There are two possible future scenarios at the extremes, maximum central renewable energy (RE) from wind, solar, biomass, and hydro -- or from fantasy solar by satellite -- and maximum distributed generation (DG), mostly solar photovoltaics (PV) with storage and bio. Either, or the more likely blend, could lead to large dislocations and even a death spiral for the grid, especially if the price of needed backup gas generation is not as low as currently forecasted. Regulators need to be cautious to minimize the damage and maximize the benefits. This means applying age-old regulatory principles that require careful review of proposed investments. Who pays should be a function of who benefits. Low-income families are likely to be the last to benefit and to need protection.

The benefits of investing in efficiency measures for low-income homes go far beyond saving energy. This paper names and quantifies those non-energy benefits. Filed with the Mass. Department of Telecommunications and Energy.

This paper describes the impact on the poor of volatile and rising energy prices worldwide and the Massachusetts Model to combat poverty through energy policy that helps meet the home energy needs (heating and electricity) of low-income households. We compare the Massachusetts Model to similar efforts in other developed economies: · Other US states, · Western Europe, and · Eastern Europe. We observe fundamental similarities in the approach to low-income home energy needs, but wide variation in the scale and scope of programs across the US as well as across Europe. This paper is a high-level effort to describe and explain the similarities and variations and to suggest some lessons that might be learned therefrom. We discuss issues of federalism, the role of past and current political consensus on underlying values, how income levels and income gaps affect what is practical to achieve, the role of climate policy in addressing low-income needs and of narrow economics in addressing climate challenges, and some means for developing appropriate programs in specific places. Programs to help low-income households keep their lights on and stay warm or cool vary greatly across US states and European nations. Such elements as identification and certification of low-income households, source and stability of funding, low-income pricing, cash assistance, limiting payments due, restrictions on termination of service, and provision of energy efficiency (including such issues as comprehensiveness) are handled in different ways with varying degrees of success.

Slides summarizing The Massachusetts Model for Low-Income Energy Service Delivery

Led by the Low-Income Energy Affordability Network (LEAN), Massachusetts has established a broad safety net of energy services and protections for its low-income residents.

$1 million investment in low-income energy efficiency produces economic benefits 34 times its value, including 337 jobs -- triple the impact of tax breaks to attract manufacturing. [State data are available.] Reducing energy use in low-income homes can lower poverty levels and is one of the most potent tools states have for stimulating the economy. Funds spent on programs to make low-income homes more energy efficient in the Entergy service territory return 23 times the economic value of the initial investment. The study takes into account the programs impact of reducing the use of fossil fuels, which helps the environment. It also includes in its economic calculations the non-energy benefits the programs create by helping cut poverty -- such as reduced fires, lower crime rates, less homelessness and improved health. Every $1 million invested in low-income home weatherization and efficiency programs produces 23 times the economic activity  including creation of 216 jobs  across the region served by Entergys utilities. The study explains low-income home energy efficiency is more than the casual tacking up of some weatherstripping and screwing in a few light bulbs. It is a systematic search for inefficiency, based on building science, coupled with professional installation measures to counter the inefficiency. The process begins with a thorough building audit that may employ such technology as appliance meters, blower doors, and infrared cameras in order to detect inefficient appliances and leaks of conditioned air. The next step would be to replace inefficient appliances and use of advanced materials to better insulate homes and eliminate air leaks. Energy costs hit low-income households disproportionately, according to the study. For example, some elderly who live on fixed incomes spend as much as 35 percent of their annual income for energy bills. The study also contains data showing poverty levels are increasing, sharply in some areas served by Entergys utilities. Among their findings: " Mississippi and Louisiana have the highest percentage of children living in poverty among the states, ranking 50 and 49, respectively. Arkansas and Texas tie for 44th place in the listings. " Hunger is rampant in states served by Entergy. More than 18 percent of people in Mississippi do not have enough to eat, placing it 51st in the rankings. Texas followed at 49, with Louisiana at 45 and Arkansas at 44. " The gap between the rich and poor is widening. Income concentration among the top 1 percent is the greatest since 1929.

