Energy “PIPP” Proposal Just the TIP of an Iceberg

The initial “PIPP” tax added to Dominion and APCo bills in 2021 may hide the full impact of the program.

By Steve Haner

As the State Corporation Commission prepares to set up Virginia’s first electricity cost shifting program, using a tax on all electric bills to provide discounts to low-income customers, advocates are already pushing to expand and enrich it.

An expert hired by an environmental group argues in testimony that the General Assembly erred when it capped electricity payments from poorer households at 6% of their monthly income if they did not have electric heat, and 10% if they did. Appalachian Voices’ expert wants the SCC to lower the rate to 5% and 8% respectively, greatly increasing the amount of revenue that must be extracted from other customers. 

The Sierra Club’s expert ripped apart the assumptions behind the initial proposal from Dominion Energy Virginia. He then pushed for the immediate addition of $19 million to pay for additional energy efficiency programs for low-income customers, rejecting Dominion’s claims that it has sufficient programs in place or in the works for that purpose.

As previously discussed, pretty much only on Bacon’s Rebellion, the new program is called the Percentage of Income Payment Plan, or PIPP, and is similar to programs in other states. More detail on those other state programs also emerges in the testimony now on file.

What is clear after reviewing the case documents around Dominion’s proposal, and that for Appalachian Power Company, is that PIPP as we see it now is just the tip of an iceberg. Nobody has any solid idea how many Virginians will actually seek to participate and will see lower bills, how much money will be needed to hold their monthly bills below the caps, and how a future General Assembly may expand this.

Hearings on the Dominion and APCo proposals will be held Wednesday and Thursday of this week.

Right now, the PIPP “universal service fee” (it’s a tax, not a fee) will apply just to customers of those large investor-owned electricity firms. In other states more utilities, including natural gas providers, have programs to subsidize low-income bills with money paid in by all other customers. Low-income customers can also pay significant bills to the rural electric cooperatives.

In their initial proposals the two Virginia utilities both estimated they would need to add about $1 to $1.15 in tax for every 1,000 kWh used, depending on the level of participation among the low-income customers. For most residential consumers, that would be about $15 a year, give or take.

But the flat per kWh additional cost would apply to all customers uniformly, including the largest industrial users. The industrial user coalitions have roused from their slumber and are participating in the case, although they filed no testimony. The added cost would be in tens or even hundreds of thousands of dollars for some of them. Some other states charge variable amount to different classes of customer, but our General Assembly did not.

The initial cost estimates the SCC has are dressed up guesses. Both of the outside experts use different methods and get different results. No one bakes in any potential impacts from the COVID-19 recession. One, Roger D. Colton, hired by the Sierra Club, provides a good summary of the participation levels in some of the other states and says almost 400,000 customer households may be eligible in Dominion’s territory, with more than 140,000 APCo households eligible.  

Something will need to be added to the bills effective January 2021 to kick this off. The SCC will be using a dart board to set the amount, so its staff recommends the initial tax should be set for only six months and then reviewed again next summer.

Colton and the other expert, John G. Howat of the National Consumer Law Center, both point out that the legislation envisions that if a customer goes on the PIPP program and stays current from there, any old unpaid bills are then forgiven. There will be many customers with those unpaid balances (more now).

Both discuss how a formal “arrearage management program” could accomplish that, but it would mean added cost and higher initial charges to the ratepayers. In rebuttal testimony, Dominion made excuses for failing to account for the bill-forgiveness element:

“The Company believes holding off on inclusion of additional costs for this component of PIPP remains reasonable at this time given the lack of information regarding what the value of those arrearage balances may be and how relief from those balances may be structured.”

Perhaps. Or perhaps Dominion was merely hoping to low-ball the starting PIPP tax, hiding that part of the iceberg to be discovered later. A couple of other aspects of this are still below the waterline.

Both Colton and Howat also note that Dominion and APCO already have significant allowance for unpaid and un-collectable bills baked in their base rates. If those assumed bad debts are suddenly covered with new PIPP cash, that’s a nice bonus for the utilities. As Colton wrote, it would constitute “a double recovery of those embedded lost revenues.” What, another double dip?  Have they no shame?

Finally, Colton addresses the interaction of PIPP with at least one of the existing benefit programs that already helps low-income families pay for heating and cooling, the Low Income Home Energy Assistance Program. It appears those benefits will be in addition to any benefit from PIPP and cannot be counted as income to the recipients. They can be used to help with the portion of the bill not covered by PIPP.

The biggest unknown is the General Assembly itself. This program was one small part of the massive Virginia Clean Energy (We Don’t Actually Need) Act. There was very little discussion. None of the legislators really understood what they were voting on and the result is a bit of a mess. Expect changes.

