PENNSYLVANIAPUBLIC UTILITY COMMISSION

Harrisburg, PA 17105-3265

Public Meeting held May 19, 2015

Commissioners Present:Gladys M. Brown, ChairmanJohn F. Coleman, Jr., Vice ChairmanJames H. CawleyPamela A. WitmerRobert F. Powelson

West Penn Power Universal Service Universal Service and Energy Conservation Plan for 2015-2018

Docket No. M-2014-2407728

Metropolitan Edison Company Universal Service and Energy Conservation Plan for 2015-2018

Docket No. M-2014-2407729

Pennsylvania Electric Company Universal Service and Energy Conservation Plan for 2015-2018

Docket No. M-2014-2407730

Pennsylvania Power Company Universal Service and Energy Conservation Plan for 2015-2018

Docket No. M-2014-2407731

FINAL ORDER

BY THE COMMISSION

On December 18, 2014, the Pennsylvania Public Utility Commission

(Commission) entered a Tentative Order, proposing to approve the Proposed 2015-2018

Universal Service and Energy Conservation Plans (USECPs or Plans) for Metropolitan

Edison Company (Met Ed), Pennsylvania Electric Company (Penelec), Pennsylvania

Power Company (PennPower), and West Penn Power (WPP) (collectively, FirstEnergy or

the Companies). The Tentative Order requested comments on the contents of the

proposed Plans. The Office of Consumer Advocate (OCA), the Pennsylvania Utility Law

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Project (PULP), and FirstEnergy filed comments and reply comments. We have

considered the comments filed by the parties and direct that FirstEnergy submit Revised

2015-2018 Plans, consistent with this Order, for the reasons described herein.

I. BACKGROUND

The Electricity Generation Customer Choice and Competition Act (Electric

Competition Act), 66 Pa. C.S. §§ 2801-2812, became effective on January 1, 1997. The

primary purpose of this legislation was to introduce competition into the retail electric

generation market. The Act established standards and procedures for the restructuring of

the electric utility industry. While opening up the electric generation market to

competition, the Act also includes several provisions relating to universal service to

ensure that electric service remains available to all customers in the Commonwealth.

The universal service provisions of the Competition Act, among other things, tie

the affordability of electric service to a customer’s ability to maintain utility service. The

Competition Act defines “universal service and energy conservation” as the policies,

practices and services that help low-income customers maintain utility service. The term

includes customer assistance programs, usage reduction programs, service termination

protections and consumer education. 66 Pa. C.S. § 2803. Section 2802(10) of the Act

commits the Commission to continuing, at a minimum, the policies, practices and

services that were in existence as of the effective date of the law. 66 Pa. C.S. § 2802(10).

Finally, the Act requires the Commission to ensure that universal service and energy

conservation services are appropriately funded and available in each electric distribution

territory. 66 Pa. C.S. § 2804(9).

To help meet the requirements imposed by the Competition Act, the Commission

established the Universal Service and Energy Conservation Reporting Requirements

(USEC Reporting Requirements) at 52 Pa. Code §§ 54.71-54.78. These reporting

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requirements require each electric distribution company (EDC) serving more than 60,000

residential accounts to submit an updated USECP every three years to the Commission

for approval. 52 Pa. Code § 54.74. Further, the Commission adopted its Customer

Assistance Program (CAP) Policy Statement at 52 Pa. Code §§ 69.261-69.267. Although

the Competition Act does not define “affordability,” the Commission’s Policy Statement

provides guidance on affordable payments. 52 Pa. Code §§ 69.261-69.267. The

Commission balances the interests of customers who benefit from the programs with the

interests of the customers who pay for the programs. See Final Investigatory Order on

CAPs: Funding Levels and Cost Recovery Mechanisms, Docket No. M-00051923

(Dec. 18, 2006), (Final CAP Investigatory Order), at 6-7.

As reported by FirstEnergy, the number of residential customers served and the

number of customers enrolled into CAP by its Companies are as follows:

Table 1Residential Class Size1 and CAP Enrollment2

FirstEnergy Companies

Residential Customers 11/2014

CAP Enrollment(as of 12/31/14)

Met Ed 490,309 16,290Penelec 499,759 22,378

PennPower 141,929 4,872WPP 621,365 22,090

Totals 1,753,362 65,630

Thus, FirstEnergy is required to submit triennial USECPs to the Commission for

approval.

1 FirstEnergy Comments at 9-10 2 As reported by FirstEnergy to the Commission’s Bureau of Consumer Services (BCS).

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II. HISTORY

1. FirstEnergy’s USECPs

The most recent USECPs for Met Ed, Penelec, and PennPower were their 2012-

2014 Plans, approved by the Commission at Docket No. M-2011-2231038, by order

entered on March 1, 2012. The most recent USECP for WPP is its 2011-2013 Plan,

approved by the Commission at Docket No. M-2010-2207924, by order entered on

September 27, 2012.

On May 14, 2010, Trans-Allegheny Interstate Line Company (TrAILCo), WPP,

d/b/a Allegheny Power, and FirstEnergy Corp filed with the Commission a Joint

Application (Joint Application) at Docket Nos. A-2010-2176520 and A-2010-2176732 to

obtain approval for a change of control of WPP and TrAILCo under Chapters 11 and 28

of the Public Utility Code (Code), 66 Pa. C.S. §§ 101, et seq., to be effected by the

merger of Allegheny Energy, Inc. (Allegheny) with Element Merger Sub., Inc. (Merger

Sub), a wholly-owned subsidiary of FirstEnergy Corp.

In the Initial Decision, issued on December 20, 2010, the OALJ recommended that

the Joint Application for a change of control of WPP and TrAILCo, through a merger be

approved. Initial Decision at 80-81. The Commission approved the merger of WPP and

TrAILCo into FirstEnergy in an Order entered on March 8, 2011.3

On January 11, 2013, WPP petitioned the Commission at Docket No.

P-2013-2342756 for a partial waiver of 52 Pa. Code §§54.74 and 57.76 to allow WPP to

file its next USECP and Third-Party Impact Evaluation one year later than scheduled in

3 See Joint Application of WPP d/b/a Allegheny Power, Trans-Allegheny Interstate Line Company, and FirstEnergy Corp. for approval of change of control of WPP and Trans-Allegheny Interstate Line Company, Docket Nos. A-2010-2176520 and A-2010-2176732.

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order to parallel the reporting due dates of the other three FirstEnergy Companies. The

Commission approved the petition in an Order entered on February 28, 2013.4

In compliance with Commission regulations, FirstEnergy submitted its 2015-2017

Plans on February 28, 2014, and served OCA, PULP, Community Legal Services (CLS),

the Office of Small Business Advocate (OSBA), and the Bureau of Investigation and

Enforcement (BIE).

On June 27, 2014, the Commission issued a Secretarial Letter to all utilities

providing a revised USECP filing schedule. As part of the new filing schedule, the

FirstEnergy USECPs for 2015-2017 were extended to include 2018. On August 27,

2014, FirstEnergy filed and served amended USECPs for 2015 through 2018.

On August 1, 2014, FirstEnergy petitioned the Commission to amend the

Companies’ previously approved USECPs to make immediate changes to their Low

Income Usage Reduction Programs (LIURPs), also known as WARM. FirstEnergy

requested to make the following changes to the current WARM programs:

Lower the minimum eligibility threshold for average annual usage from 7,200

kWh to 6,500 kWh.

Remove the minimum usage threshold for customers who receive weatherization

services coordinated by the PA Weatherization Program or a Natural Gas

Distribution Company.

Reduce the wait period for customers to receive WARM services again from seven

to five years.

4 See Petition of WPP for Waiver of 52 Pa. Code §§ 54.74 and 54.76 and to Establish New Due Dates for USECP and Third-Party Impact Evaluation, Docket No. P-2013-2342756.

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On August 18, 2014, OCA filed comments in support of FirstEnergy’s Petitions.

No parties filed comments in opposition. The Commission approved FirstEnergy’s

Petitions in an Order entered on November 13, 2014 at Docket Nos., M-2010-2207024

for WPP and M-2011-2231038 for Met Ed, Penelec, and PennPower.

On December 18, 2014, the Commission entered a Tentative Order, tentatively

approving FirstEnergy’s Proposed Plans for 2015-2018 and requesting comments. On

December 19, 2014, FirstEnergy submitted a Request for Extension of Time to file

Comments and Reply Comments. A Secretarial Letter was issued on December 22,

2014, approving the Companies’ request. OCA, PULP, and FirstEnergy individually

filed Comments on January, 28, 2015, and Reply Comments on February 12, 2015.

On March 31, 2015, staff requested additional information from FirstEnergy. We

received its filed response on April 14, 2015 (Supplemental Filing). No parties filed

comments regarding this additional filing.

2. Focused Management and Operations Audit

At the February 12, 2015 Public Meeting, the Commission released the Focused

Management and Operations Audit (PUC Management Audit) of the FirstEnergy

Companies, containing 28 recommendations.5 In response to the audit, FirstEnergy

submitted an Implementation Plan dated January 8, 2015, indicating acceptance of 25 of

the recommendations, partial acceptance of one recommendation, and rejection of the

other two recommendations.

5 Focused Management and Operations Audit of Met Ed, Penelec, PennPower, and WPP (collectively referred to as the FirstEnergy Pennsylvania Companies) at Docket Nos. D-2013-2365991, D-2013-2365992, D-2013-2365993, and D-2013-2365994.

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III. DISCUSSION

The General Assembly has acknowledged the importance of helping low income

customers maintain utility service, and the Competition Act requires the Commission to

continue, at a minimum, the same level and nature of consumer protection policies and

services that were in place at the time the Competition Act became effective. 66 Pa. C.S.

§ 2802(10). Under the Competition Act, universal service programs are subject to the

administrative oversight of the Commission, which must ensure that the utilities run the

programs in a cost-effective manner. 66 Pa. C.S. § 2804(9).

As detailed in the following paragraphs, FirstEnergy’s Plans substantially comply

with applicable provisions of the Public Utility Code, 66 Pa. C.S. §§ 101, et seq.,

Commission regulations and Commission policy statements. The Plans contain all of the

components included in the definition of universal service at 66 Pa. C.S. § 2804(a), which

mandates that universal service programs be available in each large EDC service territory

and that the programs be appropriately funded. Finally, these Plans, in part, meet the

submission and content obligations of the universal service reporting requirements at 52

Pa. Code § 54.74, the Low Income Usage Reduction Program (LIURP) regulations at 52

Pa. Code §§ 58.1-58.18, and the CAP Policy Statement at 52 Pa. Code §§ 69.261-69.267.

IV. CONTENTS OF UNIVERSAL SERVICE PLANS

A. Requirements

The USEC Reporting Requirements at 52 Pa. Code § 54.74(b) require an EDC to

include the following information for each component of its universal service plan:

Program description

Eligibility criteria

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Projected needs assessment

Projected enrollment levels

Program budget

Plans to use community-based organizations

Organization structures

Explanation of differences between the approved plan and

implementation of that plan.

The following sections provide a summary of the information provided by the

FirstEnergy Companies regarding the contents of their Plans.

B. Differences between the Proposed 2015-2018 Plans and the previously approved

Plans

With the exception of changes specifically addressed in this Order, the

Commission approves FirstEnergy’s proposed changes to its Universal Service programs

in its Proposed 2015-2018 Plans. FirstEnergy shall make all necessary system

enhancements necessary to make these changes by January 2016 or earlier. FirstEnergy

shall file a progress report at each docket advising BCS and the parties of that Company’s

progress toward this implementation on a quarterly basis starting July 1, 2015.

1. CAP (PCAP & WCAP)6

FirstEnergy listed several changes for its CAP programs in 2015-2018 compared

to the prior Plans:

6 The CAPs for Met Ed, Penelec, and PennPower are each called the Pennsylvania Customer Assistance Program (PCAP). The CAP for WPP is called the WPP Customer Assistance Program (WCAP).

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For Met Ed, Penelec, and PennPower’s CAPs:

Assess security deposits on PCAP accounts.

Require PCAP participants to recertify annually.

For WPP’s CAP:

Change the name of WPP’s CAP from the Low Income Payment and Usage

Reduction Program (LIPURP) to the WPP Customer Assistance Program

(WCAP).

Apply bill subsidy credits (CAP credits) monthly at time of billing.

Calculate the customer’s monthly “asked to pay” amount to be the difference

between the usage based bill and the bill subsidy credit.

Continue outreach to community agencies and Low Income Home Energy

Assistance Program (LIHEAP) grant recipients to increase participation.

Eliminate the requirement for WCAP applicants to have a delinquent account

balance of at least $50.

2. LIURP (WARM)

FirstEnergy listed several changes for LIURP in 2015-2018 compared to the prior

three-year Plans:

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Lower WARM’s minimum annual usage threshold from 7,200 kWh to 6,500

kWh.

Waive minimum usage requirement for WARM when coordinated with the PA

Weatherization Assistance Program (WAP) or a Natural Gas Distribution

Company’s (NGDC) LIURP.

Permit weatherization services again after five years with high electric use or at

FirstEnergy’s discretion.

Increase seasonal and health and safety allowances to align with contractor

price increases.

Increase health and safety measure spending for air sealing and insulation up to

50% of the seasonal allowance.

Implement new technologies and services when cost effective and meet energy

savings 7-to-12 year payback.

Send identified low income customers and WARM participants a Home

Energy Report, to comply with PA Act 129.

Change independent third-party inspections to a method based on 35% of total

production to focus more on homes with electric heat, supplemental electric

heating, or air conditioning.

Enhance computer systems and by rewriting the WARM tracking system to

increase efficiency of program administrative processes.

