PENNSYLVANIAPUBLIC UTILITY COMMISSION

Harrisburg, PA 17105-3265

Public Meeting held September 17, 2015

Commissioners Present:Gladys M. Brown, ChairmanJohn F. Coleman, Jr., Vice ChairmanJames H. CawleyPamela A. WitmerRobert F. Powelson

Peoples Natural Gas Company LLC Universal Service and Energy Conservation Plan for 2015-2018 Submitted in Compliance with52 Pa. Code § 62.4.

Docket No. M-2014-2432515

TENTATIVE ORDER

BY THE COMMISSION

On July 16, 2014, Peoples Natural Gas Company LLC (Company or PNGC), on

behalf its Peoples Division and its Equitable Division, filed its proposed Universal

Service and Energy Conservation Plan (USECP or Plan) for 2015-2017 (2015-2017 Plan)

in compliance with 52 Pa. Code § 62.4, relating to natural gas universal service and

energy conservation reporting requirements. On August 19, 2015, PNGC filed an

amended USECP for 2015-2018 (Proposed 2015-2018 Plan). By this Tentative Order,

we will solicit comments from interested parties regarding PNGC’s Proposed 2015-2018

Plan and indicate issues that require further attention before the Proposed 2015-2018 Plan

can be fully approved.

I. BACKGROUND

A. Statutory and Regulatory1

The Commission promulgated its Customer Assistance Programs (CAP) Policy

Statement at 52 Pa. Code §§ 69.261-69.267, initially effective July 25, 1992,

subsequently amended in part, effective May 7, 1999. The CAP Policy Statement,

applicable to, inter alia, natural gas distribution companies (NGDCs) with gross annual

operating revenue in excess of $50 million, provides guidance on affordable payments

and establishes a process for a utility to work with the Commission’s Bureau of

Consumer Services (BCS) in the development or revision of a CAP. 52 Pa.

Code §§ 69.261-69.267.

The Commission promulgated its Residential Low Income Usage Reduction

Programs (LIURP) regulations at 52 Pa. Code §§ 58.1 – 58.18, initially effective January

16, 1993, subsequently amended in part, effective January 3, 1998. The LIURP

regulations, applicable to, inter alia, NGDCs having annual retail sales exceeding 10

billion cubic feet, requires those NGDCs to establish fair, effective and efficient energy

usage reduction programs for their low-income customers. Thereafter, the energy

utilities began filing low-income usage reduction plans and considering how to address

arrearages for low-income customers. 52 Pa. Code §§ 58.1 – 58.2.

The Natural Gas Choice and Competition Act (Gas Competition Act), effective

July 1, 1999, opened the natural gas supply market to competition and established

standards and procedures for restructuring Pennsylvania’s natural gas utility industry.

66 Pa. C.S. §§ 2201, et seq. Its universal service provisions ensure that natural gas

service remains universally available to customers in the Commonwealth. “Universal

1 The endeavors of this Commission and the various stakeholders to formally address low-income policies, practices, and services began at least as early as 1984. See, e.g., the record at Recommendations for Dealing with Payment Troubled Customers, Docket No. M-840403.

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service and energy conservation” is defined as “policies, practices, and services that help

low-income customers maintain their natural gas service.” 66 Pa. C.S. §§ 2202 and 2203.

Universal service programs are subject to Commission oversight and must operate in a

cost-effective manner. 66 Pa. C.S. § 2203(8). The Commission must ensure that

universal service is appropriately funded and available in each natural gas distribution

territory. 66 Pa. C.S. § 2203(8). The Gas Competition Act mandates that the

Commonwealth must, at a minimum, continue the “level and nature of the consumer

protections, policies and services within its jurisdiction that are in existence [as of July 1,

1999] to assist low-income retail gas customers to afford natural gas services.” 66 Pa.

C.S. § 2203(7).

The Commission promulgated the Universal Service and Energy Conservation

Reporting Requirements regulations (Reporting Requirements) for NGDCs, effective

December 16, 2000.2 52 Pa. Code §§ 62.1-62.8. NGDCs serving more than 100,000

residential accounts must submit updated USECPs every three years to the Commission

for approval. 52 Pa. Code § 62.4. CAPs, which address universal service, and LIURPs,

which address energy conservation consistent with the Gas Competition Act, along with

Hardship Funds, and CARES, are four requisite elements of a USECP.

The Commission balances the interests of customers who benefit from the

programs with the interests of the customers who pay for the programs. See Final

Investigatory Order on CAPs: Funding Levels and Cost Recovery Mechanisms, Docket

No. M-00051923 (Dec. 18, 2006), (Final CAP Investigatory Order), at 6-7.

Jurisdictional utilities can both provide more-affordable energy service to eligible

low-income customers, and recover the costs of their approved CAPs and LIURPs. See

66 PA. C.S. § 2203(6). Non-CAP residential customers bear these costs and expenses

2 See 30 Pa.B. 6430.

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through tariff rates for jurisdictional residential energy service and/or universal service

riders. Neither the statutes nor the regulations define “affordability.”

B. CAP Customer Shopping

PNGC does not currently have provisions for CAP customers to shop for natural

gas. Shopping for natural gas for CAP customers is, however, currently under

consideration by the Commission in Investigation of Retail Natural Gas Markets, Docket

No. I-2013-2381742. Thus, any new regulations or policies promulgated as a result of

that investigation may supersede a utility’s provisions (or lack thereof) for shopping by

its CAP customers.

II. HISTORY

A. Jurisdiction

As an NGDC with more than 100,000 residential customers, PNGC is required to

maintain an approved triennial USECP. 52 Pa. Code §§ 62.4 and 62.7.

Table 1Residential Class Size3 and CAP Enrollment4 for PNGC

Division Residential Customers

CAP Enrollment

Peoples 330,459 21,012Equitable 243,610 14,342

Totals 574,069 35,354

3 As of 12/31/2014. 2014 Report on Universal Service Programs & Collections Performance at 6.4 As of 6/30/2015. Reported by PNGC to BCS.

