COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC MEETING BEFORE THE COMMITTEE ON TRANSPORTATION AND PUBLIC UTILITIES - - - Room 400, City Hall Philadelphia, Pennsylvania Wednesday, November 19, 1997 9:05 a.m. - - - RES. 960757 - Authorizing City Council's Committee on Transportation and Public Utilities to hold hearings on utility bill delinquencies and their impact on utility rates, utility terminations, and unsafe living conditions. - - - PRESENT: COUNCILWOMAN HAPPY FERNANDEZ, Chairlady COUNCILMAN FRANK DiCICCO, Vice-Chair COUNCILMAN W. THACHER LONGSTRETH COUNCILMAN MICHAEL A. NUTTER COUNCILMAN ANGEL ORTIZ COUNCILWOMAN MARIAN B. TASCO COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center Plaza, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 I N D E X RESOLUTION 960757 PAGE Dr. Dennis Culhane, Associate Professor, Center for Mental Health Policies and Services Research, University of Pennsylvania--------- 5 Matthew J. McCrory, Jr., Deputy Commissioner, Philadelphia Fire Department----------------- 13 6 Gregory Martin, Executive Vice-President, Chief Operating Officer, PGW----------------------- 20 7 Michael Nadol, Deputy Commissioner, Philadelphia Water Department----------------------------- 23 Denise Garrett, Bureau Chief, Water Revenue Bureau--------------------------------------- 31 Joseph Donaghy, Manager, Accounts Receivable, PECO Energy---------------------------------- 41 Lillian Ross, Manager, Community Services, PECO Energy--------------------------------------- 47 Liz Robinson, Executive Director, Energy Coordinating Agency-------------------------- 65 Paul Donohue, Manager, Credit and Collections, PGW------------------------------------------ 96 Liz Hersh, Executive Director. Tenants' Action Group---------------------------------------- 122 Bob Lang, Representative, Homelessness Prevention Program, Tenants' Action Group---- 123 Valeria C. Bullock, Coordinator, Energy Projects, Community Legal Services----------- 133 Dr. Drew Hyman, Professor, Public Policy and Community Systems, Penn State University----- 148 Lucy Merrick, Acting Chairperson, Utility Committee, Action Alliance------------------- 173 Theodore Lee, Landlord-------------------------- 179 Debra Lee Walker, Landlord---------------------- 182 - - - 3 RESOLUTION 960757 CHAIRWOMAN FERNANDEZ: Good morning. I would like to convene this Public Hearing of the Transportation and Public Utilities Committee. My name is Councilwoman Happy Fernandez. I am the Chair of the Committee. And I would also like to note the presence of Councilman Angel Ortiz, who is also a member of the committee. Would the staff please read the title of the resolution.
Resolution No. 960757, authorizing City Council's Committee on Transportation and Public Utilities to hold hearings on utility bill delinquencies and their impact on utility rates, utility terminations, and unsafe living conditions. CHAIRWOMAN FERNANDEZ: Good morning and thank you all for being here. And I hope we will have an informative and hopefully productive conversation about a chronic and very serious issue in our city, which is the amount of people and the amount of dollars involved in delinquent payment of utility bills, and also some of the implications for residents of our city when they are unable to pay their utilities. 4 RESOLUTION 960757 And, as we will hear, some of those customers do then end up in our homeless shelters. In 1992, this Committee held some hearings and heard testimony from the three major utilities serving the citizens of Philadelphia: The Philadelphia Water Department, the Philadelphia Gas Works, and PECO Energy Company providing electricity. And at those hearings we looked at some of the issues that had been raised in a PUC, a Pennsylvania Utility Commission, report that had looked at this issue of delinquencies among utility customers and tried to lay out some constructive ways to assist customers who are trying their very best to pay their bills, but have serious financial problems and stresses. But also take a look at customers who may be delinquent in their bills, but are deciding for various reasons not to pay their utility bills, and are adding to the cost to other customers. So in 1992 we got some baseline testimony. And at that point a number of the utilities said, here is where we are now and here is where we want to be going over the next several 5 RESOLUTION 960757 years to make some changes, again, to tighten up on people who are able to pay, but are not, and to continue to find ways to assist customers who have serious financial problems and need various types of assistance. So here it is five years later. And we thought it was important to take a look at what were some of the, hopefully, constructive changes that the various utilities had adopted to both reduce the amount of dollars and numbers of delinquent customers, and also, again, find ways to make sure that people who desperately needed utilities had them. So it is five years later. In some ways things may have gotten better. Yet, in the larger climate in our city, and particularly concerns about the numbers of people living below the poverty line, certainly we do face a very serious problem in the City of Philadelphia, as do most urban areas across the country. And that is, having such a high concentration of low-income people. In the City of Philadelphia, for example, 20 percent of the people in the City of 6 RESOLUTION 960757 Philadelphia live below the poverty line. And also in our city, close to 400,000 people each year, at some time during the year, have a low enough income to qualify for food stamps. So with Welfare changes and Welfare cuts already starting to hit, particularly single adults, already, but now over the next several years people who have been receiving AFDC, traditionally aid to families with dependent children, will also have serious cutbacks in their so-called Welfare benefits. So I think the problem of having high concentrations of low-income people, having many people who face serious economic problems trying to pay their utility bills, yet the issue the utilities face of how do they keep their rates low so we are a competitive region economically, and also how they do not burden the bulk of the ratepayers who are paying their bills. I think these are some of the issues we need to look at.
And, frankly, what I would like us to continually keep in mind is, are there ways that the utilities in our city could work more closely 7 RESOLUTION 960757 together to assist customers who need special types of assistance, and then maybe ways to cooperatively, in a coordinated way, tighten up customers who may be, quote, playing the system and for various reasons not paying their utility bills, even though they are able to. So with those opening remarks, I would also like to welcome Councilman Marian Tasco to the hearings. Let's call our first panel, who is Dr. Dennis Culhane, from the University of Pennsylvania Center for Mental Health, Policies, and Service Research. And Deputy Fire Commissioner Matthew McCrory of the Philadelphia Fire Department. Good morning. And would you introduce yourself for the record. And why don't we begin with Dr. Culhane.
Yes. My name is Dr. Dennis Culhane. I am an Associate Professor at the University of Pennsylvania. MR. McCRORY: I am Matthew J. McCrory, Jr., the Deputy Fire Commissioner for Technical Services. 8 RESOLUTION 960757 CHAIRWOMAN FERNANDEZ: Proceed.
I would like to thank Councilwoman Fernandez and the Committee on Transportation and Public Utilities for offering me this opportunity to speak to the issues of delinquent utility bills, homelessness, and unsafe living conditions. What I would like to do specifically today is to share the results of some of our recent research regarding the relationship between utility terminations and homelessness, and between utility terminations and fires in Philadelphia. Through the initiative of Councilwoman Fernandez and Council President John Street, the University of Pennsylvania undertook a study in 1994 designed to look at the relationship between utility terminations and the onset of homelessness. Interest in this relationship arose, in part, through discussions with other members of the homelessness and emergency services provider community about the possibility of linking homelessness prevention efforts to neighborhood-based energy assistance agencies. 9 RESOLUTION 960757 What we did was, we took the addresses of all of the people who entered the Philadelphia shelter system in a three-year period. And then we matched those addresses to the gas works and the water company and the electric company's termination records. And today I am going to report on the results of the gas and electric cutoffs and the relationship between the homeless addresses and those. Of the addresses with the water termination, 6 percent of them eventually had a shelter admission. Of the folks who had had a gas termination, about 9 percent of those folks eventually had a shelter admission, or about 1 out of every 10. More interestingly, of the people who did finally come into the shelter system, 20 percent of them had had a utility termination prior to their shelter admission, including percent of homeless 23 families and 18 percent for homeless singles. 24 90 percent of these cases involved gas shutoffs. So it was much more common that it 10 RESOLUTION 960757 was gas shutoffs than water shutoffs. When we look at the time between the termination and the onset of homelessness, the average time interval is about 274 days, or 6 months. It was slightly less for families than for 7 singles. 8 But the bulk of those terminations 9 occurred within eight months. About 80 percent of them occurred within eight months of the termination, and half of them occurred within six months of the termination. We also looked for seasonality, to see if there was any relationship given that utilities are not turned off during the winter period. We thought we might see terminations occurring in the summer or in the spring, and then it would later show up as a spike in shelter admissions. The only place that we found evidence of that was with water terminations for single adults. So those are probably dwellings that are nearly abandoned. And we did see that there was a 11 RESOLUTION 960757 relationship between water terminations at those addresses, and then a peak of shelter admissions several months thereafter in the winter months. Our results suggest that some form of emergency energy assistance could reduce the risk for homelessness among both singles and families. We know that about -- that when you look at homelessness in the City of Philadelphia, we have got about 22,000 people a year who go through the shelter system. So clearly those households, at least many of them -- and by this research at least out of every in the families and 1 out of every 5 in the singles -- may have been able to avert that homelessness if they had such assistance. More research is needed to assess the degree at which these terminations occur relatively close in time to the shelter admission, recognizing that percent of the utility terminations occur at 21 least a year after. 22 We also recently matched addresses 23 for utility shutoffs with addresses for fires.