This study shows how both environmental and social welfare principles were advanced in the context of an energy regulatory process in a poor US southern state. Electric power in the southern US has been relatively inexpensive for about 70 years, so policymakers have had very little motivation to develop cheaper alternatives such as energy efficiency. With the possible exception of biomass, there is very little native renewable energy in the South that is economic. Further, clean energy and low-income supports have been relatively low political priorities over the years. However, over the past decade, with marketization of the natural gas and electricity industries throughout much of the nation, power costs even in the South have risen and become less affordable for low-income and other customers. At the same time, environmental concerns have led utilities and policy-makers to look for more sustainable resources than the dirty coal and expensive gas typically used to generate much of the electricity in the South. Thus, the stage was set for a significant policy shift in Arkansas in 2006 and 2007. . . .

The value to everyone of using energy efficiency to reduce poverty and help stimulate a New Orleans Revival

Low-income issues in re-regulation and re-restructuring. Parma Principles attached. See "Take Back - Resources" page from Issues tab for legislative language to adapt for each issue.

Investments to eradicate poverty can pay for themselves, returning to all Americans 3.75 times the amount invested. Investments in energy efficiency for low-income homes are especially cost-effective, returning at least $7 to society for every $1 invested. Anti-poverty investments are particularly cost-effective if they are carefully targeted. Energy efficiency is one example. Another is investments in high-quality pre-school education for low-income children, which return $9 for every dollar invested. Other proven investments are food for hungry children, preventive health care, and job training. Thus a careful $400 billion investment can generate at least $1.5 trillion in savings and income -- that's $18,000 for every non-poor American household, or a 30 percent increase in median income. The gap between rich and poor in the U.S. has hit levels reminiscent of the Great Depression. "The Economics of Poverty" shows how investments to eliminate poverty are among the most cost-effective investments we can make.

A summary of avoidable costs of poverty and how investing in the elimination of poverty, particularly in energy-efficiency for low-income households, can benefit everyone. Based on the findings of a report recently published by Entergy Corporation, Jerrold Oppenheim and Theo MacGregor show that investments to eradicate poverty can pay for themselves.

Low-income research resources compiled by Shirley Bergert of Connecticut Legal Services for Take Back the Power conference.

A slide presentation of the basics that regulatory commissions need from consumer advocates in order to approve programs to assist low-income consumers and how advocates can meet those needs.

Investments to eradicate poverty can pay for themselves, returning to all Americans 3.75 times the amount invested. Investments in energy efficiency for low-income homes are especially cost-effective, returning at least $7 to society for every $1 invested. Anti-poverty investments are particularly cost-effective if they are carefully targeted. Energy efficiency is one example. Another is investments in high-quality pre-school education for low-income children, which return $9 for every dollar invested. Other proven investments are food for hungry children, preventive health care, and job training. Thus a careful $400 billion investment can generate at least $1.5 trillion in savings and income -- that's $18,000 for every non-poor American household, or a 30 percent increase in median income. The gap between rich and poor in the U.S. has hit levels reminiscent of the Great Depression. The Economics of Poverty shows how investments to eliminate poverty are among the most cost-effective investments we can make. [LINKS TO PRESENTATION SLIDES AT BOTTOM OF PAGE]

Principles developed by a national ad-hoc group of low-income advocates, including sign-ons.

Electricity prices have risen as much as 34% since restructuring began in 1998. For low-income customers, the increase is as much as 47%. A shortage of natural gas nearly caused electricity blackouts last winter. Prices have also become much more volatile and are scheduled to increase by as much as 28% more as Sstandard Offer ends this month -- prices would go even higher under proposals pending at the FERC.

Policymakers should focus on price and reliability instead of choice. Low-income assistance should be restored and expanded. electricity and natural gas contracts should be lengthened further, with a laddered mix smoothing price volatility. Cost-effective efficiency and renewable energy should be expanded in order to decrease demand for natural gas and for electricity and thereby lower the price of both. A Builder of Last Resort should be appointed to build generation on a cost-of-service basis if the market fails to prevent blackouts. This will also help control prices.

