income—The combined gross income of all adults in a residential household who benefit from the public utility service, as defined in 66 Pa.C.S. § 1403 (relating to definitions).

 LIHEAP—Low Income Home Energy Assistance Program—A Federally funded program, administered in this Commonwealth by the Department of Human Services, which provides financial assistance grants to low-income households for home energy bills.

 Low-income customers—A residential utility customer whose annual gross household income is at or below 150% of the FPIG.

 Low-income payment-troubled customers—Low-income customers who have arrears or failed to maintain one or more payment arrangements.

 NGDC—Natural gas distribution company—A natural gas distribution company as defined in 66 Pa.C.S. § 2202 (relating to definitions).

 USAC—Universal Service Advisory Committee—A group of interested stakeholders who meet at least semiannually, receive universal service program updates and provide feedback on proposed utility initiatives.

 USECP—Universal Service and Energy Conservation Plan—A plan that contains the utility's universal service programs as approved by the Commission.

§ 69.263. CAP development.

 (a) A utility should develop and strive to improve its CAP consistent with the guidelines provided in §§ 69.261, 69.262, 69.264—69.267 and this section.

 (b) The Bureau of Consumer Services will work with the utility in CAP development. USACs and other interested stakeholders may assist the utility.

 (c) Before implementing, revising or expanding a CAP, a utility should file its CAP proposal with the Commission and serve copies on the Bureau of Consumer Services and on stakeholders from the utility's most recent USECP proceeding. This will allow for staff review, comments, discovery and revisions prior to Commission approval of design elements. This review is not for ratemaking purposes, and the rate consequences of any CAP will be addressed within the context of subsequent Commission rate proceedings as described in § 69.266 (relating to cost recovery).

§ 69.264. Scope of CAPs.

 CAPs should be targeted to low-income customers. The participation limit for CAP should reflect a needs assessment, consideration of the estimated number of low-income households in the utility's service territory, the number of participants currently enrolled in the CAP, participation rates for assistance programs and the resources available to meet the needs of the targeted population. A utility may use payment-troubled status to prioritize CAP enrollments and to control CAP costs if necessary and only if approved to do so by the Commission.

§ 69.265. CAP design elements.

 The following design elements should be included in a CAP:

 (1) Program funding. Program funding should be derived from the following sources:

 (i) Payments from CAP participants.

 (ii) Operations and maintenance expense reductions.

 (iii) Universal service funding mechanism for EDCs and NGDCs.

 (iv) Other sources as may be approved by the Commission.

 (2) Payment plan. Generally, CAP payments for jurisdictional home energy should not exceed the percentages of CAP participants' annual income specified in the schedule in subsection (i). Payment plans should be based on one or a combination of the following:

 (i) Percentage of income plan (PIP). Total payment for total electric and natural gas home energy under a percentage of income plan is determined based upon a scheduled percentage of the participant's annual gross income. The participating household's gross income and size place the household at a particular poverty level based on the FPIG.

 (A) Generally, maximum payments for electric nonheating service should not exceed the following maximums:

 (I) Household income between 0—50% of FPIG at 2% of income.

 (II) Household income between 51—100% of FPIG at 4% of income.

 (III) Household income between 101—150% of FPIG at 4% of income.

 (B) Generally, maximum payments for natural gas heating should not exceed the following maximums:

 (I) Household income between 0—50% of FPIG at 4% of income.

 (II) Household income between 51—100% of FPIG at 6% of income.

 (III) Household income between 101—150% of FPIG at 6% of income.

 (C) Generally, maximum payments for electric heating or for natural gas heating and electric nonheating combined should not exceed the following maximums:

 (I) Household income between 0—50% of FPIG at 6% of income.

 (II) Household income between 51—100% of FPIG at 10% of income.

 (III) Household income between 101—150% of FPIG at 10% of income.

 (ii) Percentage of bill plan. The participant's household payment is calculated as a percentage of income payment and converted to a percentage of the annual bill. When a utility determines subsequent CAP payment amounts, a participant will continue to pay the same percentage of the total bill even if annual usage has changed.

 (iii) Rate discount. The participant's energy usage is billed at a reduced rate.

 (iv) Minimum monthly payment. The participant's payment contribution is calculated by taking the participant's estimated monthly budget billing amount and subtracting the maximum, monthly CAP credit (previously called billing deficiency).

 (v) Annualized, average payment. The participant's payment contribution is calculated by determining the total amount the participant paid over the last 12 months and dividing by 12 months to determine a monthly budget.

 (vi) An alternative payment formula. An alternative payment formula must be reviewed by the Bureau of Consumer Services and approved by the Commission.

 (3) Control features. The utility should include the following control features to limit program costs:

 (i) Minimum payment terms. Minimum payments should be set in utility-specific USECP proceedings. A utility may propose alternatives to a flat minimum payment for each account type.

 (ii) Nonbasic services. A CAP participant may not subscribe to nonbasic services that would cause an increase in monthly billing and would not contribute to bill reduction. Nonbasic services that help to reduce bills may be allowable. CAP credits should not be used to pay for nonbasic services.

 (iii) Consumption limits. Limits on consumption should be set at a percentage of a participant's historical average usage. A level of 110% is recommended. Adjustments in consumption should be made for extreme weather conditions through the use of weather normalization techniques.

 (iv) High usage treatment. Utilities should target for special treatment those participants who historically use high amounts of energy.

 (v) Maximum CAP credits. These will be established in individual utility USECP proceedings, if deemed appropriate. If applied, CAP credit limits should consist of a tiered structure based on the household's FPIG level such that lower income households receive higher CAP credit limits.

 (vi) Exemptions. A utility may exempt a household from maximum CAP credit or consumption limits if one or more of the following conditions exist:

 (A) The household experienced the addition of a household member.

 (B) A member of the household experienced a serious illness.

 (C) Energy consumption was beyond the household's ability to control.

 (D) The household is located in housing that is or has been condemned or has housing code violations that negatively affect energy consumption.

 (E) Energy consumption estimates have been based on consumption of a previous occupant.

 (4) Eligibility criteria. The CAP applicant should meet the following criteria for eligibility:

 (i) Status as a utility ratepayer or new applicant for service is verified.

 (ii) Household income is verified at or below 150% of the FPIG.