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3. Customer Assistance and Referral Evaluation Services (CARES)

FirstEnergy proposed no major changes to its CARES programs.

4. Hardship Fund (Dollar Energy Fund)

FirstEnergy proposed to increase income eligibility for its Hardship Fund, also

referred to as its Dollar Energy Fund (DEF),7 from 200% to 250% of the Federal Poverty

Income Guidelines (FPIGs).

C. Program Descriptions

The FirstEnergy Proposed 2015-2018 Plans contain four major components that

help low income customers maintain utility service as follows: (1) CAP, which provides

discounted rates for low income residential customers; (2) WARM, which is the

Companies’ LIURP providing weatherization and usage reduction services; (3) CARES,

which provides referral services for payment-troubled customers experiencing a

temporary hardship; and (4) DEF, the Hardship Fund that provides grants to those with

overdue balances and an inability to pay energy bills. With these four programs in place,

the FirstEnergy proposed USECPs meet the requirements of the Competition Act.8

We will summarize each component and discuss issues raised through the

Tentative Order or through comments received.

7 Dollar Energy Fund is a non-profit organization that administers the Hardship Fund for FirstEnergy Companies and other utilities. 8 Met Ed, Penelec, and PennPower’s Proposed 2015-2018 Plans contain an additional component, the Gatekeeper Program, which recruits company field personnel to recognize and report “distressed” customers as the employees perform their other job-related duties. This includes reporting those who have communication or isolation issues, difficulty paying bills, physical limitations, or a residence in obvious disrepair or neglect. Because income is not an eligibility criterion, the Gatekeeper Program does not meet the definition of a universal service program.

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1. CAP (PCAP and WCAP)

FirstEnergy’s CAPs helps residential low income customers maintain electric

service through lower monthly payments and/or the elimination of past-due balances

through 1/36th monthly arrearage forgiveness. In some respects, the PCAPs and WCAP

operate identically. All FirstEnergy CAP customers can have their pre-program

arrearages forgiven after three years of on-time, in-full payments. CAP customers must

meet the following requirements:

Gross household income at or below 150% of the FPIG.

Have an active residential account.

A qualifying annual energy burden.

Service address must be the customer’s primary residence (except for those on

active military duty).

WARM participation when eligible.

LIHEAP participation.9

When the household’s annual energy burden is less than a Company’s thresholds,

that customer would not qualify for monthly CAP credits, but would still benefit from

arrearage forgiveness.

Customers must recertify for CAP annually. Companies send a recertification

explanatory letter at least 60 days in advance of the Benefits End Date. Customers must

be paid in full to recertify, or they are dismissed from CAP.

Other aspects of the PCAPs and WCAP operate differently. Therefore, we will

first review the remaining PCAP procedures of Met Ed, Penelec, and PennPower and

then examine the remaining features of WCAP.9 Electric heating CAP customers must direct LIHEAP grants to FirstEnergy or risk dismissal from CAP. Proposed 2014-2018 Plans at 12.

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PCAP

PCAP combines percent of income with a rate discount. Participants pay the

difference between their annual electric bills and their annual PCAP credits. If the annual

energy burden is greater than 3% of household income for customers WITHOUT electric

heat or 9% of household income for customers WITH electric heat, PCAP provides

monthly credits for the difference. Table 1 illustrates PCAP credit calculations for

heating and non-heating customers:

Table 1Examples of Monthly PCAP Credit Calculation

Customer Non-Heating Heating CustomerAnnual IncomeFamily of Four $16,500 $16,500

Applicable % of annual income 3% of $16,500 = $495 9% of $16,500 = $1,485

Annual electric bill: $1,020 $2,200Annual electric bill

compared to % of income $1,020 > $495 $2,200 > $1,485

PCAP pays the difference $1,020 - $495 = $525 $2,200 - $1,485 = $715Annual PCAP Credits $525 $715

Monthly PCAP Credits(Annual Credits ÷ 12) $43.75 $59.58

PCAP recalculates CAP credits quarterly to reflect the customer’s most recent

12-month energy burden. The maximum annual PCAP credit for a non- heat account is

$960 or $80 monthly. For a heating customer, the maximum annual credit is $2,400 or

$200 monthly.

PCAP has minimum payment requirements of $12 for non-heating accounts and

$45 for heating accounts.

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Met Ed, Penelec, and PennPower offer several ways to enroll or recertify for

PCAP. Customers may apply by visiting a Community Based Organization (CBO),

calling DEF, or through a referral from the WARM program. Customers may recertify

for PCAP in person, by telephone, U.S. Mail, or fax, as deemed necessary by the PCAP

agency or the Company.

WCAP

Like PCAP, WCAP participants pay the difference between their annual electric

usage and their WCAP credits. However, WPP has different energy burden thresholds

based on a household’s poverty level and type of electric account as shown in Table 2

below.

Table 2Energy Burden Thresholds to Qualify for WCAP Credits

% Of Poverty Level Less than 50% 51% - 100% 101% - 150%Heating 13% 16% 17%Water Heating 8% 12% 14%Base-load 5% 6% 7%

Table 3 illustrates how the energy burden (annual electric bill) and income

determine the WCAP credit.

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Table 3Examples of Monthly WCAP Credit Calculation

Customer Baseload Water Heating Heating CustomerAnnual IncomeFamily of Four $15,200 $10,200 $25,500

Percent of Poverty* 64% 43% 107%Applicable % of annual income 6% of $15,200 = $912 8% of $10,200 = $816 17% of $25,500 = $4,335

Annual electric bill: $1,420 $1,200 $5,000Annual electric bill compared to % of

income$1,420 > $912 $1,200 > $816 $5,000 > $4,335

WCAP pays the difference $1,420 - $912 = $508 $1,200 - $816 = $384 $5,000 - $4,335 = $665

Annual WCAP Credits $508 $384 $665Monthly WCAP

Credits(Annual Credits ÷ 12)

$42.33 $32 $55.42

*Based on the 2014 FPIGs

WCAP recalculates CAP credits quarterly to reflect a customer’s most recent

12-month energy burden. The maximum annual WCAP credit for a non-electric heat

account is $560 or $46.67 monthly. For an electric heat account, the maximum annual

credit is $1,400 or $116.67 monthly.

WCAP has minimum payment requirements of $25 for baseload accounts, $30 for

water heating accounts, and $50 for electric heating accounts.

Customers may apply for WCAP by calling DEF or through a referral from the

WARM program. Customers may recertify for WCAP by phone, however, WPP may

require an in-person application or recertification. WPP requires in-person verification if

one of the following situations exists:

WCAP arrearage exceeds $1,000;

Questionable household size;

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Questionable or zero household income reported;

Participant is not receiving benefits from other eligible programs; or

Other reasons as determined.

To supplement our analysis of the FirstEnergy PCAP and WCAP, BCS reviewed

448 informal CAP complaints opened between January 2013 and January 2014.10 Staff

identified potential areas of concern and potential deficiencies inherent in the FirstEnergy

CAPs as detailed below.

a. Estimated Meter Readings

The Companies schedule meter readings bi-monthly and estimate meter readings

the other months. Customers have the option to provide a customer reading in lieu of an

estimated one.11 Problems with access, storm restoration, extreme weather conditions,

work stoppage, and other emergencies can prevent regularly scheduled Company meter

readings.12 It is our understanding that the Companies do not reschedule canceled meter

readings.

In our review of 448 informal complaints related to FirstEnergy CAPs, we found

52 cases – approximately 12% of our sample – where customers complained of

unaffordable monthly CAP bills resulting from estimated meter readings. Many received

low monthly estimated bills for several months then received a large make-up bill when

the meter is read; some examples follow:

10 BCS received a total of 872 informal complaints from FirstEnergy CAP customers in 2013 and reviewed a sample of 448 complaints for the Tentative Order.11 “If a public utility bills on a monthly basis, it may estimate usage of service every other billing month, so long as the public utility provides a customer with the opportunity to read the meter and report the quantity of usage in lieu of the estimated bill.” 52 Pa. Code § 56.12 (2).12 “A public utility may estimate the bill of a customer if extreme weather conditions, emergencies, equipment failure, work stoppages or other circumstances prevent actual meter reading.” 52 Pa. Code § 56.12 (3).

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A PennPower customer received an estimated bill for $3.19 in January, and the

actual reading in February resulted in a bill for $502.00.

One Penelec customer had three months of estimated bills, then received a bill

for $710.00 based on an actual meter reading.

A Met Ed customer had six months of low estimated meter readings and then

received a make-up bill for $1,002.00 based on an actual meter reading.

A WPP customer received only 2 actual meter readings in a 12-month period

(Company cited “staffing issues” for the consecutive estimates). After multiple

estimated bills, this customer received a make-up bill for $1,109.00 based on

an actual meter reading.

A Met Ed customer had four months of low estimated meter readings and then

received a make-up bill for $1,112.00 bill based on an actual meter reading.

In many of these cases – as required by 52 Pa. Code § 56.14 – the Companies

offered amortization over several months however, amortizing such balances can be

unaffordable to CAP customers and results in more program debt or service termination.

Most low income customers do not have emergency funds or financial resources to cover

make up bills after months of estimated billing. Customers enroll in CAP to receive and

pay an affordable bill each month. Our review of informal CAP complaints shows that

the FirstEnergy Companies’ estimated meter readings can result in grossly uneven and

unaffordable bills for CAP customers throughout the year.

We are aware that the FirstEnergy Companies plan to install “smart” meters

throughout its service territories, to enable actual meter readings remotely and prevent

estimated readings. But FirstEnergy anticipates that it may be several years before it can

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complete smart meters installation.13 In the interim, we are concerned that many

FirstEnergy CAP customers will continue to receive unaffordable bills making up for

estimated ones.

In the Tentative Order, we directed FirstEnergy to explain whether it offers, or

would consider offering, additional relief (besides an equal payback period) to CAP

customers receiving unaffordable make-up bills. We requested FirstEnergy to submit a

proposal and timeline for this additional relief, if warranted, and invited interested parties

to comment on ways to provide more consistent and accurate monthly bills for

FirstEnergy customers enrolled in CAP, pending smart meter installation.

1. Comments: OCA avers that amortization of make-up bills may not be enough and

recommends that FirstEnergy place all CAP customers on budget billing based on actual

usage from a prior period to minimize billing fluctuations. OCA further recommends that

1) maximum CAP credits should not limit the credits applied to a make-up bill and

2) monthly arrearage forgiveness should not be denied based on a customer’s inability to

pay a full make-up bill. OCA Comments at 5-7.

FirstEnergy describes how it provides relief to customers who receive high bills

after consecutive estimated meter readings:

If a customer received three or more consecutive estimated bills, the customer is offered to have a dunning lock placed on the account for the number of months equal to the consecutively estimated months. The customer is expected to pay the remaining amounts due over that period of time.

If the customer does not accept this option, the Companies’ Human Services group is notified. The Human Services group will review

13 FirstEnergy projects that it will install 98.5% of all smart meters by mid-2019. One hundred percent installation of all smart meters is projected to be achieved sometime before 2025. Smart Meter Deployment Plan Annual Progress Report Ending 6/30/2014-Met Ed, Penelec, PennPower, West Penn Power, Docket Nos. M-2013-2341990, M-2013-2341991, M-2013-234-1993, M-2013-2341994, http://www.puc.pa.gov/pcdocs/1302351.pdf.

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the account and determine an amount that may be added to deferred arrears, subject to debt forgiveness, due to the estimated billings. The customer is contacted and the adjustment is documented on the customer account.

Additionally, in all situations involving high bills, the Companies’ Human Services group may make fair and appropriate adjustments to the balance due after its investigation of the cause.

FirstEnergy Comments at 3.

2. Reply Comments: OCA contends that FirstEnergy’s relief options are not designed

to assist CAP customers who have received high bills due to estimated billing.

CAP customers generally do not have the financial resources to pay a much larger electric bill and are enrolled in CAP because of their need for an affordable utility bill. An amortization of the bill over a period of months will require the customer to pay additional dollars above their affordable monthly payment. A CAP customer may not be able to pay a higher monthly bill and, therefore, may be at risk for getting behind on payments or for termination if they are unable to pay the make-up bills. The CAP customer should not be penalized for an inability to pay a large make-up bill based on an estimated reading.

OCA Reply Comments at 3.

OCA again recommends that FirstEnergy should consider adopting budget billing

for all CAP customers based on actual usage, not to limit credits for a make-up bill based

on maximum CAP credit limits, and not to deny a customer arrearage forgiveness based

on an inability to pay a make-up bill in-full. OCA Comments at 3-4.

PULP submits that FirstEnergy’s options for payment relief are not adequate to

protect CAP customers who have received a high bill after consecutive estimated meter

readings. PULP seconds the recommendations of OCA. PULP further recommends that

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the Commission direct FirstEnergy to make those modifications prior to approval of its

Proposed 2015-2018 Plans. PULP Reply Comments at 2-3.

FirstEnergy agrees with OCA that budget billing provides more consistent

payment amounts and avoids fluctuations in billing. CAP customers have the option of

being placed into budget billing if they request it. FirstEnergy Reply Comments at 4-5.

In response to OCA’s concern that maximum CAP credits may limit the credits

applied for a make-up bill, FirstEnergy explains that a customer’s monthly CAP credits

never reach the maximum limit:

CAP credits are determined at time of enrollment, and recalculated quarterly, based on average annual energy burden. The resulting CAP credit amount is applied equally throughout the year. Applying the CAP credits in this manner eliminates any fluctuation in the credits being applied, and also eliminates the possibility that the maximum CAP credit limit will be reached at an earlier point in the year.

FirstEnergy Reply Comments at 5.

