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COVID-19 shows why a Percentage of Income Payment Plan is needed

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As I’ve been thinking about it over the past week or so, I really think that the decision we are making today is less one I come to as an economic regulator, trying to make decisions based on the data and economic principles, and more one that I have to come to with just morality and the deep reckoning that we are all so critically interconnected and that this pandemic has laid bare some of the deep structural inequities in our economy…”


Today the Rhode Island Public Utilities Commission (RIPUC), now under the leadership of newly confirmed Chair Ronald Gerwatowksi, extended the moratorium on utility shut-offs for low-income Rhode Islanders through November 1, which effectively extends the moratorium until early spring 2021. On top of that, the RIPUC also extended the moratorium on shutoffs for all of National Grid‘s other customers through September 30.

In deciding this, the three person commission took into account the very real possibility that the worst of COVID-19, and its subsequent economic impacts, could still be ahead of us.

Commissioner Abigail Anthony, who has been poring over the data regarding low-income utility customers, said that the arrearage management program (AMP) is “just not working for customers. It’s almost universally a failure.” The AMP was designed to help people who have fallen behind on their utility payments to keep their utilities on and pay down the balance over time. And it is just not working.

Anthony then said something extraordinary:

“As I’ve been thinking about it over the past week or so, I really think that the decision we are making today is less one I come to as an economic regulator, trying to make decisions based on the data and economic principles, and more one that I have to come to with just morality and the deep reckoning that we are all so critically interconnected and that this pandemic has laid bare some of the deep structural inequities in our economy…


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“I hope that all of this will come to a point of reckoning – a reckoning that this and many other systems in our economy have deep inequity and are making it really, really hard to break out of cycles of poverty.”

To that end, Anthony suggested that though the discussion of the moratorium on shutoffs might not be the time to look at more comprehensive solutions to the problem of low-income people paying for utilities, that times should come soon.

Commissioner Marion Gold added that she had noted that even before the pandemic, even before the economic downturn, “even when the economy was booming, we were finding that arrearages were growing across the country, at a crisis point.”

In their filing with the RIPUC in support on the extended moratorium, the Rhode Island Center for Justice wrote that, “in response to mounting arrearages during the COVID-19 crisis, and increasing economic instability moving forward, the PUC should consider implementing a percentage of income payment plan in an appropriate future docket.”

A percentage of income payment (PIPP) allows low-income utility customers to pay lower rates for utilities. The George Wiley Center has been advocating for PIPP for years.

The Center for Justice writes:

“While we understand that an emergency order is not the proper mechanism for creating a new permanent payment plan, Rhode Island’s experience with coronavirus has dramatically underscored how profoundly our state needs a new approach to utility payments — one that can generate a sustainably and reliably payable bill for utility customers during and through the public health emergencies, economic and environmental crises, and other shocks we are likely to face with potentially more frequency in the coming years. As such, we recommend that the PUC give consideration to implementing a Percentage of Income Payment Plan (PIPP) in an appropriate future docket…”

“One of the advantages of a PIPP is its ability to adapt to and absorb the changing economic circumstances of customers. When disaster strikes and thousands of Rhode Islanders lose a significant portion of their household income, under a PIPP they can continue paying their bills in a sustainable manner. That is vital for consumers — and it also means that utilities are not forced to deal with the kinds of mounting arrearages that are inevitable in a crisis of this magnitude without an income-linked payment arrangement for the most vulnerable consumers in the most heavily impacted communities.”

It’s not just a matter of the present pandemic. In their brief, the Center for Justice notes that climate change is making for an ever more chaotic and uncertain world, full of potential economic shocks. “Climate scientists agree that the climate crisis is going to increase the frequency of natural disasters, and their resulting human catastrophes and economic shocks and that these will occur with greater consistency and intensity…

“This reality calls for long term planning. An income-linked payment requirement for low-income consumers is simply a better system for absorbing severe economic fluctuations and crises, whether caused by a resurgence of coronavirus over the next 18 months or other crises in the future.”

You can read the entire brief from the Rhode Island Center for Justice here.