Proposed Modifications to the Rules Regarding Electric Termination of Service In AZ

Arizona Corporation Commission
1200 W. Washington Street
Phoenix, AZ 85007
September 30, 2019



Re: Docket No. RU-00000A-19-0132
In the Matter of Proposed Modifications to the Rules Regarding Termination of Service.

WORKSHOP TESTIMONY ON BEHALF OF AARP

Good morning, Chairman Burns and Commissioners.


AARP is glad to have this opportunity to address you today about the statewide rules that set the standards for utility billing and the termination of service. On behalf of its approximate 900,000 Arizona members, AARP advocates for fair and reliable utility rates and reliable service. Many of its members live on fixed incomes. Some members struggle with the inability to pay their utility bills, and are more vulnerable to falling behind in their utility payments. Because facing the prospect of disconnection from an essential utility service can be a matter of life and death, the Commission’s permanent rules should incorporate an abundance of caution. AARP believes that these rules should primarily consider the health and safety of the most vulnerable consumers.


My name is John B. Coffman. For 30 years, I have been an attorney and consumer advocate focusing on the interests of residential utility customers. I was the state consumer advocate for the State of Missouri until 2006, and since then I have represented AARP with regard to utility issues in over 20 other states. I am a professor of utility law. I have also served as an expert witness for AARP in the most recent Arizona Public Service Company (“APS”) rate case.

After 739 people died in Chicago, Illinois during a 1995 heat wave, I developed a keen interest in the topic of hot weather safety, and its relationship to utility billing and connection policies. I have been involved in several state utility commission proceedings like this one, where policy makers are trying to determine the right level of regulatory protection. Even though most heat-related deaths do not occur right immediately after a utility disconnection, I have come to believe that utility commission’s rules and practices do play an important part in protecting the health and safety of customers who rely upon essential utility services, particularly energy services that protect a home against extreme temperatures.

Consensus is not always easy to find among stakeholders on these issues, and ultimately it usually comes down to commissioners making tough decisions. Again, AARP believes that the importance of health and safety should be considered paramount as these rules are considered. AARP stands by to assist the Commission with its suggestions and insight on the matter.

Heat waves are the deadliest of all natural disasters, based on the number of deaths caused by exposure to extreme heat. In a normal year, the number of deaths associated with hot weather are greater than the deaths resulting from all other natural disasters combined.
(1) For the purpose of illustrating the seriousness of this health and safety issue, the chart shows the number of deaths caused by extreme heat in Arizona, alongside the official death count associated with all hurricanes in the entire United States over recent year

(1) Eric Klinenberg, “Heat Wave: A Social Autopsy of Disaster in Chicago” (1999).

(2) National Oceanic and Atmospheric Administration, National Hurricane Center reports.
(3) Arizona State Department of Health Services.

Heat-related death is a particularly big problem for older citizens. Maricopa County reports that about three-fourths (75%) of such deaths occur to individuals over 50 years of age. (4)

Furthermore, it is important to understand that the number of deaths reported do not tell the whole story of harm, because increases in serious injury and illness is also correlated to hot weather. The last slide attached to my testimony comes from the Arizona Department of Health Services, and it shows the number of annual emergency room visits (nearing 3,000 annually) for heat-related illnesses.

AARP appreciates the Commission’s Staff effort in drafting making the first proposal for new permanent changes to the Arizona Administrative Code (A.A.C.), rules5, and for recognizing that stronger consumer protections are needed. It is sometimes hard to know where to start, but the Staff proposal has given the other stakeholders something to which they could react. So, thank you to the Staff for getting the process started with a good first draft. AARP submitted formal comments last week6, which included some suggestions for amendments to the Staff’s proposal.

On a procedural note, we believe that the Commission is on the right path on this topic, which is a rulemaking. AARP favors the codification of statewide standards into rules of general applicability, as opposed to utility-specific tariffs, whenever possible. Tariffs are more difficult for the average consumer to access, while Commission- promulgated rules can more clearly set out universal consumer rights and responsibilities.
(4) Heat-Associated Deaths in Maricopa County, AZ Final Report for 2016, p. 9.

