By Steve Haner
Four years after approval, a state program to provide lower electricity costs to low income families is still struggling to get going. Administrative costs have far exceeded any actual benefits to utility customers to date.
It is called the Percentage of Income Payment Program (PIPP) and was created by the 2020 General Assembly as part of the Virginia Clean Economy Act. Almost three years ago, both Appalachian Power Company and Dominion Energy Virginia received permission to charge extra on their customer monthly bills to fund it.
Both companies have now filed updates with the State Corporation Commission and are seeking to adjust the amount they collect from general customers. Dominion, which had enrolled 8,600 PIPP beneficiary accounts as of late March, is seeking to eliminate its monthly charge for a while. Appalachian, which still had zero customers enrolled by the time of its report, has applied to raise its surcharge.
Both are relatively tiny amounts so far. Just how large and how expensive the program might become over time remains anybody’s guess, but as utility costs grow so will the total amount of subsidies and surcharges. The intention is to limit a poor family’s electric bill to 10 percent of income if they use electricity for heat, and 6 percent if they use some other heating source.
So, another cost driver for the long term will be the continued push from government to eliminate the use of anything but electricity for heat. Natural gas and heating oil are squarely in the crosshairs of the Biden Administration and others who accept the climate catastrophe narrative and blame it on carbon-based fuels.
It is also important to remember that residential customers who qualify for PIPP will eventually be exempt from paying any of the construction and financing costs of Dominion’s growing offshore wind empire. That will be another way for all the Dominion customers not part of PIPP to subsidize those who are.
The SCC set things up to start enrolling people in PIPP in late 2023, but Dominion reports it didn’t sign up anybody until late January of this year. The approvals are actually screened by the Department of Social Services, which also has its costs paid out of the pot of money the utilities collect. The new state budget just approved raised the allowed overhead charge for the bureaucrats to $5.5 million annually from the initial $3 million.
Dominion reported that as of March 31 it has provided $807,000 in subsidies to those customers, most of whom did use electricity for heat. So, that was for just two months, and not all were enrolled the whole time. The average subsidy was $170, partly to reduce their current bills and partly to retire any unpaid prior bills on their accounts. (Yes, that is yet another way general customers subsidize the PIPP households, by retiring their overdue bills.)
During the initial period Dominion also collected $541,000 for its internal administrative costs. For the new rate-year starting November 2024 it projects $1.5 million in administrative costs.
Dominion’s initial surcharge to customers, another of those ubiquitous “riders” listed separately on monthly bills, is just 73 cents per 1,000 kilowatt hours used. The rate is the same for all classes of customer. An unspent balance has accumulated, so Dominion now proposes to reduce the surcharge to zero. It also reserves the right to come back to the SCC before the end of the next rate period if costs accelerate and deplete that balance.
Appalachian started its bill charge very small, about 4 cents on that same 1,000 kwh. It now proposes to raise it to $1.32 effective June 1 and raise about $20 million per year. It is projecting that 30,000 of its customers will eventually qualify, about two-thirds of them using electric heat, with an annual benefit cost of $13.5 million.
Appalachian also notes there remains confusion over whether in order to collect PIPP, the customer needs to participate in an energy efficiency program. An SCC order in 2020 considered that to be a precursor, but the state DSS guidelines do not. It asks the SCC for clarification.
The annual reporting requirements ask the utilities to report how many of the PIPP households are being or have been served by a program to reduce energy usage, and just how much energy has been saved. Both reported that too little data exists yet to say.
In its report, Dominion said about 1,000 of its first 8,600 enrollees had participated in a company-sponsored energy demand reduction program, and another 300 lived in properties where previous owners or tenants had done so.
To recap, this rate subsidy for the poor was approved four years ago now, and almost three years ago the SCC authorized the two companies to start charging all of their customers (including the poor, of course) to build this fund. But through the end of this first report cycle, most of the money spent went to government or company overhead expenses.
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