High and volatile natural gas bills have made Arkansas utility bills more difficult to pay, especially for low-income families. States have met this growing crisis with commodity acquisition strategies, energy efficency programs financed by ststem benefit funds, new sources for customer assistance, and innovative arrearage management programs.

How LEAN was created.

Slides presented by Jerrold Oppenheim at a conference sponsored by the New Mexico State University Center for Public Utilities.

The objective of electric utility policy should include reliable service and affordable, stable prices for residential customers. Retail (and even wholesale) competition has not accomplished this objective anyplace in the world. Instead, it has brought higher and more volatile rates, along with catastrophic failures in customer service, redlining, and sharp increases in low-income arrearages. In addition, the merchant generation business model has failed, which threatens reliability. Future policy directions for residential electric service should include portfolio management that requires least-cost resource choices consistent with a portfolio mix that achieves rate stability. There also needs to be a mechanism that assures there will be a builder of last resort to assure supply at a reasonable price.

Proponents of deregulation point to success in the UK (residential rates up 25%, industrial rates down 13%), Texas (residential rates up 15%), and Ohio (residential customers are charged $3.21 for every $1.00 they "save"). Further, separating customer service functions from utilities to new marketing companies has brought slamming, redlining, mass disconnections of service, and other abuses. Instead of replicating these failures in an effort to rescue deregulation for marketers, focus should be on solutions to real customer problems: price volatility, impending shortages of power (with accompanying price spikes), and an affordability crisis for low-income families.

We are deeply grateful for the consideration you have shown our low-income clients as you have taken on the difficult task of restructuring the electricity industry. This has been particularly important in the current days of skyrocketing utility prices, deep freeze, and federal assistance cuts. We now write you out of concern about the proposal circulating to amend the 1997 electricity restructuring act. We are especially concerned that it could threaten the nation-leading low-income and consumer protections you sponsored to enactment in the 1997 act; and that it would be likely to result in redlining of low-income families.

Low-income bills doubled and home energy burdens tripled this winter, as benefits dropped. Low-income heating utility bill arrears consequently tripled. Both electricity and natural gas retail prices have become unaffordably volatile. Department orders recognize that exposing residential customers to spot prices is unacceptable and that risk management can stabilize retail prices, but it has yet to fully act on these findings.

Includes graphs and data.

We do not usually address education, but we applied cost-effectiveness analysis to high- quality education for three- and four-year olds because utilities have a stake in a well-educated population. This paper analyses and describes how each dollar invested in the pre-school education of three- and four-year-old children from low-income families returns more than $9 to the nation, in present value terms.

What utility regulatory commisions need in order to approve utility low-income efficiency programs that coordinate with DOE weatherization.

Preliminary analysis of the cost-effectiveness of a low-income energy efficiency program for the District of Columbia. Filed by the DC Energy Office. See Appendix A to Report of the Retail Competition Group to the District of Columbia Public Service Commission Office.

Sharp increases in energy bills during the winter of 2001 require regulatory action to dampen price volatility and its impact on low-income families, including: long-term purchasing of wholesale commodity, builder-of-last-resort for electricity, efficiency programs, and additional assistance.

As part of Entergy's attempt to fulfill a vision of affordable electricity for all, and to determine the need for and feasibility of developing System Benefit Funds (SBF) for implementation in Louisiana, New Orleans, Arkansas, and Mississippi, we surveyed utility programs across the country, and presented our results to the Entergy Low-Income Summit.

A national survey of the energy burden faced by low-income customers and programs designed to lower that burden, including payment assistance, energy efficiency, weatherization, and arrearage management, and the cost-effectiveness thereof.

One way to lessen the impact of electric industry restructuring, and to protect customers from the volatility and rising prices restructuring brings, is for states to provide comprehensive energy efficiency and education programs to low-income customers.

"The low-income residential demand-side management and education programs shall be implemented through the low-income weatherization and fuel assistance program network and shall be coordinated with all gas distribution companies in the commonwealth with the objective of standardizing implementation."