24 Although it is a better predictor of 25 shelter admission, utility termination also 12 RESOLUTION 960757 significantly increases the likelihood of a fire later occurring at the same address. 25 percent, or 754, were later reported as addresses where fires occurred, with 35 percent of those occurring within six months of the gas shutoff. 8 percent of those, or 49, later had fires, with percent occurring, again, within six 12 months. 13 This means that properties with prior 14 gas shutoffs are 50 percent -- 56 more likely to 15 have a fire. 16 Unfortunately, that is based on the 17 number of units in the city. We did not divide it 18 by the number of buildings. 19 If we divided it by the number of 20 buildings, I think it would be more like 400 percent. But I can get you the exact number in the next day or two. But we used the number of actual units in the city. But it has got to be much more like 400 percent, at least five or six times what we 13 RESOLUTION 960757 have here. And with electricity shutoffs, it was about 212 percent greater risk of a fire following electricity termination. So together these data indicate that the relationship between utility terminations and shelter admissions is a significant problem and offers an opportunity, I think, for some kind of intervention to potentially reduce these very negative outcomes. Thank you. CHAIRWOMAN FERNANDEZ: Why don't we hear the testimony of the Deputy Fire Commissioner, and then see if there are some questions between the two of you. MR. MATTHEW J. : Good morning, Chairwoman Fernandez and members of the Transportation and Public Utilities Commission. I appreciate the opportunity to testify before you today. The Philadelphia Fire Department is concerned with the number of problems that occur in properties in which there are bypassed utilities or where the utilities have been terminated. 14 RESOLUTION 960757 Many times when utilities are terminated, occupants resort to other means of providing heat and light. People are using substitute sources of heat and light, with little regard for the potential dangers to themselves and their neighbors. These alternative methods often results in fire, injuries, and even deaths. On February 22, 1996, a 57-year-old man died in a house fire at 3034 North Darien Street. The property had no heat or hot water systems. The fire started when an operating electric space heater was placed too close to combustibles. Another fire occurred on November 27, 1996, at 2314 North Sydenham Street. This property, a two-story row dwelling, had no central heating system, and the occupant was using portable electric space heaters and kerosene space heaters to heat the property. A 50-year-old man was killed in this fire that started in the living room, where combustibles close to a space heater were ignited. This room had three electric space heaters in 15 RESOLUTION 960757 operation. As recently as October 2, 1997, an 86-year-old grandmother died in a house fire in her home at 1905 North Darien Street. This fire started on clothing on a sewing table on the second floor of the two-story home. The occupant was using candles as a source of light due to the electric being turned off the previous day by PECO. In addition to these deaths, there have been several civilian injuries. Our firefighters also face additional dangers attempting to extinguish a fire under these conditions. In the case of bypassed utilities, fires in those properties have caused injuries not only to the occupants, but to responding firefighters, as well. In 1995 and 1996, a total of four firefighters were injured by electric shock in separate incidents. So you can see that an illegal electric hook-up will create a great deal of problems and danger not only for the occupants of the property, but for the firefighters sworn to 16 RESOLUTION 960757 protect them. Our Fire Marshal's office routinely handles complaints from the public concerning illegal utility connections.
These complaints are turned over to the responsible agency. The Philadelphia Fire Department is dedicated to preserving both life and property in the city. But terminated utilities and illegal connections make our job much more difficult. Thank you. CHAIRWOMAN FERNANDEZ: Thank you. I hear, on the average, there are 30 to 40 fires a year in structures that have gas and electric shutoffs, or illegal connections? MR. McCRORY: Yes. CHAIRWOMAN FERNANDEZ: And do you have any figures on how many deaths and injuries are caused by these kind of fires? You gave us some anecdotal information. I wonder, do you keep the figures on deaths and injuries? MR. McCRORY: They were the figures for those two years, Councilwoman. Two for 1996, and so far this year, one for 1997. 17 RESOLUTION 960757 CHAIRWOMAN FERNANDEZ: Deaths or injuries? MR. McCRORY: Deaths. I don't have the injury statistics here. CHAIRWOMAN FERNANDEZ: Well, I think both of you have shown the very disastrous and damaging results of people unable or unwilling to pay their utilities, shutoffs, and then some of the consequences that can occur, either fires and fire deaths, and injuries, and/or people coming into the homeless system, both of which end up costing us in the city, you know, additional financial costs. But even more important, the human cost of suffering, particularly the trauma for families who end up going into a homeless shelter, or individuals going into a homeless shelter, how long it takes those folks to get themselves back on their feet. And I know I have been involved in, and I know that Dr. Culhane has been involved in, trying to do more homelessness prevention efforts, to do all we can to prevent people from becoming homeless in the first place. And certainly you in the fire 18 RESOLUTION 960757 department are trying to do all you can to prevent people from, you know, being hurt or injured with fires. Are there any questions or comments from other members of the committee? I would like to welcome Council Thacher Longstreth. And at one point I saw Councilman Nutter. Did you have a question? Thank you very much for your testimony. And, again, I think you have set the bottom line and sort of the end results of when we fail to deal more constructively with utility terminations.
Thank you, Councilwoman. CHAIRWOMAN FERNANDEZ: Our next panel are the representatives from the three utilities. So I would like to call Gregory Martin from the Philadelphia Gas Works, who is the Chief Operating Officer. Then from the Water Department, Denise Garrett, who is Bureau Chief of the Water Revenue Bureau, and Mike Nadol, Philadelphia Water 19 RESOLUTION 960757 Department Deputy Water Commissioner, and Joann Dahm, General Manager for Public Affairs of the Water Department. Why don't you all come up together, if you would. And from PECO, Joseph Donaghy, Manager of Accounts Receivable, and Lillian Ross, Manager of Community Services. Maybe have the lead person who is testifying from each utility be at the mike. I think in our city we have, perhaps, a unique situation, in that we have one utility that is totally publicly owned and managed, and that would be the Philadelphia Water Department. Then we have a utility that is sort of a hybrid, the Gas Works. Where the Gas Works is owned by the city, a municipally owned utility, but the management of the Gas Works is contracted out to a private company. And then we have PECO, which is totally privately owned and operated. So in a sense we have three different types of ownership and management. Yet I think from all I have read from your testimony, you all have a 20 RESOLUTION 960757 common problem and a common issue of, what do you do with customers who are unable or unwilling to pay their utility bills. So why don't we begin with your testimony. You all sent it ahead of time, and I tried to get it around to members of the committee. I would also like to welcome Councilman Frank DiCicco, who is on the committee. But why don't we begin with Mr. Martin from the Gas Works, and hear the major testimony from each utility. And then I would like to have some questions and conversation. Go ahead, and identify yourself officially for the record.
Good morning, Chairwoman Fernandez and members of the committee. My name is Gregory Martin. I am Executive Vice-President and Chief Operating Officer of the Philadelphia Gas Works. With me today are Miss Christine Acolcho, who is Manager of the Energy Assistance Programs, and Powell Donoghue, who is Manager of Credit and Collections. I have previously submitted a copy of 21 RESOLUTION 960757 my testimony. I have before me summaries that I will be reading from this morning, if the Committee chooses to have it. PGW's customer base remains constant over time. The number of customers range between 516,000 to 520,000 customers. Residential customers comprise about 95 percent of all customers. On average, they account for about 67 percent of total gas sales, 72 percent of gas operating revenues, and 98 percent of accounts receivable. At any time about one-fourth of PGW's customers' accounts may be delinquent. Compared to major Pennsylvania gas utility companies, PGW experiences considerably higher levels of service terminations due to nonpayment of utility bills. In 1996, PGW's nonpayment service terminations were 36,078, representing 73.4 shutoffs per thousand residential customers. This compares to 16.74 terminations per thousand residential customers for major Pennsylvania gas utilities. PGW cooperates with customers using 22 RESOLUTION 960757 repayment agreements in lieu of shutoffs to eliminate delinquent receivables. Compared to 1995, the rate of nonpayment shutoffs has declined by about 6 percent, from 78.85 per thousand residential 7 customers, to 66 per thousand residential customers 8 in 1997. 9 By contrast, the number of repayment 10 agreements in 1997, compared to 1995, have increased 11 by 14 percent, from 43,305 to 49,391. 12 This equates to about 100 repayment 13 agreements per thousand residential customers, 14 compared to 1 per thousand residential customers for 15 other major gas utilities. 16 PGW funds customer support programs at levels considerably higher than other major Pennsylvania gas utilities. PGW's annual costs include about $48.5 million for customer support programs. The breakdown is about $33 million for the Customer Responsibility Program, $13.5 million for the senior citizen discount, and $2 million for the Conservation and Works Program. Bear in mind, these costs flow into gas rates. 23 RESOLUTION 960757 Each $1 million of costs represent about 1.77 cents per thousand cubic feet in the gas cost rate. PGW's high level of delinquent accounts, accounts receivables, and resultant service terminations may be influenced by demographical characteristics of its customer base. However, we recommend that an analysis of many factors that impact these conditions be undertaken. Some factors to consider are policies and procedures affecting service shutoffs, repayment agreements, dispute resolution, and customer support programs. I am available to answer any questions you may have. CHAIRWOMAN FERNANDEZ: What I would like to do is hear from each utility, and then we'll look at some of the issues across the utilities. So why don't we turn to the Water Department and Water Revenue.
Good morning, Councilwoman Fernandez and members of the Committee. I am Michael Nadol, Deputy Water 24 RESOLUTION 960757 Commissioner. And I will be delivering our testimony jointly with Denise Garrett, Chief of the Water Revenue Bureau. As members of Council know well, operation of the city's water utility is a shared function between the Water Department itself and the city's Revenue Department, which is principally responsible for our billing and collection activities. And because those activities are so critical to the issue before us this morning, Denise and I will be sharing information with you jointly. I would also like to introduce Joann Dahm from the Water Department's Public Affairs group, who oversees some of the particular Customer Assistance Programs administered by the Water Department itself, including our Conservation Assistance programs and Homeowners Emergency Loan programs that may be of interest to the committee. This morning we would like to lay before you our current thinking on this issue. We don't pretend to have all the answers to the challenges that our customers, particularly our 25 RESOLUTION 960757 low-income customers, face. And we welcome this opportunity to hear from you and to learn more from some of our sister utilities. Our current strategy really focuses on three general areas. First, we believe the most important thing we can do to help our customers afford their bills is to keep those bills, to keep our rates, as low, as stable, and as equitable as possible. Secondly, we think it is critical to have a consistent and effective collections practice that treats people equally and gives our customers accurate bills. And we would like to share with you some of our progress in these two areas. And, finally, we are very proud of our utility's and our city's leadership in providing targeted assistance programs for those of our customers who truly do require an extra hand in dealing with their utility obligations. In terms of the first of those areas, our rates, we are proud to tell you that we have the lowest rates of any utility of our kind in the region. Sometimes our customers don't always RESOLUTION 960757 realize this, because here in Philadelphia a water bill also includes the costs for sewage treatment and the costs for stormwater treatment. And if you compare a bill to one of our suburban neighbors, for example, Philadelphia Suburban Water's district, they would only be seeing a bill for just the water component of those services. If you look at each component of our services, bit by bit, the aggregate of those costs, the Water Department's rates in Philadelphia are, again, extremely competitive. Our current water rates, for example, are less than half those charged by Philadelphia Suburban Water. That's something that we think does more than anything else we can do to help our customers meet their obligations. And we are committed both through efficient collection practices and through cost containment in our operations to keeping our bills at that kind of low, competitive level. In addition to being low now, we are committed to keeping our rates stable in the 27 RESOLUTION 960757 future. We haven't had a rate increase since 1995. It is more than two and a half years without a rate increase. We are not projecting to need another rate increase until at least the Year 2000. And we hope that that, as well, demonstrates our commitment to keeping our bills affordable. And, finally, as we have shared with some members of Council in the past, we're working on a project for the future to help ensure that our rates are as equitable as possible. And this involves the portion of our bill that covers the city's services in operating our stormwater system, the storm drains that flow off the city streets and take water away from streets to prevent flooding from people's backyards, as well. And we are currently billing for those services on the basis of meter size.
Customers with small meters pay the least; customers with bigger meters pay more. But it is a fixed rate that doesn't necessarily correlate with a high degree of equity 28 RESOLUTION 960757 to the actual amount of water that a customer's property may be putting into the stormwater system. We are working on a new allocation plan, which we hope to present to Council soon, to change the way those costs are apportioned among our different customers to better reflect, again, the amount of stormwater that they are putting into our system. And while we are still crunching the numbers, we certainly anticipate that this will result in a reduction in the stormwater portion of the bills that we send to our smaller residential customers, particularly those folks in row homes, those folks who are probably most likely to have difficulty affording our bills. Now, in terms of our billing and collection practices -- the second general area that's part of our strategy -- I think Denise Garrett is best able to address any questions that Council may have and to share with you some of the progress that we have been making in several years. The one issue that I would add on this topic is to give Council an update on our Automatic Meter Reading Project. 29 RESOLUTION 960757 We believe that this bears on the issue at hand, in that currently so many of our bills are based on estimates. Those estimates aren't always accurate, and that can result in surprises for customers that can create an unanticipated financial burden. If we have been estimating a customer low, and we finally gain access to the property, get an accurate reading, it can result in a high bill 11 that that customer may have a difficult time handling. And, therefore, we are hopeful that the Automatic Meter Reading Program will enable us to eliminate that kind of problem. As you know, thanks to all of the members of this committee, we were authorized to move forward with automatic meter reading in June. Within 90 days we installed our first automatic meter reading device. In our first half month of installation, we installed 5,000 meters. In our second full month, we installed 15,000 meters. In just over two months of total activity, we have already installed meters in over 30 RESOLUTION 960757 30,000 homes. And we hope to begin some of our first billing based on the automatic reading in December's bills, if our ongoing testing should prove that that's prudent. Finally, we have provided Council, in the testimony that we have distributed, extensive information about the multiple assistance programs offered by both the Water Department and the Water Revenue Bureau. In total, we spend nearly $14 million a year in discounts for senior citizens, charitable organizations, and in special targeted grants to assist customers at risk of shutoff, to assist customers in water conservation, to assist those homeowners who may be facing a necessary repair in order to keep their service in good working order. We are very proud of these programs. Our experience is that most water and sewer utilities offer very limited Customer Assistance Programs. Traditionally in many parts of the country, water and sewer bills just haven't been that big a problem for people relative to the generally higher costs of energy. 31 RESOLUTION 960757 We would like to keep it that way. But we also recognize that in a community like Philadelphia, we do have a greater role to play. And, again, we are available to answer any questions you may have about the specific programs that we offer. But in the aggregate, we think they represent a very strong commitment to our customers in the most difficult circumstances. And now I would like to, if Council pleases, ask Denise Garrett to add a little more detail about some of our billing and collections issues. CHAIRWOMAN FERNANDEZ: Particularly since '92.
Okay. Good morning, Councilperson Fernandez and members of the Committee on Transportation and Public Utilities. I am Denise Garrett, Chief of the Water Revenue Bureau. And I thank you for this opportunity to come before you and give testimony on the status of water and sewer delinquencies in our city. My two previous testimonies submitted 32 RESOLUTION 960757 in February of '97 and November of '97 gives very specific information on the status of this critical subject. I will attempt to summarize those submissions. In February of '94, the Water Revenue Bureau had just completed the transition of monthly billing from a quarterly billing environment. This shift had a positive impact on revenues, in excess of $25 million. The impact was more in acceleration than in actual gain. We recognize that the shift would soon erode, and began taking steps to ensure that we could maintain the advantage monthly billing had given us. To this end, the Bureau began implementing numerous improvement programs to its various functions. These improvements are detailed in my testimony, but include such things as an automatic application for tenants, collection agencies, zip check and zip phone which are early collection programs, USTRA, which is Utility Services Tenants Rights Act, transcript billing to our commercial customers. 33 RESOLUTION 960757 Most notable of these enhancements is the installation of a predictive dialing system and an automated collection system that we have used to notify our customers of their delinquencies early in the process. Notification of a problem before it escalates is the key to helping our customers maintain their service. In addition to enhancement that make it easier to pay, the outreach we provide continues to allow for intervention before customers are without water service. In this fiscal year we extended that outreach to those customers in danger of losing their service because of shutoffs. We found that early intervention works in this venue, as well. We made two critical changes to our payment agreement and our shutoff process. In our payment agreement system, we limited the amount of payment agreements that a customer could enter into, in order to facilitate a change in the behavior patterns of customers. What we found were that customers would enter into payment agreements, subsequently 34 RESOLUTION 960757 would breach those agreements, enter into another payment agreement, and continue a cycle of delinquency. We also changed our shutoff parameters. We reduced the amount of delinquency required before an account is notified of shutoff. And this change, though it may seem harsh at first, was actually a very positive change. Because what it does is, it allows customers to begin taking action before the account is so delinquent that they are not able to make a downpayment to enter into a payment agreement. We have done an extensive rule analysis. And in that rule analysis, which I have detailed in my testimony of November of 1997, we found that a lot of the rules that we have issued here have actually fostered and continue to foster delinquencies in our customers. The most notable is the shutoff or termination -- I'm sorry, termination of billing on customers who are shut off. Effectively when a customer is shut off, water service is no longer being used. However, stormwater costs, which represents 80 35 RESOLUTION 960757 percent of our service billing, is in fact continuing. What we found in this case, when we reinspect these customers, when we go back out to see if service is still off, is that approximately 50 percent of those customers have actually restored their own service. And then we will bill them back from the date of that restoration, including any accumulated usage at that point. This presents a hardship for customers. And we found that in reviewing this, we probably need to look at how we are effecting these changes and what changes we should make in this area. One other area is moratorium.
We have been doing a ten-year study of moratorium. And in that study we found that during what we term the enforcement moratorium -- and that term describes the period where customers are no longer notified that they are in danger of shutoff, which is approximately 45 days before the moratorium begins -- customers actually stop paying us at that time. 36 RESOLUTION 960757 Our current collection rates have been going up. But those collection rates declined significantly in those months -- that month before the moratorium begins. We actually see that decline continuing into, roughly, January. Around February, when the enforcement moratorium effectively stops for us, which is the period where we begin sending notices again for April terminations, that rate starts to climb again. Those customers come back into compliance and continue to pay us. This signals to us that these are not customers who have payment trouble situations, but customers who are taking advantage of the moratorium, the fact that we are not shutting off. They are making payments. And the reduction in the termination amount have allowed them to continue to make payments and to move into other processes to maintain water service. Our low-income customers presently are not affected by the moratorium. They can come into our offices at any time, moratorium or not, make applications for services. And we provide assistance to them so that they maintain water 37 RESOLUTION 960757 services on an annualized basis. Annually we will review those accounts to determine if those customers have complied. If they have not complied, we send them notification, ask them to come into the office, and continue our outreach so that we can maintain services to those properties. Customers that find themselves in shutoff venues, in situations where we are reinspecting properties that are legally turned off, if those customers at any time declare themselves to have difficulty paying or are low income, those customers are moved out of those processes and into perhaps to assist them in maintaining water services. As a summary to this, basically what we are saying is, we are finding that some of the practices that we have internally are actually contributing to the growth in our accounts receivable. This growth continued over an eight-year period. And it was not until Fiscal Year 1997 that we began to see a tapering of the growth. 38 RESOLUTION 960757 And in this year, Fiscal Year 1998, is the first year that we have actually seen a reversal of the growth of our accounts receivable. The positive side of this is the fact that, from the implementation of monthly billing in Fiscal Year 1993 to date, the Water Revenue Bureau and the Water Department have been successful in maintaining the $25 million acceleration. Our collections have been positive. And it is on this basis that we have been able to assume that we will not be requiring any additional rate increases in order to maintain our operation. I would like to talk a little bit about some of the early-intervention programs. Our automated tenant application process, which went into effect in 1989, with the implementation of the Residential Customer Service Regulations, was automated in 1995. That automation permitted us to bring a new customer into the system, to bill that customer directly, the customer being a tenant, while maintaining a lien against any charges that are not outstanding. 39 RESOLUTION 960757 We discovered that that practice was unfair to our landlords. And, such, we implemented an additional automated process that allowed us to notify our landlords when that account becomes delinquent, at the first delinquent bill. And to continue to notify that landlord until that account becomes current, even if the customer enters into a payment agreement. This practice has been positive for us.
And it has been, I believe, a positive leverage for not only the department, but the landlord, to maintain services at the property, number one, and also to ensure that those people who have taken responsibility for the bills will continue to pay them. The other major change that we have made in our process is to implement collections and enforcement fairly across our base. Prior to 1995, all of our customers were not subject to a termination in the event of nonpayment. Specifically, the area of apartment buildings, tenant-occupied homes. We implemented the state's Utility Services Tenants' Rights Act at that time to notify 40 RESOLUTION 960757 landlords that they are responsible for the bill. And if they do not pay, we will go directly to their tenants. In putting this program in place, we realized revenues in excess of $20 million to date. And even though we have had to terminate properties, our procedure has been to terminate for no more than hours, and to move that account into our court 10 process. 11 We have had tenants come into our 12 system, new tenants come into our system, as 13 customers. 14 We have had apartment building 15 occupants take responsibility and be able to 16 maintain service to their properties by collectively 17 paying for water and sewer charges. 18 And we have had landlords comply as a 19 result of our ability to move forward and take 20 action for nonpayment. 21 We believe that all of these things 22 have been a positive influence on reducing the 23 accounts receivable. 24 Even though it is a small amount -- it is less than percent at this point -- however, 41 1 RESOLUTION 960757 we believe that in the future this reduction will continue. I am available for questions, if you have any. Thank you. CHAIRWOMAN FERNANDEZ: I have a lot. But why don't we move on and hear PECO. Why don't we have Mr. Martin and Mr. Nadol.
Good morning, Councilwoman Fernandez and members of the Committee. My name is Joe Donaghy. I am the Manager of PECO Energy's Accounts Receivable Division. And with me today is Lillian Ross, who is the Manager of our Customer Community Services Division. And we all work within the Customer Services Department at PECO Energy. And Lillian is going to testify about some of our low-income programs later, after this. For the record, our comments today pertain only to the 600,000 electric customers in Philadelphia County. I'd like to start my testimony by 42 RESOLUTION 960757 explaining the current status of receivables at PECO. Our company's bad debt or uncollectable accounts is much greater than most other investor-owned utilities. 5 percent of our total electric revenue, or approximately 70 to 80 million dollars annually. 5 percent of their total revenues. The differential between the averages reflects the costs associated with serving customers in an urban setting, primarily low income. Of the 70 to 80 million dollars, 30 to 40 million dollars of uncollectable debt is technically not recovered from our customers. It is the difference between the $40 million in the company's operating budget, which is set aside for uncollectables, and the remaining uncollectable debt. In establishing our current electric rate, the Public Utility Commission in 1990, the Limerick rate case, established $40 million annually for the company's operating budget would be set aside for uncollectables as a cost of doing 43 RESOLUTION 960757 business. The issue of account delinquencies, then, is a significant one for PECO. The impact of accounts which need to be charged-off for PECO Energy's low-income customer assistance program has averaged over $25 million for Philadelphia during the period of '92 through '96. Other gross residential charge-offs for the City of Philadelphia average almost $30 million over the same period. 4 million customers. Of this, 245,000 are low-income residents. And in Philadelphia we serve approximately 180,000 low-income residents. Coupled with the demographics, with our high rates, and due to a number of factors, we have a large number of customers who are unable to pay for the service. It should be noted that PECO Energy has not raised rates since January of '94 except for some modest fuel adjustment charges. And under the terms of the new legislation covering customer choice, our rates for transmission and distribution service are frozen 44 RESOLUTION 960757 until January 1, 2004, and generation rates will be frozen until January 1, 2009. We have been able to hold the line on our rates by becoming more efficient through redesigning work processes, installing new technology, and restructuring our operations. The results of this is that PECO Energy's employment has been reduced from approximately 13,000 in 1987, to 7,200 today. And with the recent passage of electric utility competition legislation, even the longer rate ceilings and future rate reductions will be -- as you may be aware, we enacted a more active collection program in 1992. And the information we provided to the committee addresses the data. You will notice that after several years of improvement, dollars associated with 1995 and 1996 delinquencies, they begin to increase again. We believe that's based upon -- we believe, based upon discussions with other utilities, that it is not an aberration. We have utilized television, radio, and print media to remind customers they need to pay 45 RESOLUTION 960757 their electric bills on time, and contact us any time they need assistance in paying their bill. We want to make sure that any customer needing assistance receives it. However, those with the ability to pay should do so on time. And, unfortunately, one of the consequences of not paying the bill is service termination. And we prefer to keep the meter turning, but sometimes there is no other option.
And in the data presented to the committee, we went from '92 through '96. And, on average, we have about 30,000 terminations systemwide. And the Philadelphia area is about 20,000 terminations. In 1993, which was a significant number of terminations, with 64,000 terminations throughout the PECO territory, terminations were based on accounts that were more than $25 past due. In 1994 -- CHAIRWOMAN FERNANDEZ: Make sure any of the numbers you give, we are concerned about Philadelphia county, not your whole territory.
And that's what we explained. There were numbers back from '94 and 46 RESOLUTION 960757 beyond. And older than that -- CHAIRWOMAN FERNANDEZ: I find it very confusing to go back and forth.
In '94 we did change our termination policy from $25, we moved that delinquency amount up to $100 before we would take a customer out and put them through the termination process. While we received many telephone calls about potential illegal electric connections, we have not tracked this in the past, but have done so in 1996. We removed 507 illegal connections last year. And in our continuing efforts to ensure safety for families, PECO Energy has been a major sponsor of the Philadelphia Fire Department's Save A Child campaign for ten years. And as you know, this program facilitates the installation of battery-operated smoke detectors for residential applications. In addition, PECO does a great deal to assist those who are having trouble paying their electric bills. And Lillian Ross is going to be going through the programs that we have available at 47 RESOLUTION 960757 PECO to assist the low-income programs.
Good morning, Councilwoman Fernandez and members of the Committee. My name is Lillian Ross, and I am the Manager of PECO Energy's Community Services Division. PECO Energy administers a number of programs in support of the low-income and payment-troubled customers. One program is the Low-Income Usage Reduction Program, LIUR. And this is a state-sponsored program designed to provide energy education and conservation measures to assist low-income and residential customers to reduce their energy usage. PECO has administered this program since 1988 and has made significant improvements since its inception. Initially the program focused on weatherization, home and heater repairs, and replacements for PECO Energy's low-income residential customers whose heating and water heating source was electric. Or, in the surrounding counties, gas. 48 RESOLUTION 960757 Naturally, this program as designed limited the participation of many of our low-income customers. In an effort to improve the program and assist more customers, PECO Energy, in concurrence with the Bureau of Consumer Services, in 1995 implemented a strategy that successfully refocused the program to include base load applications. In order to accomplish this task, the program now targets the highest usage, energy usage, and the lowest income and highest arrearages. Customers are scheduled for a base load audit or either a home energy audit, depending on their heating source. Both these audits analyze the customer's current electric usage, identify and recommend appropriate behavioral changes. Customers who receive the base load audit receive additional monitoring and feedback at regular intervals regarding their conservation efforts. We believe that more of a focus on education and energy efficiency would have a 49 RESOLUTION 960757 longer-lasting result and would be more effective for the customer. And we have provided you our data to support our participation in that program. Another program that we participate in is the Low Income Heating Energy Assistance Program, LIHEAP. Our customer consultants, or telephone representatives, are trained to identify payment-troubled and/or low-income customers who may qualify for LIHEA. Consultants secure a financial statement over the telephone when a customer calls in to request payment arrangements. At this time not only does the customer receive LIHEAP information, but is provided information and referrals for additional opportunities for assistance. Additionally, we do extensive outreach to all of our identified low-income customers to afford them with the opportunity of taking advantage of LIHEAP funding. And the charts that you have represent the customers who have received LIHEAP 50 RESOLUTION 960757 funds. That's since 1992. Another program that assists our customers in paying their bills is the Matching Energy Assistance Fund. As the name indicates, this is a program that allows all customers to contribute to a fund through their PECO Energy bill statement. PECO, in turn, matches our customer and meets its contributions dollar for dollar. PECO Energy is committed to doing everything it can by helping our customers by supporting privately funded fuel programs, including the Utility Emergency Services Fund, UESF, here in Philadelphia. We promote this program through periodic mailings to our customers, as well as our participation in various fund-raising activities. 7 million. The total matching energy assistance funds donated in Philadelphia to Philadelphia customers have amounted to over $754,000 annually since 1992. PECO Energy also offers Customer Assistance Programs to help low-income customers pay 51 RESOLUTION 960757 their bills and to reduce the company's uncollectable accounts. In 1985 PECO Energy implemented the CAP I program, designed to aid low-income, payment-troubled customers to manage their electric usage to a level they can afford.
The method for determining the payment amount was based on affordability and would have been considered a combination of both a percentage of bill and also percentage of income plan. PECO Energy -- once enrolled in the program, the customers had to meet specific criteria to remain in the program. And failure to comply with these criteria would result in dismissal from the program. Because of the requirements to participate in other utility-sponsored programs in the City of Philadelphia, the requirement to designate a LIHEAP grant to PECO Energy was waived to help relieve the financial burden for customers having to designate their grant to other utilities. In April 1996, PECO Energy, in concurrence with the Pennsylvania PUC, implemented a 52 RESOLUTION 960757 pilot Customer Assistance Rate program. The pilot program included a newly designed discount rate for participants and provides for the use of modified meters that required customers to pre-pay for electricity. The pilot operates simultaneously with the existing CAP I program. The new pilot, or CAP Rate, changes the process of calculating the CAP I payment based on the customer's billing rate, percentage of their bill, and percentage of income. The CAP I methodology was not only time-consuming for the company, but was very often confusing to the customer. The CAP rate is an actual tariff billing rate for the CAP rate pilot customers, instead of a fixed payment amount that is less than the amount billed. The CAP rate program streamlines the eligibility process by using various Commonwealth agencies. The Pennsylvania Department of Welfare's Voice Response Unit is used to verify reported income of customers receiving government assistance. The Department of Revenue is also a 53 RESOLUTION 960757 resource to perform this qualifying process for CAP rate by verifying income via tax returns who -- for customers who do not receive public assistance, to ensure that the Federal Poverty Guidelines are satisfied. The CAP rate pilot program provides a tariff rate of either a 50 percent reduction or a 9 percent reduction in the kilowatt hour charge for 10 the first 500 kilowatt hours used. 11 The 50 percent reduction will apply 12 to customers at or below 100 percent of the federal 13 poverty level. 14 The 25 percent reduction applies to 15 customers at 100 to 150 percent of the federal 16 poverty level, which will hopefully benefit 17 payment-troubled, working-poor customers. 10,000 18 customers have been admitted into this program. 19 The revised CAP program will provide 20 for any arrears present at admission to be forgiven 21 if the customer, number one, had a pre-program 22 balance of more than $500; number two, is in the 23 program for 6 to 12 months; and, three, remains 24 current in his or her payments. 25 CHAIRWOMAN FERNANDEZ: Miss Ross, 54 RESOLUTION 960757 maybe you could sort of summarize and maybe go more to the bottom line of points. I think we had the written testimony, and we don't need every detail.