 (5) Payment-Troubled Criterion. If appropriate, a utility may prioritize CAP enrollments or control CAP costs using a payment-troubled criterion. When determining if a CAP applicant is payment-troubled, a utility should apply one of the following criteria:

 (i) A household that has a pre-program arrearage. The utility may define the amount of the pre-program arrearage.

 (ii) A household that has received a termination notice or has failed to maintain a payment arrangement.

 (6) Late Payment Charges. CAP customers should be exempt from late payment charges.

 (7) Appeal process. The utility should establish the following appeal process for program denial:

 (i) If the CAP applicant is not satisfied with the utility's initial eligibility determination, the utility should use utility company dispute procedures in §§ 56.151 and 56.152 (relating to general rule; and contents of the public utility company report).

 (ii) The CAP applicant may appeal the denial of eligibility to the Bureau of Consumer Services in accordance with §§ 56.161—56.165 (relating to informal complaint procedures).

 (8) Administration. If feasible, the utility should include nonprofit CBOs in the operation of the CAP. The provisions of § 69.265(8) apply to CAP services whether they are provided by the utility or by a third-party on behalf of the utility. The utility should incorporate the following components into the CAP administration:

 (i) Outreach. A utility should develop and incorporate a Consumer Education and Outreach Plan as part of its USECP. Education and outreach may be conducted by nonprofit CBOs and should be targeted to low-income customers. The utility should make automatic referrals to CAP when a low-income customer calls to make payment arrangements.

 (ii) Intake and verification. The utility should accept applications for CAP through mail, telephone, electronically or in-person. The utility should also offer online platforms that allow customers to submit CAP applications and documentation electronically. Intake and verification may be conducted by nonprofit CBOs on behalf of the utilities. Intake should include verification of the following:

 (A) Identification of the CAP applicant and household members. The utility may request, but not require, Social Security numbers (SSNs) to verify identity. Household members should be permitted to provide alternative identification in lieu of SSNs. The utility should clearly explain the identification options on CAP applications and other communications.

 (B) The annual household income.

 (I) The utility should accept income documentation of at least the last 30 days or 12 months, whichever is more beneficial to the household. CAP applications and recertification letters should identify acceptable income timeframes and explain how each may benefit the customer.

 (II) A household reporting zero income should complete the standardized zero-income form and provide additional verification, if necessary.

 (C) The household size.

 (D) The ratepayer status.

 (E) The class of service—heating or nonheating.

 (iii) Calculation of payment. Calculation of the monthly CAP payment should be the responsibility of the utility. The utility may develop a payment chart so that the assisting CBOs may determine payment amounts during the intake interview.

 (iv) Explanation of CAP. A complete and thorough explanation of the CAP components should be provided to participants.

 (v) Application for LIHEAP grants. The utility should inform a CAP participant of the participant's responsibility to apply for LIHEAP grants annually, as well as other energy assistance programs, if eligible.

 (vi) Consumer education, outreach and referral.

 (A) Consumer education and outreach plans should include information on benefits and responsibilities of CAP participation and the importance of energy conservation.

 (B) Consumer education and outreach plans should be developed with input from USACs and reflect focused outreach and education efforts, specific to the demographics of the individual service territory, spanning the duration of the universal service plan period. The utility should include the following provisions in its plan:

 (I) Specific efforts to educate and enroll eligible and interested customers at or below 50% of FPIG.

 (II) Resources, translation services, and translated materials for those customers who are of Limited English Proficiency.

 (C) Customer education should include referrals to other appropriate support services.

 (vii) Account monitoring. Account monitoring should include both payment and energy consumption monitoring. A CAP participant's bills should be evaluated at least quarterly to determine whether the CAP credit amount and billing method is appropriate.

 (viii) Recertification.

 (A) A utility should recertify a participant's eligibility for CAP benefits within the following time frames:

 (I) A household reporting no income should recertify at least every 6 months.

 (II) A household with income that participates in LIHEAP annually should recertify at least once every 3 years.

 (III) A household whose primary source of income is Social Security, Supplemental Security Income, or pensions should recertify at least once every 3 years.

 (IV) All other CAP households should recertify at least once every 2 years.

 (B) A utility should identify and implement more effective ways of communicating its recertification practices and procedures to CAP participants and improve its methods of collecting appropriate income information from customers in order to minimize disruption in CAP participation.

 (ix) Pre-program arrearage forgiveness. Pre-program arrearage forgiveness should occur over a 1- to 3-year period contingent upon receipt of regular monthly payments by the CAP participant.

 (A) A CAP participant should receive pre-program arrearage forgiveness for each on-time and in-full monthly CAP payment regardless of in-CAP arrears.

 (B) A CAP participant should receive retroactive pre-program arrearage forgiveness for any monthly payment missed once the household pays in full its CAP balance/in-program arrears/debt.

 (x) Routine management program progress reports. Progress reports that may be used to monitor CAP administration should be prepared at regular intervals. These reports should include basic information related to the number of participants, payments and account status.

 (9) Default provisions. The failure of a participant to comply with one of the following should result in dismissal from CAP participation:

 (i) Failure to abide by established consumption limits.

 (ii) Failure to allow access or to provide customer meter readings in 4 consecutive months.

 (iii) Failure to report changes in income or household size.

 (iv) Failure to accept budget counseling, weatherization/usage reduction or consumer education services.

 (v) Failure to recertify eligibility.

 (10) Transfer of service. A CAP household should be able to retain program enrollment status when transferring service within the utility's, or an affiliate's, service territory.

 (11) Collection Activity. A utility should initiate collection activity for CAP accounts after no more than two payments in arrears. A customer should not be removed or defaulted from CAP as a precursor to termination for non-payment.

 (12) Reinstatement policy. A customer may be reinstated into CAP at the utility's discretion.

 (13) Evaluation. The utility should thoroughly and objectively evaluate its CAP in accordance with the following unless otherwise modified in § 54.76 (relating to evaluation reporting requirements) for EDCs or § 62.6 (relating to evaluation reporting requirements) for NGDCs.

 (i) Content. The evaluation should include both process and impact components. The process evaluation should focus on whether CAP implementation conforms to the program design and should assess the degree to which the program operates efficiently. The impact evaluation should focus on the degree to which the program achieves the continuation of utility service to CAP participants at reasonable cost levels. At a minimum, the impact evaluation should include an analysis of the following:

 (A) Customer payment behavior.

 (B) Energy assistance participation.

 (C) Energy consumption.

 (D) Administrative costs.

 (E) Program costs.