(5) Attachment 1 to the August 30, 2019 Staff Memorandum in this docket.
(6)AARP Comments, September 23, 2019.


AARP has also reviewed the Staff’s September 26, 2019 revised draft for permanent rules, and was pleased to see that some of AARP’s suggestions were incorporated. Now I will summarize AARP’s positions on its priority issues in relation to this most recent revised Staff draft.

1. Weather Moratoriums
AARP supports the original Staff Proposal to provide a robust prohibition on residential energy service disconnections during extreme temperatures--a moratorium when temperatures that do not exceed 32°F for the next five days' forecast (for gas utilities), and a moratorium when temperatures would exceed 95°F for the next five days' forecast (electric utilities).(7)

AARP has concerns about the revised Staff recommendation to place the hot weather moratorium at 105°F. Many states have set their hot weather moratoriums at 95°F, and it is the most common high temperature used in hot weather rules of this type.8 The only other state known to have a temperature moratorium higher than 95°F is Oklahoma, which a moratorium on disconnections set at 103°F. If the revised Staff proposal for 105°F is adopted, then it will be the highest hot weather prohibition in the country. We know that Arizona gets hotter than most other states, but that doesn’t change the physiological dangers of extreme heat upon the human beings who rely on utility service in this state.
(7) Attachment 1 to the August 30, 2019 Staff Memorandum, p. 6.

(8) United States Department of Health and human Services website survey of seasonal disconnect rules -- https://liheapch.acf.hhs.gov/Disconnect/SeasonalDisconnect.htm

If it would be helpful to the Commission, AARP is suggesting that you consider an alternative method of establishing disconnection moratoriums—that the rules refer to the expertise of the National Weather Service (NWS) regarding when a hot weather-based moratorium is most needed. For example, the Commission could require a moratorium on utility disconnections whenever the NWS issues an “Excessive Heat Warning” or other similar heat advisory. The NWS and other governmental weather agencies take into account more than the temperature when issuing such warnings; other factors include humidity, the length of time that high temperatures are expected to persist, and how high the temperature lows are expected to be over a given period of time. Relying on such warning or alerts can allow moratoriums to be more precisely linked to health and safety.

Some Arizona electric utilities already rely upon some type of NWS weather alert to set disconnection moratoriums, either through tariffs, orders, or according to internal utility policy. If the practice of linking termination processes to NWS alerts has proven to be a good internal safety policy for some regulated utilities, then AARP believes that it could be codified into Arizona rules and applied uniformly to all electric utilities.

2. “Door Knock” Safety Checks

AARP strongly supports the Staff proposal to codify within the A.A.C. rules an expectation that regulated utilities be responsible for attempting to make in-person contact with someone at the premise of a residential account which is in danger of being terminated for nonpayment.9
(9) Ibid., p. 6; changes to A.A.C. Rule R14-2-211(A)(6)(c).


There are several reasons to clarify the requirement that a representative knock on the door at the premise prior to termination. Sometimes an older individual may not be fully aware of the threat of termination through written notifications. Also, being physically at the home can sometimes make it easier for someone to spot potential dangers that would occur if a vulnerable customer were to lose essential services. A knock on the door by a human being can be a life-saving way to attempt personal notification, and to make one last ditch effort to identify dangers.

Other concerns may be raised by utilities regarding this requirement of personal notice on the customer premise, but these concerns can be addressed, as other states have done. Regardless of any amendments to this Staff proposal, AARP asks that the permanent rules ultimately contain at least one attempt by a human being to make an in- person safety check with a door knock at the premise prior to the termination of any residential energy service.

3. Deferred Payment Plans10

Most state utility commission rules provide standards setting the minimum terms for a payment plan that is available to a customer to help pay off arrearages, particularly after a customer has expressed an “inability to pay” and has sought energy assistance. This way, a customer can continue getting service, while arrears are deferred and divided by a number of months
(10) See Rule R14-2-210(H), found at pp. 69-70 of A.A.C. Title 14, Chapter 2.