We believe that this program provides the customers with an option to better be able to afford their monthly bills. And in addition to the CAP rate program, we do offer a prepayment meter option as an alternative to termination. Thank you. CHAIRWOMAN FERNANDEZ: I think there were a number of questions. But just to lay out at least where I am coming from, I think we are all concerned about keeping utility rates low, both for the benefit of our citizens and businesses in this city. And it is certainly important to economic development to have our rates low. Yet, on the other hand, in a city like ours, with such a high concentration of low-income people, we also have to be concerned about people who have severe financial stress, and may, in various ways, need assistance so that they 55 RESOLUTION 960757 can pay their utility bills, keep their utilities on, and not end up in homeless shelters or on the streets. So we have, you know, sometimes two difficult-to-balance issues. And I think what I have been trying to get at with both the information we asked ahead of time, which came in in different forms of clarity and confusion, I'd like to get, at least in my mind, a clear picture of how many customers, you know, are delinquent and what's the pattern of shutoffs. And, then, what is the cost to the utilities -- and, therefore, the ratepayers -- of various programs designed to assist low-income customers. And, also, the collection costs. So I am trying to look at the costs of some of these issues, in addition to the sheer numbers. So I would like to first go back and perhaps use Mike Nadol's chart from the Water Department, that very clearly laid out what kinds of assistance programs you have for low-income customers and how much each costs. So I think that was in Mr. Nadol's 56 RESOLUTION 960757 testimony, where he laid out in a very clear way the kinds of Customer Assistance Programs that the Water Department and the Water Revenue Bureau have to, again, assist people who have severe financial problems and need some kind of assistance. And if I see the bottom line there, you have ended up with $13.6 million is spent for these variety of assistance programs, including -- it is in Mike Nadol's testimony, and it is a very handy little chart -- it has a senior citizen discount, et cetera. I tried to fill in the figures from PGW. And let's see if I can figure it out. PGW, from Mr. Martin's testimony, would show that PGW is spending $48 million on various Customer Assistance Programs, 13 million on the senior citizen discount, 33 million on the Customer Responsibility Program, and then 2 million on conservation programs. Is that correct?
That is correct -- CHAIRWOMAN FERNANDEZ: PECO, I really couldn't figure out. So could you review for me, the people from PECO, what is the dollar value? 57 RESOLUTION 960757 You told me all of the details about the different programs. But could you tell me, what is the cost to the utility and ratepayers of the various Customer Assistance Programs?
The Customer Assistance Programs are $6 million. And that's not including the $25 million discounts that we talk about in our Customer Assistance Programs. So we have a Customer Assistance Program, where there is a write-off option, that averages, from '92 through '96, averaged $25 million. Then we have administrative costs of our low-income reduction program, and some call centers to handle customers on our Customer Assistance Programs. Those run $6 million, and then the write-off piece is an additional million. 20 CHAIRWOMAN FERNANDEZ: I don't think 21 the other utilities were including write-offs in 22 there; right? 23
I don't believe so. $6 24 million is the number. 25 CHAIRWOMAN FERNANDEZ: $6 million. 58 RESOLUTION 960757 So the bottom line is, the Water Department is spending $13.6 million on various assistance programs; the Gas Works, $48 million; and the electric company, $6 million. Is that correct? From any of the utilities, is there anything incorrect about what I just said?
No, not from the Gas Works. CHAIRWOMAN FERNANDEZ: Mr. Martin, why don't you sum up so you are right there. So that's one issue. And I think we need to take -- maybe today isn't the day to do it -- a look as a city and as the utilities in our city, what kinds of help is being given. Questions I would have, which, again, we don't have to delve into today, but questions of, how much communication and coordination is there among the utilities around these various assistance programs? Is it sort of each one doing their thing, or are there cases in which, whether it is around conservation or various kinds of customer assistance, there is any kind of communication, so 59 RESOLUTION 960757 what one utility is doing for a low-income customer, the other utilities, who may be treating and helping the same customer, are aware of it? So, just briefly, how much communication is there among the three utilities?
Chairwoman Fernandez, to my knowledge, there is very little or no 9 communication that PGW is having with the other utilities concerning low-income customers or customers who may need energy assistance. It seems to me that, particularly in the area of conservation, that there are some opportunities for cooperation for dealing with or addressing the needs of our common customers. And perhaps there could be some discussion and collaboration around that issue.
I would echo Mr. Martin's comments. I don't think this is something that we have done a good enough job at historically. I would also, on the same subject, like to add the notion to the dialogue that we -- that there are other groups who can be part of bringing us all together and who can be part of coordinating our services. 60 RESOLUTION 960757 We are very proud of our partnership with the Energy Coordinating Agency and Neighborhood Energy Centers in delivering our conservation assistance programs. That's something that we don't try to do ourselves, but that we try to do through community-based organizations that perhaps can be closer to the neighborhoods and the customers they're serving than a big, bureaucratic utility, as well intentioned we may be, can ever be. And we know that those kinds of community-based organizations also do assist our customers in accessing other kinds of assistance for nonwater utility bills. Perhaps to some degree this coordination is happening in a more informal manner through those kinds of organizations. But I'm sure it could be improved if we all sat down at the table more aggressively. CHAIRWOMAN FERNANDEZ: Yes. Councilwoman Tasco wanted to add to that.
I had written during the course of the testimony -- I don't want to take away your questioning -- but I wanted to, 61 RESOLUTION 960757 while we were on this subject -- CHAIRWOMAN FERNANDEZ: We will deal with this subject, and then we will go on to some of the others.
My question was along the lines of coordination. Is it possible to form a task force of the various utilities, along with the Office of the Homeless? So that if a person is delinquent at PGW with their gas, they may be delinquent with their water, and they may be delinquent with their electricity. And as soon as those services are terminated, then you begin to see them move to the homeless shelters. So if there is a way to somehow, through some task force, along with someone from the Office of the Homeless, and any social service department, that we can catch those people and provide a service to them before they are out on the street -- because eventually we pay -- and find a way to help them remain in their home without coming into the shelter, would be far better than having 62 RESOLUTION 960757 them evicted and in the shelter system. And, in the end, we are still paying for their care. There would seem to be a way to try to provide some kind of safety net to prevent those people from being in the street. And I don't know how you do that. But I think the communication is so important. I know you compete for the LIHEAP grant. But, I mean, that can be worked out, too. My whole premise now on solving problems is that, if we can go to the moon, we can solve any problem here on earth. It's not that complicated. And I would like to see some effort made where there is a coming together with these agencies, along with whatever social service agency in the city needs to be, probably the Office of the Homeless. Because they can be alerted to what's going on, and probably look at the family and lay out a plan for that family so the family is not evicted, that we were able to provide some service for them to stay in their home. CHAIRWOMAN FERNANDEZ: Well, 63 RESOLUTION 960757 actually, if I could just add for the record, I have been co-chairing a homelessness prevention task force for the last two and a half years with John Kromer, where there has been some pilot homelessness prevention projects, particularly dealing with utilities and some of the other issues. Where the Office of Housing is there, the homeless czar -- but I don't like that word -- plus various other community agencies. And I am trying to recall if the utilities are there. I think they were invited, whether they regularly come. And that group has really been trying to look at how you prevent homelessness. And, actually, one of the important points brought out, that really stuck in my mind -- which I wanted to bring up later, but I will bring it up here -- in some of the energy neighborhood-based offices, they are often finding that people who present and come saying, "I am about to be evicted," or "I am about to lose my home," basics of budgeting really have never been dealt with. And when they will ask people to list 64 RESOLUTION 960757 the five priority bills they have to pay, often utilities and rent don't make the list. So then people go back and say, "But, wait. If you want to stay in your home, you have to deal with utilities and rent." How do you move that up higher on your priority list? And it certainly struck me. I never got any education in school or even in my family about how to do a budget. So how do we expect people, if there has been no counseling or training at home or school, how are people even supposed to know how to do a budget? And particularly when your income is tight, it is probably even tighter to do a budget than if you have more surplus income. What I would like to do, I know the Energy Coordinating Agency was designed to bring the utilities together around issues affecting low-income people. Could I just call Liz Robinson up, who was asked to testify later. Could you just briefly review for the record, here at this point, what kind of coordination there is among the utilities through ECA. I think Mr. Nadol had 65 RESOLUTION 960757 brought that up.