 (ii) Time frame. Unless otherwise modified by § 54.76 or § 62.6, program impacts should be evaluated by an independent third-party at no more than 6 year intervals and submitted to the Commission. The impact evaluations should be filed and served at the utility's then-current USECP docket and submitted to the Bureau of Consumer Services.

 (iii) Evaluation plan approval. The utility should submit the impact evaluation plan to the Bureau of Consumer Services for review and approval.

 (14) Industry-standardized forms. Utilities are encouraged to develop and use standardized CAP forms and CAP procedures.

§ 69.266. Cost recovery.

 (a) In evaluating utility CAPs for ratemaking purposes, the Commission will consider both revenue and expense impacts. Revenue impact considerations include a comparison between the amount of revenue collected from CAP participants prior to and during their enrollment in the CAP. CAP expense impacts include both the expenses associated with operating the CAPs as well as the potential decrease of customary utility operating expenses. Operating expenses include the return requirement on cash working capital for carrying arrearages, the cost of credit and collection activities for dealing with low income negative ability to pay customers and uncollectible accounts expense for writing off bad debt for these customers. When making CAP-related expense adjustments and projections, utilities should indicate whether a customer's participation in a CAP produced an immediate reduction in customary utility expenses and a reduction in future customary expenses pertaining to that account.

 (b) In rate cases, parties may raise the issue of recovery of CAP costs, whether specifically or as part of universal service program costs in general, from all ratepayer classes. No rate class should be considered routinely exempt from CAP and other universal service obligations.

§ 69.267. Alternative program designs.

 Alternative program designs that differ from §§ 69.261—69.266 and this section may reduce uncollectible balances and may provide low-income customers with needed assistance. These programs may be acceptable if the utility can provide support for design deviations. Before implementing an alternative program design, the utility should submit its proposal including an evaluation plan as described in § 69.265(13) (relating to CAP design elements) to the Bureau of Consumer Services for review. Thereafter, if the utility determines to proceed with proposing the alternative program design, it will need to file and serve the proposed alternative program design as it would a proposed USECP that conforms to this policy statement. The proposed alternative program design should not be implemented until it has received Commission approval.

[Pa.B. Doc. No. 20-409. Filed for public inspection March 20, 2020, 9:00 a.m.]

_______

¹  Released via order entered on January 17, 2019, in Energy Affordability for Low-Income Customers, Docket No. M-2017-2587711 (Energy Affordability proceeding). http://www.puc.pa.gov/pcdocs/1602386.pdf. See also Review of Universal Service and Energy Conservation Programs, Docket No. M-2017-2596907 (Review proceeding).

²  Order entered on May 5, 2017, in the Review proceeding.

³  Order entered on May 10, 2017, in the Energy Affordability proceeding.

⁴  As indicated in Appendix B, there were numerous stakeholders in Review and Energy Affordability proceeding. In addition to the participating EDCs and NGDCs and the Energy Association of Pennsylvania (EAP), other active participants included statutory advocates, low-income advocates, industrial user groups, community-based organizations, other agencies, energy marketers, educational institutions, and others. Our appreciation extends to all who participated actively or by observation.

⁵  A low-income customer is one with a household income at or below 150436000f the Federal Poverty Income Guidelines (FPIG).

⁶  Section 2803 of the Electricity Generation Customer Choice and Competition Act, 66 Pa.C.S. §§ 2801—2816 (1997), and Section 2202 of the Natural Gas Choice and Competition Act, 66 Pa.C.S. §§ 2201—2212 (1999), (respectively Electric Competition Act and Natural Gas Competition Act; collectively Competition Acts).

⁷  LIURPs are intended to assist low-income customers in conserving energy and reducing residential energy bills. The Commission's LIURP regulations at 52 Pa. Code §§ 58.1—58.18 (promulgated in 1993 and last amended in 1998) require covered energy utilities to establish fair, effective, and efficient energy usage reduction programs for their low-income customers. Chapter 58 was effective January 16, 1993. See 23 Pa.B. 265. Sections 58.2, 58.3, 58.8, and 58.10 were amended effective January 3, 1998. See 28 Pa.B. 25. See 52 Pa. Code § 58.2 for the definition of ''covered utility.'' A utility may spend up to 202410020f its annual LIURP budget on customers having an arrearage and whose household income is at or below 20037711736320f FPIG. See 52 Pa. Code §§ 58.1, 58.2, and 58.10.

⁸  CARES and Hardship Funds, unlike CAPs, are not covered by express policy statements. CARES and Hardship Funds, unlike LIURP, do not have extensive regulatory or policy provisions.

⁹  66 Pa.C.S. §§ 2203(8) and 2804(9).

¹⁰  52 Pa. Code §§ 54.74 and 62.4.

¹¹  52 Pa. Code §§ 54.76 (a)-(b) (electric) and 62.6 (a)-(b) (natural gas).

¹²  A general timeline of activities in these two proceedings can be found in Appendix A.

¹³  Including housekeeping changes, all seven sections of the CAP Policy Statement will have revisions.

¹⁴  Chapter 14 defines Household Income as ''[t]he combined gross income of all adults in a residential household who benefit from the public utility service.'' 66 Pa.C.S. § 1403 (relating to definitions).

¹⁵  We are not making a final precedential decision regarding cost recovery in this docket.

¹⁶  This docket number is also cited as Docket No. M-00840403.

¹⁷  City NGDCs have similar requirements as well. 66 Pa.C.S. § 2212(b).

¹⁸  For a more detailed list of activities in Docket No. M-2017-2587711, see Appendix A.

¹⁹  Met-Ed, Penelec, Penn Power, and WPP are collectively referred to as ''FirstEnergy'' or the ''FirstEnergy utilities.''

²⁰  Peoples and Peoples-Equitable are collectively referred to as ''Peoples.'' UGI South and UGI North are collectively referred to as ''UGI.''

²¹  USR Requirements, 52 Pa. Code §§ 62.1—62.8 (natural gas) and 54.71—54.78 (electric).

²²  For a full list of stakeholders who filed or participated in Docket No. M-2017-2587711, see Appendix B.

²³  For a more detailed list of activities in Docket No. M-2017-2596907, see Appendix A.

²⁴  For a full list of stakeholders who filed or participated in Docket No. M-2017-2596907, see Appendix B.

²⁵  The USWG met on May 7, 2018, July 18, 2018, September 27, 2018, and February 6, 2019. A separate working group also met on July 30, 2019, to discuss the USRR at Docket No. M-2019-3011814.