Subsection H (2) of the current R-14-2-210 “Billing and Collection” section of the customer billing rules says that when a residential customer is threatened with termination, the utility may offer a payment plan to pay off a reasonable amount of the arrearages that have been accumulated. However, AARP is concerned that this rule contains a restrictive time table, requiring that an outstanding balance must be paid over a period not to exceed 6 months. The shorter the payback period, the larger the add-on to each month’s utility bill payment, the more difficult it will be for the customer to pay the extra arrearage portion of the bill, on top of normal monthly charges. Setting payment plans too high can set up a household for failure, and increase the likelihood of a customer defaulting again, starting the cycle of termination once again.

It can be more beneficial to all parties to strike a balance that spreads out the allowable arrearage payback period, setting up more realistic payment levels. AARP proposes that the provision in the rules setting the length of deferred payment plans be increased to 12 months in length (or as long as 24 months, if special circumstances warrant). This time frame would be more uniform with the rules commonly in effect in other jurisdictions.


Subsection H (7) currently says that a utility is not required to offer a deferred payment plan if a customer has not fulfilled the terms of a prior payment plan. AARP proposes that customers must be allowed to enter into another payment plan unless they have missed more than 2 payment due dates over the previous year. Again, a balance needs to be struck that allows for second chances, and the expectation is that everyone’s interests are better off, provided that the customer can stay connected and is paying something extra each month toward any arrears.

Payment plans can also be even more effective if they incorporate the option of arrearage management programs. Such programs allow for a forgiveness of a small portion of outstanding balances, on the condition that a customer makes prompt payments on their deferred payment plan. This type of program incentivizes good payment practices while helping the customer climb out of the financial hole created by their current arrearages. Therefore, AARP suggests that the Commission explore the idea of requiring that utilities offer deferred payment plans that contain an arrearage management component, making such features mandatory with deferred payment plans.

4. Annual Notice Regarding the Rate Plan Comparisons

After the previous rate case for Arizona Public Service (APS) concluded in 2017, public concern has been growing among customers who are unsure whether they are currently on the most economical rate plan for their household, compared with the various electric rate plans that are offered. In that rate case, APS was allowed to initially force new customers on either a “time-of-use” rate plan or a “demand rate” plan. AARP believes that, given the complexity of such alternative rate plans, customers deserve to know once a year what they would have paid on alternative rate plans, compared to what they did pay on their current rate plan.

Therefore, AARP proposes that utilities that offer a variety of different (voluntary or involuntary) rate plan offerings provide an annual pro forma comparison (or “shadow bill”) to their residential customers, comparing what that customer did pay to what they would have paid for the same service under other eligible rate plans, and allowing a customer to switch plans at that time, after explaining the terms of all applicable rate plans.(11)

AARP believes that it is possible for energy utilities to generate such pro forma information. But since rate plans continue to increase in complexity, AARP believes that it should be Commission policy, codified in the A.A.C., to provide explicit pro forma comparisons for each available rate plan to each residential customer. When a utility continues to have complex rate design options, AARP believes that that utility’s obligation to provide clear notice to its customers should be increased and made more uniform with regard to showing alternative rate impacts.

Subsection 4.1 of the general APS tariff now says: "APS will use reasonable care in initially establishing service to the Customer under the most advantageous rate schedule applicable to the Customer." Subsection 4.3 says that the customer can pick another alternative rate after the next meter reading, then no further rate changes may be made for 12 months, and no refunds will be given if the customer could have fared better under a different rate plan.

However, neither the rules nor APS’ current tariffs provide a clear requirement for providing notice to the customer in a way that informs them about when they are clearly on a less economical rate plan. AARP believes that the Commission’s rules should be proactive in at least requiring annual notice informing consumers of their choices, so that everyone is aware when they could be switching to a cheaper plan.

Thank you for this opportunity to testify on these important issues.

(11) AARP suggests that this new rule proposal be located at the end of Section R14-2-210, p. 69 of Title 14, Chapter 2.


Attachments:


1. Arizona Department of Health Services, “Heat-Caused and Heat-Associated Deaths in Arizona by Year” (2008-2018).

2. Arizona Department of Health Services, “Heat-Related Illness Emergency Department & Inpatient Admissions” (2015-2018).