FirstEnergy notes that monthly CAP credit application does not change whether

bills are estimated or based on actual readings. FirstEnergy Reply Comments at 5.

In the Supplemental Filing, FirstEnergy reported that switching all customers to

budget billing would cost approximately $75,000 and would take approximately 13

months for WPP and 17 months for the other FirstEnergy Companies. Supplemental

Filing at 3.

3. Resolution: We agree with OCA and PULP that FirstEnergy’s current options for

payment relief are not sufficient to help CAP customers resolve high balances caused by

estimated readings. As OCA points out, amortizing the balance can be a financial burden

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for a CAP household. Placing a portion of a high bill into deferred arrears would relieve

the CAP customer from the responsibility of making payments toward that balance while

in CAP, but it would extend the amount of time needed for the household to achieve full

arrearage forgiveness. If the household left CAP for any reason (e.g., income increased

over program limits), then any remaining deferred arrears would still become the

customer’s responsibility to pay.

Recent audits and Commission Orders have also addressed the high bills caused

by FirstEnergy’s estimated meter readings. At the February 12, 2015 Public Meeting, the

Commission released the PUC Management Audit of the FirstEnergy Companies. The

Commission found that FirstEnergy use of estimated meter reading has been increasing.

WPP had an eight-fold increase in the number of meters not read in six months over a 5

year period, from 111 customers in 2009 to 879 customers in 2013.14 PUC Management

Audit at 129-130. The PUC Management Audit provided several recommendations to

help improve FirstEnergy’s meter reading performance, including:

Increase staffing and/or use contractors while implementing smart meter

technologies; and

Initiate measures to eliminate or substantially reduce the number of meters not

read within six or twelve months.

PUC Management Audit at 139-140.

In its Implementation Plan to the PUC Management Audit15, FirstEnergy stated

that it has hired more meter reading staff and increased the number of meters read in

2014 across all Companies. It intends to improve meter reading performance levels and

14 WPP reported a high of 2,135 customers who had not had a meter read in 6 months during 2012. PUC Management Audit at 129-130.15 The Companies submitted the Implementation Plan on January 8, 2015, and the document was released publicly on February 12, 2015 at each of the four audit dockets.

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increase staffing in 2015. Implementation Plan Recommendation X-1. FirstEnergy

explained that meter reading managers and supervisors will proactively focus on accounts

to prevent instances of 6 to12 months of consecutive estimates. Its information

technology systems enhancements also automatically generate a “must read” order for

any meter not read in 120 days and allow the changing of estimated/actual read

schedules. Implementation Plan Recommendation X-2.

In our Implementation Plan Order entered on March 30, 2015, at the same audit

dockets, the Commission noted that many of the findings and recommendations from the

PUC Management Audit were also cited in previous FirstEnergy audits. We directed

FirstEnergy to provide “specific descriptions for investments, process improvements,

increased staffing, use of specified technologies, and timelines which will provide

binding commitments by the Companies towards rapid compliance with reliability and

customer service deficiencies.” Implementation Plan Order at 2-3. As part of this more

detailed revised Implementation Plan, FirstEnergy was directed to provide a description

of how the issue of unread meters will be addressed.

FirstEnergy is directed to provide a formal and detailed plan for the elimination of unread meters within sixty (60) days of the entry of this Order to the BCS. This plan should include: (1) specifics on how management performance metrics will be aligned with meter read regulations; (2) how meter reading staffing will be adjusted for each company where meters are not being timely read; and (3) how technology and information systems will address this non-performance prior to installation of smart meters.

Implementation Plan Order at 2-3.

We agree with PULP and OCA that FirstEnergy should provide consistent and

affordable bills on a monthly basis to its CAP customers. Given the low estimated cost

of switching all CAP customers to budget billing ($75,000), we find this payment option

offers the best immediate protection from receiving extremely high bills due to estimated 22

meter readings. The long-term protection will be to reduce or eliminate estimated meter

readings.

Accordingly, we direct FirstEnergy to place all CAP customers into budget billing.

WPP should complete this process by or before June 2016. Met Ed, Penelec, and

PennPower should complete this process by or before October 2016. Prior to

implementation, FirstEnergy shall provide educational materials to currently enrolled

CAP customers about this upcoming change, explaining budget billing calculation,

effects on monthly bills, and the anticipated start date. Materials should emphasize that

CAP remains the most affordable payment option available. Companies should provide

phone numbers for customers to call in case there are questions about this change, and

remind CAP customers of all CAP benefits. FirstEnergy shall file a progress report at

each USECP docket advising BCS and the parties of that Company’s progress toward

this implementation on a quarterly basis starting July 1, 2015.

b. Calculating CAP Credits at a New Residence

Customers who relocate within FirstEnergy territory can continue in CAP and the

Companies recalculate the CAP credits based on the prior 12-month energy usage of the

new residence. Similarly, the CAP credit for a new CAP-eligible customer is also based

on the prior 12-month energy usage of the residence. The Companies inform both sets of

these CAP customers that they will recalculate CAP credits again after six months.

In our review of 448 informal complaints related to FirstEnergy CAPs, we found

13 instances where a Company significantly decreased or eliminated a customer’s

monthly CAP credits based on the low usage at a new residence. Most of these

customers had moved into new residences that had apparently been vacant or rarely used

over the past 12-months. Many complainants reported that their CAP credits increased

significantly after the 6-month review. FirstEnergy did not inform BCS that it offered

23

any billing adjustment on those first uncredited six months after it determined the

household’s new energy burden. Therefore, these low-income customers paid six months

of electric bills that far exceeded FirstEnergy’s energy burden threshold for CAP

participants.

In the Tentative Order, the Commission questioned whether it was reasonable to

extrapolate a calculation for CAP credits from such non-representative data.

In the Tentative Order, we directed that FirstEnergy consider using a different

methodology to determine the energy burden of CAP participants who have lived in a

residence less than 12 months or for CAP customers relocating to a new residence if it is

apparent the usage is below average.

1. Comments: FirstEnergy reports that it made enhancements to its systems in

January 2013 including a quarterly recalculation of CAP Credits which factors in the

customer’s current usage at his/her residence. This process adjusts usage for CAP

customers who move into a new residence or who have lived in a location for less than

12 months. FirstEnergy states that it has no alternative process to estimate usage for

customers in these situations – which is a small number – and claims that there are too

many variables in a customer’s energy consumption to automate such a process.

FirstEnergy Comments at 4.

2. Reply Comments: PULP notes that FirstEnergy does not provide data to support its

assertion that the number of customers affected by this situation is too small to initiate the

system changes needed to address this issue. PULP Reply Comments at 3-4. PULP

recommends that the Commission direct FirstEnergy to make system enhancements

necessary “to ensure that CAP customers who move or have not lived in a residence for a

full 12 months are not required to make payments which exceed CAP energy burdens.”

PULP Reply Comments at 4.

24

In the Supplemental Filing, FirstEnergy clarified that it had identified the number

of customers affected by this issue as “small” based on the number of complaints filed

with BCS (13 out of 448 complaints received). FirstEnergy provided the number of

customers who relocated and were removed from CAP after the quarterly CAP credit

recalculation for Met Ed, Penelec, and PennPower in 2014 (449, 450, and 121,

respectively). The Companies also identified the number of customers in 2014 who

applied for CAP while living in a residence for less than 12 months for Met Ed, Penelec,

and PennPower (3,448, 3,612, and 561, respectively). Supplemental Filing at 4-5.16

3. Resolution: The Commission acknowledges that FirstEnergy has made system

enhancements that help to alleviate this issue by reducing the time period between CAP

credit recalculations from 6 to 3 months. However, customers who apply for CAP at a

new residence or current CAP customers who relocate are still at risk of receiving CAP

bills that exceed the Companies’ energy burden threshold when the property’s historical

usage is minimal or below average. The 7,621 customers who, in 2014, lived in

residences less than 12 months before applying for CAP account for more than half the

CAP enrollment population of Met Ed, Penelec, and PennPower.

Given the complex system changes involved, we are not persuaded to require

FirstEnergy to develop an alternative method to determine a customer’s energy burden

when actual usage data is not available. Nevertheless, we recommend that FirstEnergy

address this issue in future system enhancements by automating retroactive billing

adjustments for customers who received CAP bills in excess of their energy burden level

when actual usage data becomes available. For the “small number” of customers

currently affected, First Energy should consider a manual billing adjustment once they

determine actual usage.

16 FirstEnergy notes that WPP’s WCAP calculates energy burden differently than PCAP and did not provide the corresponding customer data for WPP. Supplemental Filing at 4.

25

We will continue to monitor the effect of FirstEnergy’s CAP Credit calculation on

customers in new residences through informal complaints filed at the Commission.

c. Requirement for Customers to be Current on CAP to Qualify for Recertification

As noted previously, the Proposed 2015-2018 Plans state that customers must be

“current on CAP” to recertify, or risk dismissal from CAP. Proposed 2015-2018 Plans

at 13. In the Tentative Order, FirstEnergy was directed to clarify what CAP obligations a

customer must meet in order to qualify for recertification.

1. Comments: FirstEnergy explained that CAP customers must pay all past due “ask

to pay” amounts on the bill to recertify and continue in CAP. Otherwise, the customer is

in default. FirstEnergy Comments at 4.

2. Reply Comments: No new points were raised regarding this issue in the reply

comments received.

3. Resolution: The Commission acknowledges that CAP customers’ accounts must

be current to recertify. FirstEnergy is directed to include this clarification regarding CAP

recertification in its Revised 2015-2018 Plans.

d. Recertification Reminders

In its Proposed 2015-2018 Plans, FirstEnergy provides the following description

of how the Companies notify customers that it is time to recertify for CAP:

The system allows for notification to be placed on the bill, and also for recertification reminder letters to be sent to the customer at least 60 days in advance of the Benefits End Date, providing information on when benefits

26

will expire, and also whom to contact to complete the recertification process.

Proposed 2015-2018 Plans at 13.

We could not discern the number of recertification reminder letters sent to CAP

customers before the benefit end date. Also, the Company did not clarify the timing or

contents of the bill message reminding the customer to recertify. Ninety of the 448

informal complaints that BCS reviewed concerned customers removed from CAP for

failure to recertify. Many involved months of unaffordable bills and large arrearages

before they re-enrolled in CAP. The Commission expressed concerned that FirstEnergy

gives insufficient customer notice for recertification or removal from CAP.

We suggested in the 2014-2017 USECP Tentative Order for UGI Utilities, Inc. -

Gas Division, UGI Utilities, Inc. - Electric Division, UGI Penn Natural Gas, Inc., and

UGI Central Penn Gas, Inc. (UGI), that the UGI companies consider adopting one or both

of the following practices:

Recertification letters sent to CAP customers 30 and 10 days before a recertification deadline.

A reminder phone call from the CAP agency representative to customers shortly before and after the recertification deadline if they do not yet have proper recertification documentation.

UGI 2014-2017 USECP Tentative Order, Docket No. M-2013-2371824 (October 2,

2014) at 16-17.17

17 UGI ultimately agreed to amend its recertification notification process to include: A recertification notice letter mailed a month prior to the anniversary date; A contact from the CBO 15 days prior to the anniversary date; A reminder letter mailed from the Company on the anniversary or on the recertification due date; and A contact from the CBO 1 month past the anniversary date.

UGI 2014-2017 USECP Final Order, Docket No. M-2013-2371824 (January 15, 2015) at 18-21.27

In the Tentative Order, we directed FirstEnergy to provide details in its comments

about its recertification notification process, including the number and timeline of

reminder letters and bill messages, and any other process enhancements to encourage

customers to recertify.

1. Comments: OCA supports additional CAP recertification reminders and notes that

CAP removal has detrimental effects on low-income customers. Customers then lose

their bill discount and pre-program arrears become due immediately, posing a greater risk

of service termination. OCA endorses the Commission’s proposal that FirstEnergy send

30- and 10-day recertification notices and attempt telephone contact before and after the

deadline as well. OCA Comments at 7-8.

FirstEnergy explains that the Companies sufficiently remind all CAP participants

to recertify several times during a program year, beginning at enrollment:

CAP participants are advised at the time of application that they are required to recertify annually or if there is a change in gross household income, household size or heat source. A notice to recertify is mailed to CAP participants 60 days prior to the benefit end date. A message is printed on the participant’s electric bill 30 days prior to the benefit end date. If a participant does not recertify before the benefit end date, automatic dismissal will occur for failure to recertify. Once removed, the customer will receive a letter that explains the account has been removed from CAP for failure to recertify and provides instructions on how to reapply.

FirstEnergy Comments at 4-5.

2. Reply Comments: OCA reiterates its supports for additional recertification, as

stated in its Comments. OCA Reply Comments at 4-5.

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PULP not only supports OCA’s position but further recommends that FirstEnergy

submit an enhanced recertification process prior to final approval of its Proposed 2015-

2018 Plans. PULP Reply Comments at 5.

3. Resolution: Although we agree with OCA and PULP that an additional reminder

letter or a telephone contact might encourage more CAP participants to recertify, we will

not direct further notifications at this time, however.

FirstEnergy is directed to fully describe its recertification notification process in its

Revised 2015-2018 Plans.

e. Security Deposits

In its proposed Plans, FirstEnergy proposes to assess security deposits on CAP

accounts. Proposed 2015-2018 Plans: Met Ed at 14, Penelec at 14, PennPower at 14, and

WPP at 15.

On October 22, 2014, Governor Corbett signed into law House Bill No. 939 (Act

No. 155 of 2014), which updated Title 66, Chapter 14 of the Public Utility Code. As of

December 22, 2014, 66 Pa. C.S. § 1404 is amended so that “[n]o public utility may

require a customer or applicant that is confirmed to be eligible for a Customer Assistance

Program to provide a cash deposit.” Accordingly, FirstEnergy Companies may not assess

security deposits on its CAP customers. This amendment has rendered comments on this

subject moot, as FirstEnergy has acknowledged that it will remove the security deposit

provision from its 2015-2018 USECPs.