²⁶  We are also making some housekeeping changes to the CAP Policy Statement.

²⁷  52 Pa. Code § 69.265(2)(i)(A)—(C).

²⁸  Fisher, Sheehan & Colton, The Home Energy Affordability Gap 2015: Pennsylvania (Public Finance and General Economics, 2nd Ser. 2016), at 1.

²⁹  Applied Public Policy Research Institute for Study and Evaluation, LIHEAP Energy Burden Evaluation Study (2005). http://www.appriseinc.org/reports/LIHEAPBURDEN.pdf.

^{30, 31}  New York State Energy Research Development Authority, Home Energy Affordability in New York: The Affordability Gap (2008—2010) (2011). http://www.fsconline.com/downloads/Papers/2011%2006%20NYSERDA%20AffordGap.pdf

%20NYSERDA0X1.E0008C6340000P-1039ffordGap.pdf.

³²  The Pennsylvania Service Providers are AARP Pennsylvania; ACTION Housing, Inc.; Community Justice Project; Disability Rights Pennsylvania; Health, Education, and Legal Assistance Project; Homeless Advocacy Project; Interim House, Inc.; Just Harvest; Laurel Legal Services; Legal Aid of Southeastern Pennsylvania; MidPenn Legal Services; Neighborhood Legal Services Association; North Penn Legal Services; Pennsylvania Coalition Against Domestic Violence; Pennsylvania Council of Churches; Pennsylvania Institutional Law Project; Pennsylvania Legal Aid Network; Philadelphia Legal Assistance; Regional Housing Services; SeniorLAW; Southwestern Pennsylvania Legal Services, Inc.; The Women's Center, Inc.; The Women's Resource Center; Stephen R. Krone; and Medna D. Makhlouf.

³³  PA-EEFA are the Keystone Energy Efficiency Alliance; Housing Alliance of Pennsylvania; Green and Healthy Homes Initiative; National Consumer Law Center; National Housing Trust; and Natural Resources Defense Council.

³⁴  The Low Income Advocates are the Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania (CAUSE-PA); Tenant Union Representative Network (TURN); and Action Alliance of Senior Citizens of Philadelphia (Action Alliance).

³⁵  Decreases to the energy burden level will primarily increase CAP credit expenditures but could also increase PPA forgiveness costs as more customers in debt may participate due to this change. References to ''CAP costs'' in this document refer to the total costs for the program (i.e., CAP Credits, PPA forgiveness, and administration).

³⁶  The Energy Affordability Report incorrectly identified 10% as the maximum energy burden for all participants in Ohio's CAP (i.e., Percentage of Income Payment Plan Plus (PIPP)). The 10maximum energy burden applies only to electric heating customers. PIPP customers with natural gas heating can have a maximum energy burden of 12%: 6% for natural gas heating and 6% for electric non-heating. https://www.development.ohio.gov/is/is_pipp.htm.

³⁷  See New York Public Service Commission's Order Adopting Low Income Program Modifications and Directing Utility Filings, Case 14-M-0565 (effective May 20, 2016), at 3. NOTE: New York also limited the budget for each utility's payment assistance program to 21707f revenues for sales to end-use customers. These costs are recovered from all ratepayer classes. NY May 2016 Order at 3-4.

³⁸  New Jersey requires Universal Service Fund (USF) customers to pay energy burdens of 3% for natural gas service, 3% for electric non-heating, and 6% or electric heating. The discount provided to customers is based on the difference between their annual utility bills (after LIHEAP is applied) and required percentage of household income. https://www.state.nj.us/dca/divisions/dhcr/faq/usf.html#q1.

³⁹  The Commission provided further clarifications of these estimates via a Secretarial Letter issued on March 7, 2019. On April 8, 2019, all EDCs and NGDCs filed and served the requested projections.

⁴⁰  66 Pa.C.S. § 2202 defines natural gas ''universal service and energy conservation'' as ''Policies, practices and services that help residential low-income retail [natural] gas customers and other residential retail [natural] gas customers experiencing temporary emergencies, as defined by the commission, to maintain natural gas supply and distribution services. . . .''
66 Pa.C.S. § 2803 defines electric ''universal service and energy conservation'' as ''Policies, protections and services that help low-income customers to maintain electric service. . . .''

⁴¹  NFG notes that customers reporting zero income, who are charged the minimum payment, slightly inflated this average. Excluding zero-income customers reduces the 2016 average energy burden for CAP customers at or below 501075040f the FPIG to 6.9NFG Comments at 4.

⁴²  These cost projections for the utilities that use PIP-based CAP payment plans may be the most accurate, based on the supplemental information. This includes PECO, PGW, UGI, Peoples, and FirstEnergy. Peoples' projection may, however, have been low because the projection did not include the projected cost of PPA forgiveness in the estimates.

⁴³  The estimated cost impacts of a 10maximum energy burden level are the difference between the historical and the projected costs of CAPs based on current models (using the 2016—2018 historical CAP costs and the utility projections for 2019—2021) and the projected costs of a PIP CAP with the 10% maximum energy burden levels (based on the supplemental information filed by utilities on April 8, 2019).

⁴⁴  Actual EDC and NGDC annual CAP spending in 2017 totaled $330,924,928. 2017 Report on Universal Service Program & Collections Performance at 73.

⁴⁵  The Energy Affordability Report estimated a maximum 10% energy burden for CAP customers could increase program costs by approximately $102,439,768 per year. Report at 107—110.

⁴⁶  PECO's supplemental information did not break down the projected cost impacts of the CAP PIP model by fuel type. Therefore, we have combined the estimated cost impacts for PECO's electric and natural gas CAPs.

⁴⁷  PECO reported current monthly universal service costs recovered from residential ratepayers are $4.31 for electric and $3.21 for natural gas. PECO Comments at 4.

⁴⁸  Energy Affordability Report at 6.

⁴⁹  Although not a neighboring state, Illinois has an Energy Assistance Program administered by the state's Department of Commerce and Economic Opportunity. The Illinois PIP provides that customers are charged a maximum of 65f their income for natural gas and electric service. The maximum PIP credit a customer can receive is $150 per month ($1,800 annually). Funding is subject to appropriation from the Illinois General Assembly. The Illinois model requires customers to be enrolled in LIHEAP. 305 ILCS 20/1—20/18. See particularly http://www.ilga.gov/legislation/ilcs/documents/030500200K18.htm.

