The Public Utilities Commission of Ohio rejected a plea from consumer advocates this week to adjust a program meant to help low-income utility customers.
The low-income users in the Percentage of Income Payment Plan (PIPP) program are on the hook for higher rates than standard users, which means all users will pay more to utility companies in the long run to make up the difference.
The Ohio Consumers’ Counsel (OCC) asked the PUCO to intervene and prevent low-income participants in the program from paying higher rates for electricity and therefore the rider that funds the PIPP program. The Universal Service Fund (USF) rider is charged to customers based on the rate they pay for electricity.
The PUCO turned down the plea in their meeting Wednesday.
"We believe that the electric PIPP program affords low-income customers a means to maintain their service and balances the interest of all electric utility customers who pay the USF in compliance with applicable law," the commission's decision states.
The commission found that the rates charged to those customers, while higher, came about in valid auctions using methods within state law.
While the format may "occasionally result" in higher prices than the standard price, the auctions were established to reduce the cost of the PIPP rate, compared to the standard rate, "over the long-term," the decision states.
The commission said they found the arguments without merit, but also found OCC’s opposition to the rate methodology for the PIPP program would have been more appropriately raised in a different type of proceeding.
Merrilee Embs, a spokesperson for the Ohio Consumers’ Counsel, said the organization is "grateful that for decades the state has offered a program to protect at-risk Ohioans from disconnection of their gas and electric utility services" because "utility services are always needed and especially needed to protect the health of Ohio families in the state’s cold winters."
"Unfortunately, this year there is a problem where low-income consumers could be billed more for electricity than what many non-low-income consumers are being billed by the utilities. We and others have asked the PUCO and the Department of Development for this problem to be fixed and we are disappointed that the problem continues for people,” Embs said.
The Department of Development previously refused to answer questions about how the auctions and if they would consider changes.
Utility companies were against the consumer advocate proposals, arguing the people in the program only have to pay 5 or 10% of their income toward their bill anyways.
But, the OCC points out, anyone who leaves the program will owe their entire balance, which will be higher than typical users because of the higher rates. The consumers' counsel estimates bills could be $300 to $1,500 higher than standard bills.
The higher rates also mean all utility customers are on the hook for more, since the state collects funds from all users with the Universal Service Fund rider to pay utility companies the part of the bill the PIPP customers don't have to pay, as long as they remain in the program.
PIPP is for people making at or below 175% of the federal poverty rate. That amounts to about $48,000 a year for a family of four or $22,000 a year for a single person.
Andrew Tinkham, senior outreach and education program specialist with Ohio’s residential utility watchdog, the Office of the Ohio Consumers’ Counsel, said the PIPP program is a lifesaver for some, but it isn't right for low-income users to be discriminated against by being charged a higher rate than standard customers who aren't in the program.
It has to do with the way electric rates are set going into winter each year. During annual electricity rate auctions, the rates for the customers in the PIPP program are auctioned off separately from the standard rates other users who aren’t in the program pay.
And lately, those auctions have resulted in rates that are higher for low-income consumers.
Tinkham said the OCC believes it is “unlawful” for low-income users to be charged a higher rate than their standard customer peers. OCC filings in the case call the practice “illogical” and “discriminatory.”
The rates for the PIPP electric users began to rise above the standard rates in the 2017 auctions. The trend continued, and now, for the 2022/2023 winter season, rates for all four electric distributors are higher for low-income customers, according to a spokesperson for the PUCO.
Tinkham said that with the recent expansion of the PIPP program, to include people making 175% of the poverty level instead of the previous threshold of 150% of the poverty level, even more people will be charged the higher rates and even more will need to be collected from all users to pay the electric companies the difference.