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f. Households Reporting No Income

In the Tentative Order, we directed FirstEnergy to explain its policies and

procedures when a CAP applicant or participant reports zero income. We encouraged

FirstEnergy to consider revising its zero income eligibility to something similar to that of

Duquesne Light, PECO, or PGW. These other utilities allow customers who report no

source of income to enroll or remain in CAP if they provide documentation of how they

meet monthly expenses.

1. Comments: OCA notes that the Department of Human Resources (DHS) allows

customers reporting zero income to qualify for LIHEAP if they explain how they meet

basic living expenses and financial obligations. OCA Comments at 9, citing the 2015

LIHEAP State Plan, Section 601.103.18 OCA recommends adopting a policy requiring

“only that the zero-income customer explain on a properly verified form how [the]

customer pays for his or her bills.” OCA Comments at 9.

FirstEnergy provides the following explanation of its verification procedure for

CAP applicants or participants who report zero income:

The [FirstEnergy] Companies’ CAP program requires households reporting zero income to complete a no-income form. The form requires the household to report how long the household has been living without income and to explain how certain household expenses are met. Applicants claiming zero income for the first time are required to recertify for CAP after 90 days and then on an annual basis.

FirstEnergy Comments at 5.

2. Reply Comments: No new points were raised.

18 http://www.dhs.state.pa.us/cs/groups/webcontent/documents/document/c_108845.pdf.30

3. Resolution: FirstEnergy is directed to describe its zero income verification process

in its Revised 2015-2018 Plans.

g. Minimum Payment Requirements

The Proposed 2015-2018 Plans have minimum monthly payment requirements.

For Met Ed, Penelec, and PennPower, the minimum is $12 for non-heating accounts and

$45 for heating accounts. For WPP, the minimum is $25 for baseload accounts, $30 for

water heating accounts, and $50 for electric heating accounts. Proposed 2015-2018 Plans

at 9.

In the BCS review of 448 informal complaints related to FirstEnergy CAPs, at

least four customers received zero CAP bills for multiple months because their CAP

credits exceeded their monthly electric usage costs.

In the Tentative Order, we questioned allowing the application of CAP credits to

reduce a bill to below the minimum monthly payment requirements. According to 52 Pa.

Code § 69.265(3)(B-C), a non-heating CAP customer should pay at least $12-15 monthly

and an electric heating CAP customer should pay at least $30 - $40 monthly. We are also

concerned that allowing CAP customers to have a zero bill is detrimental to helping them

establish good payment habits. Using only enough CAP credits to reduce a CAP

customer’s bill to the minimum monthly payment amount would allow application of

remaining CAP credits at a later time, especially benefitting those customers with large

monthly make up bills following low estimated bills. This should also help CAP

customers experience less fluctuation in monthly bills.

In the Tentative Order, we directed FirstEnergy to explain whether the Companies

will revise application of CAP credits to ensure that CAP customers pay the minimum

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billing amount each month. We also asked FirstEnergy to explain whether CAP credits

exceeding the minimum payment could apply to future bills.

1. Comments: OCA supports and recommends minimum payment amounts each

month, regardless of whether PCAP or WCAP credit exceeds monthly usage. OCA

agrees that paying less than the minimum amount or nothing is inconsistent with 52 Pa.

Code § 69.265(3)(B-C). OCA reinforces that minimum payment requirements encourage

CAP customers to develop good payment habits and earn arrearage forgiveness for each

payment, which help control program costs paid by other residential customers. Further,

OCA notes the benefit of conserving CAP credits for future high bills. OCA Comments

at 9-11.

FirstEnergy explains that it provides annual CAP credits to customers in

12 monthly installments and it is not able to enforce a minimum monthly payment.

Monthly CAP credits may exceed the customer’s billed amount in some months

especially in months of low usage or when they apply a LIHEAP grant. Then, the excess

credit amount applies to the next monthly bill. It believes that requiring a monthly

minimum CAP payment would prevent customers from receiving the full benefits of

CAP and/or LIHEAP. Even though FirstEnergy offers budget billing for CAP, bill

amounts may not be consistent, and the budget true-up could also be different.

FirstEnergy Comments at 5-6.

2. Reply Comments: OCA reiterates its support for minimum monthly CAP

payments. OCA Reply Comments at 5.

The OCA submits that contrary to the Companies’ arguments, the minimum payment does not prevent customers from receiving the full benefit of CAP or the [LIHEAP] grant. CAP customers will continue to receive both the benefits of CAP and LIHEAP even if they are required to pay a minimum monthly bill. The minimum CAP payment requirement allows the CAP customer to conserve the

32

benefit of its CAP credits for a month when the credit is actually needed.

OCA Reply Comments at 5, citing Tentative Order at 25 and OCA Comments at 11.

OCA notes that FirstEnergy does not apply arrearage forgiveness for bills paid by

Dollar Energy or LIHEAP grants. OCA Reply Comments at 6, citing Tentative Order at

26.

PULP agrees with FirstEnergy, stating that requiring CAP customers to make a

minimum monthly payment would prevent them from receiving the full benefit of CAP

and/or LIHEAP, and contends that FirstEnergy complies with the set minimum payment

requirements in Section 69.265(3)(B-C). PULP Reply Comments at 6-7, citing Proposed

2015-2018 Plans at 9.

PULP recommends the Commission approve FirstEnergy’s current minimum

payment requirements and process without change because:

[I]t is both its CAP design and LIHEAP requirements which render [FirstEnergy] unable to require the customer to directly pay that amount each month. As noted, CAP credits are determined annually by the Companies and in any given month the average CAP credit can exceed the customer’s billed amount. Furthermore, LIHEAP regulations would prevent it from acting as if the LIHEAP grant it receives directly from DHS, as a certified LIHEAP vendor, was not treated in the same manner and to the same effect as another CAP customer making the payment directly.

PULP Reply Comments at 7.

FirstEnergy explains that that it does use its minimum billing requirements to

determine the customer’s monthly CAP bill:

33

Inherently built in to the design of the program is a minimum amount the customer is responsible to pay before determining the CAP credit amount. But in any given month the average CAP credit can exceed the customer’s billed amount, since usage may fluctuate from month to month. For this type of situation, the excess CAP credit will apply to the customer’s next billing.

FirstEnergy Reply Comments at 7.

FirstEnergy further explains that it cannot enforce a minimum CAP payment

amount for the month(s) LIHEAP grants must apply to current and future CAP bills.

FirstEnergy Reply Comments at 7-8.

The Companies reported in the Supplemental Filing that revising the billing

system to charge customers a monthly minimum amount would require 100 man hours

and cost $7,000. Making system changes to apply monthly PCAP credits only up to the

minimum amount and then apply excess credits to the next month’s bill would take 9

months and cost $110,000. FirstEnergy notes that this change would not guarantee that

customers will be required to make a minimum payment when they receive a hardship

fund or LIHEAP grant. Supplemental Filing at 6.

3. Resolution: In the Tentative Order, we suggested that FirstEnergy Companies

consider revising the application of CAP credits to ensure that CAP customers pay the

minimum bill each month. We did not propose that LIHEAP grants (or hardship fund

grants) be applied in the same manner. We are aware that DHS currently requires

utilities to apply LIHEAP cash grants to monthly CAP “asked to pay” amounts.19

Although we understand FirstEnergy and PULP’s position on LIHEAP, we maintain our

interest in establishing a CAP billing process that requires minimum monthly bills.

19 “Public utilities that operate CAPs will apply the LIHEAP cash component benefits only to the customer’s monthly ‘Asked to Pay’ amount.” 2015 Pennsylvania LIHEAP State Plan at §601.45

34

We disagree that a required minimum monthly bill will deprive customers of the

full benefits of CAP. CAP customers would maintain affordable monthly bills, pre-

program arrearage forgiveness, and reserve some CAP credits for future high usage or

make up bills.

At this time, we will not require FirstEnergy to make system or Plan changes to

ensure that customer CAP credits do not exceed monthly minimum payment

requirements. We directed FirstEnergy in this Order to place all CAP customers on

budget billing to address billing fluctuations caused by estimated meter readings. This

should more evenly distribute CAP credits and required payments. Budget billing should

reduce the number of instances where CAP bills fall below a minimum payment amount.

h. Arrearage Forgiveness

The Proposed 2015-2018 Plans explain that:

Debt forgiveness credits (1/36 of pre-program debt) will be awarded in response to customer payments of in-full monthly PCAP bills, whenever those payments occur. [CAP] participants must remain in the Company’s standard residential billing cycle (20-day due date) in order for debt forgiveness credits to be awarded by the host computer system.

Proposed 2015-2018 Plans at 11. Further, a footnote on the same page explains that the

Companies will not apply monthly arrearage forgiveness for credits from LIHEAP or

Dollar Energy Grants, but they will grant forgiveness retroactively when the customer

pays the next month’s bill. Proposed 2015-2018 Plans at 11.

We are unsure if FirstEnergy applies forgiveness credits when CAP participants

pay on-time and in-full, regardless of existing CAP arrears. In another utility’s USECP

proceeding, the Commission directed arrearage forgiveness for each timely and in-full

monthly CAP payment, even though CAP arrears exists, as follows: If a customer misses 35

one month, but then pays the next month in full and on time, he/she will still receive

1/36th arrearage forgiveness for the one month paid. See PGW 2014-2016 USECP,

Docket No. M-2013-2366301 (August 22, 2014) at 20-26.

Second, it is not clear whether FirstEnergy CAP customers receive arrearage

forgiveness retroactively for any missed payments once they pay the account in full.

Duquesne Light Company and PPL Electric, for example, allow CAP customers to

receive arrearage forgiveness for any monthly payments missed once the entire CAP

balance is caught up. See Duquesne Light Company 2014-2016 USECP Final Order,

Docket No. M-2013-2350946 (March 6, 2014) at 19-20; and PPL Electric 2014-2016

USECP Final Order, Docket No. M-2013-2367021 (September 11, 2014) at 28-30.

The Tentative Order directed First Energy to clarify these situations.

1. Comments: FirstEnergy reports that it forgives 1/36th of pre-program arrears “in

response to in-full payments of CAP obligations (‘ask to pay’)” and provides retroactive

arrearage forgiveness for any missed payments once the CAP account is paid in-full.

FirstEnergy Comments at 6.

2. Reply Comments: No new points were raised regarding this issue in the reply

comments received.

3. Resolution: FirstEnergy is directed to clarify in its Revised 2015-2018 Plans that

CAP customers receive arrearage forgiveness for each timely and in-full monthly

payment, regardless of CAP arrears, and retroactive forgiveness for any months missed

once the account is caught up.

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i. Applying overpayments to CAP accounts

In its Proposed 2015-2018 Plans, the FirstEnergy Companies do not explain how

they apply customer payments made in excess of the requested CAP amount due.

In the Tentative Order, we directed FirstEnergy to explain how it applies CAP bill

overpayments. Applying CAP overpayments to anything other than a customer’s

payment responsibility may impose additional financial burdens on low-income

households who may logically anticipate that paying ahead would reduce the next

monthly payment. Applying excess CAP payments to the customer’s next monthly bill

reduces the risk of customer default and dismissal from the program. The Commission

noted it has previously required another utility to apply any overpayments first to any

existing CAP arrears and then to the customer’s next monthly CAP bill. See PGW 2014-

2016 USECP Final Order at 38-39. Duquesne Light and PPL Electric have also agreed

to adopt this procedure in its 2014-2016 USECPs. See Duquesne Light Company 2014-

2016 USECP Final Order at 10-12; and PPL Electric 2014-2016 USECP Final Order at

33-34.

1. Comments: FirstEnergy explains that it currently applies CAP overpayments “first

to any open deferred arrears balance and, if the customer has no deferred arrears, the

excess payment will apply to future ‘ask to pay’ amounts.” FirstEnergy agrees to amend

the way it applies CAP overpayments to be consistent with the process we described in

the Tentative Order. FirstEnergy has estimated the cost of implementing this change to

be $20,000. FirstEnergy Comments at 7.

2. Reply Comments: No new points were raised regarding this issue in the reply

comments received.

37

3. Resolution: The Commission supports FirstEnergy’s decision to apply excess CAP

payments to any existing program arrears and then to the next month’s CAP bill.

Accordingly, FirstEnergy is directed to reflect this payment application change in its

Revised 2015-2018 Plans and make all necessary system changes by January 2016 or

earlier. FirstEnergy shall file a quarterly progress report, at each docket, advising BCS

and the parties of that Company’s progress toward this implementation, starting July 1,

2015.

j. WPP Energy Burden and CAP Credits

As noted above, there are significant differences in the PCAP and WCAP energy

burden thresholds and CAP credit limits. Low-income customers of Met Ed, Penelec,

and PennPower may receive monthly PCAP credits if their energy burden is more than

3% for non-heating accounts or 9% for electric heating accounts. For low-income WPP

customers, the monthly WCAP credit energy burden threshold is as low as 5% for non-

heating accounts and as high as 17% for electric heating accounts, with energy thresholds

varying based on household income. The offered subsidy amount is also significantly

different between WPP and the other FirstEnergy Companies. Met Ed, Penelec, and

PennPower offer annual CAP credits up to $960 for non-heating customers and up to

$2,400 for heating customers, while WPP only offers annual CAP credits up to $560 for

non-heating customers (a $400 difference) and up to $1,400 for heating customers (a

$1,000 difference).

