{"id":292301,"date":"2026-09-23T14:50:15","date_gmt":"2026-09-23T14:50:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-pa\/292301\/"},"modified":"2026-09-23T14:50:15","modified_gmt":"2026-09-23T14:50:15","slug":"who-should-pay-for-low-income-utility-assistance-in-pa-it-all-falls-on-residential-customers-2","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-pa\/292301\/","title":{"rendered":"Who should pay for low-income utility assistance? In Pa., it all falls on residential customers"},"content":{"rendered":"

Spotlight PA<\/a> is an independent, nonpartisan and nonprofit newsroom producing investigative and public-service journalism that holds power to account and drives positive change in Pennsylvania. Sign up for our free newsletters<\/a>.<\/p>\n

HARRISBURG \u2014 As rising energy prices drive up the cost of the customer assistance programs that Pennsylvania electric and natural gas utilities are required to offer, the question of who should pay for them is still hotly disputed.<\/p>\n

In Pennsylvania, those costs are shouldered solely by residential customers. Businesses and factories don\u2019t have to contribute, unlike in other states.<\/p>\n

The programs offer much-needed relief for the most vulnerable Pennsylvanians<\/a>, lowering monthly bills and offering a path to debt forgiveness. But as energy costs increase, the price tag for the programs also rises, increasing the burden on residential ratepayers \u2014 most of whom don\u2019t qualify for help.<\/p>\n

In 2024, residential electricity customers paid almost $90 on average toward the cost of the programs, state data<\/a> show. For natural gas customers, the average cost was around $47.<\/p>\n

Consumer advocates have argued for years that those costs should be spread across all customer classes.<\/p>\n

As energy costs increase, the assistance programs \u201cget more expensive, for the same benefit,\u201d said Patrick Cicero, an attorney at the Pennsylvania Utility Law Project who previously served as the state\u2019s consumer advocate.<\/p>\n

The state Public Utility Commission \u201call along should have been assigning these costs to all rate classes,\u201d Cicero said.<\/p>\n

Industrial and commercial ratepayers say they shouldn\u2019t have to pay for assistance they can\u2019t participate in and don\u2019t benefit from.<\/p>\n

In 2019, the PUC reversed its position on the issue, encouraging utilities to share the costs more widely. But utilities were not required to do so, and in practice, residential customers continued to foot the bill.<\/p>\n

More recently, regulators have issued guidelines<\/a> on how large data centers should pay into the assistance programs to help offset the price increases they cause. The guidance isn\u2019t binding, and it\u2019s not yet clear how closely utilities will follow it.<\/p>\n

The utility commission also approved a recent settlement<\/a> in a rate case filed by PPL Electric Utilities that requires data centers to make an annual contribution to the assistance programs.<\/p>\n

Consumer advocates say those changes, while necessary, don\u2019t solve the underlying unfairness in the way Pennsylvania pays for customer assistance.<\/p>\n

Given the commission\u2019s guidance and the increased need for assistance, the utility commission \u201canticipates seeing broader cost recovery proposals from utilities, advocates, and other stakeholders,\u201d said Nils Hagen-Frederiksen, a spokesperson for the agency.<\/p>\n

\u201cThe PUC stands ready to consider those proposals.\u201d<\/p>\n

Cost questions<\/p>\n

Electric and natural gas utilities are required to offer several forms of assistance for low-income customers. These include discounted bills and debt forgiveness, as well as energy efficiency programs and referral services for customers experiencing temporary hardships.<\/p>\n

In 2024, utilities spent more than $580 million<\/a> on the programs, state data show. With one exception, they recovered those costs entirely from residential customers, mostly through extra charges.<\/p>\n

Not all states require utilities to offer assistance programs; among those that do, all except Pennsylvania spread the costs across all customer classes, so that industrial and commercial ratepayers contribute as well, according to experts and testimony in PUC proceedings.<\/p>\n

Requiring small businesses, already battered by the pandemic and high inflation, to help pay<\/a> for the assistance programs could be \u201ctheir death knell,\u201d the state\u2019s Small Business Advocate has argued in utility filings.<\/p>\n