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B. Existing USECPs

The Commission approved PNGC’s 2012-2014 USECP (for what is now Peoples

Division) on December 5, 2012 at Docket No. M-2011-2245355. On November 3, 2014,

PNGC filed Supplement No. 47 to Tariff Gas – PA PUC No. 45 (Supplement 47) at

Docket No. R-2012-2285985, requesting tariff revisions to introduce a CAP Plus charge

for Peoples Division beginning November 1, 2014. On November 5, 2014, the

Commission authorized the tariff revisions via Secretarial Letter. On November 13,

2014, the Coalition for Affordable Utility Service and Energy Efficiency in Pennsylvania

(CAUSE-PA) filed a combined complaint to PNGC’s Supplement 47 and a request for

reconsideration of the Commission’s authorization. PNGC filed an answer on March 20,

2015. The complaint and answer are under review by the Commission.

The Commission approved the 2013-2016 USECP for Equitable Gas Company

(Equitable Gas) on August 29, 2013 at Docket No. M-2012-2308007. On July 14, 2014,

PNGC filed a Petition at Docket No. P-2014-2431703 to (1) temporarily defer Equitable

Division’s arrearage forgiveness time period from 48 to 36 months5; and (2) apply CAP

credits to People’s CAP bills when issued.6 PNGC requested both of these changes as

Equitable Division’s customers migrate into the PNGC customer information and billing

system. On August 22, 2014, the Commission granted the Petition. PNGC reported

successful migration of accounts as of July 6, 2015.

5 “Beginning on or before September 1, 2014, the arrearage forgiveness amount will be based on 1/36th of the pre-program arrearage.” Equitable Gas 2013-2016 USECP at 6.6 “CAP credits are applied on a monthly basis when the CAP payment plan is paid up to date. Monthly CAP credits associated with missed CAP payments will be applied once the customer makes missed CAP payments and brings the payment plan to a current status.” PNGC 2012-2014 USECP at 12-13.

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C. PNGC (i.e., Peoples) and Equitable Gas Merger

On December 18, 2013, the Commission approved a settlement allowing Equitable

Gas to merge into PNGC, with PNGC as the surviving entity.7 Since Equitable Gas

operated under separate tariffs and accounting procedures compared to PNGC, the

NGDCs remain the “Peoples Division” and the “Equitable Division” of PNGC.8

Under the terms of the merger Settlement, PNGC agreed, inter alia, to:

Fund Equitable Division’s CAP consistent with the needs analysis in Equitable

Gas’ USECP.

Establish a Universal Service Advisory Group.

Manage Equitable Division’s CAP similar to that of PNGC, through agency

partnering to increase the number of intake sites, administer CAP, and track and

monitor referrals and enrollments.

Continue to recover CAP costs under Equitable Gas’ existing recovery

mechanism.

Increase its total donation (administrative and matching) to the Dollar Energy

Fund by 10% and maintain that level of funding for 5 years following the merger.

PNGC will review and report ways to increase customer contributions to the

Commission and the Office of the Consumer Advocate (OCA).9

7 See Joint Application of PNGC LLC, Peoples TWP LLC and Equitable Gas Company, LLC,. . . (2) to Merge Equitable Gas Company, LLC with PNGC LLC, . . . and (7) for Approval of Certain Changes in the Tariff of PNGC LLC, Docket Nos. A-2013-2353647, A-2013-2353649, and A-2013-2353651 (December 18, 2013).8 An affiliate, Peoples TWP, continues to operate under its separate tariffs but is a small NGDC not subject to mandatory triennial Commission approval of its USECP. Peoples TWP’s 2015 Triennial Report on USECP is available at http://www.puc.state.pa.us/general/pdf/TW_Phillips_USP.pdf.9 Report filed with the Commission on December 22, 2014.

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Increase LIURP annual expenditures to $1,250,000 for Peoples and $800,000 for

Equitable Division for the first four years following the merger.

D. Proposed 2015-2018 USECP

On May 30, 2014, PNGC filed a Petition at Docket No. P-2014-2424357 seeking

to defer the filing date of its 2014-2017 USECP from June 1, 2014, to July 16, 2014. On

June 18, 2014, the Commission issued a Secretarial Letter granting the Petition.

On June 27, 2014, the Commission established a revised USECP filing schedule.

The schedule extended PNGC’s USECP for 2015-2017 to include 2018. PNGC

submitted a proposed 2015-2017 Plan on July 16, 2014. On August 19, 2015, PNGC

filed and served an amended proposed USECP for 2015 through 2018.

PNGC’s Proposed 2015-2018 Plan appears to substantially comply with Title 66,

Commission regulations, and Commission policy statements. The Plan appears to:

contain all of the components cited in the statutory definition of universal service, 66 Pa.

C.S. § 2202; meet the mandate for universal service programs to be available and

appropriately funded in each large NGDC’s service territory, 66 Pa. C.S. § 2203(8); meet

the submission and content requirements of the Universal Service Reporting

Requirements at 52 Pa. Code §§ 62.1-62.8, and the requirements of the CAP Policy

Statement at 52 Pa. Code §§ 69.261-69.267; and to meet the submission and content

requirements of the LIURP regulations at 52 Pa. Code §§ 58.1-58.18.

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In July and August 2015, PNCG filed proposed tariffs10 to implement some of the

changes proposed in its proposed 2015-2018 USECP. PNGC has withdrawn the

proposed tariffs pending the conclusion of this docket.

This Tentative Order allows interested parties to comment on the Proposed 2015-

2018 Plan and the concerns raised herein.

III. Discussion

A. Program Modifications Proposed for the 2015-2018 Plan

PNGC proposes several program modifications for its Peoples and Equitable

Divisions, based on best practices identified within the Company and the Pennsylvania

utility industry. Some changes are also predicated on the Joint Settlement Agreement in

the PNGC-Equitable Gas merger. The proposed 2015-2018 Plan, as approved, will

replace the Equitable Gas 2013-2015 USECP provisions currently in effect for Equitable

Division.

