Pascoag Utility District’s General Manager, Mike Kirkwood, testified before the R.I. Senate Corporations Committee on Tuesday evening, April 12, to bring the views of PUD management before the Senate regarding an important issue that could impact customer electric rates. This issue is working its way through both Senate and House committees in the Rhode Island legislature (S 412 and H 5437), and is generically known as the Percentage of Income Payment Plan, or P.I.P.P., legislation.
PUD management, for the reasons described below, is against this legislation in its current form, but we made clear to the Senate committee that we are very empathetic to the root issue, which is the increasing difficulty of low income customers throughout the state to be able to pay their natural gas and electric bills.
The Senate and House, through the two proposed bills, would set up a system where a Universal Service Fund would be established through an additional charge in rates to all customers for the purpose of providing up to $150 per month in electric and natural gas subsidies to low income customers based on income level.
The issues that we at PUD have with this mechanism, which amounts to an increase in rates to all of our electric customers, are the following:
PUD, unlike many other utility providers in the state, is a public company that is owned by its customers. PUD does not make a rate of return and does not have a typical “bottom line” of earnings. All of PUDS costs are passed directly through to its customers, and so any increase in rates from a program like this is a directly added burden to all the folks in our service territory who work hard every day to make ends meet.
Being a not-for-profit entity means PUD works extremely hard to control costs and bring the best service to its customers that it can under the lowest possible rates. So we are already working hard to make our rates as affordable as possible to all classes of customers, including our low income customers.
PUD works closely with its customers who are experiencing difficulty with payments. The benefit of being a small public company means we have dedicated employees who live and work in this community, and we represent our customers who have a vested share in our company as owners. We provide personal face to face contact with those customers in financial duress and strive to work out payment plans that allow people to get back on their feet again with dignity and respect. This is a benefit to all of our customers through the lowest possible write-offs of unpaid debts, and therefore helps in keeping rates low.
We are very concerned that burdening our customers with additional costs through this surcharge would further exacerbate this societal problem by pushing many of our customers who are near the precipice themselves, over the edge. We have many customers who are likely experiencing difficulty paying their bills, but strive to do so. Adding an extra burden to these folks through a utility surcharge seems like the wrong solution to this societal problem, and may cause many of them to be pushed into a default situation.
PUD is concerned that a mandated additional charge through P.I.P.P. would hinder the fund raising efforts of many important programs such as the Good Neighbor Energy Fund. These programs are already working extremely hard to tackle this very issue.
The Senate committee hearing was well attended, and the proponents of the Senate and House bills did a very effective job at describing the hardships of folks who are financially decimated. We at PUD feel that pain deeply, but believe the legislation in S 412 and H 5437 in its current form is the wrong solution to this problem.
The Chairman of the Senate Corporations Committee, Senator Miller, is a very honorable man who opened the committee meeting by stating more work needs to be done on S 412 before it is brought to a vote based on the controversial issues in this bill. He is establishing a special committee of legislators and constituents to participate in this effort before a revised bill is brought to a vote, and I am proud to say that PUD management was invited to be on this committee, and that we will actively participate.
At its base human level, this is an issue that affects us all deeply. A solution is not easy, but caring folks will always try to find the best path forward.