In the Tentative Order, we expressed concern that low-income customers served

through WPP receive significantly less benefit from CAP than customers served by other

FirstEnergy Companies. WPP customers are less likely to qualify for CAP credits and

will receive less of a discount on their monthly bills than CAP customers served by Met

Ed, Penelec, and PennPower.

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We acknowledged that WPP’s CAP credit limits may be consistent with the CAP

Policy Statement at 52 Pa. Code § 69.265(3)(v)(B-C). However, the Commission has

permitted EDCs to set higher CAP credit limits in recent USECPs,20 and we do not object

to the higher CAP credit limits for Met Ed, Penelec, and PennPower.

In the Tentative Order, we recommended that FirstEnergy consider aligning the

CAP policies and procedures of WPP with those of the other FirstEnergy Companies,

which should include sharing the same energy burden thresholds and CAP credit limits.

This would ensure that all FirstEnergy low-income customers receive the same benefits

from CAP. Therefore, FirstEnergy was directed to address whether it plans to, and if so,

how to, modify the energy burden threshold and CAP credit limits of WPP’s WCAP to

match those of PCAP.

1. Comments: OCA supports modifying WPP’s energy burden threshold, CAP

credits limits, and minimum payment requirements for WCAP to match PCAP. OCA

Comments at 11-12, 15-16.

WPP had proposed to initiate a Universal Service Rider (Rider) in its then-pending

base rate increase request at PA PUC, et al. v. WPP, Docket No. R-2014-2428742, et.

al.21 WPP would also modify its energy burden levels and CAP credit limits to be

consistent with the other FirstEnergy companies subject to approval of the Rider.

FirstEnergy Comments at 7.

2. Reply Comments: FirstEnergy agrees that WCAP’s minimum monthly payment

requirements should match those of the other FirstEnergy Companies, and would make

20 Duquesne Light was directed to increase maximum CAP credits limits to $700 for non-heating customers and $1,800 for heating customers. See Duquesne 2014-2016 USECP Final Order at 10. The Commission also approved PPL’s 2014-2016 USECP, which offered an 18-month CAP credit limit of $1,275 for non-electric heat customers ($852 annually) and $3,240 for electric heat customers ($2160 annually). See PPL Revised 2014-2016 USECP at 10-11.21 That proceeding also addressed WPP’s Petition for Approval of Smart Meter Deployment Plan, M-2013-2341991.

39

those modifications if the Commission approves its Rider. FirstEnergy Reply Comments

at 12.

3. Resolution: By order entered on April 9, 2015, the Commission adopted the

Recommended Decision and approved, with certain reporting obligations, a joint petition

for settlement in the rate case proceeding, including the initiation of the WPP Rider.

Within 30 days of this Final Order, FirstEnergy shall file a timeline at this docket

detailing when WPP will modify its CAP credit limits, energy burden levels, minimum

payment requirements, and other components of its CAP to be consistent with PCAP, to

the Commission and all parties to this proceeding. A revision to WPP’s 2015-2018

USECP shall be filed when the modifications have been completed.

If WPP can make any of these modifications immediately, it should include those

changes as part of its Revised 2015-2018 Plan to be filed consistent with this Order.

k. $5 Co-Payment for WCAP Customers

This issue was not addressed in the Tentative Order.

1. Comments: PULP reports that WPP requires all WCAP participants to pay an

additional $5 co-payment on each monthly bill, regardless of whether or not the customer

has any existing pre-program or CAP arrears. PULP recommends that co-payment be

eliminated. PULP Comments at 5-6.

[I]t is PULP’s understanding that the co-payment is required and collected even if there is no current pre-program arrears nor any current CAP arrears. Thus, a customer who has had all pre-program arrears forgiven and who has remained current on all CAP payments is nevertheless obligated to pay a $5.00 co-payment each month.

40

PULP Comments at 6.

2. Reply Comments: FirstEnergy agrees to eliminate the $5 co-payment in WPP’s

2015-2018 USECP. FirstEnergy Reply Comments at 14.

3. Resolution: In WPP’s Revised 2015-2018 Plan, FirstEnergy should acknowledge

that it is eliminating the $5 co-payment on WCAP monthly bills. This shall become

effective with the implementation of WPP’s 2015-2018 USECP.

2. LIURP (WARM)

FirstEnergy’s LIURP program is called WARM and it provides energy

conservation measures and education to low-income customers. WARM targets

customers who participate in CAP or LIHEAP. WARM’s primary objectives are to

reduce overall energy use, energy bills, and arrearages of eligible low-income customers.

The program also strives to increase participants’ health, safety and comfort in the home.

a. Eligibility

The WARM program is available to households with incomes at or below 150%

of the FPIG. LIURP regulations also allow use of up to 20% of the WARM budget for

special needs customers. Special needs customers are defined as those with medical

problems or personal crisis situations such as loss of income, and those whose household

income is at or below 200% of the FPIG. The Companies do not require these

households to carry an account balance in order to qualify. Households must not have

received WARM services within the last five years, although the Company can grant

exceptions.

41

FirstEnergy also requires an annual minimum usage averaging 6,500 kWh, and a

minimum residency of six months at the service address. However, the Companies will

waive the minimum usage requirements for customers who are having their

weatherization services coordinated by an agency/contractor with an NGDC LIURP

program or with the Department of Community and Economic Development’s (DCED)

WAP.22 By waiving usage requirements for those coordinated jobs, the Companies can

leverage resources and funding streams to provide more energy efficiency measures,

strive for deeper, whole-house savings and remedy many health and safety issues that

they could not address within the scope and funding of just a single weatherization

program.

FirstEnergy’s Chronicles case management system automatically generates

WARM applications for customers meeting the eligibility criteria. The Chronicles

system also generates a report of customers with incomes at 151 to 200% of the FPIG

who may meet the special needs criteria to qualify for WARM. WARM employees also

refer customers to other Universal Service and assistance programs as necessary.

There were no issues raised regarding WARM/LIURP eligibility in either the

Tentative Order or in comments. Accordingly, no changes are required at this time.

b. Allowances

The Companies report that more than half of WARM participants use space

heaters as supplemental electric heat in winter, even though electric is not their primary

heat source. We refer to this as “de facto heating”. It often occurs when low-income

households are unable to pay for furnace repair or replacement, oil delivery, or natural

gas service restoration. Instead, these customers use cheaper-to-own-but more 22 The Companies recently lowered the usage threshold from an annual average of 7,200 kWh to 6,500 kWh pursuant to Commission approval at Docket Nos. M-2010-2207924 and M-2011-2231038 (November 13, 2014). Additionally, the Companies received approval to waive usage thresholds for jobs that would coordinate with WAP or NGDCs’ LIURP programs.

42

expensive-to-operate electric space heaters during the winter.23 Electric space heating can

be a significant source of energy inefficiency in the home and is an unsafe alternative to a

functioning central heat source. The de facto heating issue is compounded for CAP

customers, especially if the CAP credits apply at the lower amount for a non-heat account

as compared to application at the higher amount for a heating account. A CAP customer

quickly depletes CAP credits by using the inefficient space heaters for supplemental heat.

In the past, the Companies attempted to direct de facto heating customers to WAP

and NGDC LIURP programs to repair gas or oil heating systems. However, these same

homes often suffer structural or other deficiencies that disqualify them from all

weatherization programs.

The Companies request in their Proposed 2015-2018 Plans to amend the cost-

effective budget calculation for each home, called the seasonal allowance, to adjust for

recent contractor price increases and to direct higher budgets towards homes requiring

more extensive work. Proposed 2015-2018 Plans at 18. This procedure complies with

the recommended best practices identified by FirstEnergy’s third-party LIURP evaluator,

Michael Blasnik, and would allow the Companies more flexibility to address issues such

as de facto heating as necessary. For the homes with lower estimated energy savings, the

procedure adjusts the budget downward, ensuring that they spend funds in proportion to

energy savings potential.

Many times there are barriers to installing energy-saving measures because of

serious health or structural issues in a home.24 These homes have some of the highest

usage but are ineligible for weatherization. In their Proposed 2015-2018 Plans, the

Companies request to increase the allowance for health and safety measures to more

adequately address minor repairs, code compliance, and installation of measures that do

23 See , e.g., CAUSE Comments to the March 1, 2012 Act 129 Phase II Secretarial Letter, Docket No. M-2012-2289411, at 13-14.24 This is often referred to as an issue with “deteriorating housing stock.”

43

not directly produce energy savings but are nevertheless necessary, such as carbon

monoxide detectors. FirstEnergy proposes to raise the allowance from 30% to 50% of

the seasonal allowance of a job, “contingent upon positive annual evaluation results.”

Proposed 2015-2018 Plans at 18. Combustion safety testing costs would be in addition to

health and safety spending.

BCS recently released several LIURP Codebook guidance memos with minor

changes to how LIURP-participating utilities report health and safety measures, making it

easier to identify these measures and to determine impact on overall LIURP budgets.

These two proposed changes would facilitate increased coordination among

weatherization programs and enable the Companies to begin addressing the de facto

heating problem. Program partnering will strive to remedy some structural and health

and safety issues, allowing the Companies to then serve some of those high usage

customers, previously disqualified from WARM.

While we proposed no changes to the health and safety allowance provisions in

the Tentative Order, we requested comments on the Companies’ proposed changes to the

seasonal and health and safety allowances.

1. Comments: OCA supports the proposed LIURP seasonal allowance changes to

address de facto heating:

The use of electricity as a de facto primary heating source is dangerous, is more expensive to the customer, and will result in the customer exceeding the maximum CAP credit allowance. Further, it will increase the cost of the program to non-CAP residential ratepayers because it significantly increases a CAP customer’s usage levels.

OCA Comments at 13.

44

OCA recommends that FirstEnergy coordinate its Act 129 and LIURP program

efforts to address de facto heating. OCA Comments at 13.

2. Reply Comments: FirstEnergy agrees that the proposed seasonal allowance

changes “will be used in part to address de facto space heating through the installation of

insulation, air sealing and heating system repair measures in an effort to reduce electric

space heater use.” FirstEnergy Reply Comments at 9. FirstEnergy will not replace fossil

fuel heating systems but will refer those households to LIHEAP Crisis, a WAP, or an

NGDC’s LIURP. FirstEnergy Reply Comments at 9.

3. Resolution: The Commission applauds FirstEnergy for taking a proactive and

reasonable approach to address both de facto heating and the increasing number of

structures disqualified from LIURP, due to housing stock deterioration. The proposed

changes will allow more low-income homes to qualify for weatherization services, while

maintaining overall program quality and cost-effectiveness. To track the effectiveness of

these seasonal and health and safety allowance changes, the Companies shall track the

impact and report the same to BCS as part of the annual LIURP reporting due to the

Commission each April 30th.

c. New LIURP Measures

FirstEnergy reports that it added two new energy saving measures to its WARM

program – heat pump water heaters and furnace whistles. In the Proposed 2015-2018

Plans, FirstEnergy is proposing to add four more: ductless mini split heating and cooling

systems, LED lighting, increased maximum attic R-value to R44, and customized audit

and energy educations for CAP customers with the highest electric usage.

45

The LIURP regulations at Section 58.11(a) have specified since 1998 that an

individual measure should meet a simple 7- or 12-year payback period.25 Program

emphasis, however, has shifted significantly since 1998 from prescriptive-based

measures to deeper, whole-house energy conservation. Thus, there is an increasing

number of situations where contractors perform an energy audit for a LIURP job and

identify potential remediation, but the utility has to limit the installed measures in order

to meet the “appropriate” payback period. EDCs must determine if each proposed energy

saving measure is feasible and cost-effective.

Deteriorating housing stock is not the only reason utilities have difficulty serving

eligible LIURP customers. Some homes received previous weatherization services, and

may be considered in the “stay out” period. Even when a previously treated household

still demonstrates high usage, utilities often cannot install further cost-effective energy

efficiency measures until the “stay out” period has expired. It may also have been limited

to installing cheaper measures previously. Some measures may not have qualified

because their payback periods exceeded 7- to 12-years. Thus, some households forego

potential savings when utilities cannot (1) install all appropriate measures in one

comprehensive treatment and/or (2) return to a home during a stay-out period, even if

more potential savings exist.

In the Tentative Order, we opined that the Companies should seek flexibility to

install all appropriate measures indicated by a comprehensive audit, regardless of

payback period, provided that the overall job is still cost-effective. Each job should

maximize potential energy savings, particularly for home “heating” jobs, to limit repeated

treatments. We requested comments on whether and how the Companies could gain this

flexibility.

25 Over the years, this payback period has been additionally interpreted as a stay-out provision. On November 13, 2014, at Docket Nos. M-2010-2207924 (2011-2014 USECP for WPP) and M-2011-2231038 (2012-2014 USECPs for Met Ed, Penelec, and PennPower), First Energy received approval to reduce the stay-out period from 7 years to 5 years if usage and potential savings warranted.

46

1. Comments: OCA supports the Commission’s recommendation that FirstEnergy

“develop a more comprehensive, whole-house approach to energy conservation.” OCA

Comments at 14. OCA avers that greater flexibility should result in greater savings for

the customer and the program. OCA Comments at 14.

FirstEnergy supports having greater flexibility “to install all appropriate measures

indicated by a comprehensive audit, regardless of payback period and especially for a

‘heating’ customer, provided that the overall job is still cost-effective.” FirstEnergy

Comments at 7. It reports that within 90 days of approval of its USECPs, it will seek to

implement promptly all services and measures identified in an audit for customers of

Met Ed, Penelec, and PennPower if the entire job will be cost effective. Due to the

additional money and time needed to provide comprehensive LIURP services, the

Companies plan to serve at least 92% of its identified LIURP participants. Additionally,

WPP sought a LIURP budget increase of $454,247 to provide more LIURP services

through its then-pending base rate case at Docket No. R-2014-2428742. FirstEnergy

Comments at 7-8.