1. CAP Changes

Confirm that Dollar Energy Fund (DEF) now administers Equitable Division’s

CAP.

Confirm that Equitable Division’s CAP billing format matches that of Peoples

Division.

Implement CAP Plus for Equitable Division.

10 See PNGC, Docket No. R-2015-2495020; Equitable Division, Docket No. R-2015-2495082; and Peoples TWP, Docket No. R-2015-2496586.

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Confirm that CAP payments will be based on either a customer’s percent of

income or a budget bill amount, whichever is lower, for both divisions.

Confirm that CAP credits will be applied upon issuance of CAP bills.

Minimum monthly CAP payment now set at $25 for both divisions.

Beginning January 2016, PNGC will review and determine if monthly CAP

payments are the most beneficial payment for the customer.

Beginning January 2016, PNGC will apply CAP overpayments to the next

monthly CAP bill.

Introduce a 3-year pilot program offering CAP to customers with arrears and

annual incomes between 151 and 200% of the Federal Poverty Income Guidelines

(FPIG).

2. LIURP Changes

Conservation Consultants Inc. (CCI) will administer the LIURPs for both PNGC

Divisions.

Explore ways to maximize benefits by coordinating funding for LIURP

weatherization jobs with the Department of Community and Economic

Development’s (DCED) Weatherization Assistance Program (WAP).

Increase PNGC LIURP annual budget to $2,050,000; $1,250,000 per year for

Peoples Division and $800,000 per year for Equitable Division.

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Allocate up to 25% of Peoples Division LIURP budget for weatherization services

to non-CAP participants.11

3. Emergency Furnace/Service Line Repair Program

Increase furnace house/service line budget to $400,000 annually.

4. Customer Assistance and Referral Evaluation Services (CARES)

Explore partnering with United Way’s Southwestern Pennsylvania 2-1-1 to

streamline application procedures.

Participate in additional community events to increase referrals and program

awareness.

Eliminate CARES income eligibility requirement for Peoples Division.

5. Hardship Fund

Increase contributions to DEF by 10% (donations and administration) and

maintain that level of funding through 2018.

B. Program Descriptions

The Proposed 2015-2018 Plan contains the four requisite major components

that help low income customers maintain utility service: (1) CAP, which provides

discounted rates for low-income residential customers; (2) LIURP, which provides

11 As established in PNGC’s 2012 base rate proceeding pursuant to paragraph 37 of the August 3, 2012 Joint Petition for Settlement at 8-9.  See PA PUC, et al. v. PNGC, Docket No. R-2012-2285985.

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weatherization and usage reduction services to help low-income customers reduce their

utility bills; (3) CARES Program, which provides information and referral services; and

(4) Hardship Fund, which provides DEF grants to low-income customers who have

exhausted all other forms of assistance. With these four programs in place, PNGC’s

2015-2018 Proposed Plan substantially meets the requirements of the Gas Competition

Act, our regulations and guidelines. PNGC considers its Emergency Furnace/Service

Line Repair Program and its Community Weatherization Partnership Program,

approved12 outside a triennial USECP review process, to be universal service programs.

1. Customer Assistance Program

CAP offers several benefits to payment-troubled residential heating customers.

CAP customers pay a percent of income payment or budget billing (whichever is lower).

They also receive 1/36th of pre-program arrearages forgiven for each month of on-time

and in-full CAP payments.13 To be eligible for CAP, a customer must have income at or

below 150% of the FPIG, have a residential heating account, and be payment troubled.

PNGC identifies a household as “payment troubled” if it has:

A broken payment agreement or termination notice;

Housing and utility costs (rent or mortgage, property taxes, gas, electric, water,

telephone, and sewage) exceeding 45% of the household’s total income;

Disposable income of $100 or less after subtracting all household expenses from

household income; or

A PNGC bill arrearage.

If payment-troubled customers have received a Low Income Home Energy

Assistance Program (LIHEAP) grant in the past 2 years14, or if the customer gives verbal 12 See Docket No. R-2010-2201702.13 PNGC exempts CAP customers from late payment charges.14 PNGC reports it accepts verbal declaration of monthly income for LIHEAP recipients to determine the monthly CAP payment.

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permission for DEF to use income documentation submitted for an electric utility’s

CAP,15 the customers need not provide income documentation to enroll in PNGC’s CAP.

PNGC calculates a customer’s monthly CAP bill based on a percentage of the

household’s gross income or the average annual bill (budget bill) for the residence,

whichever is less. Table 2 shows the required percent of income CAP Payments.

Table 2Percentage of Income CAP Payment

Household Income According to the FPIG

Monthly Income % to Pay

0-50% FPIG 8% of Household’s monthly income51-100% FPIG 9% of Household’s monthly income101-150% FPIG 10% of Household’s monthly income

If a customer’s calculated percentage of income exceeds the budget bill for the

residence, the budget bill will be the CAP payment amount. The minimum monthly CAP

payment is $25. PNGC will bill customers with a pre-existing balance an additional $5

per month toward pre-program arrears.

Beginning November 1, 2014, Peoples Division added a CAP Plus16 charge, which

had been previously approved pursuant to Secretarial Letter as noted above, to all

monthly CAP bills. Through this Plan, PNGC proposes to add a CAP Plus charge for

Equitable Division CAP bills. PNGC calculates the CAP Plus amount by dividing

LIHEAP grants for customers participating in the CAP program for the previous LIHEAP

heating season by the sum of (1) current active CAP participants and (2) the projected

average number of CAP participants to be added for the projected quarter. It adds the

resulting CAP Plus amount to each CAP customer’s bill.

15 This only applies in situations where DEF also administers the electric CAP.16 On April 10, 2014, the Commonwealth Court ruled that the PUC had the authority to authorize a similar CAP Plus as part of Columbia’s CAP program. PCOC v. PA PUC, 89 A.3rd 338 (Pa. Cmwlth. Ct., 2014).

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Customers reporting zero income can enroll in CAP if they provide documentation

of support from a friend, family member or social agency helping them pay their current

living expenses. They will receive CAP minimum bills.

