Legislation
Model Legislation for Fair Share Payment Program to Assure Affordable Electric and Natural Gas Services
Publication
Barbara R. Alexander, Consumer Affairs Consultant
March 2003
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The impact of poverty on a household's ability to afford essential utility services is significant. Low-income households have an energy burden (percentage of income that must be spent to keep the heat and lights on) that has varied from 9 percent to 14 percent on average over the past decade, reflecting both prices and weather conditions. This energy burden contrasts with the median 3 percent burden of families that are not poor.
This AARP model for state legislation proposes a fixed credit percentage of income payment plan. It is entitled the “Fair Share Payment Program” because it targets benefits to those whose energy burdens (i.e., annual electricity and natural gas bills) exceed a certain percentage of household income. Such customers are deemed to have an unaffordable energy burden.
The difference between the customer's percentage of income payment and the annual utility bill represents the bill payment assistance amount that would be funded by ratepayers. The amount of the credit is to be calculated annually and applied in equal installments over a 12-month period. The structure of the payment plan resembles a budget payment plan in which the payment requested is equal to a fair percentage of household income, and the balance of the bill is paid via the fixed monthly credit.
In addition, the model includes language to increase consumer participation in the Lifeline and Linkup telephone discount programs. (24 pages)