FISCAL NOTE



FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to reduce utility rates for low-income residential customers. As written, this bill would extend the period during which gas and electric utilities must offer special reduced rates from the winter heating billing months of December, January, February, March, and April to the entire year. The bill would also require the utilities to extend the special reduced rates to residential utility customers receiving Social Security Disability Insurance (SSDI). Additionally, the bill updates the names of two of the programs that would qualify recipient residential utility customers for the special reduced rates. And for those residential utility customers receiving assistance from the Supplemental Nutrition Assistance Program (SNAP - formerly the Food Stamp program), the reduced rates would be available to all SNAP households, not just those of recipients 60 years of age or older. The special reduced rates offered by the gas and electric utilities to their eligible customers are 20 percent less than the rates that would be applied if the customer did not qualify for the program. The gas and electric utilities offering the special reduced rates are granted an existing tax credit in the amount certified by the Public Service Commission as the revenue deficiency attributable to providing the special reduced rates. Based upon information provided by the Consumer Advocate Division of the Public Service Commission, the extension of the special reduced rates to residential customers receiving Social Security Disability Insurance and to all recipients of the Supplemental Nutrition Assistance Program and extending the offering of the reduced rates year round would increase the discounts offered by gas and electric utilities by roughly $23.6 million per year. The increase in discounts of roughly $23.6 million would provide the gas and electric utilities offering the reduced rates with additional tax credits of $23.6 million, which would result in a reduction in the General Revenue Fund of roughly $23.6 million per year beginning in FY2013. The Consumer Advocate Division of the Public Service Commission also provided the following information on other possible expansions of the special reduced gas and electric utility rates: Expansion from Current Program--Amount 1. Extend to year-round application (current recipients only)--$4.4 million 2. Extend to households with SSDI--$2.8 million 3. Extend to households with SSDI and year-round application--$5.0 million 4. Extend to households with SNAP (under age 60)--$8.0 million 5. Extend to households with SNAP (under age 60)and year-round application--$14.2 million Expansion options 1, 3, and 5 above are provided in the bill, as written. The addition of the options assume that there is no overlap of customers who are eligible for the current program and those eligible for the SSDI and SNAP programs. Additional administrative costs to the State Tax Department associated with passage of this bill would be minimal. The Public Service Commission may incur some additional administrative costs due to passage of this bill.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2012
Increase/Decrease
(use"-")
2013
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 -23,600,000 -23,600,000


Explanation of above estimates (including long-range effect):


Passage of this bill would extend the period during which gas and electric utilities must offer special reduced rates from the winter heating billing months of December, January, February, March, and April to the entire year. The bill would also require the utilities to extend the special reduced rates to residential utility customers receiving Social Security Disability Insurance (SSDI). Additionally, the bill updates the names of two of the programs that would qualify recipient residential utility customers for the special reduced rates. And for those residential utility customers receiving assistance from the Supplemental Nutrition Assistance Program (SNAP - formerly the Food Stamp program), the reduced rates would be available to all SNAP households not just those of recipients 60 years of age or older. The special reduced rates offered by the gas and electric utilities to their eligible customers are 20 percent less than the rates that would be applied if the customer did not qualify for the program. The gas and electric utilities offering the special reduced rates are granted an existing tax credit in the amount certified by the Public Service Commission as the revenue deficiency attributable to providing the special reduced rates. Based upon information provided by the Consumer Advocate Division of the Public Service Commission, the extension of the special reduced rates to residential customers receiving Social Security Disability Insurance and to all recipients of the Supplemental Nutrition Assistance Program and extending the offering of the reduced rates year round would increase the discounts offered by gas and electric utilities by roughly $23.6 million per year. The increase in discounts of roughly $23.6 million would provide the gas and electric utilities offering the reduced rates with additional tax credits of $23.6 million, which would result in a reduction in the General Revenue Fund of roughly $23.6 million per year beginning in FY2013. The Consumer Advocate Division of the Public Service Commission also provided the following information on other possible expansions of the special reduced gas and electric utility rates: Expansion from Current Program--Amount 1. Extend to year-round application (current recipients only)--$4.4 million 2. Extend to households with SSDI--$2.8 million 3. Extend to households with SSDI and year-round application--$5.0 million 4. Extend to households with SNAP (under age 60)--$8.0 million 5. Extend to households with SNAP (under age 60)and year-round application--$14.2 million Expansion options 1, 3, and 5 above are provided in the bill, as written. The addition of the options assume that there is no overlap of customers who are eligible for the current program and those eligible for the SSDI and SNAP programs. The number of additional utility customers that would receive the special reduced rates, as determined by the Consumer Advocate Division of the Public Service Commission is as follows: Expansion from Current Program--Additional Customers 1. Extend to year-round application (current recipients only)--0 2. Extend to households with SSDI--17,799 3. Extend to households with SSDI and year-round application--17,799 4. Extend to households with SNAP (under age 60)--51,043 5. Extend to households with SNAP (under age 60)and year-round application--51,043 Additional administrative costs to the State Tax Department associated with passage of this bill will be minimal. The Public Service Commission may incur some additional administrative costs due to passage of this bill.



Memorandum


The stated purpose of this bill is to reduce utility rates for low-income residential customers. As written, this bill enumerates five programs that would qualify the recipient for the reduced rates. This is an increase from the four programs that previously qualified a recipient. However, language in W. Va. Code §24-2a-1(d)(1) reading “ . . . four forms of assistance which confer eligibility for the special reduced rates . . . ” was not updated.



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov