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The New York Public Service Commission entered an Order Adopting Low Income Modifications in May 2016, which applied to commission-regulated gas and electric utilities in New York. The Commission established within the Order a robust regulatory policy framework for addressing low-income electric and gas customer needs. Despite this major advancement in addressing affordability issues for regulated energy utilities, private water utilities in New York have yet to implement large-scale, low-income water customer assistance programs (CAPs)—but this appears to be changing.

Two major private water companies in New York have introduced proposals for low-income CAPs in their most recent rate cases. Although such programs have not yet been approved by the New York Public Service Commission, they are likely set a precedent for how other commission-regulated water companies can go about creating similar programs in the future.

SUEZ Water

SUEZ Water, a private water company previously known as United Water, provides water services to approximately 500,000 people in New York, as well as to millions of other customers in North America. SUEZ’s service area in New York encompasses the counties of Rockland, Orange, Westchester, and Tioga.  SUEZ Water is a leader in research and development of water technology, receiving the Smart Water Company of the Year Award at the Global Water Awards in April 2017. SUEZ is now on its way to becoming a leader in affordability programs for private water utilities in New York.

In its rate case to the New York Public Service Commission—approved in January 2017—SUEZ Water included a proposal for a “Low Income Rebate Program.” The proposal stated that within six months of the order adopting the rate proposal, SUEZ would create a more formal proposal, based on stakeholder input and comments, which would aim to address the following:

  • A method to identify low income customers
  • The proposed number of rebates and dollar amount per rebate, demonstrating that the dollar value of the rebate and associated water savings is cost-effective on a dollar per MGD saved basis
  • A timeline for the roll-out of the program
  • The proposed total budget of the program[1]

SUEZ provided that the budget for the program would be funded either through the System Improvement Charge or, at the company’s discretion, deferred to the next rate case. In addition to the rebate program, the New York Public Service Commission directed SUEZ to work staff and interested stakeholders to design a program to deliver low-income discounts to income-eligible customers. The Commission specifically directed SUEZ to work with local community-based organizations, social service agencies and the local electric and gas utility to minimize the costs of administering the program. SUEZ was given nine-months from the January 2017 order to submit a proposal for the low-income discount program.

As of May 2017, SUEZ had not yet submitted a follow-up proposal with the specifics for the low-income rebate program or the low-income discount program.

New York American Water

 New York American Water, a private water company, provides water services to approximately 370,000 people in New York. New York American Water’s service area encompasses the counties of Nassau, Ulster, Putnam, Sullivan, Washington, Orange and Westchester.

The utility included the specifics for its own proposed low-income CAP in the body of its rate case. Specifically, the company provided that the low-income program will go into effect within 60 days of the commission’s order approving its rates. Single-family residential customers are deemed eligible based on previous approval for Medicaid or the Low-Income Home Energy Assistance Program benefits, and a third party will be used to verify eligibility. Qualifying customers will receive a discount on their water bill equal to their monthly fixed service charge, up to $17.74 per month.

New York American Water further provides that the budget for the program will be capped at $80,000 per rate year and “recovered through the revenue requirement.” The company will be utilizing a third-party administrator from NY that has experience operating such programs for gas and electric utilities.

New York American Water’s rate case is still pending, and the public comment period concluded April 7th.

Why is this so Important for the Future of Affordability Programs for Water Utilities?

 Water and wastewater utilities across the country face affordability challenges as they figure out how to handle the need to increase utility rates to reflect true costs of water and replacement and repair of aging infrastructure. As the EPA’s 2016 compendium, “Drinking Water and Wastewater Utility Customer Assistance Programs,” demonstrates, there are affordability programs in almost every state funded by sources other than rate revenue. In most cases these programs have limited funding capacity to impact significant numbers of customers. To create a robust program that will have a wider impact, utilities generally will need to fund CAPs using rate revenue.

Legal obstacles arising from outdated statutory language, ambiguous terminology, perceived constitutional or jurisdictional limitations, and potentially applicable case law, have held utilities back from moving forward with funding CAPs through their rates.

In New York, for example, private water companies are regulated by the New York Public Service Commission. Under state statutes, no commission-regulated utility can charge or receive (by any special rate, rebate, drawback or other device) a greater or less compensation for water than it receives “from any other person or corporation for doing a like and contemporaneous service with respect thereto under the same or substantially similar circumstances or conditions.” Additionally, N.Y. Pub. Serv. Law § 89-b(3) maintains that no commission-regulated utility shall make or grant any undue or unreasonable preference or advantage to any person, corporation or locality, or to any particular description of service in any respect whatsoever.”

While these statutes, at first glance, appear limiting in terms of what revenue sources commission-regulated utilities can use to fund CAPs, the recent New York Public Service Commission Order establishing a regulatory policy framework requiring energy utilities to provide certain low-income assistance reflects a strong policy shift and establishes an encouraging environment where commission-regulated water utilities can begin to take the same steps toward protecting their low-income customers.

Note: The Environmental Finance Center at UNC is currently identifying affordability pathways as part of a research project for a consortium of water organizations. Check out the project online to learn more.

[1] See Proceeding on Motion of the Commission as to the Rates, Charges, Rules and Regulations of Suez Water New York Inc. for Water Service, Case No. 16-W-0130 (N.Y. Pub. Serv. Comm’n 2017).

Erin Riggs is a legal advisor to the EFC. She is a graduate of the University of Florida’s Levin College of Law where she pursued a law degree with a specialization in Environmental and Land Use issues.