PNGC applies monthly CAP credits at billing. It has a $1,000 annual CAP credit

limit unless the customer’s household increases in size, experiences a serious illness, or

consumes energy beyond its ability to control. PNGC can make exceptions for customers

living in condemned housing, or housing with code violations negatively affecting

consumption.17 PNGC refers special needs customers, identified through this process, to

CARES.

PNGC will monitor CAP customer accounts to identify any customer whose

weather-normalized annual usage has increased by more than 25% and will contact that

customer to determine if the usage is justified. Justified usage may include the same

special circumstances outlined in the paragraph above. Absent such justification, PNGC

will bill the CAP participant for the excess usage.

CAP customers who have received LIHEAP in the past 24 months or are on a

fixed income (i.e., pension, Social Security, and/or disability) must recertify once every

two years. All other CAP participants must recertify annually. PNGC sends

recertification notification letters 60 days and 30 days before the recertification date.

PNGC removes customers from CAP if they do not recertify by the end of this 60-day

period.

a. Extended Customer Assistance Program (E-CAP) Pilot – Comments Requested

PNGC proposes a three-year pilot program, entitled E-CAP, to allow customers

with incomes between 151 and 200% of the FPIG to receive CAP benefits such as

17 PNGC gives CAP customers priority for LIURP services.

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arrearage forgiveness, bill discounts, and late payment charge exemption. In addition to

the income requirement, the household must have an active heating account (or be an

applicant for service) and be payment troubled. E-CAP customers will pay 11% of the

household’s monthly gross income or the account’s budget bill (whichever is lower),

$5 toward any pre-program arrears, and the CAP Plus charge. Proposed 2015-2018 Plan

at 17.

The Company projects that 2,759 customers from Peoples Division and 2,200

customers from Equitable Division would be eligible to participate in E-CAP. Proposed

2015-2018 Plan at 18. PNGC will request recovery of E-CAP costs through its USECP

riders if the E-CAP pilot is approved.18

Proposed Resolution: We invite comments on the proposed E-CAP Pilot Program.

b. Pre-program Arrearage Forgiveness — Clarification Requested

PNGC CAP customers can receive full pre-program arrearage forgiveness after 36

months of CAP payments but it does not state if it gives arrearage forgiveness for each

on-time and in-full monthly payment, regardless of earlier missed CAP payments. Nor

does it describe whether the CAP customer can receive retroactive arrearage forgiveness

for months missed once the CAP balance is current. Proposed 2015-2018 Plan at 10.

The Commission has previously directed that Philadelphia Gas Works (PGW)

must apply arrearage forgiveness for each timely and in-full monthly CAP payment

beginning by or before 2016. See PGW 2014-2016 USECP Final Order, Docket No.

M-2010-2186052 (August 22, 2014) at 20-26. Columbia Gas, Duquesne Light, PPL

Electric, and UGI have also voluntarily allowed CAP customers to receive arrearage

18 PNGC has advised BCS informally that it will request a similar E-CAP provisions for Peoples TWP if E-CAP is approved for PNGC.

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forgiveness for any monthly payments missed once the entire CAP balance is paid in full.

Columbia Gas Revised 2015-2018 USECP at 24, Docket No. M-2014-2424462;

Duquesne Light Company Revised 2014-2016 USECP at 3, Docket No. M-2013-

2350946; PPL Electric Revised 2014-2016 USECP at 7, Docket No. M-2013-2367021;

and UGI Revised 2014-2017 USECP at 16, Docket No. M-2013-2371824.

Proposed Resolution: In its comments to this Tentative Order, PNGC should explain

whether it applies 1/36th arrearage forgiveness for each on time and in-full monthly CAP

payment, regardless of existing CAP arrears, and whether the Company applies arrearage

forgiveness retroactively to any months missed once the CAP customer catches up on any

missed payments. If PNGC does not apply arrearage forgiveness in either of these ways,

we ask the Company to provide the estimated annual cost to implement these approaches

in its comments to this Tentative Order.

c. Monthly CAP Payment Review – Comments Requested

Currently, PNGC only recalculates a CAP payment amount when the customer

recertifies. For customers who have received LIHEAP within the past 24 months or are

on fixed incomes, this review process happens only once every two years. PNGC

recertifies all other CAP customers annually. Proposed 2015-2018 Plan at 10. This

process can negatively impact CAP customers on budget billing, as they may not reap the

benefits of any decreased usage for up to two years when they recertify.

Beginning January 2016, PNGC proposes to begin monthly bill reviews to make

certain that the CAP payment amount is most beneficial to the customer. PNGC will

notify customers when it revises their budget and/or calculated bill amount due to new

usage or income information. Proposed 2015-2018 Plan at 10.

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Proposed Resolution: The Commission notes this policy change would promote

conservation and invites comments from stakeholders.

d. CAP Overpayments – Comments Requested

PNGC reports that it applies any CAP bill overpayment to the CAP credits.

PNGC proposes to begin applying CAP overpayments to the next month’s CAP bill

amount by January 2016. Proposed 2015-2018 Plan at 10.

Proposed Resolution: As discussed in other utilities’ USECP proceedings, the

Commission supports applying CAP bill overpayments to the next month’s CAP amount

due.19 We invite comments from stakeholders concerning this policy change.

e. Recertifying CAP Customers Using Information from Electric CAPs – Change

Proposed

When DEF administers both an electric utility’s CAP and PNGC’s CAP, a

customer receiving both services may give verbal permission to use the same income

information to enroll in both utility’s CAP. As noted in the Final Order for Columbia

Gas Company’s 2015-2018 USECP,20 the Commission supports utility efforts to

coordinate, simplify and streamline CAP programs’ application/recertification processes.