Thank you very much for holding these hearings. The Energy Coordinating Agency was created largely as a result of crisis in the mid '80s. And our effort as a nonprofit corporation has been to seek the voluntary cooperation of all parties who have a stake in this problem. And that includes the three local utilities, city government, and those agencies at the state level which administer federally funded services and programs, including LIHEAP and the weatherization program, weatherization assistance program. Our degree of coordination among and between all of these services, frankly, varies from year to year. The model that we have developed in order to bring coordination to the person who needs it is the Neighborhood Energy Center. This is a 66 RESOLUTION 960757 preexisting, community-based organization, serving as a one-stop shop for energy services. And the notion is that all services are available at the Neighborhood Energy Center. A customer walks in and is able to access anything and everything they need, even if they don't know that it exists. So that a counselor sits with them, analyzes their problem, determines what it is that's going to solve that problem, and make sure that those services are applied to the customer at the time of their intake. The notion of this is a very powerful notion. Because, frankly, the problem with energy services is that there isn't any way to bring them all to bear. They're funded very separately. There is the federal funding and some city money. No state dollars, by the way. And certainly very large contributions by the three local utilities. And we have found over the years that unless these services are coordinated, they tend to diminish in their impact and in their value. And, in some cases, as some of these 67 RESOLUTION 960757 resources shrink -- and I am speaking specifically of the LIHEAP program -- we see confusion resulting from the competition for those resources. So, frankly, our position has always been that unless there is very clear coordination of resources, you won't have the maximum possible impact of the resources. And, in fact, you may run at cross-purposes as people try to compete for the scarce dollars to offset their delinquencies. So to answer your question directly, we don't have a perfect world. We don't have perfect coordination now. And we certainly encourage all efforts to increase coordination. Because, as I will testify later, I think that without really working together on this problem, we don't have any chance of solving it. CHAIRWOMAN FERNANDEZ: Okay.
Well, this is from, 68 RESOLUTION 960757 you know, a vantage point of many years doing this work. Quite frankly, I believe that the Neighborhood Energy Centers are an excellent vehicle for delivery of these services. And that they have proven themselves capable of delivering a broad range of not only the assistance -- which is what most people come in for, is the cash assistance to relieve their bill payment problem -- but what the centers really do is work on the underlying cause of the bill payment issue. So over the years we have moved into budget counseling, even without -- this is without any assistance from the utilities. And our belief is that people, even people without adequate income, need to really carefully be conscious of what they're spending their scarce dollars on. So budget counseling is really part of our approach. It is an integral part of our approach. We believe that that's a cornerstone of working on the problem with a low-income household. 69 RESOLUTION 960757 So we work from the payment issues, toward the solutions. And the solutions, inevitably, involve conservation services and -- many more times than we would care to think -- repair. As you know, people are living in homes that are sucking up enormous amounts of energy, way more than they can possibly pay for, because these homes are in very, very poor condition. So it is not an easy problem, and it won't be fixed with a band-aid. So it requires a very deliberate pooling of resources and a very methodical application of those resources to that household's problem over time, so we see this bill 17 come down, or these bills. Usually people have high bills in more than one area; it is not just a high gas bill. It is a high gas bill, it is a high electric bill, high water bill. They have leaks here, they have inefficient appliances, they have got holes in their roof. The combination of problems creates a position or a situation where the family -- the 70 RESOLUTION 960757 energy bills are truly out of control. So the only solution is a comprehensive one, where all of these services are brought to bear in a focused way, deliberately moving through the treatments that need to be applied to the household, until the problem is solved.
Well, are you saying that that is the answer to the concern I raised about the communication between the three utilities, in trying to catch a family before they are evicted? That is what my concern is. Suppose somebody doesn't know anything about an energy agency. What happens to them, and they don't have the help? What I'm trying to do is find a solution to trying to keep the person off the street.
And we are not going to solve it here today. So I raise that. And if the three utility companies are not talking to each other, if PGW sees a 71 RESOLUTION 960757 customer who has a high gas bill, and that gas is going to be terminated, do they have any sense of contacting PECO and saying, "Well, look, I have this customer over here. I know we have a lot of work to do" -- you may not have the staffing, but this is just a hypothetical -- "and does that person have a water problem?" So if the person is delinquent in the water bill, and we are going to terminate the water. And then PECO says, "Well, by the way, the same person hasn't paid the electricity, so the electricity is going to be turned off." And the next time, you know, they are downtown in the homeless shelter. So what I'm trying to figure out is, how do we catch that person before that person gets to the shelter?
And we are not going to answer it here today, but it is the question I raise. How do we come about looking at that issue, Councilwoman, and trying to find some 72 RESOLUTION 960757 mechanism, whether it is through the energy office or whether -- I don't care who does it, as long as we try to get Mary Jane and John Doe, if the problem has to be with utilities -- like you said, there are other problems, also. They may need some counseling and blah, blah, blah. CHAIRWOMAN FERNANDEZ: And also job assistance.
They come into the system; they go into the homeless shelter, they stay there. We find them a Section 8, which we just dealt with yesterday, they go back into the house, and then they are maybe back in the cycle again.
Because once they stay in a homeless shelter, they don't stay there forever. They go back into another apartment. Have we really dealt with the underlying problem --
-- that causes 73 RESOLUTION 960757 why they were homeless in the first place.
Exactly. Well, before I entered the energy world, I ran People's Emergency Center for five years. And, frankly, I left the homeless world determined to do something about preventing homelessness. And I saw energy as one of the costs, one of the few costs, that a low-income household can actually control. And they can actually do something about that problem, about the energy cost, which is destabilizing their housing situation. So energy is a very important piece of this, this homeless puzzle. The Homelessness Prevention Program, which is now underway in its third year, is a program which identifies people on the threshold of becoming homeless. And I should say that not every utility termination is going to result in homelessness. And one of the difficulties is defining who is truly on the verge of homelessness. Because we don't have -- this program 74 RESOLUTION 960757 that we are running, the Homelessness Prevention Program, does not have the resources to give a grant to every person who has got a shut-off notice, you know. That's just absolutely not possible. So we are attempting to define and be able to predict homelessness in an individual case. And this approach really starts with making the client fully aware of what their problem is, how they got there, and how they -- not we, but how they -- need to solve it. And it almost always involves increasing their income, to be perfectly honest. So a big part of what we work on -- again, we are not trying to apply band-aids that will only solve the problem over the short term. We are trying to dive for the solution. And if you are talking to a client whose income is, in fact, inadequate, the next logical thing to do is talk about increasing that income. So a lot of our effort is in employment, is jobs. And we are finding, despite what you might think, we are finding lots of jobs for lots of people. So the employment path is a viable path for 75 RESOLUTION 960757 a very large number of these people. Not everybody. Not everybody by any stretch. I mean, not everybody is employable. But this certainly is a viable and workable solution for lots of folks.
We just expanded from two to three. This is our first year with three centers. We have one in Southwest Philadelphia, that's our newest one, one in North Philly, and one in South Philly. We would love to see this all over the city. Now, TAG is also running a similar program, which is using three additional centers. So there are a total of six sites. CHAIRWOMAN FERNANDEZ: Homelessness prevention sites?
Oh, yes. And we issue checks to each of the 76 RESOLUTION 960757 utilities on behalf of certain clients who qualify every month, every week. CHAIRWOMAN FERNANDEZ: And just for the record, the city did put in an additional $1 million to support the expansion of these Homelessness Prevention Centers.
Yes. Yes. CHAIRWOMAN FERNANDEZ: Thank you. Again, we can hear more of your testimony. But I thought it was relevant to bring that up. Are there any other comments from any of the utilities on this issue? Again, I counted up. It is about $67 million the three utilities are paying. And that's, essentially, the ratepayers are investing in assistance programs for low-income customers. So that is a big chunk of money. And I think we have to look very carefully at how that can best be utilized and spent. And so I think I would like to have a way to continue this conversation among the different utilities. Any other comments with members of the Committee? 77 RESOLUTION 960757
I do. I have some other questions. CHAIRWOMAN FERNANDEZ: Go ahead. And then I had some.
All of you stated, each of the utilities stated, that there was an increase in the delinquencies in this year. Did I hear you say that? Is that correct? Have you done any analysis to determine what is causing the increase in delinquency? Have you noticed a decline in employment, or did down-sizing happen as a result of the increase in delinquencies?
Councilwoman Tasco, we have not at PGW done an analysis of some of the social issues that impact delinquencies. But I can tell you that we have taken a look at some income factors, as an example. Just recently I had a group take a look at several groups of customers: Our defaulted CRP customers, the nondefaulted CRP customers, customers who have agreements with PGW, and then 78 RESOLUTION 960757 customers who don't have agreements with PGW. And we looked at them across the city geographically. Broke down those customers by numbers and receivables according to zip code. We overlaid on that median income. And one of the interesting things that came out was that at approximately 27 to 28 thousand dollars of household income, you find that delinquent receivables average about $400. That's the point where customers begin to have difficulty. And if you also take a look at the frequency of the customers being delinquent, the number of times that they are delinquent, you will find, again, that from about 28 to 27 thousand dollars of median household income is where customers have difficulty. And it is across the board geographically. That's one of the things that we have looked at, and I offer that for consideration.
At PECO we, again, did not do any investigation at this point of the social aspect. But we have been looking at some just general trends in the economy. And we are seeing 79 RESOLUTION 960757 some things play out in our territory that would affect low, as well as non-low-income customers. When you look at the economic indicators, most of them are going in the right direction. But one that is really significantly in the wrong direction is, consumer debt that is up in this region and across the country. And it is continuing to rise and expected to go and continue to rise out to the Year 2001 based on what we have seen. Our bankruptcies are up over 27 percent, and that was in 1996. And that was at record levels. Those record levels are going to be broken this year in '97. We believe those bankruptcy numbers will probably be up about or 18 30 percent over last year's numbers. So there are a 19 lot of things like that that are churning. 20 Also, when we look at the credit card 21 industry, about 2.5 million credit cards a year are 22 sent out through the mail, which is about 17 for 23 every consumer. A lot of people are getting into 24 those credit cards and getting themselves in 25 trouble. 80 1 RESOLUTION 960757 The trends also show that in the low-income area, the charge card usage is a little bit higher than in other income brackets. So we are trying to look at those to see what's working out. What we also did was, talk to some of our other utilities across the country. And we looked at '95 to '96 data, where it was Houston Power & Light saw an increase of percent, on up 10 to Wisconsin Power, 25 percent in their 11 delinquencies and uncollectables. Commonwealth 12 Edison in Chicago was up 25 percent. So the '95 to '96 trends were pretty much, most of the peers I was talking to across the country, they were experiencing them. And then we were trying to look within our own area in terms of financial indicators, is there something that we can look at, focus on, see what we can do to resolve that issue. That's where we have been.
