Proposed Low-income Electric Rate Could Raise Costs for Some of Connecticut’s Poorest Customers

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Advocates for low-income electric customers say a proposed discount rate could end up costing some of the state’s poorest residents more on their electric bills.

The Public Utilities Regulatory Authority is proposing a discounted rate for low-income electric customers, but the proposal would also end the Below Budget Payment program, which caps monthly payments at $50 for about 5,700 of the state’s poorest electric customers.

PURA’s proposed rate would instead offer a 10 percent discount on the monthly bills of customers earning less than 60 percent of the state median income (about $76,000 for a four-person household), and a 45 percent discount for the poorest customers who are eligible for benefit programs including Medicaid, Supplemental Nutrition Assistance Program (SNAP) and Supplemental Security Income (SSI).

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Bonnie Roswig, attorney with the Center for Children’s Advocacy, said that the concept of a low-income discount rate that aims to keep poor customers’ bills in an affordable range could address some of the long-running issues stemming from high energy bills in Connecticut.

“If a bill is unaffordable based on the reality of an individual’s household income, there’s always going to be the challenges around low-income customers not being able to pay, having their service terminated, and all the health implications and societal implications that come with that,” Roswig said.

The key is making a rate that is actually affordable for people, she said.

In its draft decision, PURA said the discounts were intended to reduce electric bills to below six percent of a customer’s household income – a threshold used in other state programs to define what is an “affordable” energy bill.

But it’s not clear that a standard discount for all customers below a certain income threshold will reduce every bill to below the six percent threshold, given the wide range of incomes affected, said Roswig. 

“That income range varies, and so do monthly bills, so the question becomes: Are those two rate levels really going to make monthly bills affordable?” Roswig said.

The question is especially acute for people in the Below Budget Payment plan – available to customers who have electric heat and receive SSI – whose bills are now capped at $50. 

About 5,700 customers were enrolled in that program as of June, Roswig said, but PURA’s decision directs Eversource and United Illuminating to end before the 2023 heating season.

PURA’s Office of Education, Outreach and Enforcement said that the program creates an incentive for customers receiving government assistance to miss payments on purpose so they can create an arrearage and be placed in the Below Budget Payment program with a lower monthly bill. 

Customers would have the same incentive to avoid signing up for the new discounted low-income rate if they would pay less under the Below Budget Payment program, the office said. 

Eversource argued that it would be confusing to customers and difficult to implement the low-income rate if the Below Budget Payment program was still in place. 

Because they are on SSI, those customers would qualify for the 45 percent discount, which sets a target bill in the range of $93 to $140 a month – or 4 to 6 percent of the income of someone earning 160 percent of the federal poverty guideline [$42,400 for a four-person household]. 

That could double or nearly triple the monthly bill of someone on the Below Budget program, Roswig said. And how much the new discount rate helps other customers depends largely on how much energy they use, something low-income renters might have less control over, she said.

Gannon Long, policy and public affairs director for Operation Fuel, a nonprofit that provides heating assistance, said she was also concerned that ending the Below Budget Program would leave those customers with higher bills. She said she did not agree that customers would be incentivized to miss payments and put themselves at risk to qualify for the program.

“The idea that you’re setting up bad incentives, I just don’t know how many people are going to say, ‘Oh let me put myself at risk of being shut off every month just so I can get this thing that I probably have never even heard of in the first place,’” Long said.

The low-income discount rate was a key piece of the “Take Back Our Grid Act” state lawmakers passed in the wake of the damaging Tropical Storm Isaias in 2020, and PURA has been investigating how to develop a new set of rates that will reduce the burden on electric customers who can’t afford to pay their bills.

While there are assistance programs to help customers pay their arrearages, the low-income rate is meant to help customer pay before they rack up any overdue bills, PURA said in its draft decision – leaving fewer people at risk of having their service shut off, and resulting in a lower amount of unpaid bills that other ratepayers must cover.

But Long said that it’s not clear the low-income rate will actually help all customers with low-incomes, especially those on fixed incomes.

“If your bill is $100 – which, depending on where you live, it’s probably more than that – you’re going to see an increase in your costs,” Long said. “And this is the lowest-income, most vulnerable ratepayers that we’re talking about, so we can’t assume they can just absorb that, or that they’re getting that much more income, or their other costs are going down that much.”

PURA is expected to issue a final decision later this month. The draft decision calls for Eversource and United Illuminating to establish the new rates by Nov. 1, 2023. But Eversource said it would take 16 months after a final decision to implement – which would be around February 2024 – and United Illuminating said it would take 11 months after it brings on a contractor to work on the project.