James Crawford: Notes Socialized Utility Rate Meeting, 10-10-12

Notes Socialized Utility Rate Meeting, 10-10-12By James Crawford

We attended the working group meeting for socialized utility rates the afternoon of 10-10-12. We had a couple hours of spirited discussion but ended up about where we started with not much resolved.

We had another discussion of the nondiscrimination clause which I discussed in my notes from last meeting. The section under discussion and the suggested changes follow:

NMSA 1978 62-8-62 Discrimination

No public utility shall, as to rates or services, make or grant any unreasonable preference or advantage to any corporation or person within any classification or subject any corporation or person within any classification to any unreasonable prejudice or disadvantage. No public utility shall establish or maintain any unreasonable differences as to rates of service either as between localities or as between classes of service. Nothing shall prohibit, however, the commission from approving economic development rates and rates designed to retain load or from approving energy efficiency programs designed to reduce the burden of energy costs on low-income customers pursuant to the Efficient Use of Energy Act.” (Highlighted material to be removed)

At this meeting we had a suggestion from personal communication between Carmela and Steven Michel of WRA and NEE fame for another version. Michel’s version changed the last line above to read. “Nothing shall prohibit, however, the commission from approving economic development rates and rates designed to retain load or from approving programs or rates designed to reduce the burden of energy costs on low-income customers including but not limited to, energy efficiency programs pursuant to the Efficient Use of Energy Act.”

The room quickly rejected the notion of adding “or rates” to the language. Utility representatives suggested the following change to the wording of the last line. “Nothing shall prohibit, however, the commission from approving economic development rates and rates designed to retain load or from approving low income programsas proposed by the utilities designed to reduce the burden of energy costs on low-income customersincluding but not limited to, energy efficiency programs pursuant to the Efficient Use of Energy Act.”

The utilities all seemed dead set against establishing a separate rate class for low income customers. Their main concern was the amount of default or past due accounts that was outstanding. They were most interested in establishing some way to negotiate settlements with delinquent account holders to reduce the total amount of bad debt to be written off. However in all the discussion there did not seem to be a clear cut path to allow them to do that. They were hoping that it could be a “program proposed by the utility” as laid out in the last version of the discrimination clause described above.

Nothing was really agreed to and most of the utilities were unwilling to commit to any idea without more study and legal analysis. NM Gas Company seemed to be the only one willing to offer suggestions.

The meeting was supposed to concentrate on discussion of the disconnect moratorium. We did have some discussion at the end but not in great detail. In my opinion, the disconnect moratorium and its unintended consequences is the root of the problem. However, that has not been clearly defined by the group.

A big share of the past due and delinquent payment problem is because of the disconnect moratorium. It is a moratorium against disconnecting a customer for nonpayment between November 15 and March 15. I think the intent was that customers would continue to pay as much as they could when bills spiked in the winter but could spread the difference out over the summer. However, many customers, with the encouragement of some consumer advocate groups, have viewed it as a payment moratorium instead of a disconnect moratorium and people are paying nothing during the moratorium period. The total past due bill has to be paid off after March 15 and must be paid before November 15 to again qualify for another moratorium season. That makes the utility bill burden even greater for indigent customers and leads to increased total defaults and merely defers disconnects for a few months.

We also heard that the moratorium is of no value in the southern part of the state where utility bills spike more in summer than winter. Default is greater in summer there.

The moratorium statute is found at NMSA 27-6-18 and reads as follows:

A: Except as provided in Subsection C of this section, unless requested by the customer, no utility shall discontinue or disconnect service to a residential customer during the heating season for nonpayment of the customer’s utility bill if the customer meets the qualifications to receive assistance pursuant to the low-income home energy assistance program from the administering authority during the program’s current heating season.

B. The utility shall make payment plan options available to the customer pursuant to rules adopted by the public regulation commission.

C. If the customer does not pay the past due charges from the customer’s utility bill before the beginning of the next heating season, the customer shall not be eligible for protection from discontinued or disconnected utility service pursuant to this section during the next heating season until the past due charges are paid in full.

NM Gas Company proposed the following change to part C.

Proposed C. If the customer does not pay the past due charges from the customer’s utility bill before the beginning of the next heating season and fails to make a minimum payment of $25.00 for current monthly charges during that heating season, the customer shall not be eligible for protection from discontinued or disconnected utility service pursuant to this section during the next heating season until the past due or minimum monthly charges are paid in full.

The idea is for the customer to at least pay some minimum amount after satisfying the past due amount from the last heating season so that the moratorium is not a total payment moratorium. There was a lot of discussion about whether the minimum payment should be a set amount like the sample $25 or a percentage of a normal monthly bill. I don’t think there was any resolution on this but the other utilities were going to take it back home for more study and analysis. I had to point out that “or” in the last line is the wrong word. If I was an indigent customer, I would choose the minimum payment and let the past due bill go. They all agreed that it should say “until the past due AND minimum monthly charges are paid in full”.

About this point we were done with the meeting and agreed to meet again on October 23 with promises by the utilities to have their study and analysis done and be prepared to finalize a proposal. We were still seriously thinking about how to work in ability to negotiate settlements with folks with past due accounts.

On Thursday, the day after our meeting, Jim Williamson of PRC sent out a note that sent all we had been talking about back to the drawing board. He cited a statute that clearly prohibits any kind of negotiated settlements. The language follows:

NMSA 62-8-5. Adherence to schedules. 

No public utility shall directly or indirectly, by any device whatsoever, or in anywise, charge, demand, collect or receive from any person a greater or less compensation for any service rendered or to be rendered by such public utility than that prescribed in the schedules of such public utility applicable thereto then filed in the manner provided in this act, nor shall any person receive or accept any service from a public utility for a compensation greater or less than that prescribed in such schedules. 

So it appears that neither discriminatory rates nor negotiated settlements are very good options for dealing with indigent utility bills.

In thinking about it, I opined that we have not adequately defined the problem. I tried to do that and offered some suggestions as a starting point for a solution which I sent to the members of the working group. My paper on that is attached as well.