⁵⁰  See Energy Affordability Report at 22—25.

⁵¹  Low-income average energy burdens vary from 1237757775360 20When based on an annual household income of $10,000, this results in $1,200 to $2,000 in annual energy costs.

⁵²  See 2017 Report on Universal Service Programs & Collections Performance at 53. http://www.puc.state.pa.us/General/publications_reports/pdf/EDC_NGDC_UniServ_Rpt2017.pdf.

⁵³  For example, see Duquesne 2017—2019 USECP Order, Docket No. M-2016-2534323 (order entered on March 23, 2017) at 28—31, OP # 15.

⁵⁴  Low Income Advocate Comments at 38-39, Docket No. M-2017-2587711.

⁵⁵  Currently, CAP participants with annual household incomes at or below 500f the FPIG could have an energy burden of 120 206r roughly $1,200 to $2,000 annually based on $10,000 annual household income. Under the new policy, the maximum combined energy burden for the subset of customers with annual household incomes of $10,000 should be 637757775104r $600. This could result in hypothetical annual reductions between $600 and $1,400 or an average annual savings of $1,000.

⁵⁶  In 2017, 95,534 households with household incomes in the 00 50 0.000000PIG tier participated in utility CAPs; 57,587 of which were electric CAP participants, and 37,947 were natural gas CAP participants. See 2017 Report on Universal Service Programs & Collections Performance at 52.

⁵⁷  For utilities that do not have a PIP-based payment plan, system safeguards should be established to ensure the customer's calculated payment does not exceed the maximum energy burden.

⁵⁸  A CAP household's bill may also exceed the maximum energy burden level if it exceeds the utility's CAP credit limit, e.g., due to usage.

⁵⁹  See Duquesne 2017—2019 USECP, M-2016-2534323 (filed on March 12, 2018), at 5.

⁶⁰  See 2019—2021 USECP (filed on June 24, 2019), at 12, for Met-Ed (M-2017-2636976), Penelec (M2017-2636969), Penn Power (M-2017-2636973), and WPP (M-2017-2636978).

⁶¹  See PECO 2016—2018 USECP at 35.

⁶²  See PPL 2017—2019 USECP at 5.

⁶³  See Columbia 2015—2018 USECP, M-2014-2424462 (filed on August 12, 2015), at 18.

⁶⁴  See PECO 2016—2018 USECP at 35.

⁶⁵  See NFG 2017—2020 USECP, M-2016-2573847 (filed on April 2, 2018), at 17.

⁶⁶  See Peoples 2015—2018 USECP, M-2014-2432515 (filed on July 20, 2018), at 6, 7, 12.

⁶⁷  See PGW 2017—2020 USECP at 6.

⁶⁸  Includes UGI North, UGI South, UGI Central, and UGI Utilities, Inc.-Electric Division (UGI Electric). See UGI's 2014-2017 USECP, M-2013-2371824 (filed on February 17, 2015), at 15.

⁶⁹  This issue was not addressed in the Energy Affordability proceeding.

⁷⁰  Includes UGI North, UGI South, UGI Central, and UGI Electric.

⁷¹  This policy would not prohibit EDCs and NGDCs from accepting income based on other timeframes (e.g., 60 or 90 days).

⁷²  This is similar to the definition of ''Low-income [payment-troubled] customers'' in Section 69.262 of the CAP Policy Statement.

⁷³  Columbia Gas considers a household to be payment-troubled if it has received a termination notice or has broken a payment agreement within the past 12 months or through a utility referral or credit scoring. Columbia Gas 2015—2018 USECP at 17, Docket No. M 2014-2424462 (filed on August 12, 2015).

⁷⁴  NFG considers a household to be payment-troubled if it has an arrearage on the account or at least one current, canceled, or defaulted arrangement on the account at the time of application. NFG 2017—2020 USECP at 8, Docket No. M-2016-2573847 (filed on April 2, 2018).

⁷⁵  People's and People's-Equitable consider a household to be payment troubled if it meets any of the criteria listed in 69.265(4)(iii)(A)—(D). Peoples 2015-2018 USECP at 8, Docket No. M-2014-2432515 (filed July 20, 2018).

⁷⁶  Duquesne states that low-income customers must demonstrate or express an inability to pay their electric bills to qualify for its CAP. Duquesne 2017—2019 USECP at 12, Docket No. M-2016-2534323 (filed March 12, 2018). However, this is not a payment-troubled criterion under the CAP Policy Statement.

⁷⁷  Opinion Dynamics Corp. (March 2013). ''Low Income Assistance Program Evaluation'' at 4. http://www.opiniondynamics.com/wp-content/uploads/2013/06/Low-Income-Payment-Assistance-Program-Evaluation.pdf. Retrieved August 1, 2019. ''More customers who have low [PPA] balances have higher than average on-time rates. Customers with less than $391 in arrearages pay on-time 610f the time, while customers with more than $1,514 in arrearages pay on-time 450f the time.''

⁷⁸  PECO Gas reported a CAP participation rate of 75 0n 2017, but it is the Commission's understanding that only customers which have applied for PECO's CAP are counted as confirmed low-income.

⁷⁹  In the Commonwealth, prior to 2009, utilities could use LIHEAP grants to fund CAPs by subsidizing CAP credits. In 2009, the Pennsylvania Department of Human Services (DHS), then known as the Department of Public Welfare (DPW), informed utilities that they must apply LIHEAP grants directly to a customer's CAP bill or ''asked-to-pay'' (ATP) amount. At that time, the CAP Policy Statement, Section 69.265(9)(ii) & (iv), provided that a utility could impose a penalty on a CAP participant that was eligible for LIHEAP benefits but failed to apply for LIHEAP, not exceeding the amount of an average LIHEAP benefit. Participants who directed their LIHEAP benefits to another utility or energy provider were exempt from the penalty provision. Section 69.265(9)(iii) provided that LIHEAP grants should be applied to the CAP shortfall. The 2009 LIHEAP directive from DHS conflicted with these aspects of the CAP Policy Statement. Utilities could no longer apply LIHEAP grants to a CAP customer's deferred arrears or to the CAP shortfall. On April 9, 2010, the Commission suspended Section 69.265(9)(ii)-(iii) of the CAP Policy Statement by order entered at Docket No. M-00920345.

