Overview of Low-Income Restructuring
Legislation and Implementation

New York
Last Updated: December 2007

New York is different from other restructured states in that the New York Public Service Commission (PSC) rather than the state legislature has spearheaded and directed the restructuring process. It is also different in that the PSC has created a broad-based, multi-utility system benefits fund for energy efficiency, including low-income programs, but rate assistance programs have been designed and implemented on a utility-by-utility basis as part of individual utility restructuring or rate case settlements.

The PSC has stated its support for universal service and for adequate funding of low-income affordability programs, but it has largely left it up to individual utilities to set program design and funding levels. As of 2007, restructuring plans and merger or rate case settlements filed by the major electric and gas companies include nearly $40 million annually for low-income rate assistance programs – mostly consisting of discounts off the basic monthly service charge – funded through utility rates and administered by the utilities. Some of these programs offer arrearage forgiveness and case management as well.

Since 1998 most low-income energy efficiency programs have been funded through a systems benefits charge (SBC) on electricity bills and administered by the New York State Energy Research and Development Authority (NYSERDA).

The SBC program, known as New York Energy $mart^SM, provides efficiency programs for all customer classes, including low-income renters and homeowners. The SBC program was created to ensure that certain public benefit energy efficiency and energy research programs were adequately maintained during the state's transition toward a more competitive electric market.

On December 14, 2005, the PSC approved a five-year extension of the SBC and increased the program's annual funding from $150 million to $175 million. The decision committed $875 million for energy efficiency and research between July, 2006 and June, 2011. Annual funding for low-income programs was increased by $11 million per year, the PSC ruled, noting that the state's low-income and elderly populations are disproportionately impacted by higher commodity prices.

The SBC began in February 1998 with an order by the PSC to allow the SBC for public purpose programs, including low-income energy efficiency. The SBC was in place for an initial period of three years beginning July 1, 1998, with annual funding of about $78 million, averaging $14 million yearly for low-income programs.

On January 26, 2001, the PSC approved the continuation and expansion of the SBC for an additional five years through June of 2006. Yearly funding rose to between $125 to $150 million and averaged $25 million per year for low-income initiatives.

Initially, the program included these five utilities: Central Hudson Gas and Electric Corporation, Consolidated Edison Company of New York, Inc., New York State Electric and Gas Corporation (NYSEG), National Grid (formerly Niagara Mohawk Power Corporation), and Orange and Rockland Utilities. The second round of funding added Rochester Gas and Electric. Outside the SBC, the Long Island Power Authority and the New York Power Authority administer their own energy efficiency programs.

The investor-owned electric utilities collect the SBC revenues from customers, retain a portion of the revenues to fund certain utility-administered, unexpired public-benefit programs that predated the SBC program, and transfer the remainder to NYSERDA, which was chosen by the PSC in 1998 as the third party administrator. NYSERDA's multi-year operations plans, evaluations and other program materials are available on its website, including its plan for the latest round of funding, from July, 2006, through June, 2011.

Low-income program components offered under the initial round of SBC funding included the Direct Installation Program, the Publicly Assisted Housing Program (PAHP), and Low-Income Aggregation. Under the $8.5 million Direct Installation program, electric efficiency measures were installed in 10,235 housing units, mostly in the Consolidated Edison/ New York City area, reducing annual electric bills by about $299 per unit and saving about $6 million per year. Under the PAHP, energy audits and financial packaging were completed for 10,220 units at a cost of $13.3 million, for annual customer savings of $520.

NYSERDA's plan for the second round of funding coincided with an important change in the Weatherization Assistance Program (WAP) that allowed the federal program, for the first time, to fund electric efficiency improvements. As a result, NYSERDA shifted its focus from supplementing weatherization efforts, as it had done under the Direct Installation program, to serving households with incomes between 60 percent and 80 percent of the state median income, the so-called working poor. NYSERDA considered this population to be under-served by other public and private statewide energy efficiency programs.

The major low-income program components funded from mid-2002 through June 2006 were:

Assisted Home Performance with ENERGY STAR®
This component targeted 1-4 family residences of lower-income households between 60 and 80 percent of state median income that weren't eligible for assistance through the WAP. Energy efficiency services included energy audits, financing, and installing energy efficiency measures. These households were also eligible for low-interest loans or project subsidies. Services were provided to over 1,400 lower-income households per year, at a total cost of $16 million.