We have no objection and encourage DEF to enroll customers into PNGC’s CAP using

income information gathered through electric CAPs. This process reduces the

documentation burden for both the customer and the companies. We encourage PNGC to

19 For example: See Duquesne Light 2014-2016 USECP Final Order, Docket No. M-2013-2350946 (March 6, 2014), at 10-12; See PPL Electric 2014-2016 USECP Final Order, Docket No. M-2013-2367021 (September 11, 2014), at 33-34; and See Philadelphia Gas Works 2014-2016 USECP Final Order, Docket No. M-2013-2366301 (August 22, 2014), at 38-39.20 See Columbia Gas Company’s 2015-2018 USECP Final Order, Docket No. M-2014-2424462 (July 8, 2015) at 28-33.

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establish a reciprocal data sharing agreement with participating EDCs for CAP

enrollment and recertifications.

Proposed Resolution: We do, however, have concerns about PNGC’s reliance on verbal

authorization from a customer to use information previously gathered for an electric

CAP. PNGC should have a signed customer information release statement, similar to

Customer Agreement Form used by Columbia Gas21, or other verifiable documentation,

which specifies, inter alia, that (1) the disclosure of the customer’s information is limited

only to those entities on which PNGC relies for eligibility verification and (2) PNGC will

disclose only that information which is necessary to verify program eligibility. In its

comments to this Tentative Order, PNGC should provide a draft of its customer

information release statement and/or describe its verifiable documentation process so that

interested parties may address the process in their reply comments.

2. Low Income Usage Reduction Program (LIURP)

LIURP provides weatherization and conservation services to low income

customers. The primary objectives for PNGC’s LIURP include reducing customer

energy bills, controlling high usage, and making homes more energy efficient. The

program installs energy reducing measures with reasonable paybacks that benefit the

customer, such as heating system and water tank improvements and replacements,

insulation and air sealing, and other weatherization measures. All LIURP jobs performed

also have a customer education component.

To be eligible for LIURP, a residential heating customer22 must have an income

below 150% of the FPIG, and an annual consumption greater than 140 MCF. PNGC

reserves up to 20% of the LIURP annual budget to provide weatherization services to

21 See Columbia Gas Company’s 2015-2018 USECP, Docket No. M-2014-2424462, at Attachment A.22 Renters must have gas account in their name and receive landlord permission to participate.

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customers with incomes from 151-200% of the FPIG that may have special needs. The

customer must have resided at the property for at least one year and must not have had

gas service terminated during that time.

a. Additional Eligibility Requirements

PNGC LIURP eligibility requirements state that a customer must continue to plan

to live at the same address for another year after receiving weatherization services. We

understand that providing LIURP services represents making an investment in both the

customer and the property, but we question whether it is reasonable to require a customer

to commit to remaining in that residence for an additional year. This condition would be

difficult to enforce, especially with low-income customers who are renting, as this

segment of the population is historically transient. We do not want to create the potential

for disqualification of otherwise eligible customers simply because they cannot guarantee

they will remain at the property. The predicate for LIURP programs has been that

weatherization benefits the premises. Any installed measures will still provide a benefit

to future residents. The conservation education benefits the customer.

Proposed Resolution: We invite comments from stakeholders on this matter.

b. Proposal to Incorporate Base Rate Settlement Funding Terms into the Proposed

2015-2018 Plan

In PNGC’s 2012 base rate proceeding at R-2012-2285985,23 the stakeholders

agreed that the NGDC, which at the time included only the service territory and tariff

rates applicable to what is now Peoples Division, would “attempt to apply” 25% of [its]

LIURP funding to eligible non-CAP customers. In particular, the provisions established

in that rate case are as follows:

23 PA PUC, et al. v. PNGC, LLC, Docket No. R-2012-2285985, et al., (September 27, 2012).

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IV. THE SETTLEMENT TERMS * * * * * G. Non-CAP Universal Service Cost Recovery

[Peoples Division’s] annual . . . LIURP funding will be increased from $1.0 million to $1.1 million. The . . . $100,000 increase in LIURP funding [is] included in the $15.4 million [rate] increase and will be recovered by increases in charges under Rider F. [The Peoples Division] will attempt to apply 25% of annual LIURP funding to eligible customers not participating in CAP. . . . Any unexpended LIURP funds will be carried over to the following year.

While we understand PNGC’s reasoning to fund Peoples Division non-CAP

participants who meet all other LIURP eligibility criteria, the LIURP regulations in

particular and our CAP Policy Statement in general do not support mandates establishing

specific budget allocations or numbers of jobs based on CAP/non CAP status. The

LIURP regulations at Section 58.10(a)(1) clearly state that eligible customers should be

prioritized based on usage, amount of arrears, and income, relative to arrears. The

regulations do not mention any requirements with regard to CAP (or non-CAP) customer

status. All eligible, low-income customers should have access to the LIURP program.

We caution these NGDCs to avoid creating a circumstance where a non-CAP customer

with lower usage could potentially preempt a CAP customer with higher usage in order to

meet the 25% budget allocation requirement.

The Commission has designated USECP dockets (i.e., triennial reviews or

petitions to amend existing plans) as the preferred proceedings for introducing changes to

universal service programs.

Proposed Resolution: We direct the stakeholders to address the merits of going forward

with the proposed carve-out of LIURP funding up to 25% of the annual budgets, for non-

CAP customers. Because our concerns here relate to universal service considerations,

which were addressed outside a USECP proceeding, we shall serve this Tentative Order

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on the active parties in PA PUC, et al. v. PNGC, LLC, Docket No. R-2012-2285985, et

al.

c. Coordination with other Programs

CCI, a non-profit agency, serves as the third-party LIURP administrator for

PNGC’s Peoples and Equitable Divisions. It conducts energy audits, contracts with

CBOs and private contractors to install weatherization measures. CCI performs post-

installation inspections on up to 25% of weatherized homes. PNGC will coordinate its

LIURP with other existing programs such as Habitat for Humanity, Rebuilding Pittsburgh

Together, Re-Energize Pittsburgh, DCED’s WAP and other utility LIURP programs.

PNGC will also strive to coordinate with its Community Weatherization Partnership

Program. Such coordination will leverage funding streams to provide deeper and more

comprehensive weatherization treatment of homes, and create possible remedies to many

of the health and safety issues that may have previously disqualified premises from the

program. We applaud PNGC for their coordination efforts and encourage them to track

the coordinated jobs, to facilitate program review and future impact.