2. Reply Comments: PULP supports granting greater flexibility to FirstEnergy in

providing LIURP services and addressing de facto heating. PULP Reply Comments

at 7-8. PULP contends that greater LIURP flexibility will “enhance the effectiveness of

the program, reduce low-income household usage, enhance their safety, extend their CAP

credits, reduce monthly debt and the costs borne by other ratepayers of debt, collections,

and termination.” PULP Reply Comments at 8.

3. Resolution: The proposed flexibility in the application of measures that do not

conform to the previous payback period requires a waiver of the LIURP regulation at

Section 58.11(a), which restricts each installed measure to a payback period of 7 or 12

years.26 The Commission shall grant the four FirstEnergy Companies a temporary partial 26 Section 5.43(a) of our regulations permits a utility to petition for waiver of a regulation. 52 Pa. Code § 5.43(a). Section 5.43(b) requires that such petitions be served on “all persons directly affected and on other partiers who

47

waiver of the LIURP regulation at Section 58.11(a) under the conditions described

herein.27 This waiver shall be in effect upon the publishing of this Order and shall be for

the duration of the 2015-2018 USECPs unless terminated sooner by the Commission. As

a condition of the partial temporary waiver, the Companies shall report the findings to

BCS as part of the required annual LIURP reporting, so we can evaluate whether the

waiver should be extended and/or whether we should address this matter on an industry-

wide scale.28

The Commission recognizes that the Companies need time to implement this

change. Further, the Commission acknowledges that the Companies may have to slightly

reduce the overall anticipated number of jobs to accommodate an increase in

comprehensive heating jobs that may include measures that do not meet the current

payback period. The Companies shall coordinate with BCS on the timing and effect of

change. Accordingly, these provisions are to be reflected in the Revised 2015-2018

Plans.

Regarding WPP, we note that the WPP base rate case at R-2014-2428742 has been

resolved by partial settlement as detailed in the Recommended Decision issued on

petitioner believes will be affected by the petition.” 52 Pa. Code § 5.43(b). Section 56.452(a) permits a utility to apply for a modification or temporary exemption of Chapter 56 of our regulations if compliance would result in an “unreasonable hardship” or if a “technical advance [would] permit[] an enhanced level of customer service.” 52 Pa. Code § 56.452(a). Section 56.452(b) requires the utility to provide notice to persons who may be affected by the modification or temporary waiver. Such notice may be by bill insert or other reasonable manner. 52 Pa. Code § 56.452(b). In our opinion, FirstEnergy’s request for this partial temporary waiver of Section 58.11(a) would permit an enhanced level of customer service. Further, this waiver will have prospective application to residential customers who are not yet identified, thus advance customer notice of the request for the waiver is impractical. As a substitute for that notice, we find that OCA, the statutory advocate for residential customers, is aware of the request and has no objections. Further, the Companies will explain the applicable payback period provisions to any residential customer that could benefit from the change. Thus, the requirements for a temporary partial waiver have been met.27 This waiver shall apply only to heating jobs for which the audit indicates should receive comprehensive measures. The overall job must still be cost-effective and otherwise meet LIURP regulations.28 LIURP jobs performed during the 2015 program year are evaluated during the 2016 post-period and will be reported to BCS by April 1, 2017. This would be the earliest point at which any data would be available for evaluation, and we understand that it will only represent a partial program year. It may be necessary to reserve our initial evaluation until a full year of data can be obtained (i.e., 2016 program year, reported by April 1, 2018).

48

March 17, 2015, and adopted by the Commission by order entered on April 9, 2015. The

settlement provided as follows:

[WPP] will designate $350,000 in LIURP dollars to be collected through the USC Rider to its WARM[/LIURP] program. These funds will supplement the [WPP’s 2015-2018 USECP] WARM[/LIURP] budget as tentatively approved by the Commission on December 18, 2014 at Docket No. M-2014-2407728. The purpose of this additional funding is to conduct a pilot to enable [WPP] to provide whole-house WARM[/LIURP] program energy efficiency and conservation measures and repair or replacement of non-functioning fossil fuel heating systems, including electrical service upgrades, ducts, flue, and chimney repairs if needed. Under this pilot, [WPP] will serve up to fifty homes by April 30, 2017. Any funds not expended by April 30, 2017 will be carried over to supplement the 2018 LIURP. In the event that the [WPP] 2015-2018 USECP WARM[/LIURP] budget is not approved by the Commission, [WPP] nevertheless commits to designate $350,000 to be recovered through the USC Rider as a supplement to the approved budget for the purposes of conducting the pilot.

RD at 29.

The settlement in WPP’s base rate case, inter alia, establishes a pilot program in

which WPP will provide whole-house WARM/LIURP program energy efficiency and

conservation measures and will repair or replace non-functioning fossil fuel heating

systems, including electrical service upgrades, ducts, flue, and chimney repairs if needed.

WPP projects that the pilot program will serve up to fifty homes by April 30, 2017. This

provision should be included in WPP’s Revised 2015-2018 Plan.

d. Education

Energy education, an often overlooked but critical weatherization program

component, enables behavior modification for reducing usage and establishing good

49

conservation habits. As evidenced by the use of home energy reports in several Act 129

portfolios, effective energy education can drive or supplement energy savings.29

FirstEnergy has a successful energy education component for its WARM

programs. All trained auditors attempt to engage the customer using their “energy

education notebook” and Act 129 home energy reports, to design targeted household

savings strategies. Both the auditor and customer sign partnership agreements detailing

the customer savings strategies.

The Companies evaluate the WARM participant’s energy use 5-months post-

treatment to proactively identify and limit “non-savers.” If post-treatment usage

decreased by 5%, the customer receives a congratulatory letter. If energy usage has

increased by more than 5%, the contractor must follow-up by phone and/or visit to try to

identify reasons for such increase. This is a LIURP “best practice.” Such an early

evaluation allows time for remedial education about lifestyle or adjustments to

weatherization measures.

No issues were identified regarding this aspect in the Tentative Order or in

comments. Accordingly, no changes are required to the education component of

FirstEnergy’s WARM program.

f. Training and Quality Assurance

FirstEnergy requires contractor and crew members who perform combustion

safety testing or who make decisions involving selection of energy efficiency measures,

to be Building Performance Institute (BPI) certified30 as BPI Building Analyst

29 See, for example, the impacts of energy conservation education undertaken pursuant to Act 129, 66 Pa. C.S.  § 2806.1, as evidenced by the use of home energy reporting programs in the large EDC’s Act 129 portfolios documented at various dockets. 30 BPI is a non-profit organization, recognized for national standards in development, training, and credentialing contractors who perform residential energy efficiency retrofit work.

50

Professionals. The Companies sponsor and encourage contractor attendance at national

and regional conferences for continuing education and hold specific training on WARM

procedural issues.

The Companies utilize third-party inspectors as part of their quality assurance

process for inspections of completed WARM jobs and to BPI train/test auditors and crew

members. In the past, the job classification (heating, water heating, or baseload)

determined the inspection rate of the homes. First Energy inspectors evaluated 50% of

home heating jobs and 15% of the less complex water heating and baseload jobs. The

Companies are requesting to change the inspection rate to 35% of total production,

instead of basing the rate on job classification. Proposed 2015-2018 Plans at 21.

The Companies explain that the number of households using supplemental and de

facto electric heat has substantially increased. Treatment for those homes requires more

comprehensive energy efficiency measures and combustion safety testing, and

consequently, more oversight and inspection. The proposed change will allow the

Companies to appropriately focus more of the overall inspections on complex jobs,

mirroring actual job production. Proposed 2015-2018 Plans at 21.

In addition to the evolution of technologies and comprehensive measures that are

available within the FirstEnergy WARM program, increased coordination with other

weatherization programs also warrants increased oversight. Beginning July 1, 2015, the

WAP program will have new national Department of Energy Standard Work

Specifications (SWSs) that will apply to all jobs. WAP will require inspections on all

jobs, including those coordinated with utility LIURP work. In the majority of cases,

there is significant overlap among the contractors performing and inspecting this work.31

31 This issue was also discussed in UGI USECP 2014-2017, Docket No. M-2013-2371824 (October 2, 2014) at 31. 51

LIURP regulations do not specify work quality standards, nor do they require

credentials for contractors, or guidelines for quality control and the number/level of job

inspections. Historically, each participating utility develops these LIURP program

elements independently.

We would prefer to defer to the WAP SWS standards on all LIURP-WAP

coordinated jobs because it would help standardize quality control. In many instances, the

same contractor is performing the work on these coordinated jobs. There may often be no

need to duplicate audits and inspections. Situations with ongoing electric and gas

weatherization may require different audits and inspections, depending on contractor

qualification and experience, and the agencies involved. We encourage the Companies to

utilize a single, coordinated or combined audit or inspection, whenever appropriate.

Currently, quality control procedures for non-coordinated LIURP jobs are subject

to ad hoc review and approval in the individual utility’s USECP proceedings. These

reviews vary significantly from utility to utility, as do the quality control protocols and

procedures. This highlights the question of whether stakeholders need to address the

development of LIURP work quality standards and/or uniform quality control guidelines

regarding inspections and training for all LIURP jobs at a program-wide level. As other

weatherization programs in Pennsylvania move toward higher standards and more

consistent work quality and protocols, it is critical that the LIURP program do the same.

FirstEnergy has been an active participant as part of the Pennsylvania Weatherization

Advisory Council’s (PAC) Coordination Committee, and many of the changes previously

implemented or proposed in this USECP are the result of that participation. We applaud

the Companies for recognizing the long-term goals of the PAC, and for the efforts taken

so far, to improve the WARM program.

52

In the Tentative Order, we requested comments on the quality assurance changes

proposed by FirstEnergy. We received no comments or reply comments directly related

to these changes.

Resolution: Accordingly, we shall approve the proposed changes to FirstEnergy’s

inspection rate and quality control procedures for the WARM program. In situations

where the Companies have coordinated on weatherization jobs, they should strive to

minimize duplicated costs, such as audits or inspections. On coordinated WAP jobs, we

encourage the Companies to defer to the WAP SWS-based quality control inspection

protocol, as the SWS-based inspections have the potential to bring a level of

standardization and consistency to all of the jobs and work quality being performed,

regardless of weatherization program. We recognize that this may take some trial and

error to coordinate and develop a functional, effective protocol. We will remain flexible

in our initial evaluation of these coordinated jobs as long as the Companies track and

report on the progress in their annual LIURP evaluations to the Commission.

3. CARES

CARES assists payment-troubled residential customers who are experiencing a

recent hardship, such as illness, injury, death of a wage earner, family problems,

disability, sudden loss of income, or any customer over the age of 60 requiring special

assistance. FirstEnergy representatives make referrals to social service agencies, provide

information regarding available programs and attempt to help customers enroll into

company CAPs when appropriate. CARES has no qualifying income guidelines, and

FirstEnergy uses its automated case management system, Chronicles, to track program

responses.

Resolution: Accordingly, consistent with our discussion in the Tentative Order, we

find that FirstEnergy’s CARES programs continue to comply with Commission

53

regulations. See 52 Pa. Code § 54.74(b)(1). No changes are required regarding this

program in FirstEnergy’s Revised 2015-2018 Plans.

4. Hardship Fund

FirstEnergy utilizes the DEF as its hardship fund. DEF provides residential

customers with temporary financial help in paying their electric bill. Company

shareholders, employees and customers are the primary contributors to the fund. A

customer may receive one maximum grant of $500 per program year. With few

exceptions, to be eligible, the customer must be an adult resident with a residential

account in their name, meet income guidelines of 250% or less of the FPIG, paid at least

$150 within the past 90 days, owe at least $100 on the bill, provide income and expense

information, apply for LIHEAP first, if available, and apply for CAP. FirstEnergy has

the discretion to exclude CAP-eligible customers from receiving a hardship fund grant,

depending on DEF funding levels.

Requiring expense information to qualify for the Hardship Fund grant

This issue was not addressed in the Tentative Order.

1. Comments: OCA contends that FirstEnergy should not require Hardship Fund

applicants to submit expense information to qualify for a Hardship Fund grant. OCA

Comments at 16-17.

Customers who are applying for a hardship grant are typically in the midst of a crisis with either a pending termination or are attempting to restore service after termination. Requiring the customer to provide income and household expense information presents an unreasonable burden and will further delay assistance in these situations. In particular, for CAP customers, the requirement to provide income information and household expense information is particularly unnecessary. Household expense

54

information is not a requirement for enrollment in CAP. For FirstEnergy’s customers, such a delay could impact the household’s health and safety by unnecessarily delaying restoration.

OCA Comments at 16.

OCA recommends that the expense information requirement be eliminated. OCA

Comments at 17.

2. Reply Comments: FirstEnergy explains that Dollar Energy Fund sets its own

eligibility requirements, but, as of October 1, 2014, Dollar Energy Fund is no longer

requiring customer expense information to qualify. FirstEnergy Reply Comments at

13and Supplemental Filing at 7.

3. Resolution: FirstEnergy is directed to remove the expense information requirement

for its Hardship Fund in its Revised 2015-2018 Plans.

D. Eligibility Criteria

The four components of FirstEnergy’s Proposed 2015-2018 Plans have slightly

different eligibility criteria as demonstrated in Table 4 below.

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Table 4Eligibility Criteria

Program Income Criteria Other Criteria

CAP 150% FPIG

Residential customer at primary address (except for those on active military duty)

Energy burden must qualify for CAP credits. Otherwise, only arrearage forgiveness applies.