⁸⁰  See 66 Pa.C.S. § 1409.

⁸¹  We note that PECO offers PPA forgiveness over a one-year period.

⁸²  For example, see PGW 2014—2016 USECP, Docket No. M-2013-2366301 (order entered on August 22, 2014), at 20—26.

⁸³  This issue was not addressed in the Energy Affordability proceeding.

⁸⁴  ''CAP balance'' is sometimes referred to as ''in-program arrears.''

⁸⁵  This issue was not addressed in the Energy Affordability proceeding.

⁸⁶  http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/78/~/legal-requirements-to-provide-your-ssn (link no longer valid).

⁸⁷  See, e.g., NFG 2014—2016 USECP, Docket No. M-2013-2366232 (order entered on May 22, 2014), at 25-26; and PGW 2014—2016 USECP at 14—20.

⁸⁸  For example, see Duquesne's 2014—2016 USECP, Docket No. M-2013-2350946 (order entered on March 6, 2014), at 10.

⁸⁹  Instead, most NGDCs impose limits on CAP natural gas consumption. If customers exceed these consumption limits, they can be provided with energy conservation education, referred to LIURP (if eligible), and ultimately removed from CAPs if usage reduction services and/or education are unsuccessful. For example, see UGI's 2014—1017 USECP, Docket No. M-2013-2371824 (filed on February 17, 2015), at 17-18.

⁹⁰  See PECO 2016—2018 USECP, Docket No. M-2015-2507139 (filed on February 17, 2017), Addendum A at 32; and PPL 2017—2019 USECP, Docket No. M-2016-2554787 (filed on November 3, 2017), at 17.

⁹¹  This issue was not addressed in the Energy Affordability proceeding.

⁹²  This provision is not intended to recommend CAP credit limits for utilities that do not currently impose such limits (i.e., NGDCs), but NGDCs are not prohibited from proposing CAP credit limits if they can justify a need for them.

⁹³  See PECO 2016—2018 USECP, Docket No. M-2015-2507139 (filed on February 17, 2017), at 7.

⁹⁴  See PGW 2017—2020 USECP, Docket No. M-2016-2542415 (filed on August 31, 2017), at 17.

⁹⁵  See PPL 2017—2019 USECP, Docket No. M-2016-2554787 (filed on June 30, 2016), at 15.

⁹⁶  Customers can apply for these benefits online through the Commonwealth's COMPASS website: https://www.compass.state.pa.us.

⁹⁷  http://www.dhs.pa.gov/cs/groups/webcontent/documents/document/c_279179.pdf.

⁹⁸  See Staff Report Summarizing Public Comments, Feedback and Suggestions Regarding Universal Service and Energy Conservation Programs at 27.

⁹⁹  The USWG included representatives from the EDCs, NGDCs, Pennsylvania Utility Law Project (PULP), CLS, OCA, United Way, DEF, KEEA, and OSBA.

¹⁰⁰  See Appendix C.

¹⁰¹  For example, if a household completes a zero-income form at CAP application and then again at recertification, a utility may request additional information about how living expenses are being paid.

¹⁰²  See Duquesne 2017—2019 USECP at 9.

¹⁰³  See FirstEnergy's 2019—2021 USECP at 16.

¹⁰⁴  See PECO 2016—2018 USECP at 7-8.

¹⁰⁵  See PPL 2017—2019 USECP at 13, 16.

¹⁰⁶  See Columbia 2015—2018 USECP at 23-24.

¹⁰⁷  See NFG 2017—2020 USECP at 16.

¹⁰⁸  See Peoples Natural Gas 2015—2018 USECP at 12.

¹⁰⁹  See PGW 2017—2020 USECP at 17-18.

¹¹⁰  Includes UGI North, UGI South, UGI Central, and UGI Electric. See UGI's 2014—2017 USECP at 19.

¹¹¹  This issue was not addressed in the Energy Affordability proceeding.

¹¹²  Lifeline is a federal program that lowers the monthly cost of phone and internet for low-income eligible customers. https://www.fcc.gov/general/lifeline-program-low-income-consumers.

¹¹³  For example, see FirstEnergy 2017 APPRISE Universal Service Impact Evaluation at 22. http://www.puc.pa.gov/general/pdf/USP_Evaluation-FirstEnergy.pdf. Of customers removed from FirstEnergy CAPs in 2013—2015, 63 0.000000e+00re removed for failing to recertify, and 8 0.000000e+00re removed because their income was too high, on average.

¹¹⁴  Duquesne reports it initiates collections when a CAP customer has a balance exceeding $50 and is overdue by at least seven days. The FirstEnergy utilities initiate collections when a CAP customer has a balance exceeding $100 and the account is six or more days past due—or—when the balance exceeds $25 and the account is greater than 61 days past due. The UGI utilities initiate collections when the CAP balance exceeds the collections threshold (at least $200, subject to seasonal changes) and the account is at least 40 days past due.

¹¹⁵  This issue was not addressed in the Energy Affordability proceeding.

¹¹⁶  52 Pa. Code § 56.113; 52 Pa. Code § 56.353.

¹¹⁷  66 Pa.C.S. § 1406(e); 52 Pa. Code § 56.100; 52 Pa. Code § 56.340.

¹¹⁸  For example, charging customer a PIP or average bill, whichever is less.

¹¹⁹  Peoples 2015—2018 USECP at 10.

¹²⁰  PECO 2016—2018 USECP, Docket No. M-2015-2507139, at 33-34.

¹²¹  FirstEnergy 2019—2021 USECP at 10.

¹²²  See, e.g., 2017 Report on Universal Service Programs & Collections Performance at 51.

¹²³  Duquesne 2017—2019 USECP, Docket No. M-2016-2534323 (order entered on March 23, 2017); see also Statement of Vice Chairman David W. Sweet, Columbia 2019—2021 USECP, Docket No. M-2018-2645401 (order entered on August 8, 2019); and Statement of Commissioner David W. Sweet, PGW 2017—2019 USECP, Docket No. M-2016-2542415 (tentative order entered on January 26, 2017).

¹²⁴  66 Pa.C.S. § 1403 (relating to definitions).

¹²⁵  We are not making a final precedential decision regarding cost recovery in this docket.

¹²⁶  The Competition Acts require EDCs and NGDCs to establish ''an appropriate nonbypassable, competitively neutral cost-recovery mechanism'' which is designed to fully recover the costs of universal service programs. Sections 2203(6) (natural gas) and 2804(9) (electric).

