Now Is the Time to Establish a Universal Service Fund

Now Is the Time to Establish a Universal Service Fund
By Blossom A. Peretz

With summer temperatures reaching into the 90s, now is the perfect time to think about the freezing temperatures of winter. Specifically, we need to focus attention on the plight of the more than 100,000 of our fellow state residents who are expected to lose either their gas heat or their electric power or both this year because they cannot afford to pay their utility bills.

Although New Jersey now has the highest median income in the nation, we lack a Universal Service Fund that provides affordable electric and gas service for low-income residents. States from Connecticut to California, as well as Massachusetts, New Hampshire, Vermont, Montana, Illinois, Wisconsin, as well neighboring New York and Pennsylvania, have instituted Universal Service programs to ensure that all of their residents have the opportunity to obtain and maintain quality utility service at affordable prices.

We may be among the richest states, but nearly 1.2 million of our fellow New Jerseyeans have incomes at or below 175 percent of the federal poverty level, with 300,000 of those people living below 50 percent of the poverty level.

Unaffordable energy bills lead to unsafe practices, such as skipping meals and doctor visits, not paying other bills, burning potentially hazardous items in fireplaces and using ovens, burners and even charcoal grills for heating. No family should have to make the hard choice between heating and eating.

Unfortunately many do. The statistics of the last few years are telling; the number of state residents who had their utility service terminated has increased. In 2000, 119,041 state residents had their electricity and gas shut off, up from the 117,792 who had service terminated in 1999. For the first five months of this year, there were 50,759 service terminations, a dramatic increase from the 40,675 who lost service during the same period in 2000. With the economy in a downturn and joblessness rising, no one can predict how many New Jerseyeans will lose their heat and electricity next winter. There is every reason to be concerned over the coming cold months.

That is why now is the perfect time to establish a Universal Service Fund in New Jersey. While there are existing programs such as Lifeline Home Energy Assistant Program (LIHEAP) and NJSHARES, there are gaps in the safety net they provide. Only a Universal Service Fund can provide the blanket protection that is needed.

The Electric Discount and Energy Competition Act of 1999, which began the process of deregulating utilities in New Jersey, calls for a Universal Service Fund. To meet that goal, the Division of Ratepayer Advocate, the state agency that represents all utility customers, has proposed the creation of a comprehensive, statewide program to assist New Jersey's low-income residents.

Under the Ratepayer Advocate’s proposal, the approximately 1.2 million state residents at or below 175 percent of the federal poverty level would be enrolled. Low-income consumers would receive a credit based on a sliding scale, depending on household income. A crisis intervention fund, coordinated with existing emergency benefits, would also be provided for all consumers. To ensure that recipients adopt conservation measures, the assistance would be based on past energy usage.

What will be the cost to New Jersey ratepayers? Approximately 80 cents a month, which is less than a cup of takeout coffee.

A Universal Service Fund also makes sound economic sense. Utilities spend millions of dollars each year in attempts to collect overdue bills from households that do not have the resources to pay them. Even if a utility does finally collect a bill from a low-income household, it has spent considerable sums on the collection process. These costs are passed on to all ratepayers. Universal Service programs in other states have greatly reduced utilities' collection costs. Isn't it better to spend the money to help ensure uninterrupted service for every family on a limited income rather than spend the money on collection costs?

It is time for New Jersey to establish a Universal Service Fund before next winter is upon us when it will be too late to prevent old and young from suffering.

Ratepayer Advocate Blossom A. Peretz is the Director of the New Jersey Division of the Ratepayer Advocate.

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