3. Emergency Furnace/Service Line Repair Program

Separate from LIURP, yet funded through residential base rates and the universal

service rider, Peoples Division’s Emergency Furnace/Service Line Repair Program24

assists low-income customers in making repairs to their furnace or service line when they

otherwise could not afford to do so. PNGC will budget $400,000 annually for this

program, for a total of $1,600,000 over the course of this 4-year Plan.

24 Pa. PUC, et al., v. PNGC, Docket No. No. R-2010-2201702 (June 9, 2011), approving and adopting the April 11, 2011 Settlement and providing that Peoples Division’s Emergency Furnace/Service Line Repair Program costs be recovered under Rider F.

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Equitable Division has a similar program in place, providing up to $750 for a line

repair or $1,250 for a furnace repair/replacement. Equitable Gas did not recover these

program costs through its universal service rider, and neither does Equitable Division.

Equitable Gas initially financed this program through a Gulf/TETCO pipeline refund.

PUC-assessed fines have added to Equitable’s program balance. Only $103,000

remained as of August 2015. PNGC anticipates spending approximately $35,000 of that

balance annually and will discontinue the Equitable Division program once all funds are

exhausted.

To qualify for either program, customers must have incomes at or below 200% of

the FPIG and be in need of emergency heating system or service line repairs.

Proposed Resolution: An Emergency Furnace/Service Line Repair Program is not

required to be part of a USECP, although we find value in this program for both Peoples

and Equitable Divisions.  Stakeholders may comment regarding funding of these

programs and/or discontinuing the program as planned by Equitable Division.  We also

request comments as to whether this program would be better served as a permanent part

of LIURP.

4. Community Weatherization Partnership Program

Peoples Division’s Community Weatherization Partnership Program25 for low-

income customers is also separate from LIURP. Peoples Division works in partnership

with other public and privately funded programs to leverage resources in providing

conservation and efficiency in a comprehensive manner, meeting needs not met through

other programs. The budget is $50,000 for each year in this proposed plan for a total

25 Pa. PUC, et al., v. PNGC, Docket No. No. R-2010-2201702 (June 9, 2011), approving and adopting the April 11, 2011 Settlement and directing that Peoples Division’s Community Weatherization Partnership Program costs be recovered under Rider F.

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amount of $200,000. Residential base rates and a universal service surcharge will fund

the program.

At this time, the Community Weatherization Partnership Program is only available

to People’s Division customers. PNGC proposes to evaluate extending this service for

customers served by the Equitable Division.

Proposed Resolution: A Community Weatherization Partnership Program is not required

to be part of a USECP, although we find value in this program.  Stakeholders may

comment regarding continuing funding of this program for Peoples Division and/or

expanding the program to Equitable Division.  We also request comments as to whether

this program would be better served as a permanent part of LIURP.  

5. Customer Assistance & Referral Evaluation Services (CARES) Program

The CARES program assists customers who are experiencing temporary hardships

and cannot pay a natural gas bill. Company service representatives, customer service

personnel, social services staff persons, or the Commission can refer customers to this

program. Customer Relations Specialists then help connect these customers to social

service agencies that provide further information regarding available programs.

PNGC employs a Gatekeeper Program as another aspect of CARES. This

program aids older and special needs customers who cannot obtain assistance on their

own. PNGC trains employees to recognize danger signals and report possible problems

to its Customer Relations Specialists for further assistance.

CARES can also provide special thermostats and large print/Braille bills to assist

customers who are visually impaired. PNGC increases awareness of the Earned Income

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Tax Credit and LIHEAP26 through bill inserts, partnerships with other agencies, and other

media.

6. Hardship Fund

PNGC partners with DEF as its fund of last resort, providing utility bill grants to

payment troubled low-income customers. DEF receives donations from utility

customers, utility employees, and investors. PNGC matches customers’ donations up to

$330,000 for Peoples Division customers and up to $220,000 for Equitable Division

customers. PNGC also contributes up to $66,000 and $44,000, respectively for

administrative costs.

DEF serves customers who need even more help after exhausting all other forms

of assistance. DEF provides Hardship Fund grants to help customers avoid termination

of service or to help customers have their service restored.

A customer may receive one Hardship Fund grant, up to $500, per program year.

To be eligible, a customer must meet the following criteria:

• Have a residential heating account;

• Total gross household income must be at or below 200% of the FPIG;

• Must have paid a minimum of $150 on gas account within the past 90 days

(minimum of $100 if age 62 and over);

• Must have an account balance of $100 or more (account balance of $0 if

age 62 and over, but not a credit balance);

• Must provide income verification; and

• Must first apply for all other available energy assistance resources.

26 PNGC also reports that is has implemented a web portal to enable the PA Department of Human Services and other social service agencies to verify a customer’s account and expedite eligibility for assistance programs.

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C. Eligibility Criteria for Each Component

The components of PNGC’s Plan have slightly different eligibility criteria.

Table 3Eligibility Criteria

Program Income Criteria Other Criteria

CAP 150% FPIG or less - Be a payment troubled, active residential heating or non-heating customer.

E-CAP Between 151 and200% FPIG

- Be a payment troubled, active residential heating customer or an applicant for service with a prior balance.

LIURP

150% FPIG or less

20% of the LIURP budget may be

allocated to customers with incomes up to

200% FPIG

- Residential gas heating customer, annual consumption above 140 MCF, continuous service for 12 months and living in the primary residence.

- Renters must have gas account in their name and landlord permission.

Emergency Furnace

Service Line Repair Program

200% FPIG or less

- Need emergency repairs to heating system or house/service lines.

- Equitable Division’s program ends when funds are depleted.

Community Weatherization

Partnership Program

No income requirement - Available to Peoples Division customers only.

Peoples Hardship Fund/ Dollar Energy

Fund

200% FPIG or less

- Serves only terminated heating accounts. Customers must first apply for LIHEAP and Crisis benefits.