¹²⁷  The LIURP regulations state that program expenses ''shall be allotted among ratepayers.'' Section 58.4(e)(1).

¹²⁸  The CAP Policy Statement recommends program funding come from (1) payments from CAP participants; (2) LIHEAP grants; (3) operations and maintenance expense reductions; and (4) universal service funding mechanisms. Section 69.265(1).

¹²⁹  Customer Assistance Program, Docket No. M-991232 (order entered April 9, 1999). 29 Pa.B. 2495 (May 8, 1999); https://www.pabulletin.com/secure/data/vol29/29-19/753.html. This docket number may also be cited as Docket No. M-00991232.

¹³⁰  ''PGW's cost allocation was determined prior to the Commission's oversight of the [utility]. Dominion Peoples and PG Energy agreed to a cost allocation among more than residential customers through settlement agreements, which did not constitute legal precedent.'' Final CAP Investigatory Order at FN 25.

¹³¹  The Commission has previously allocated the costs of a universal service program to all customer classes. Annual funding for LIURP was initially recovered from all ratepayers. Most utilities now recover LIURP costs from residential ratepayers via a universal service rider.

¹³²  Pa. PUC, et al. v. PPL, Docket Nos. R-00049255, et al. (order entered on December 22, 2004).

¹³³  PJM is the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states, including Pennsylvania, New Jersey, Maryland, and the District of Columbia. https://pjm.com.

¹³⁴  The Industrial Customers further argue that approving cost recovery based on the ''public good'' argument would require the Commission to redefine interclass cost allocation to include ''indirect costs.'' Industrial Customer Comments at 4. Staff notes that a precise definition of ''indirect costs'' was not provided.

¹³⁵  66 Pa.C.S. § 2806.1. Act 129 requires EDCs with more than 100,000 customers to adopt energy efficiency and conservation (EE&C) plans, subject to approval by the Commission, to reduce electric consumption.

¹³⁶  Pa. PUC, et al. v. PPL at 97-98.

¹³⁷  Final CAP Investigatory Order at 31.

¹³⁸  See 2017 Report on Universal Service Programs & Collections Performance at 6, 60, and 73, as adjusted.

¹³⁹  See 2017 Report on Universal Service Programs & Collections Performance at 6, 60, and 73, as adjusted.

¹⁴⁰  Service territories with larger percentages of low-income populations will tend to have higher per capita universal service costs. Philadelphia's higher universal service costs can be attributed in part to the greater number of low-income households in that service territory. However, residential ratepayers across the Commonwealth are charged significant universal service costs annually. For example, in 2017, average combined universal service costs for PPL residential customers that heat with natural gas from UGI South (formerly UGI Gas) were approximately $87 ($7.25 monthly); WPP residential customers that heat with natural gas from Columbia paid approximately $117 ($9.75 monthly); and Duquesne non-CAP residential customers that heat with natural gas from Peoples paid approximately $79 ($6.58 monthly).

¹⁴¹  NGDC universal service spending was $182.4 million in 2006 and $109.6 million in 2017.

¹⁴²  EDC universal service spending was $138.9 million in 2006 and $275.9 million in 2017.

¹⁴³  http://www.puc.pa.gov/pcdocs/1524987.pdf. This docket number is sometimes cited as Docket No. I-900002.

¹⁴⁴  In that 2017 rate case proceeding, PGW argued that all non-residential customers indirectly benefit from universal service programs by keeping low income customers in their homes and allowing them to contribute to Philadelphia's economic activity. PGW contended ''the portion of universal service costs paid by non-residential customers is offset by the substantial positive economic impact in Philadelphia on those non-residential customers created by PGW's universal service programs.'' Pa. PUC, et al. v. PGW at 63.

¹⁴⁵  See, e.g., Act 129 Phase III Implementation Order, Docket No. M-2014-2424864 (June 19, 2015). http://www.puc.state.pa.us/pcdocs/1367313.doc.

¹⁴⁶  See, e.g., 2016 TRC Test Order, Docket No. M-2015-2468992 (order adopted on June 22, 2015). http://www.puc.pa.gov/pcdocs/1367195.docx.

¹⁴⁷  New York, for example, determines the specific distribution of this cost recovery in rate cases, where the total impacts of all revenue requirement changes can be considered. See Order Adopting Low Income Program Modifications and Directing Utility Filings, New York Public Service Commission, Case 14-M-0565 (Issued and Effective May 20, 2016), at 4.

¹⁴⁸  In PGW's 2017 rate case, the Commission noted that recovering universal service costs from all ratepayers does not appear to be a violation of Title 66 or Commission regulations. Pa. PUC, et al. v. PGW at 74.

¹⁴⁹  Some documents use the term ''non-bypassable.''

¹⁵⁰  We are not making a final precedential decision regarding cost recovery in this docket. We are merely providing that the recovery of CAP costs in particular can be fully explored in utility rate cases henceforth. Decisions regarding cost recovery will remain the province of utility-specific proceedings.

¹⁵¹  A rate case is the appropriate forum to determine the cost allocation for each ratepayer class. In its 1992 Report, BCS recommended the cost allocations for CAP across ratepayers should depend on a number of factors, including the amount of CAP funding needed, the relative ability of each class (residential, commercial, and industrial) to bear additional costs, the size (number of customers or volume of sales) of the rate classes, and the price sensitivity of industrial customers to minimize anti-competitive impacts. Final Report on The Investigation of Uncollectible Balances at 158.

¹⁵²  As noted above and in Appendix B, there were numerous stakeholders in Review and Energy Affordability proceedings. In addition to the participating EDCs, NGDCs, EAP, other active participants included statutory advocates, low-income advocates, industrial user groups, CBOs, other agencies, energy marketers, educational institutions, and others. Our appreciation extends to all who participated actively or by observation in those proceedings as well as in the many utility-specific USECPs proceedings over the years.

¹⁵³  We are not making a final precedential decision regarding cost recovery in this docket. Decisions regarding cost recovery will remain the province of utility-specific proceedings.

¹⁵⁴  See 2011—2017 Reports on Universal Service Programs & Collections Performance.

¹⁵⁵  See 2017 Reports on Universal Service Programs & Collections Performance, pages 7-8.

¹⁵⁶  See Home Energy Affordability for Low-Income Customers in Pennsylvania, Docket No. M-2017-2587711, page 108.