As Pennsylvania manufacturers compete against other states and countries, \u201celectricity costs are a live factor in where the next expansion or the next line goes \u2014 and the associated jobs,\u201d Rod Williamson, executive director of the Industrial Energy Consumers of Pennsylvania, a trade group, told Spotlight PA via email.<\/p>\n

Regulators in other states with bill assistance, however, have largely accepted arguments that since the programs serve the public interest, everyone should pitch in \u2014 even if the different customer classes don\u2019t always contribute equally, said John Howat, senior energy analyst at the National Consumer Law Center.<\/p>\n

\u2018Residential class\u2019 problems<\/p>\n

The PUC reconsidered the question of how to pay for utility assistance during a review that began in 2017.<\/p>\n

At issue was a fundamental principle of utility policy, known as \u201ccost causation\u201d \u2014 the idea that customers should pay for the costs they incur.<\/p>\n

Representatives for industrial and commercial customers argued that the status quo should prevail, contending it would be unfair for businesses to help pay for assistance they couldn\u2019t receive.<\/p>\n

Consumer advocates countered that, under a literal interpretation of the cost causation argument, most residential customers shouldn\u2019t have to pay for the programs either, since only low-income customers can participate. They argued that affordable utility service is a public good with broad social benefits.<\/p>\n

Recovering the costs from residential customers put a \u201csignificant burden\u201d on those households, the PUC concluded, noting that increased program costs would make bills \u201cincreasingly unaffordable\u201d in the years to come.<\/p>\n

\u201cPoverty, poor housing stock, and other factors that contribute to households struggling to afford utility service are not just \u2018residential class\u2019 problems,\u201d the commission wrote in a 2019 order.<\/p>\n

Reversing its previous position, the utility commission updated its regulations<\/a> to say that, \u201cNo rate class should be considered routinely exempt\u201d from contributing. Two commissioners opposed the change.<\/p>\n

The policy update made it clear that utilities could share the cost of the programs more widely, but did not require it.<\/p>\n

In practice, little changed.<\/p>\n

Earlier this year, when the commission released guidance<\/a> intended to shield residents from cost increases caused by data centers, it noted that the burden of paying for assistance programs is \u201ccurrently borne solely by residential electric customers.\u201d<\/p>\n

The PUC recommended that data centers contribute between $250,000 and $1 million to the assistance programs each year, depending on their size. The guidelines do not \u201cpredetermine the outcome of individual utility proceedings,\u201d said Hagen-Frederiksen, the commission\u2019s spokesperson.<\/p>\n

Separately, the utility commission in June approved a settlement<\/a> of a rate case filed by PPL Electric that requires large data centers to contribute $11 million each year to the utility\u2019s assistance programs, starting in 2027. It\u2019s the first time in recent years there\u2019s been a change in how those costs are covered.<\/p>\n

Elsewhere, the argument over how to pay for the assistance programs continues.<\/p>\n

In a rate case filed this year by Peoples Natural Gas, consumer advocates are again arguing that assigning the costs only to residential customers is unfair. (The recent data center guidelines don\u2019t apply to natural gas utilities.)<\/p>\n

The company responded that such a change would inappropriately single out its commercial and industrial customers, while similar customers of other utilities wouldn\u2019t have to pay those costs.<\/p>\n

If the PUC wanted to allocate assistance costs more broadly, an expert witness for the utility said, \u201cit is important that the policy be implemented consistently,\u201d rather than on a case-by-case basis.<\/p>\n

That type of statewide consistency, Hagen-Frederiksen said, \u201cwould be most effective if it was issued by a statute enacted by the Pennsylvania General Assembly.\u201d<\/p>\n

BEFORE YOU GO\u2026 If you learned something from this article, pay it forward and contribute to Spotlight PA at spotlightpa.org\/donate<\/a>. Spotlight PA is funded by foundations and readers like you<\/a> who are committed to accountability journalism that gets results.<\/p>\n

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