Innovative Rate Programs for the Entergy Jurisdictions

1
Innovative Rate Programs for theEntergy
Jurisdictions

• Roger D. Colton
• Fisher, Sheehan Colton
• Public Finance and General Economics
• Belmont, MA
• November 2002

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The Need for a Toolkit Approach

• When your only tool is a hammer,
• you tend to see every problem as a nail.

3
Different Problems Require Different Solutions

• Slow pay Pick-a-Date
• Can pay but dont Late fees
• Seasonal no-payslevelized budget bills
• Marginal inability-to-pay EITC
• Chronic poverty IDA assistance

4
Low-income Rate Relief Two Problems to be
Addressed

• Payment troubles
• Paid but unaffordable bills

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Payment problems

• Hopelessly behind /irreducible arrearages
• Recurring pattern of disconnect/pay
  plan/reconnect
• Patterns of payment avoidance

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Paid-but-unaffordable bills

• More than 12 reported going without food for at
  least one meal a week.
• More than 20 reported going without medical
  care, by either not filling prescriptions, taking
  prescription medicines in lower than prescribed
  doses, or by skipping or postponing doctors
  appointments.
• Nearly 10 reported not making their rent or
  mortgage payments in order to pay their home
  heating bills.
• Iowa Department of Human Rights

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The fixed credit rate program

• Rate relief for current consumption
• Combined with arrearage forgiveness
• Combined with crisis component

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The necessary components of a fixed credit
program

• Target customer base customers with bills as
  excessive burden of income.
• Affordable bill set at 6 of income
• Conservation incentive
• Combined with arrearage forgiveness/customer
  copayment
• Combined with crisis assistance

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Illustration Customer A

• Situation
• Electric bill 900
• Income 12,000
• Affordable bill 720
• Beginning arrears 100
• Benefits
• Fixed credit 15/month (900 - 720 / 12)
• Forgiven arrears (2 years) 0

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Illustration Customer B

• Situation
• Electric bill 500
• Income 9,000
• Affordable bill 540
• Beginning arrears 180
• Benefits
• Fixed credit 0/month (500 - 540 / 12)
• Forgiven arrears (2 years) 5/month

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Illustration Customer C

• Situation
• Electric bill 840
• Income 6,000
• Affordable bill 360
• Beginning arrears 240
• Benefits
• Fixed credit 40/month(840 - 360 / 12)
• Forgiven arrears (2 years) 10/month

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Sources of funding for innovative rate program

• Redirected current operating expenses
• Redirected bad debt/working capital expenses
• Redirected rate refunds
• Deferred cost recovery
• Program savings
• Rate revenue

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The Concept of Net Back

• Without Rate Program
• 100 Bill
• .75 Collection rate
• 85 Amount collected
• 50 Cost of collection
• 35 Net back

• With Rate Program
• 75 Bill
• ,85 Collection rate
• 64 Amount collected
• 15 Cost of collection
• 49 Net back

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For more information

• roger_at_fsconline.com