AARP submitted the following testimony stating our position on several of the bills before the Committee on March 7th. AARP is a nonpartisan, nonprofit social welfare organization with a membership that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP is an advocate nationwide for the rights of people aged 50 and older. A substantial percentage of AARP’s members live on fixed or limited incomes. A major priority for AARP is to protect consumers from utility expenses that may endanger their health and financial security.
Oppose S.B. 839
AARP has grave concerns with S.B. 839 which would require the Public Utility Regulatory Authority (PURA) to make decisions, including rate decisions, guided by the Comprehensive Energy Strategy (CES) the Integrated Resources Plan, the Conservation Load Management Plan and policies established by the Department of Energy and Environmental Protection, notwithstanding any other provision of law to the contrary. This amendment would have the effect of letting the CES, IRP and other regulatory plans override policy adopted by the General Assembly. Current law does direct PURA to be guided by these plans, but does not include the “notwithstanding” language, which has the effect of allowing PURA to ignore state law. It is our understanding that the CES is a series of recommendations for a state energy plan, some of which can be implemented by PURA and some of which require adoption through the legislative process. AARP opposes any implication that the CES or any other plan, policy or decision of PURA or DEEP could override legislative direction on any energy or transportation topic. This provision is also included in S.B. 1037.
Opposed to provisions of H.B. 6360
H. B. 6360 is a bill for implementation of some provisions of the CES. AARP continues to oppose several provisions of the CES, which have not been adequately studied or pose risks to affordable home energy for consumers. See our comments on the CES which are attached.
AARP Opposes Section 1 (b) requiring full revenue decoupling for both gas and electric distribution utilities. Decoupling is a risk to consumers. The PURA should be allowed to use its discretion, based on evidence, in approving decoupling as currently permitted under the law. Full revenue decoupling is just one type of decoupling. Decoupling is a much clearer benefit to utilities than to consumers, as decoupling provides revenue protection to the utility, regardless of the reason for lower sales. Thus, there is no direct link between giving a utility a so-called “incentive” to offer energy efficiency, and decoupling, which compensates for any and every lost sale. Further, adoption of revenue decoupling is not a necessary nor sufficient condition to increase energy efficiency, as is evidenced by the other proposals in the draft CES. Decoupling could also weaken the incentive for consumers to save energy, as consumers who decrease their usage do not necessarily see a corresponding decrease in their bills when decoupling adjustments are included. PURA should not be limited to full revenue decoupling. Other states have adopted other forms or decoupling and/or limited the rate impact of decoupling by adopting a cap on rate increases. PURA would be prohibited from adopting consumer protections on decoupling if this provision becomes law.
AARP opposes mandatory time-variant rates for residential customers. The draft CES recommended mandatory time-variant or “time-of-use” (TOU) pricing for CL&P and promotion of time of using pricing for UI. Although not currently included in this bill, AARP would like to be on the record with the General Assembly opposing this recommendation.
AARP agrees that utilities should be encouraged to offer a variety of rate options, after those options have been evaluated and determined to be cost effective and beneficial to customers with a wide range of usage profiles. Then it is the customer’s decision whether a time-varying rate is preferable. Utilities should not be allowed to justify the cost of installing smart meters on the assumption that mandatory time-based pricing, such as TOU or Critical Peak Pricing (CPP) will result in future savings in generation costs. Any alternative to the current rate structure should be voluntarily selected by the residential customer.
There can be no denying that time-based rates will produce “winners” and “losers.” However, the draft CES does not provide assumptions and analyses of the costs and benefits underlying this recommendation. There is no analysis of the experience with mandatory TOU rates in other jurisdictions and/or an analysis or the costs and benefits of mandatory TOU versus voluntary TOU. Those who argue that mandatory time-based rates are beneficial for most customers rely on a small number of short term pilot programs composed of volunteers. Customers who have already invested in energy efficiency, who already use minimal amounts of energy and those who rely on affordable electricity for health and safety will be losers under a mandatory TOU scheme. Further, they are for the most part not the customers who can make a difference in peak load through reductions in usage.
This is why major national consumer advocacy organizations including AARP, the National Association of State Utility Consumer Advocates (NASUCA), and the National Consumer Law Center (NCLC) have adopted policies that oppose mandatory or opt-out dynamic pricing.
An alternative to the mandatory “stick” approach of TOU rates would be to provide a “carrot” in the form of rebates or credits for allowing the utility to control key heating and cooling systems during critical peak periods. This is usually referred to as a “Peak Time Rebate”. Those most able to shift usage will do so voluntarily, while those who need affordable energy to maintain safe temperatures, run medical equipment and other essential needs will not be penalized. A voluntary approach which rewards positive action (rather than punishing) is more likely to build public support and acceptance.
AARP opposes “auctioning” Standard Offer plan customers. Finally, the CES also recommends an “auction” of Standard Offer customers to competitive suppliers without their affirmative consent. AARP has testified in opposition to this proposal in Senate Finance. A copy of our testimony opposing Section 19 of S.B. 843 is attached.
Oppose S.B. 1037
This bill contains the same language as SB 839, which allows policies developed by DEEP to trump state law. State law should not be overridden by regulatory action.
Support S.B. 1035
AARP supports a study to determine whether the regulation of water utilities should be moved to PURA. Although water utilities do face unique issues, many of the ratemaking principles are the same as with electric and gas utilities.
Support H.B. 5590
AARP supports timely refunds of deposits.