Weatherization Network Initiative
This component allowed cost-effective electric-reduction measures and other energy-related building improvement efforts in 1-4 family homes that were previously weatherized but didn't receive electric measures because they were not allowed at the time under weatherization guidelines. Delivered in conjunction with the state's WAP network, the program's electric measures included energy-efficient lighting, appliances, strategies to reduce the use of electric-resistance space and water heating, and demand management opportunities that address utility summer system peak constraints. About 4,000 households were served annually at a total cost of $5.5 million.

EmPower New York
Starting in 2004, and initially available to LIHEAP-eligible customers of NYSEG and Niagara Mohawk/ National Grid, EmPower New York provides cost-effective electric reduction measures, particularly lighting and refrigerator replacements, as well as insulation and health and safety measures. On-site energy use education provides customers with additional strategies for managing their energy costs. It is now available to customers of Central Hudson, Consolidated Edison, Orange and Rockland and Rochester Gas and Electric; its budget is about $10 million annually through 2010. In 2007, it was expanded to provide natural gas efficiency services to low-income National Grid customers with non-SBC funds.

Assisted Multifamily Program (AMP)
This program provided technical assistance, training, and financial incentives to encourage the incorporation of energy-efficient design and the selection and installation of energy-efficient equipment in the state's public and publicly-assisted housing. Building upon the Direct Installation Program and the PAHP, it aimed to serve up to 80,000 apartment units at a cost of $68.4 million. The Department of Housing and Community Renewal, the WAP grantee, worked closely with NYSERDA to ensure that AMP and WAP activities are coordinated to ensure maximum benefit.

The Low-Income Aggregation Program
This component was designed to fund a variety of aggregation strategies designed to use the untapped market power of aggregated low-income energy buyers to secure lower prices for electricity, natural gas, fuel oil, and propane. It also proposed to provide energy efficiency services such as a summer fill and tune-up program for low-income fuel oil customers, along with budget counseling and energy management education.

The latest evaluation of Energy $mart ^SM, finalized in May 2005, noted the following about the low-income program initiatives:

• They accounted for 13.4 percent of the total 8-year (1998-2006) budget, or $128.4 million.
  
  
• The Assisted Multifamily Program aimed to increase awareness and understanding of energy efficiency among owners of low-income multifamily buildings. As of year-end 2004, nearly 7 percent of eligible low-income multifamily housing units were participating in the program.
  
  
• The Low-Income Direct Installation Program, administered between 1998 and 2002, installed efficiency measures in 10,236 low-income homes, with a net annual energy savings of 11,500 MWh.
  
  
• The Weatherization Network Initiative (WNI), which provided electric efficiency measures to households up to 60 percent of SMI serviced 1,426 units of low-income housing with electric reduction measures, saving 1,423 kWh per unit at an average cost of $686 per unit. Overall, the program saved 2,030 MWh per year.

In its plan for the 2006-2011 SBC funding, NYSERDA said it would merge the WNI and EmPower New York to simplify program structure and provide more comprehensive services. It also planned to consolidate and streamline multi-family energy efficiency programs for low-income and moderate income households. Annual funding for EmPower New York was set at about $10 million annually with a goal of serving 6,300 households each year.

NYSERDA also continued a partnership with the LIHEAP grantee, the New York State Office of Temporary & Disability Assistance (OTDA) to increase the buying power of LIHEAP funds. Through this partnership, NYSERDA provides technical and implementation support to assist OTDA in the HEAP Heating Oil Buying Component, which began in FY 2004 in five counties and began operating statewide at the beginning of FY 2008. OTDA estimated that 40 percent of low-income households in New York use bulk fuels such as heating oil or kerosene, and approximately $60 million of the state's LIHEAP grant is spent annually on these fuels. The program negotiates with vendors for lower prices for these fuels in order to leverage the LIHEAP funds.

At the end of the 2006-07 heating season, NYSERDA estimated that the program had produced savings averaging 13 cents per gallon for LIHEAP households. After the program has been implemented statewide, the LIHEAP program's oil buying power will be increased by approximately $6 million a year, according to NYSERDA.

More information is available on the program's home page and in NYSERDA's 2003 RFP requesting a program implementor.