Councilwoman, unfortunately, we don't have demographic data on our customers. Until recently and into the future we will be gathering that information. So we are really dealing with properties as it relates to 81 RESOLUTION 960757 delinquencies. We had a very slight increase in the number of delinquent properties. And, as I testified earlier, we did not have a significant increase in the number -- the amount of delinquency of our base. However, we do, we have experienced an increase in bankruptcies and we have increased the percentage of accounts to be written off. I think what should be noted, which has not been noted, is our write-off for our low-income customers has been increasing. We are presently at about $27.5 million in write-offs for those customers. We recognize that it is necessary for us to do these types of comparative studies. And because we are limited in the amount of data that we had available to us, we can't really predict trends in these areas. But we have looked at specific periods of delinquencies, such as the period pre-moratorium, the period post-moratorium, the summer months when our bills tend to be the largest, and delinquencies across different customer types; 82 RESOLUTION 960757 such as, our residential customer base, which has the highest percentage of delinquencies. Our tenant customer base, which we are starting to see -- tenant-occupied properties, I should say not the tenant customers, which we're starting to see a small decline. Our commercial customer base, which we are starting to see a decline. So in that regard we are not able to do the types of in-depth analysis that the other utilities are able to do. CHAIRWOMAN FERNANDEZ: On that issue of delinquencies, if I can try to pull the numbers from all the different testimonies -- and let me check if it is correct -- the Water Department said in 1997, they have about 174,000 delinquent customers. Is that correct?
Yes. CHAIRWOMAN FERNANDEZ: And then PGW reported that they had about 125,000 delinquent customers; is that correct?
That is correct. CHAIRWOMAN FERNANDEZ: And PECO, 83 RESOLUTION 960757 again, the chart was just sort of a chart, so a guesstimate would be PECO reports about 110,000 delinquent customers?
Yes, that's correct. CHAIRWOMAN FERNANDEZ: So there is some variation. And it might even be how you define who is delinquent. And I note, you can note and we can look, if we wanted to, at the different ways you define delinquency. Whatever it is, it is a huge number. Let's say it was only serious delinquent customers. Let's say it was only 50, 75, 85 thousand, with a little churning around the edges. That's a huge number of probably chronically delinquent customers. So I would still go back to the big question, you know, is there a way for the three utilities to have a more coordinated -- whether it is coordinated collection or coordinated assistance programs to deal with this large group of delinquent customers? Who, again, from all that I know about our city and region, the numbers are not going 84 RESOLUTION 960757 to be dramatically decreasing. And, in fact, with the Welfare changes, things could be getting worse. So we have this huge group of utility delinquent customers. One of my questions would be, do you all know how much overlap there is between delinquent water customers, delinquent electric customers, and delinquent gas customers? Is there a base somewhere where they are all the same people? My guess is, a lot of them would be similar, then there would be some differences. Do you know that?
Do we know that for sure from data? No. From supposition, absolutely it is correct, there is overlap. But there is no 17 sharing of data. Can we do better at coordinating? Obviously, from the other comments, we haven't done a good job at all communicating and coordinating. So I think we can do that. The sharing of data may be an issue, but certainly we can take a look. We know that the delinquent customers from PECO are probably, a good percentage of them, 85 RESOLUTION 960757 are delinquent elsewhere in their utility bills. But at this point we haven't done a good job at all in coordinating that effort.
Councilwoman, in our applications for water and sewer low-income assistance, we look at the other utility delinquencies. And, in fact, there is quite a bit of overlap. We generally find that those customers either have high delinquent utility bills or they are in payment agreements with those utilities on high delinquent bills. CHAIRWOMAN FERNANDEZ: How do you check that?
The customer provides us the information. We are not able to secure that information from either one of the other utilities. And we have made some outreach efforts to try to coordinate things a little better.
On our Exhibit No. 10, we indicate that customers totaling about 109,654 are in the 120-days basket in terms of delinquencies. 86 RESOLUTION 960757 That's about the point where you can consider that the customers are going to be seriously delinquent, and continue to be. Because money at that point gets to be very difficult to collect. We do use credit reports. And to the extent that the other utility companies make referrals or reports to the credit reporting agencies, we will be able to see whether customers are delinquent, and the other utility companies. There is an opportunity, as I stated earlier, for the utility companies to talk, to communicate, to try to analyze the customer base, find where there are commonalities, and perhaps develop some common methods for dealing with them at this point. We participate with other utility companies as it relates to emergency assistance for responding to emergencies, providing fuel for other utilities that find themselves in critical situations. I don't see why there isn't an opportunity for us to do the same thing with respect to delinquent accounts receivables and delinquent 87 RESOLUTION 960757 customers. CHAIRWOMAN FERNANDEZ: Councilwoman, did you have a different question? I wanted to sort of relate it to delinquencies, the issue of how you distinguish between customers who have the ability to pay, but are not, they are deciding to pay other bills, you know, their credit card bill or something, and then how you distinguish customers who have the ability, but are deciding not to, and people who have such low, squeezed incomes that they really cannot pay more and maybe cannot pay their full bill? What procedures do you use to distinguish between those two major groups of people? Knowing it is not cut and dry.
To distinguish the ability to pay, when a customer calls, we will take a financial statement. So if they have difficulty paying a bill, we will take a financial statement. And as part of the PUC regulations, we have to take certain income information and expense information, and then we determine an ability to pay. And we code the account in four 88 RESOLUTION 960757 different income brackets, which, again, is driven by regulations. Customers are in the bottom two income brackets. They will go through our eligibility requirements for Customer Assistance Programs, referrals, any of the CBOs, NECs, referral processes that we have, we will put the customer in connection with those guys, as well. But it is, basically, if the customer calls us and they provide the financial information is how we will be able to differentiate ability to pay versus nonability to pay. CHAIRWOMAN FERNANDEZ: Do you have a sense of how many of those delinquent customers fall into the ability to pay versus severe economic problems?
And, again, it is not accurate because you are waiting for the customer to react. But in our Customer Assistance Programs right now, we have 40,000 customers. So that's a very confident number, that those 40,000 customers had an inability to pay. There are some that are on the 89 RESOLUTION 960757 fringes of those eligibility requirements that I don't know. But 40,000 are in that program at this point. CHAIRWOMAN FERNANDEZ: Out of 110,000 delinquent customers?
No. They started out in that 110. But if they get on the program and they begin to pay their bills, they are no longer considered to be delinquent at that point. So the customer may come in, we put them on an affordable payment. And if they are making that affordable payment, then we consider them to be current, and they would not be in that 110,000 number. Some of them could be there if they are behind on their discounted CAP rate program. CHAIRWOMAN FERNANDEZ: What I am trying to get at is, how many of your customers do you think do have the ability to pay, but are choosing not to?
What we have identified, when we did some of our testimony to the PUC around deregulation, we believe out of that 90 RESOLUTION 960757 110,000, we believe the number is somewhere around 60,000 that probably need to be in our CAP program, which is saying an inability to pay. So that's what we have been talking about. We have a higher number, but some of that is for our suburban customers. 60,000 would be related to the City of Philadelphia. CHAIRWOMAN FERNANDEZ: So 60,000 out of 110,000.
Is what we are estimating. In addition to what we already have in those two programs. CHAIRWOMAN FERNANDEZ: And what about the other utilities; how do you distinguish?
For the Philadelphia Water Department, we distinguish it similarly to PECO. Customers have to declare themselves to us, and we do an income analysis and we will bring them into our program. Under our new program guidelines, customers really have to state what their income level is, and we will then send them the information required for them to complete. 91 RESOLUTION 960757 We will assume them to be low income, or assume them to be within that category, until we receive that information back and review it. At this time we only have two classifications, those customers who declare themselves and those customers who contact us who we clearly find when we interview them that they are above 150 percent of poverty. However, we do extend our outreach to customers who have extenuating circumstances. Because we find that customers above 150 percent of poverty still do not have an ability to pay. And therefore, we will bring them into another program, which is called our Water Revenue Bureau Conference Committee, where we evaluate those circumstances and determine an affordable bill for them to pay, and maintain them through that process. CHAIRWOMAN FERNANDEZ: So, again, I am just trying to make sense. Of the 174,000 --
Includes all of our customers who have not paid. They also include those customers in our assistance programs. And we have roughly 18,000 customers in that program. 92 RESOLUTION 960757 CHAIRWOMAN FERNANDEZ: 18,000 on the assistance programs?
Yes. We have additional customers on our payment agreement programs. But those customers have elected to go into our standard payment agreement, and, therefore, we assume that they don't need our assistance in regard to supporting bill payment, but that they just need affordable payment terms so that they can make their monthly billing. CHAIRWOMAN FERNANDEZ: What I'm trying to do is, of 174,000 people, which is a lot of delinquent customers, I'm just trying to get a sense of what your categories are, how many are low income and are on your assistance programs, you know, how many are maybe on --
We have approximately 17,000 who are low income and on our assistance programs. CHAIRWOMAN FERNANDEZ: Out of the 174,000?
Out of the 174,000. CHAIRWOMAN FERNANDEZ: What about all 93 RESOLUTION 960757 the others, then?
The others, we have customers in payment agreements, which are still classified under that 174,000. And then we have those who are just delinquent and who have not paid. A large percentage of those customers in the 174,000 are tenant-occupied properties, where we have landlords, approximately 40,000 of them. And we have commercial incorporated in that group. CHAIRWOMAN FERNANDEZ: So about how many would be in the category of able to pay, but are not? I mean, again, there was so much data, I couldn't figure it out. So I am asking.
We estimate about 100,000. CHAIRWOMAN FERNANDEZ: Are able to pay, but are not?