¹⁵⁷  See 2017 Reports on Universal Service Programs and Collections Performance, page 73.

¹⁵⁸  The Low-Income Usage Reduction Program, Customer Assistance and Referral Evaluation Services, and Hardship Fund.

¹⁵⁹  See Philadelphia Gas Works, Management Efficiency Investigation Evaluating the Implementation of Selected Recommendations from the 2015 Stratified Management and Operations Audit Report, Docket No. D-2017-262752, page 38.

¹⁶⁰  See Home Energy Affordability for Low-Income Customers in Pennsylvania, Docket No. M-2017-2587711, page 106.

¹⁶¹  The amended, final CAP Policy Statement proposes the following tiered energy burden thresholds: for customers within 0—50436000f the FPIG, the maximum energy burden is 4 0.000000or natural gas heating, 2 0.000000or electric non-heating, and 6 0.000000or electric heating. For customers within 51—100-0x1.ffa0000000000p+1020nd 101—1500f the FPIG, the maximum energy burden is 6 0.000000or natural gas heating, 4 0.000000or electric non-heating, and 10 0.000000or electric heating.

¹⁶²  Released via order entered on January 17, 2019, in Energy Affordability for Low-Income Customers, Docket No. M-2017-2587711; available at http://www.puc.pa.gov/pcdocs/1602386.pdf. See also Review of Universal Service and Energy Conservation Programs, Docket No. M-2017-2596907.

¹⁶³  New York and New Jersey established a maximum energy burden of 6 0.000000or low-income customers.

¹⁶⁴  EAP Comments to PUC Secretarial Letter issued October, 16, 2017, Docket No. M-2017-258771 at 18—20; PGW Comments at 12—15, Exhibit B; OCA Comments at 9—11, Appendix A at 5—7, 49—60.

¹⁶⁵  Order Adopting Low Income Program Modifications and Directing Utility Filings, Case No. 14-M—0565 (Issued by New York Public Service Commission and Effective on May 20, 2016).

¹⁶⁶  Investigation of Uncollectible Balances, Final Report to the Pennsylvania Public Utility Commission, February 1992, pp. 116-117.

¹⁶⁷  OCA Comments to PUC Secretarial Letter issued October 16, 2017, Docket No. M-2017-258771 at 6-7, 20-21, Appendix A at 20—22, 110.

¹⁶⁸  Philadelphia Gas Works and Peoples Natural Gas Company, LLC apply their Universal Service Riders to more than just the residential customer class.

¹⁶⁹  See Lloyd v. Pa. PUC, 904 A.2d 1010, 1019-21 (Pa. Cmwlth. 2006).

¹⁷⁰  66 Pa.C.S. §§ 2203(5), 2804(7).

¹⁷¹  While total gross CAP costs for EDCs has increased by approximately 400between 2001 and 2015, from $63.25 million to $253 million, and total gross CAP costs for NGDCs have increased by approximately 486 0.000000rom 2002 to 2015, from $22.6 million to $110.2 million. During the same timeframe, the number of estimated low-income electric and natural gas customers has increased by 80 0x1.1e88000000014p-1024nd 104respectively. PUC Reports on Universal Service Programs & Collections Performance, Years 2001 through 2015.

¹⁷²  www.pgworks.com/uploads/pdfs/PGW_GAS_SERVICE_TARIFF_THROUGH_SUPP_123.pdf.

¹⁷³  Id. at 81.

¹⁷⁴  Joint Comments of PA Departments of Aging, DCED, DEP, DOH and DHS at 3 submitted to Energy Affordability for Low Income Customers (Affordability Order), Docket No. M-2017-2587711.

¹⁷⁵  Low Income Advocate Comments submitted to Affordability Order, at 52, 55, 59.

¹⁷⁶  United Way of Pennsylvania, Asset Limited Income Constrained Employed (ALICE) in Pennsylvania: A Financial Hardship Study 2019. www.uwp.org/ALICE.

¹⁷⁷  ''This body of research provides a framework, language, and tools to measure and understand the struggles of a population called ALICE—an acronym for Asset Limited, Income Constrained, Employed.'' Id. at iii.

¹⁷⁸  Ibid.

¹⁷⁹  Id. at 25.

¹⁸⁰  Id. at 3.

¹⁸¹  52 Pa. Code §§ 69.261—69.267.

¹⁸²  Review of Energy Universal Service and Energy Conservation Programs, Docket No. M-2017-2596907 (Order entered May 10, 2017).

¹⁸³  Office of Consumer Advocate Comments to Opinion and Order, Review of Universal Service and Energy Conservation Programs, Docket No. M-2017-2596907, Appendix B.

¹⁸⁴ Energy Association of Pennsylvania Comments to Opinion and Order, Energy Affordability for Low-Income Customers, Docket No. M-2017-2587711, p. 4.

¹⁸⁵  Bureau of Consumer Services 2017 Universal Service and Collections Report, p. 73, App. 5.

¹⁸⁶  OCA Comments to Opinion and Order, Energy Affordability for Low-Income Customers, Docket No. M-2017-2587711, pp. 4-5.

¹⁸⁷  Bureau of Consumer Services 2017 Universal Service and Collections Report, pp. 7—9.

¹⁸⁸  Now pending before the Commission is a Petition for Reconsideration on an issue that the Commission is adopting a final policy position on without the benefit of public comment. See Columbia Gas of Pennsylvania, Inc. Universal Service and Energy Conservation Plan for 2019-2021, Docket No. M-2018-2645401.

¹⁸⁹  Office of Consumer Advocate Reply Comments to Opinion and Order, Review of Universal Service and Energy Conservation Programs, Docket No. M-2017-2596907, p. 25-26.

¹⁹⁰  OCA Comments to Opinion and Order, Energy Affordability for Low-Income Customers, Docket No. M-2017-2587711, pp. 15-16.

¹⁹¹  66 Pa.C.S. §§ 2203(8) and 2804(9).

¹⁹²  The Chapter 14 definition of household income is still being refined through practice and case precedent. If there is a need for a standard definition of household income, it may be more prudent to adopt LIHEAP's carefully crafted definition of income, which would also further align these energy assistance programs.

¹⁹³  66 Pa.C.S. §§ 1301, 1304.

¹⁹⁴  66 Pa.C.S. §§ 2203(8) and 2804(9).

¹⁹⁵  66 Pa.C.S. §§ 2202, 2803.

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