James Crawford: Low Income Advisory Board Alternatives

Low Income Advisory Board Alternatives

By James Crawford October 12, 2012

After two meetings of the Low Income Advisory Board, I think it suffers from the same malady common to many similar groups. We have not done a good job of identifying and articulating the problem.

We started with an assumption that the problem was Section 62-8-6 the non-discrimination clause and that making a few subtle wording changes would allow the utilities to request programs and/or rate schedules specific to a new low income class of rate payers. In other words it would allow for discriminatory rates based on income levels.

Nearly all participants were uncomfortable with that as the problem definition or the needed fix. The utility representatives characterized the problem as one of delinquent payments and felt that the best fix would be to provide a way for the utilities to be able to negotiate settlements with past due account holders so that past due accounts did not become total losses. We spent a lot of time discussing scenarios of how to accomplish that goal.

However, on Thursday (10-11-12) Jim Williamson from PRC sent out a note that throws all the solutions we have discussed so far into a cocked hat. Jim sent us language from 62-8-5 that bars any kind of negotiated settlements.

We then have to conclude that neither discriminatory rates nor negotiated settlements are a solution.

After participating in the last two meetings, my perception is that the problem is related to the unintended consequences from the November 15 to March 15 disconnect moratorium. The disconnect moratorium was intended to keep the utilities from disconnecting customers for non-payment during the winter when lives might be in danger from the cold.

I am sure the intent was for customers to continue to pay what they normally were paying but would be able to defer weather related spikes in their bills spreading payment through the summer. However, one unintended consequence has been that customers, with encouragement from some consumer advocate groups, have interpreted the moratorium as a payment moratorium rather than a disconnect moratorium. After March 15, the total past due amounts come due, compounding further the indigent customer’s ability to pay. All the moratorium really accomplishes is to defer disconnects for a few months. Utility company defaults are increased because of the moratorium.

Another unintended consequence is that it does not do anything for customers in the southern part of the state where utility bills spike in the summer instead of the winter. So we also have geographic discrimination.

The problem presented by the Legislature in HJM13 was how to help indigent customers with utility bills. New Mexico already has a perfectly good program (the Low Income Home Energy Assistance Program, LIHEAP) to do just that. However, every time LIHEAP comes up, the lack of funding is mentioned. The logical thing seems to look at how to fund LIHEAP rather than fooling with the discrimination and negotiation clauses.

I have the following suggestions as possible alternatives:

A: Repeal the moratorium and add a percentage to GRT that goes to fund LIHEAP. Indigent customers can get the help needed to bridge the gap between what they can afford to pay and their total obligation. The rest of us know how much we are paying and for what purpose. All consumers have skin in the game. Utility bills are paid in full and there is no need for discriminatory rates or negotiated settlements. Out of state consumers would also be paying. People subject to tax pyramiding would be paying multiple times. Some people would be paying to cover defaults in a utility that they do not use.

B: Repeal the moratorium and give the utilities the ability to attach a LIHEAP rider to each bill based on experienced non-payment levels. Funds would go to LIHEAP to again bridge the gap between what indigent folks and pay and what they are charged. This would eliminate the seasonal and geographic problem we have now. The rate payers would be able to see how much they are paying and the amount would vary based on experienced payment levels rather than being forever fixed like a tax. Again all customers have an equal amount of skin in the game. Customers of a given utility are only paying to cover defaults within that company. Again utility bills are paid in full and there is no need for discriminatory rates or negotiated settlements. We already have a precedent for this kind of rider with the green energy rider.

English: Jesse Jackson at LIHEAP

English: Jesse Jackson at LIHEAP (Photo credit: Wikipedia) — What Has Happened To Jackson Jr.?

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