If rejected by the SCC, Colton and Howat’s ideas will become 2021 bills. The large electricity customers are likely to push for a change in the flat fee, which would shift more cost to residential users. All customers may figure out what it means to them that 400,000 Dominion households eligible for PIPP – that is everyone on various forms of public assistance – will be protected from the coming wave of higher costs related to offshore wind and solar generation.

Icebergs ahead.

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48 responses to “Energy “PIPP” Proposal Just the TIP of an Iceberg

  1. So Virginia wants to model Ohio on this?

    So we’re modelling, Trump Country Ohio? gadzooks!

    This basic idea is replicated in other thing like phone, internet, water/sewer/food and health insurance, right?

    so much for the idea that it’s not our fault that economidcally disadvantaged kids fail to get well educated.

    Pay me now or pay me later!

    • Before everybody decides if they like it or not, first they have to know. So this is step one in that process. But for my posts, who would even know? Not surprised you love this idea…..

      • Actually I don’t love the idea at all. I see it as the result of our failure to educate our economically disadvantaged kids – who do grow up – and we then pay for. Folks who are REAL fiscal conservatives should recognize our penny-wise pound-foolish problems.

  2. Baconator with extra cheese

    Are you sure it’s not the fault of the economical disadvantaged parents?
    Don’t breed ’em if you can’t feed ’em….

    • Well, until you can figure that out – what is your Plan B just bail and pay entitlements later?

      but actually – About 1/2 of births are paid for with Medicaid… so you’re paying already! Then those kids get Medicaid and free & reduced , etc.

      I caught your Harris abortion idea before it got deleted…

      • Baconator with extra cheese

        Yeah… I went to a nasty place there… self-censored…. disgusted myself.

        • well if you take the partisan politics out of it, I’ve have similar thoughts as to why folks who cannot afford, still have.

          And it’s not the promise of entitlements. It happens also in the poorest countries on earth even when famine is killing them.

          And in this country where we can easily provide free birth control, we have opposition against it

          Colorado teen pregnancies dropped 20 percent near these clinics. Now their funding is at risk

          Funding is at risk for the clinics after rule changes place restrictions on abortion services

          https://www.denverpost.com/2019/03/22/colorado-teen-pregnancies-title-x-funding/

          • I’d rewrite your “And in this country where we can easily provide free birth control, we have opposition against it” as:

            “And in this country where we can easily provide taxpayer funded birth control, we have opposition against it”

  3. Keep pounding away this issue, Steve. Sooner or later the dominant media will have to pick it up. How can they possibly ignore it?

    ….Unless they’re consciously suppressing it. I don’t suppose we can rule that out. The RTD spent vast resources illuminating the behind-the-scenes decision-making about Dominion’s shift to renewable fuels. It was interesting inside baseball, to be sure, but entirely retrospective, and the revelations really don’t come as a surprise. I am astonished they still haven’t picked up the use-electric-rates-to-redistribute-the-wealth issue.

    • re: ” It was interesting inside baseball, to be sure, but entirely retrospective, and the revelations really don’t come as a surprise.”

      Actually, it totally contradicted the narrative in BR that it was the Dems and Enviros who wanted wind so bad they took a bad deal to get it.

      I like the way youse guys just slide off that wrong thinking and right into “wealth transfer”!

      I would posit that when PIPP started in a fairly Red state like Ohio – that it does have support and that Conservatives here totally ignore or are willinfully ignorant that there is very likely strong public support for it.

      Ya’ll keep saying “wait until the public finds out”…. so which is it?

      😉

      In ya’lls “world” – there should not be taxpayer-funded Medicaid or food stamps , etc… it should just be done with “charity” and the “free market”. I think ya’ll are in the minority on that.

    • After I blaze the trail, somebody usually follows….There is a part II that I’ll work on today.

      Larry, we have all hit “post” on some comment and then reflected on it and hit “delete.” 🙂 You should respect that and not drag it back in….might be you next time.

  4. James Wyatt Whitehead V

    I feel like I am about to ask a dumb question. How would Dominion know which customer is poor and should be charged less and which customer is well off let’s sock it to them?

    • Eligibility will be determined by a state agency, DSS or the Department of Community and Housing Development. Family X is enrolled, and the state notifies Dominion that their monthly bill may not exceed a certain amount. I assume Dominion tracks the amounts owed above the cap and collects them from the “universal service fee” pot. Yes, the bureaucracy will be substantial. People will move on or off the list as their circumstances change.