- Must have paid at least $150 toward their bill within the past 90-day period.

- Customers over age 62 may have zero or more balance, those under 62 must have balance of at least $100.

- Must be residential, single-family dwelling or apartment.

CARES No income requirement

- Must have missed payments or demonstrated an inability to pay bills and have special needs.

D. Projected Needs Assessment

In compliance with 52 Pa. Code § 62.4(b)(3), PGNC’s Proposed 2015-2018 Plan

includes a needs assessment for its universal service programs, depicted in Table 4.

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Table 4Needs Assessment

Peoples Division

Equitable Division

Customers with household incomes at or below 150% of FPIG (potentially CAP eligible) 89,841 70,878

Customers with household incomes at or below 200% of FPIG (potentially Hardship Fund eligible) 99,646 79,555

Identified number of payment troubled customers with incomes between 151 and 200% of FPIG (E-CAP eligible) 2,759 2,200

Estimated number of potential LIURP participants 14,604 9,319Cost to serve customers needing LIURP (average $4,500 per job) $65,718,000 $41,935,500

Proposed Resolution: We tentatively find that the needs assessment of PNGC’s Proposed

2015-2018 Plan complies with the requirements of Section 62.4(b)(3).

E. Projected Enrollment Levels

Table 5 shows PNGC’s enrollment projections for each program component for

the calendar years covered by its proposed Plan.

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Table 5Projected Enrollment Levels

2015 2016 2017 2018Peoples Division

CAP 21,000 21,500 22,000 22,500E-CAP 1,300 1,400 1,500 N/ALIURP 245 245 245 245

Emergency Furnace/Service

Line Repair Program

140 140 140 140

Community Weatherization

Partnership Program

50-100 50-100 50-100 50-100

CARES 500 500 500 500Hardship Fund 1,500 1,500 1,500 1,500

Equitable DivisionCAP 14,000 15,000 16,000 17,000

E-CAP 1,100 1,200 1,300 N/ALIURP 165 165 165 165CARES 600 600 600 600

Hardship Fund 900 900 900 900

Proposed Resolution: At this time, it appears that the projected enrollment levels in the

CAP and LIURP programs are a reasonable estimate of the households that will enroll in

the various universal service programs. This evaluation, however, is not a limit on CAP

enrollment.

F. Program Budgets

PNGC recovers CAP, LIURP, Emergency Furnace/Service Line Repair, and

Community Weatherization Partnership program costs through Tariff Rider F from its

non-CAP residential ratepayers. PNGC also proposes that its pilot E-CAP is a universal

service program and intends to file the appropriate tariffs if approved.27 Table 6 below 27 Recovery of universal service costs are subject to the provisions of 66 Pa. C.S. §§ 2203(6) and 2203(8) for NGDCs as well as 52 Pa. Code § 69.263, relating to rate consequences of CAPs, and § 69.266, relating to cost recovery. USECP proceedings do not address or set utility rates or universal service riders. PNGC shall follow the usual and customary rate and rider

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shows the proposed budget levels for each universal service component and the

calculated average monthly spending per non-CAP customer for 2015-2018.

Beginning January 1, 2014, PNGC raised shareholder contributions to LIURP to

increase the Peoples Division LIURP annual budget from $1,150,000 to $1,250,000 and

the Equitable Division LIURP annual budget from $700,000 to $800,000. Any unused

funds roll from one calendar year into the next.

procedures relating to cost recovery.

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Table 6Projected Universal Service Budgets

2015 2016 2017 2018Peoples Division

CAP* $5,583,793 $5,686,285 $5,790,850 $5,897,531E-CAP $321,950 $386,000 $450,700 N/A

LIURP** $1,250,000 $1,250,000 $1,250,000 $1,250,000Emergency

Furnace/Service Line Repair Program

$400,000 $400,000 $400,000 $400,000

Community Weatherization

Partnership Program$50,000 $50,000 $50,000 $50,000

CARES $212,729 $216,819 $221,032 $223,983Hardship Fund*** $396,000 $396,000 $396,000 $396,000

Total $7,718,472 $7,889,104 $8,062,582 $7,721,514Average Monthly

Spending per Non-CAP Residential Customer****

$2.07 $2.12 $2.17 $2.08

Equitable DivisionCAP* $3,606,966 $3,704,236 $3,804,424 $3,907,618E-CAP $391,050 $469,000 $547,400 N/A

LIURP** $800,000 $800,000 $800,000 $800,000CARES $159,257 $163,348 $167,560 $171,983

Hardship Fund*** $264,000 $264,000 $264,000 $264,000Total $4,901,273 $5,080,584 $5,263,384 $4,823,601

Average Monthly Spending per Non-CAP Residential Customer****

$1.76 $1.83 $1.89 $1.74

* PNGC projects that CAP costs will be lower than previous years due to lower gas prices.

** Only the recoverable LIURP costs of $1,150,000 per year for Peoples Division and $700,000

for Equitable Division are counted in the “Total” and “Average Monthly Spending per non- CAP

Residential Customer.” PNGC reports that it allocates an additional $66,000 annually to each division for

Customer Relations staff time related to LIURP, which is not recovered through the USP rider nor

counted in the LIURP budgets above.

*** PNGC does not recover Hardship Fund costs in base rates and, therefore, they are not

counted in the “Total” and “Average Monthly Spending per non- CAP Residential Customer.”

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**** Based on 310,055 non-CAP residential customers for Peoples Division and 229,547 non-CAP

residential customers for Equitable Division, as reported by PNGC as of December 31, 2014. 2014

Report on Universal Service Programs & Collections Performance at 6 & 37.

G. Use of Community-Based Organizations (CBOs)

The Gas Competition Act directs the Commission to encourage utility companies

to use community-based organizations to assist in the operation of universal service

programs. 66 Pa.C.S. §§ 2203(8). PNGC manages its CAP, but DEF administers the

program and houses it within the DEF Customer Contact Center. DEF contracts with

multiple community based organizations throughout the 17 counties in PNGC’s service

territory. DEF also administers PNGC’s Hardship Fund program.