LIURP 150% FPIG or less 151-200% FPIG for

Special Needs customers

6 months at primary address 6,500 kWh/year consumption

Hardship Fund

(Dollar Energy’s criterion)

250% FPIG or less

Residential customer with at least $100 balance, seniors age 62 and over may have $0 balance (but no credit balance).

Customer must have paid at least $150 within 90 days prior to application ($100 for those age 62 and over)

Must have an emergency need Must have first applied for LIHEAP, if

available Must participate in CAP, if eligible

CARES No income guidelines Payment troubled Experiencing a recent hardship

Resolution: Consistent with discussion in the Tentative Order, we find that the

eligibility requirements of FirstEnergy’s universal service programs continue to comply

with the Commission’s CAP Policy Statement and 52 Pa. Code §§ 54.71-54.78. No

changes are required regarding this issue in FirstEnergy’s Revised 2015-2018 Plans.

E. Projected Needs Assessment

FirstEnergy submitted a needs assessment in its Proposed 2015-2018 Plans, which

is depicted in Table 5.

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Table 5Proposed 2015-2018 Needs Assessment

Met Ed Penelec PennPower WPPTotal Residential Customers 487,974 500,304 141,060 619,510

Number of Customers below 150% FPIG* 118,468 166,438 37,607 171,584

Percent of residential customers below 150% FPIG

24.3% 33.3% 26.7% 27.7%

Number of low-income customers using at least 7,200 kWh of electricity annually**

69,236 101,911 23,026 109,901

Estimated number of potential LIURP participants***

53,069 78,499 17,317 85,821

Cost to serve customers needing LIURP $169,926,938 $198,083,725 $50,669,542 $376,925,832

* Numbers based on 2010-2012 Census Data**Excludes customers already served by LIURP***Excludes customers expected to be served by Act 129

52 Pa Code Section 54.74 (b) (3) requires utilities to provide a needs assessment

for each component of its USECP. By identifying the number of households with

incomes below 150% of the FPIG, FirstEnergy has identified the customer population

that may be in need of CAP or CARES. The estimate of potential LIURP participants

only includes households using at least 7,200 KWh of electricity annually. Since the

Companies have recently changed the minimum usage requirements to 6,500 KWh

annually, the total household population eligible for FirstEnergy’s LIURP is undoubtedly

much higher.

FirstEnergy did not provide a needs assessment for its Hardship Fund program.

In the Tentative Order, we directed FirstEnergy to provide a revised needs

assessment for LIURP, identifying the number of customers using at least 6,500 kWh of

57

electricity annually, the estimated number of potential LIURP participants based on this

usage, and the estimated cost of serving those customers, and a needs assessment for its

Hardship Fund program.

1. Comments: FirstEnergy provided a revised needs assessment based on November

2014 data, including those needing LIURP, updated to reflect electric usage of 6,500

kWh annually. This reflects its reduced wait period for residences to again receive

LIURP services from seven to five years. FirstEnergy Comments at 9-10. FirstEnergy

also provided a needs assessment for its Hardship Fund program. FirstEnergy Comments

at 11.

The revised needs assessment numbers are reflected in Table 6.

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Table 6Revised Needs Assessment Based on November 2014 Data

Met Ed Penelec PennPower WPPTotal Residential Customers 490,309 499,759 141,929 621,365

Number of Customers below 150% FPIG 119,018 166,193 37,838 172,091

Percent of residential customers below 150% FPIG

24.3% 33.3% 26.7% 27.7%

Customers over 30 days in arrears with incomes at or below 250% FPIG*

44,191 49,155 11,089 47,341

Number of low-income customers using at least 6,500 kWh of electricity annually**

72,333 105,565 24,038 115,422

Estimated number of potential LIURP participants***

57,947 85,052 19,777 92,103

Cost to serve customers needing LIURP**** $185,546,294 $214,756,300 $57,867,502 $404,516,376

*Based on company data from 2014.**Excludes customers or homes already served by LIURP.***Assumes revised stay-out provision (5 vs. 7 years).***Excludes a percentage of customers unwilling or unable to participate in LIURP.***Excludes customers expected to be served by Act 129.***Assumes Act 129 will be in place through 2018.****Uses average cost per job throughout four-year plan period.

2. Reply Comments: No party filed reply comments regarding this issue.

3. Resolution: The Commission accepts the revised needs assessment and directs

FirstEnergy to include the updated information in its Revised 2015-2018 Plans.

F. Projected Enrollment Levels

Table 6 shows the projected enrollment levels for FirstEnergy’s CAP, WARM,

Dollar Energy Hardship Fund, and CARES programs.59

Table 7Projected Enrollment Levels

2015 2016 2017 2018Met Ed

PCAP 18,000 18,200 18,500 18,800WARM 1,475 1,490 1,505 1,520CARES 50 50 50 50

Hardship Fund 750 750 750 750Penelec

PCAP 24,850 25,200 25,600 26,000WARM 2,255 2,270 2,285 2,300CARES 50 50 50 50

Hardship Fund 465 465 465 465PennPower

PCAP 5,700 5,800 5,900 6,000WARM 835 845 855 865CARES 15 15 15 15

Hardship Fund 355 355 355 355WPP

WCAP 22,500 22,500 22,500 22,500WARM 925 940 955 970CARES 50 50 50 50

Hardship Fund 1,000 1,000 1,000 1,000

a. CAP Participants

BCS has noted that FirstEnergy’s CAP participation levels have declined

significantly over the past three years. Since December 2011, Met Ed’s enrollment

dropped 43% , Penelec’s dropped 42%, and PennPower’s dropped 50%. Only WPP has

shown a relatively stable CAP enrollment increasing by 1.4% since 2011. Table 7 shows

the number of participants in FirstEnergy’s CAP programs during the past three years:

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Table 8CRP Participants 2010 -2013

December 2011 December 2012 December 2013 September 2014Met Ed 29,496 28,773 17,517 16,768Penelec 39,161 36,848 24,244 22,848PennPower 10,104 9,246 5,590 5,059WPP 21,617 21,347 20,607 21,920Source: FirstEnergy Companies

Although WPP already required annual recertification for CAP participants,

FirstEnergy had earlier explained to BCS that PCAP enrollment declined for Met Ed,

Penelec, and PennPower after Commission approval of the 2012-2014 Plans,

implementing annual recertification. They noted that from mid-2012 through December

2013, many PCAP participants did not recertify or were no longer eligible, however,

based on the large number of income-eligible households within FirstEnergy’s service

territories, it seems likely that many of these customers were – and remain – eligible for

CAP.

During 2014, FirstEnergy states that its PCAP enrollment levels have stabilized,

and we note that WPP projects no increase to its annual CAP enrollment levels through

2018.

Table 9 compares the number of income-eligible households and the anticipated

CAP enrollment level by 2018 for each company. Clearly, there is a potentially large

underserved CAP population.

Table 9Current Income-Eligible Households and Projected 2018 CAP Enrollments

Company CAP Income-Eligible Households* Projected 2018 CAP EnrollmentsMet Ed 118,468 18,800Penelec 166,438 26,000PennPower 37,607 6,000WPP 171,584 22,500* Numbers based on 2010-2012 Census Data

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FirstEnergy’s proposed needs assessment showed that it served a total of 494,097

households with incomes at or below 150% of the FPIG. Proposed 2015-2018 Plans:

Met Ed at 23, Penelec at 23, PennPower at 23, and WPP at 24. As of September 2014,

FirstEnergy had only 66,595 CAP households. Table 6, above reflects a total of 495,140

households with incomes at or below 150% of FPIG. The Proposed Plans do not project

significant increases in CAP enrollments to address this disparity.

While we acknowledge that recertification changes may have lowered CAP

enrollment numbers, we are concerned that program outreach and education may be

lacking. The Proposed 2015-2018 Plans do not describe CAP outreach efforts, as

requested in the CAP Policy Statement,32 yet the numbers in Table 9 indicate an

immediate need for more effective CAP outreach and education.

PGW, for example, is identifying and contacting targeted customers, by phone and

direct mail, who would benefit from a payment arrangement, in an attempt to increase

CAP enrollment . This includes prior CAP recipients, low-income customers on payment

agreements, and LIHEAP recipients who are in debt. PGW 2014-2016 USECP Final

Order at 64-69.

In the Tentative Order, we directed FirstEnergy to explain why WPP anticipates

no increase to its CAP annual enrollments levels through 2018, and to describe its

companies’ outreach activities to increase CAP enrollment, and comment on whether it

will adopt a targeted outreach effort similar to PGW’s.

1. Comments: OCA supports additional CAP outreach efforts for FirstEnergy, noting

the high number of income-eligible households in its service territories. OCA Comments

at 14-15.

32 52 Pa. Code § 69.265(7)(i)62

FirstEnergy reports that a Joint Petition for Partial Settlement of the FirstEnergy-

Allegheny Energy merger (Merger Settlement) required WPP to attain a 55% penetration

level for CAP by 2015, which is consistent with the other FirstEnergy companies.

Achieving the 55% penetration level means that WPP will need to enroll approximately

22,500 CAP participants by December 31, 2015. FirstEnergy Comments at 11. It also

notes that historical trends in CAP enrollment “indicate slow growth and fluctuations in

participation.” FirstEnergy Comments at 12.

FirstEnergy states that its outreach efforts for CAP and its other universal service

programs include promotion through bill inserts, external websites, weatherization/energy

conservation materials, and through Customer Contact Centers, and CBOs. Dollar

Energy attempts to contact customers who have received LIHEAP crisis grants and are

not on CAP. FirstEnergy participates in community events/conferences and provides

information to local officials’ offices. FirstEnergy is willing to consider expanding its

CAP outreach to include targeting LIHEAP or DEF grant recipients not already enrolled

in CAP. FirstEnergy Comments at 12.

2. Reply Comments: OCA supports FirstEnergy’s current outreach efforts and

willingness to consider expanding this outreach to include LIHEAP and Hardship Fund

recipients not on CAP. It recommends that FirstEnergy expand its targeted outreach

efforts to include prior CAP recipients and low-income households on payment

agreements. OCA Reply Comments at 7.

PULP supports the Commission’s recommendation that FirstEnergy should

consider adopting PGW’s targeted CAP outreach efforts. PULP recommends the

Commission specifically direct that FirstEnergy implement an expanded outreach effort

similar to that of PGW. PULP Reply Comments at 9.

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3. Resolution: Through quarterly CAP enrollment updates provided to BCS, WPP

reported a CAP enrollment level of 22,708 as of March 31, 2015. Therefore, it has

already exceeded both the target CAP enrollment level set in the Merger Settlement and

its own CAP enrollment estimates in its Proposed 2015-2018 Plan. We encourage

FirstEnergy to continue its efforts to increase participation in WPP’s CAP and not to

consider the 22,500 enrollment level as a ceiling for its program.

We support FirstEnergy’s current promotional efforts and its willingness to

consider expanding CAP outreach to target those who receive LIHEAP or DEF grants but

are not on CAP. This should help Met Ed, Penelec, and PennPower regain many of the

CAP participants they have lost since 2011. We expect that FirstEnergy will take

immediate action to expand its outreach efforts as indicated, and look forward to greatly

increased numbers over the next three years.

b. CARES Enrollments

The Proposed 2015-2018 Plans for Met Ed, Penelec, and PennPower do not

include enrollment projections for CARES. Through informal communication with BCS,

FirstEnergy explained that CARES has become a component of PCAP. In addition,

FirstEnergy noted that the Commission had approved the Companies’ combined

reporting of CAP and CARES in a prior USECP filing.

In the Tentative Order, we questioned this FirstEnergy practice. While many CAP

customers may benefit from CARES services – receiving information about assistance

programs and/or referrals to social service agencies – the number of people served

through these two programs cannot be the same. CARES is not limited to CAP

customers and not all CAP customers utilize CARES. The Companies should be tracking

CARES numbers separately from CAP and should be able to project numbers through

2018 based on the program’s historical enrollment.

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We also questioned FirstEnergy’s interpretation that we have previously approved

the combined reporting of CAP and CARES enrollment information. In the Final Order

for Met Ed, Penelec, and PennPower’s 2012-2014 USECPs, the Commission accepted

FirstEnergy’s explanation that the Companies had no methodology to provide enrollment

projections for CARES or its Hardship Funds because these programs depend on

interaction with customers and donations. FirstEnergy 2012-2014 USECP Final Order,

Docket No. M-2011-2231038 (March 1, 2012) at 12. This one-time provision was not an

approval of combining CAP and CARES enrollment data. Although we acknowledged

the difficulty in accurately estimating annual participation rates for referral or emergency

services, other EDCs and NGDCs are able to provide enrollment estimates for their

CARES programs. We were not persuaded that Met Ed, Penelec, and PennPower cannot

provide these separate estimates as well.

In the Tentative Order, we directed FirstEnergy to provide annual enrollment

estimates from 2015 through 2018 for CARES for Met Ed, Penelec, and PennPower.

1. Comments: FirstEnergy provides enrollment estimates for its CARES programs

for Med Ed, Penelec, and PennPower from 2015 through 2018 in its comments. WPP’s

CARES program enrollment estimate reduced from 100 customers served annually to 50.

FirstEnergy Comments at 13. These CARES enrollment estimates are reflected in

Table 7.

2. Reply Comments: FirstEnergy provided the following answer as to why WPP’s

CARES annual enrollment estimates have decreased from 100 to 50:

In addition to the merger and staffing changes CARES has been evolving into a component of the CAP program over the past several years. The differences in the West Penn CARES budget compared to the other FirstEnergy Companies’ was questioned in the Tentative Order. West Penn

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agreed that the CARES projections needed to be updated to reflect the changes in the organization since the merger and to align with the other FirstEnergy Companies. The projected estimates were revised based on recent CARES activity.