      That part about the “bonus” this may represent to the utility is significant. I saw it immediately in March. Their base rates assume a certain level of bad debts. To his credit, one of the witnesses encouraged the SCC to adjust the tax amount to account for that.

    • Like with Medicaid, food stamps, and other, they have to “qualify” by providing income data including tax returns. I don’t know about this
      program but others – no tax return – no entitlements. That and EITC is the number one reason why poor folks – who don’t owe taxes – still file tax returns. It’s their ticket to entitlements.

      • Anybody who is enrolled in a series of programs (SNAP, Medicaid, WIC) is automatically eligible for this. But then their income determines where the cap will be, and some of those eligible may have incomes that set the cap higher than their actual bill.

        • How do they address off-the-books payments in cash and barter? I’ve met a number of people who have very modest reported incomes but a lot bigger ones off the books.

          • Probably not so different than those who are better off, use accountants to avoid taxes, right?

            So – the government tremendously subsidies health care for employer-provided as well as Medicare but the big complaint is Mediaid and Obamacare – from the folks that have employer-provided and Medicare? 😉

          • Baconator with extra cheese

            So if I work Larry and part of my salary is health insurance, I should be obligated to provide free health insurance to tbose who don’t work because I get mine as a condition of working?
            Sweet logic.
            How about they get a job…. and stop making babies until they have a job or a partner who can support them.
            Or we can use another of your logic tests. What do ALL the people who WORK feel about giving freebies to those that DON’T WORK? Maybe only those who actually pay taxes should vote on how those taxes are spent.

          • So, Baconator with extra cheese, do you like paying taxes for retired folks who don’t work?

            How about health insurance for people who DO work?

            How about the disabled ?

            I DO NOT like giving freebies to people who don’t work and especially so if they failed to get a good enough public education to give them the opportunity to work and not need or want entitlements.

      • Don’t forget SSI (disability). That’s probably the biggest entitlement program right now. And there’s no time limit. In fact I recall seeing some research that showed that one of the effects of “welfare reform” was to increase the number of people who got SSI.

        And, if you get SSI, you get medicaid too.

        SSI is not to be confused with SSDI. SSDI is disability for people with enough work credits…they had a job, they had it long enough, they became disabled, they get SSDI.

        SSI is disability for people with little or no work credits.

  5. Baconator with extra cheese

    So once they qualify they can run extension cords to the neighbors’ window ac units, grow lights, and space heaters…. let the fires begin!
    I’m going to have to eventually see an accountant to see where I can stash some cash in retirement to make sure I qualify for all the goodies. Working is becoming more and more a suckers game.
    Free public transit, free food, free medical, free college (always wanted a physics degree), free electric, and free petty cash…. damn they may even get my vote.

    • Oh no, no. You only get that free stuff if we fail to educate you and blame it instead on your parents. THEN we give you free stuff!
      😉

      • Baconator with extra cheese

        You can blame it on my parents!
        I have cigarette burn scars, a substantial psychiatric chart, and everything.
        Appalachian raised…. well Appalachian beaten, assualted, and abandoned. Just won the genetic lottery IQ-wise.
        Hope that makes your day Larry….

        • It does. You are indeed a “lucky” one but not so sympathetic to those who are not?

          Those of us who are more fortunate – what should we think with regard to those who are not?

          • Most if not all of his health problems are directly related to his previous cancer stick habit. He quit 30 years ago, however, the damage was still done.

        • My parents…well my dad…was stupid enough to move to Manassas, and too stupid to move out of there before his health went into the crapper.

          • That’s the uber entitlement that no one really talks about. Medicare. What exactly “entitles” people 65 to received not only guaranteed insurance but at a cost of about $140 a month?

            Medicare is heavily subsidized by taxpayers. It’s by far one of the biggest “wealth transfers” in the country and many seniors would be bankrupt and destitute without it.

    • Well, SSI allows you to have one car and one house no matter how expensive they are.

      Since you can’t drive your house but you can live in your car, I suggest that you stash your retirement cash in a fully-loaded Cadillac Escalade on 20″ spinner rims.

      • re: SSI – not that many get it:

        ” In FY 2020, we will pay SSI benefits to about 8 million recipients on average each month (about 2.7 million of whom concurrently receive OASI or DI benefits), and pay a total of approximately $60 billion in SSI Federal benefits and State supplementary payments through the fiscal year.”

        75 million get Medicaid.

  6. Interesting piece in the RTD by Dominion’s Murray. Predictably, he attacks Pat Wilson’s article but there are a couple points here.