PNGC manages LIURP but uses CCI to administer it. CCI conducts energy

audits, and contracts with other non-profit community action agencies to weatherize

homes, provide education and conduct the post-installation inspections.

Proposed Resolution: We tentatively find that PNGC’s use of CBOs complies with the

intent of the Gas Competition Act.

H. Organizational Structure

PNGC’s Regulatory Section, which reports to the President/CEO, manages and

directs its universal services programs. The manager of Customer Relations and five

Customer Relations Specialists administer these programs. There are 14 Universal

Service Representatives who report to the Customer Relations Specialists.

Beginning October 1, 2015, PNGC proposes to have a universal service call group

at Dollar Energy answer all customer calls for universal service programs. PNGC will

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automatically transfer calls related to credit, termination, or restoration from low-income

customers to the Dollar Energy call group.

Proposed Resolution: We are not proposing any adjustments to staffing. When combined

with the use of CBOs, we tentatively find the PNGC staffing levels to be acceptable.

I. Implementation

In July and August 2015, PNGC filed proposed tariffs to implement some of the

changes proposed in its proposed 2015-2018 USECP. PNGC has withdrawn the

proposed tariffs pending the conclusion of this docket.

Proposed Resolution: Upon conclusion of review of the proposed 2015-2018 USECP and

satisfactory review of the compliance USECP filing, PNGC may file the requisite

compliance tariffs, including a tariff for Peoples TWP, on a one-day notice, subject to 66

Pa. C.S. §§ 2203(6) and 2203(8), 52 Pa. Code §§ 69.263 and 69.266.

IV. Conclusion

The Commission tentatively finds that PNGC’s 2015-2018 Plan appears to comply

with the universal service requirements of the Gas Competition Act at 66 Pa. C.S.

§§ 2203(7), 2202, and 2203(8), the reporting requirements at 52 Pa. Code § 62.4, the

LIURP regulations at 52 Pa. Code §§ 58.1-58.18, and the CAP Policy Statement at 52 Pa.

Code §§ 69.261-69.267. The Commission’s tentative partial approval of this Plan does

not limit the Commission’s authority to order future changes to the Plan based on

evaluation findings, universal service data, ratemaking considerations, or other relevant

factors. This Tentative Order sets forth the aspects that PNGC will need to address prior

to our final approval of the proposed Plan.

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In particular, we direct PNGC to address the following points consistent with the

discussion and directions herein.

1. Explain how PNGC applies arrearage forgiveness to CAP accounts.

2. Provide a draft of a customer information release statement and/or describe its

verifiable documentation process that allows the sharing of customer information

through DEF.

We invite parties to comment on:

1. The E-CAP Pilot Program.

2. Conducting monthly reviews of CAP payment amounts.

3. Applying CAP overpayments to the next month’s CAP bill.

4. Requiring a customer to commit to remain in a residence for one year to qualify

for LIURP.

5. Using up to 25% of the Peoples Division’s LIURP budgets to serve non-CAP

customers.

6. Funding of the Emergency Furnace/Service Line Repair Program and

discontinuing the Equitable Division program as planned and whether this

program should become part of LIURP.

7. Funding of the Community Weatherization Partnership Program, expanding it to

the Equitable Division, and whether this program should become part of LIURP.

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PNGC should describe in its comments any responsive proposals for additional

relief, along with timelines and cost estimates, to afford other parties the opportunity to

reply.

Comments are due twenty (20) days after entry of this order, and reply comments

are due ten (10) days thereafter. If the comments or reply comments raise relevant

material factual issues, we may refer this matter, in whole or in part, to the OALJ for

hearing and decision; THEREFORE,

IT IS ORDERED:

1. That the proposed Universal Service and Energy Conservation Plan 2015-

2018 as filed by Peoples Natural Gas Company LLC, for its Peoples Division and

Equitable Division, on August 19, 2015, is tentatively approved, consistent with this

Tentative Order.

2. That a copy of this Tentative Order be served on Peoples Natural Gas

Company LLC, the Office of the Consumer Advocate, the Office of Small Business

Advocate, the Bureau of Investigation and Enforcement, and the Pennsylvania Utility

Law Project.

3. That a copy of this Tentative Order also be served on the active parties in

PNGC’s 2012-2014 USECP, Docket No. M-2011-2245355, Equitable Gas Company

2013-2016 USECP, Docket No. M-2012-2308007, and in PA PUC, et al. v. PNGC, LLC,

Docket No. R-2012-2285985, et al. The parties at those dockets are on notice that

universal service matters from those dockets may be revised at this docket. If they wish

to avail themselves of an opportunity to be heard on those matters, they shall do so at this

docket.

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4. That a copy of this Tentative Order be posted on the Commission’s website

at http://www.puc.pa.gov.

5. That comments to this Tentative Order shall be filed within twenty (20)

days of the entry of this order, and that reply comments shall be filed within ten (10) days

thereafter.

6. That one original signed copy of comments and reply comments shall be

filed with the Commission’s Secretary at: Pennsylvania Public Utility Commission,

P.O. Box 3265, Harrisburg, PA 17105-3265. Comments may alternatively be filed

electronically through the Commission’s e-filing system, in which case no paper copy

needs to be filed with the Secretary if the comments are less than 250 pages.

7. That an electronic copy, in WORD® or WORD®-compatible format, of all

filed submissions, comments, and reply comments be provided to Joseph Magee, Bureau

of Consumer Services, jmagee@pa.gov, Sarah Dewey, Bureau of Consumer Services,

sdewey@pa.gov, and to Louise Fink Smith, Law Bureau, finksmith@pa.gov.

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8. That the contact person for this Tentative Order is Joseph Magee, Bureau of

Consumer Services, 717-772-1204, jmagee@pa.gov.

BY THE COMMISSION,

Rosemary ChiavettaSecretary

(SEAL)

ORDER ADOPTED: September 17, 2015

ORDER ENTERED: September 17, 2015

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