In January 2005, the PSC solicited comments in Case 05-M-0090 on whether the SBC program should be continued beyond 2006, and if so, whether it should be modified or expanded in scope. Most of the responses supported renewal of the SBC program, along with increased funding and a longer-term commitment to the program. Among other issues, the PSC also sought input on whether the scope of the SBC program should be expanded to include programs for natural gas customers. The current SBC funds programs for electricity customers only. The PSC is examining that issue in a separate proceeding.

History

An exhaustive state-level review of low-income energy programs that went through a collaborative process, followed by two administrative law judges' recommendations on the matter, and a PSC policy statement, has resulted in little change to the structure of New York's non-SBC low-income energy programs. In March 2000, the PSC opened the collaborative proceeding (Case00-M-0504) to address issues still outstanding in the process of moving New York to a fully competitive market and to identify and remove obstacles to its achievement.

The collaborative, consisting of about 50 representatives of utilities, energy service companies, governmental entities and consumer advocacy groups, reviewed low-income programs and attempted to reach a consensus on program design during the transition to competition as well as once competition had arrived. In July 2001, two Administrative Law Judges assigned to the issue reviewed the collaborative's work and issued a recommended decision (RD), which the PSC did not act upon until January 27, 2004, when it issued a Notice Seeking Comments, essentially reopening the issue for further comment from interested parties.

The Commission's most recent statement in Case 00-M-0504 (which is continuing) was issued in August 2004. The PSC declined to implement any specific programmatic recommendations made by the collaborative or the administrative law judges, except to support low-income aggregation. While stating that it would not make any sweeping policy pronouncements on low-income energy programs, the PSC added, “It is enough to reaffirm that low-income programs require adequate funding and that we must continually reassess the sources of that funding.”

The PSC directed its staff to work with utilities and interested parties to explore additional opportunities for low-income aggregation programs and pledged to continue “to monitor market developments as they may impact the access to reliable energy services by customers facing financial difficulties.”

The legislature's involvement in utility restructuring has been limited, except for its passage of legislation to change how residential consumers would be treated by unregulated gas and electric suppliers, also known as energy service companies (ESCOs) or marketers. In June of 2002, the legislature unanimously passed the Energy Consumer Protection Act (ECPA) of 2002, which extends to ESCO customers those consumer protections available to regulated utility customers under existing legislation, the Home Energy Fair Practices Act or HEFPA. Considered the New York utility consumer's bill of rights, HEFPA had been in existence since 1981, but the PSC had ruled in 1996 that ESCOs did not have to comply with it. On December 20, 2002, the ECPA was signed into law.

According to the Public Utility Law Project, which supported the ECPA, along with the AARP, other consumer groups and a coalition of marketers, it does the following:

Under ECPA, all of the protections defined by HEFPA are made applicable to the transactions between the competitive suppliers and residential consumers. With respect to the commencement and continuation of service, these include rules with respect to deposits, budget billing, estimated bills, plain language bills, third-party notices, deferred payment agreements and other protections found in HEFPA for households experiencing medical emergencies, for households with elderly, blind or disabled customers, and for households that might experience a loss of service in a cold weather season. Finally, this bill allows the residential customer taking service from a competitive supplier who has a billing or service dispute with that supplier under HEFPA to take that complaint for hearing and written determination to the Public Service Commission.

For more information:

NYPSC information page on the SBC: includes history, opinions, rulings, comments by interested parties, etc.

New York Energy $mart SM Program, Evaluation and Status Report (all reports)

Case 00-M-0504: includes all files from Proceeding on Motion of the Commission Regarding Provider of Last Resort Responsibilities, the Role of Utilities in Competitive Energy Markets, and Fostering the Development of Retail Competitive Opportunities

Case 00-M-0504: Recommended Decision By Administrative Law Judges Jeffrey E. Stockholm And Joel A. Linsider, And Michael Corso, Chief Of Residential Advocacy (full decision)

Case 00-M-0504: Recommended Decision (summary regarding low income programs and universal service)

03-M-0117: Implementation of Chapter 686 of the Laws of 2002, Memorandum and Resolution Adopting Amendments to 16 NYCRR Parts 11 and 12. 1

CASE 99-M-0631 - In the Matter of Customer Billing Arrangements, Order on Petitions for Rehearing and Clarification.

The Public Utility Law Project has consumer-oriented information on its website.

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Page Last Updated: May 21, 2008