    One is that Dominion customers may be paying less than in other states. This may sound like anathema coming from me, but recently, I worked on a research project about why so many data centers are locating in the state., mostly NOVA and some around Richmond. When I asked out-of-state firms, I was told that Virginias has relatively cheap electricity rates and there seems to be no problem with supply. If so, this argues for Dominion and against it. The utility touts its cheap rates and then browbeats about future shortages.
    Another point, which is contrary to the dogma of people like Steve H and Jim B., is that there never seems to be any attention to the BENEFITS of going green, i.e. more, new jobs, less chances of flooding Norfolk, lessening the impacts of other climate change and so on. Hanging on the fossil fuel is hardly the answer. But the emphasis on BR is ALWAYS on extra, hidden costs without balancing that we benefits. It’s all cost. No benefit. And we deny climate change.
    Anyway, Here’s Murray’s piece:

    https://richmond.com/opinion/columnists/william-l-murray-column-dominion-energy-virginia-customers-will-benefit-from-va-clean-economy-act/article_4d623702-9bae-5d35-a5a0-44b801802265.html

    • A great debate for another post: Why is a job on a wind turbine any better than a job building a pipeline? A solar field superior to a gas generator? The answer is, they are not. Wipe out some jobs to create others, what difference does it make?

      My wife said: Did you read Murray’s piece? No, dear, in my head I can write Murray’s piece….

      Once Dominion went after me and my client by claiming that electricity rates were higher in Connecticut and Rhode Island, where our competitor builds ships. That was a fun moment, as I explained to the legislators that keeping it that way was indeed my goal. The Navy cares what its contractors pay for power. We wanted to keep beating EB on contracts….

    • Virginia’s green program will create ” … less chances of flooding Norfolk …”? Really? I’d agree if all the countries on the planet were doing what Virginia proposes to do but water is pretty … uh …. liquid. Or maybe “fungible”? Either way, until this becomes an international effort we are basically virtue signaling our economy down the drain in Virginia.

      A real plan would be to establish a satellite campus of Virginia Tech (UVa is hopeless) with the exclusive goal of teaching and researching clean energy. The IP developed could be licensed to private companies and / or other government entities for their green plans. That way, our willingness to lead might turn into an ability to profit. Of course, that would require a level of ambition and imagination that our General Assembly just does not possess.

  7. The emphasis always seems to be on the fossil fuel job lost without mention of the green job created

  8. Is a job building a coal plan equal to solar panels?

  9. I feel like (but would like to see some analysis) that Virginia is one of the most tax/fee-friendly states for lower incomes. I attribute this, not to liberal activism, but the rural Repub effort to accommodate rural Virginia needs. I would bet, for example, Marylanders in lower income brackets pay way more taxes than we do here. However, I have heard Maryland elected officials say they would like to change that….so in theory they would like to shift the tax burden.

    Suffice it to say with our historic Repub trend coupled with liberals urgent need to be even more tax friendly to lower income, I suspect Virginia is a national leader on lower income tax friendliness. Whether or not that is good or bad, I am not sure. But I do think we hit middle incomes hard to compensate.

  10. More subterfuge from Lord Blackface and his Democrat followers. If the asshats in the General Assembly want to force a wealth transfer – fine. Up the state income tax at higher incomes and use the money to subsidize the electric bills of less affluent Virginians. If the asshats in the General Assembly want to fund the state portion of Medicaid expansion then up the state income tax at higher incomes and use the money to subsidize the medical bills of less affluent Virginians. If the asshats in the General Assembly want to subsidize higher education for adult students with less affluent parents then up the state income tax at higher incomes and use the money to subsidize the tuition bills of adult students with parents who are less affluent Virginians.

    Once upon a time liberals used to scream for honesty and transparency in government. No more. Today’s liberals are far worse con artists than the conservatives on the Republican side of the aisle. Why? Because today’s liberals are socialists who understand that there is always a way to get rich as a grifter in a socialist society. You just need enough obfuscation to steal at scale. Ask the Cuban people how Fidel Castro ended up with a net worth of over $900m at the time of his death. Ask Terry McAuliffe how you can trade foreign visas and state funding from Mississippi to finance the absolutely absurd idea of starting a new automotive company.

    The Democratic con machine is in full swing in Virginia. “Taxes? We haven’t raised taxes.” “There are no documents for that statue removal contract.” “We had to pay $1.8m to take down those statues because no contractor would do the work.” “If we don’t keep the COVID lockdowns everybody will die.”

    • How dare you criticize the ideal government sought by Jeff Bezos and his band of Stalinists at the Post. This is the government that the editorial board and presumably Bezos has lied and fought for for decades. Keep in mind that this is the media company where members of the editorial board are permitted to violate the wall between news and opinion by pressuring reporters not to write anything critical of Tim Kaine.

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