Supplemental Filing at 8.

3. Resolution: We are still concerned both with the almost 50% decrease in the

CARES enrollment estimates for WPP and the low estimate of customers served through

the CARES programs of the other FirstEnergy Companies. Met Ed, Penelec, and WPP

are projecting to serve only 50 customers each annually through the CARES program,

and PennPower projects to serve only 15 customers annually.

We understand that CARES has been incorporated into FirstEnergy CAPs and

provides information and referral services to CAP customers, but these estimates seem

extremely low. To qualify, a customer needs to be payment troubled and have

experienced a recent hardship, but there is no income eligibility requirement. Therefore,

many FirstEnergy customers not on CAP may be eligible for – and in dire need of –

CARES services.

FirstEnergy Companies should continually make its customers aware that CARES

helps to link distressed customers with programs and local agencies that can provide

financial and other forms of assistance so that more people can take advantage of it when

experiencing a financial or personal hardship. We recommend that the FirstEnergy

Companies greatly improve its CARES enrollment well beyond its estimates and provide

information and referral services to all eligible customers in need.

Accordingly, FirstEnergy is directed to include its CARES enrollment estimates

for all four Companies as part of its Revised 2015-2018 Plans.

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G. Program Budgets

Table 10 below shows the proposed budget levels for each universal service

component and the calculated average spending per customer for 2015-2018 with the

additional and revised CARES budget numbers as explained below.

Table 10Universal Service Program Budgets

Universal Service Component 2015 2016 2017 2018Met Ed

PCAP $17,820,000 $18,018,000 $18,315,000 $18,612,000WARM $4,260,000 $4,605,000 $4,996,000 $5,339,000CARES $3,500 $3,500 $3,500 $3,500Hardship Fund Administration $75,000 $75,000 $75,000 $75,000Total $22,158,500 $22,701,500 $23,389,500 $24,029,500Monthly Cost per Non-PCAP Customer $3.92 $4.01 $4.14 $4.25

PenelecPCAP $20,501,250 $20,790,000 $21,120,000 $21,450,000WARM $5,114,000 $5,536,000 $5,978,000 $6,387,000CARES $3,500 $3,500 $3,500 $3,500Hardship Fund Administration $75,000 $75,000 $75,000 $75,000Total $25,693,750 $26,404,500 $27,176,500 $27,915,500Monthly Cost per Non-PCAP Customer $4.48 $4.61 $4.74 $4.87

PennPowerPCAP $4,770,990 $4,854,600 $4,938,300 $5,022,000WARM $2,167,000 $2,371,000 $2,600,000 $2,822,000CARES $1,000 $1,000 $1,000 $1,000Hardship Fund Administration $35,000 $35,000 $35,000 $35,000Total $6,973,990 $7,261,600 $7,574,300 $7,880,000Monthly Cost per Non-PCAP Customer $4.27 $4.45 $4.64 $4.83

WPPWCAP $11,700,000 $12,582,000 $12,582,000 $12,582,000WARM $4,002,000 $4,002,000 $4,002,000 $4,002,000CARES $3,500 $3,500 $3,500 $3,500Hardship Fund Administration $45,000 $45,000 $45,000 $45,000Total $15,750,500 $16,632,500 $16,632,500 $16,632,500Monthly Cost per Non-WCAP Customer $2.19 $2.31 $2.31 $2.31

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a. WCAP Budget

As noted above, WPP projects no increase to WCAP enrollment through 2018.

However, the proposed WCAP budget increases by $882,000 from 2015 to 2016.

FirstEnergy did not provide an explanation for this increase in WCAP spending.

In the Tentative Order, we directed FirstEnergy to explain why the WCAP budget

increases from $11,700,000 in 2015 to $12,582,000 in 2016 while it projects static

enrollment.

1. Comments: FirstEnergy explains that it intends to make WCAP’s bill subsidy and

arrearage forgiveness process more consistent with PCAP. If the Commission approves

WPP’s 2015-2018 Plan, FirstEnergy would make these modifications by 2016, resulting

in higher CAP costs for WPP compared to prior years. FirstEnergy Comments at 14.

2. Reply Comments: No party filed reply comments regarding this issue.

3. Resolution: We are satisfied with FirstEnergy’s clarification regarding the

increased WPP CAP budget for 2016. Accordingly, FirstEnergy is directed to include

this explanation in WPP’s Revised 2015-2018 Plan.

b. WPP CARES Budget

The CARES budget in WPP’s Proposed 2015-2018 Plan exceeds the CARES

budgets of Met Ed, Penelec, and PennPower by over $60,000. FirstEnergy did not

explain the high cost of WPP’s CARES.

In the Tentative Order, we directed FirstEnergy to explain both the high budget

and total per customer cost compared to that of the other FirstEnergy Companies.

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1. Comments: FirstEnergy explains that, prior to the merger of FirstEnergy and

Allegheny Energy, WPP utilized one position to handle CARES and CAP. WPP’s

Proposed 2015-2018 Plan reflects the salary and CARES-related expenses for this

position. However, WPP agrees to revise its CARES budget amount to be consistent

with the other FirstEnergy Companies. WPP’s CARES budget is now set at $3,500

annually. FirstEnergy Comments at 10. WPP’s revised CARES budget is reflected in

Table 10.

2. Reply Comments: No new points were raised regarding this issue in the reply

comments received.

3. Resolution: As long as CARES continues to be promoted and staffed

appropriately, we will accept WPP’s revised budget for its CARES program.

Accordingly, WPP’s revised CARES budget is approved and should be included as part

of WPP’s Revised 2015-2018 Plan.

H. Use of Community-Based Organizations (CBOs)

The Competition Act directs the Commission to encourage utility companies to

use CBOs to assist in the operation of universal service programs. 66 Pa. C.S. § 2804(9).

In meeting this provision, in its Proposed 2015-2018 Plan the FirstEnergy Companies

provided an extensive list of CBOs for weatherization services, income verification,

program applications, grant making, and/or referral opportunities.

No party objected to the list of participating CBOs.

Resolution: Accordingly, consistent with our discussion in the Tentative Order, we find that FirstEnergy’s use of CBOs complies with the intent of the Competition Act.

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I. Organizational Structure

The organizational structure for the FirstEnergy Companies’ Universal Service

Programs as proposed is as follows:

Table 11Universal Service Staffing

Staffing Met Ed Penelec PennPower WPPManager – Compliance & Human Services 1 1 1 1Senior Administrative Assistant 1 1 1 1Supervisor – Energy Conservation Programs 1 1 1 1Supervisor – Universal Service Programs 1 1 1 1Business Analyst - - - 1Senior Business Analyst 2 2 2 2Assistant Business Analyst 1 1 1 1Associate Business Analyst 2 2 2 1Administrative Technician 2 1 1 1 1Senior Customer Accounting Associate 1 1 1 1Advanced Customer Accounting Associate 2 2 2 1

At face value, it appears that the FirstEnergy universal service programs may have

multiple employees performing the same work for each Company. However, through

informal discussions with BCS, FirstEnergy has explained that many of the staff

positions listed above perform the same universal service administrative duties for all

four companies. For example, there is one Manager of Compliance & Human Services

that administers all universal service programs for all FirstEnergy Companies, not one

manager for each company. Nevertheless, we found it unclear whether some of the other

universal service positions listed in the Proposed 2015-2018 Plans are unique to the

company or representative of staff serving all four companies.

In the Tentative Order, we directed FirstEnergy to clarify this.

1. Comments: FirstEnergy confirms that the universal service staff identified in its

Proposed 2015-2018 Plans serve all four companies. It also notes that “[a] portion of the

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staff’s time may also serve similar universal service programs in states other than

Pennsylvania.” FirstEnergy Comments at 15.

2. Reply Comments: No party raised new issues through reply comments.

3. Resolution: We are satisfied with FirstEnergy’s clarification that the universal

service staff identified in its Proposed 2015-2018 Plans serve all 4 companies.

Accordingly, we require no changes regarding this issue in FirstEnergy’s Revised 2015-

2018 Plans.

V. CONCLUSION

In light of the above analysis, the Commission finds that FirstEnergy’s Proposed

USECPs for 2015-2018 partially comply with the universal service requirements of the

Electricity Generation Customer Choice and Competition Act at 66 Pa. C.S. §§ 2801-

2812. We also find that the proposed Plans comply with the universal service reporting

requirements at 52 Pa. Code §§ 54.74, the Commission’s CAP Policy Statement at 52 Pa.

Code §§ 69.261-69.267, and the LIURP regulations at 52 Pa. Code §§ 58.1-58.18.

Finally, the Commission’s partial approval of these proposed Plans does not limit the

Commission’s authority to order future changes to the Plans based on evaluation

findings, universal service data or rate-making considerations. Consistent with the

discussion above, we shall direct the FirstEnergy Companies to amend and file Revised

USECPs for 2015-2018 and to perform the following:

1. Enroll all CAP customers into budget billing. WPP shall complete this process no

later than June 2016. Met Ed, Penelec, and PennPower shall complete this process

no later than October 2016. Prior to implementation, FirstEnergy shall provide

educational materials to currently enrolled CAP customers about this upcoming

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change and provide phone numbers for customers to call in case there are

questions.

2. Clarify that CAP customers must pay all past due “ask to pay” amounts on the bill

to recertify and continue in CAP in its Revised 2015-2018 Plans.

3. Remove the security deposit provision in its Revised 2015-2018 Plans.

4. Describe its verification process when a CAP applicant or participant reports zero

income in its Revised 2015-2018 Plans.

5. Clarify Plans that CAP customers receive arrearage forgiveness for each timely

and in-full monthly payment, regardless of CAP arrears, and retroactive

forgiveness for any months missed once the account is caught up in its Revised

2015-2018 Plans.

6. Make system enhancements necessary to apply excess CAP payments to any

existing program arrears and then to the next month’s CAP bill no later than

January 2016.

7. File a timeline detailing when WPP will modify aspects of WCAP program to be

consistent with PCAP within 30 days of the entry date of this Order. If WPP can

make any of these modifications immediately, it should identify those changes in

WPP’s Revised 2015-2018 Plan.

8. Clarify that the $5 co-payment on WCAP monthly bills is eliminated in WPP’s

2015-2018 Plan. This change shall become effective with the implementation of

WPP’s Plan.

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9. Remove the requirement for customers to provide expense information as a

precondition for Hardship Fund eligibility.

10. Track the effectiveness of the seasonal and health and safety allowance changes

and report that information to BCS with the annual LIURP reporting due to the

Commission by each April 30th.

11. Conform the Revised 2015-2018 USECPs to reflect the partial temporary Section

58.11(a) waiver and the terms, duration, and conditions thereof.

12. Conform the Revised 2015-2018 Plans to reflect the WARM/LIURP

enhancements and partial temporary waiver of Section 58.11(a).

13. Include WPP’s pilot program as part of its LIURP in its Revised 2015-2018 Plan.

14. Provide the updated needs assessment information in its Revised 2015-2018 Plans.

15. Provide the CARES enrollment estimates for all four Companies in its Revised

2015-2018 Plans.

16. Provide an explanation for why the WCAP budget increases in 2016 in WPP’s

Revised 2015-2018 Plan.

17. Provide the revised CARES budget for WPP in its Revised 2015-2018 Plan.

FirstEnergy Companies will file and serve Revised Plans for 2015-2018 in a

compliance filing within 30 days of entry of this order, reflecting the changes directed

consistent with this order. FirstEnergy is invited to submit its Revised Plans to BCS for a

compliance review prior to filing.

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FirstEnergy shall file a quarterly progress report of changes identified in this

Order, at each docket, advising BCS and the parties of that Company’s progress toward

this implementation, starting July 1, 2015.

Having addressed FirstEnergy’s Plans and the comments and reply comments, we

note that any issue, comment, or reply comment requesting a further deviation from the

Proposed 2015-2018 Plans, but which we may not have specifically delineated herein,

shall be deemed to have been duly considered and denied without further discussion. The

Commission is not required to consider expressly or at length each contention or

argument raised by the parties. Consolidated Rail Corp. v. Pa. PUC, 625 A.2d 741 (Pa.

Cmwlth. 1993); also see, generally, U. of PA v. Pa. PUC, 485 A.2d 1217 (Pa. Cmwlth.

1984); THEREFORE,

IT IS ORDERED:

1. That the Universal Service and Energy Conservation Plans for 2015-2018 as

filed by the Metropolitan Edison Company, Pennsylvania Electric Company,

Pennsylvania Power Company, and West Penn Power on February 28, 2014, and

amended on August 27, 2014, are partially approved as consistent with Title 66 of the

Pennsylvania Consolidated Statutes, Title 52 of the Pennsylvania Code, and Commission

practice.

2. That a copy of this Final Order be served on the Metropolitan Edison

Company, Pennsylvania Electric Company, Pennsylvania Power Company, West Penn

Power, and the other parties to this proceeding.

3. Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania

Power Company, and West Penn Power shall file and serve revised Universal Service and

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Energy Conservation Plans for 2015-2018, consistent with this Order, within 30 days of

the entry date of this Order. In addition, the FirstEnergy Companies shall file a quarterly

progress report of changes identified in this Order, at each docket, advising BCS and the

parties of that Company’s progress toward this implementation, starting July 1, 2015.

4. That a copy of this Final Order be posted on the Commission’s website at

http://www.puc.state.pa.us.

BY THE COMMISSION,

Rosemary ChiavettaSecretary

(SEAL)

ORDER ADOPTED: May 19, 2015

ORDER ENTERED: May 19, 2015

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