They are able to pay, but are not. They are not in our assistance programs, they are not collected through our USTRA payment agreement process, and they are not in our 94 RESOLUTION 960757 standard payment agreements, and they have not declared themselves low income. CHAIRWOMAN FERNANDEZ: That's a lot. So what do you do about that hundred thousand?
Well, we are still notifying those customers. We contact them via telephone. Some of them are in our USTRA program, where they are receiving notification. We will eventually move forward with enforcement. We have put approximately 25,000 of them into our shutoff program in order to bring them into some sort of payment agreement status. But we are effecting various things to try to bring them into compliance. One of the things we did was drop our shutoff parameter, which was a contributing factor, we believe, to increasing the number of customers who became delinquent. And we are starting to see -- we haven't yet seen a decline, because we just began that program this year. CHAIRWOMAN FERNANDEZ: I am not sure 95 RESOLUTION 960757 I followed that. Do what?
The 174,000 is an aggregate of customers coming forward over a long period of time. And what we have done is, we have decreased the shutoff parameters. Those customers generally are not able to resolve their debts because the debts have gotten larger than they can manage. So what we have done is, we have dropped the parameters to avoid customers coming into the delinquent account with large debts. So when we go to shut off, we can then enter them into payment agreements that they can reasonably afford to pay. So, in theory, what we have done is, we have tried to reduce the number of customers coming into the population by getting to them early, with our early intervention calls and lower delinquent bills, as we try to reduce the numbers of customers that are already in the delinquent status through programs, such as our Utility Services Tenants' Rights Act. CHAIRWOMAN FERNANDEZ: I am not sure 96 RESOLUTION 960757 I am clear. We will pursue it another day.
My name is Paul Donohue, Manager of Credit and Collections for Philadelphia Gas Works. There is an indicator in our system known as the low-income indicator. If you have given a grant to PGW, if you have been on a low-income program of any sort in the past five years, the low-income indicator is on the account. There are presently 180,000 low-income indicators in our system as of today. There are 33,000 active CRP agreements. There are 21,000 defaulted CRP agreements, which means that there are 55,000 customers on the CRP program. An amazing fact is that, during the 1996 winter moratorium, 60,000 customers did not pay any bills at all to PGW. Of those 60,000 customers, only 12,000 were low income. And what we do is, we separate those customers out. And when April rolls around, those customers are our first customers that we earmark to go after to try and get our bills paid for. And if not paid, then shut off. 97 RESOLUTION 960757 So that just goes to show you that the low-income customer does try to pay the bill. But a lot of people game the system. CHAIRWOMAN FERNANDEZ: So do you feel now -- that's what I was thinking. This day and age of computers, do you feel you have some of the computer capacity you need to be IDing and then flagging customers who have that ability?
We use that 180,000 customer base for all of our LIHEAP grant phone outreach, all of our assistance programs. So I think that we are touching the low-income customers. And another fact that surprised us is that, when you shut a customer -- different customers don't pay for different reasons. Some customers won't pay you until you knock on their door. Some customers won't pay you until the gas is shut off. What we have found out is that the customer who has the ability to pay is the quickest customer back in after the shutoff. So we have found out that 98 RESOLUTION 960757 approximately 60 to 70 percent of our customers are back in our office to pay or enter into some kind of agreement within three days. The low-income customer seems to take longer to get back into the office, to come into a payment arrangement or to pay the bill at all. CHAIRWOMAN FERNANDEZ: So you sent shutoff notices to how many people last year?
Shutoff notices? CHAIRWOMAN FERNANDEZ: Where you threatened to shut off.
Probably closer to half a million people throughout the year. Shutoff notices, that you can be shut off? CHAIRWOMAN FERNANDEZ: Yes.
On a monthly basis, if we have 125,000 customers that are delinquent, they may be close to shutoff. So I would say more than half a million customers receive shutoff notices, or the 99 RESOLUTION 960757 possibility of being shut off. CHAIRWOMAN FERNANDEZ: Well, the city only has about a million and a half people.
You asked how many notices; right? CHAIRWOMAN FERNANDEZ: To different households.
Oh, I'm not sure. CHAIRWOMAN FERNANDEZ: If you send the same one --
We send them monthly. So the total number of notices, probably on a monthly basis, it may be 100,000 customers receive shutoff notices, of the 500,000 customers we have.
And that comports with the figure that about one-fifth of our customers are seriously delinquent at any point in time. That's the 109,000 that I indicated on Exhibit 10, in the category of 120 Days Delinquent. CHAIRWOMAN FERNANDEZ: And then, again, just to review for the record, on the issue of actual shutoffs -- I want to make sure the record is clear -- I have from the date of -- I was trying 100 RESOLUTION 960757 to put together. Water Revenue Bureau, 15,869 for '97; is that correct?
That's correct. CHAIRWOMAN FERNANDEZ: And PECO, the number was not precise. I was estimating about 34,000.
For '97? '97 data, we don't have. CHAIRWOMAN FERNANDEZ: Or '96.
'96 was 20,275 for Philadelphia residents only. CHAIRWOMAN FERNANDEZ: Twenty thousand --
275, and the number for 1995 was 18,388. CHAIRWOMAN FERNANDEZ: Okay. So if I look at that PGW 32,000, you have had actually more shutoffs than both water and electric.
Correct. But less shutoffs than we had last 101 RESOLUTION 960757 year, which was 36,000. And the year before was 38. So we are stepping in the right direction. CHAIRWOMAN FERNANDEZ: But with that many customers who are delinquent, I guess the whole issue of -- well, there would be one thing shutoffs, where it is shut off and it stays shut off, and the house may then go vacant or the person has to leave.
I believe last year, of the 36,000 customers shut off, approximately, when the winter moratorium came around, 8,000 of those customers were still off. CHAIRWOMAN FERNANDEZ: Because, again, it is the issue of shutoffs that then stay permanently shut off, then we know that's bumping back to the city with some problems.
On our Exhibit No. 6, we show, for Fiscal Years 1987 through 1997, the number of nonpayment shutoffs, and then the number of bill 23 paid turn-ons; that is, customers cure their deficiencies. And if you look at 1996, you will see 102 RESOLUTION 960757 that a little over half of the customers did not have the service turned back on. CHAIRWOMAN FERNANDEZ: Do PECO and the Water Department keep similar records?
In terms of the accounts being turned back on? CHAIRWOMAN FERNANDEZ: Turned off, and then how many are turned back on?
Yes. And the percentages are pretty much what Paul identified. We are about 60 to 70 percent of those that we turn off are back on within two days, in our case. And then we have to do a -- beginning September every year, we do what we call our winter survey. So everyone that we have shut off since April, we go back and revisit those properties to make sure that we can get the customers, if there is energy assistance needs, or whatever, it is a little bit more of a face-to-face contact with the customer. This year, as of September, we still had about 3500 total accounts. I don't have them 103 RESOLUTION 960757 broken out by Philadelphia or suburban, but 3500 total accounts that were still off. And now that number is down less than 2000. CHAIRWOMAN FERNANDEZ: What happens with water where, again, once the water is shut off in a house -- with electricity shut off there is a severe danger of fire. And then gas shut off, it is heat. Again, people turn on space heaters and other ways to try to keep warm. But water often means, you know, really, you can't live there anymore. How many people do you shut off that then stay shut off?
We have approximately 80 percent of our customers who, when we shut off, come back on again within the first 30 days of the shutoff. Of the remaining 20 percent, approximately 33 percent of those restore themselves. CHAIRWOMAN FERNANDEZ: Restore themselves?
Yes. 104 RESOLUTION 960757 CHAIRWOMAN FERNANDEZ: Illegally turning back on?
I have no idea of how significant it is. But another situation that may take place is that we may be shutting off after somebody has already abandoned the property. And we may not be the straw that breaks the camel's back. We may be coming in after the back is broken. Where someone has abandoned a property, and then the bills are no longer paid, and then we end up going out to terminate the service. I'm not sure, again, how statistically significant that is within these overall totals, but it is a circumstance that we know to occur. CHAIRWOMAN FERNANDEZ: One last question I had was, in terms of write-offs, could you just, for the record, note how much each for this past year you wrote off as bad debt which you figured you could never get back?
PGW this year wrote off $40 million -- it is on Exhibit 4 -- which is the highest write-off that we have ever had. 105 RESOLUTION 960757 Last year it was 34 million. CHAIRWOMAN FERNANDEZ: Okay.
In terms of the write-offs for PECO, again, I don't have them broken out for the city. But about 80, 85 percent of our write-offs are related to the city. We are going to finish the year out at about $85 million this year. CHAIRWOMAN FERNANDEZ: I want to know for the city.
I can get you more accurate numbers. But out of that number, it is probably 65 million, is what I believe it is for the city. We will make sure we get you those. CHAIRWOMAN FERNANDEZ: It is of no 17 help to us to know your region. And water, I had 25 million?
Yes. But unlike the other utilities, we don't discharge that debt. It is just classified as an inactive accounts receivable, which is subject to collection based on a lien. CHAIRWOMAN FERNANDEZ: Oh, right. You have the lien possibility. 106 RESOLUTION 960757 Well, again, that's a lot of write-offs of bad debt, which, again, is another indicator of really how serious this problem is. One last question. A man is coming later this morning, he might be here by now, Drew Hyman, of Penn State. I think he is here. I would like the utilities to stick around while he and some of the other people testify. I know there are some citizens who had some issues. But I think Mr. Hyman, with some of the work he has done, I wanted to make sure the utilities were aware of it. And perhaps if there are issues raised, I would like to call you back for any kind of comments you would have. Thank you very much. And I think a major point to come out of all this is, we have a serious problem. And certainly I think there are opportunities for more cooperation among the three utilities. And it is important not only for you and your utilities and customer base, but also for us as a city, since, whenever delinquencies turn to 107 RESOLUTION 960757 shutoffs, turn to homelessness and housing abandonment, that's where they city must and will pick it up one way or another. So we are all in this. And so it is to our interest to try to work together. And whatever money is being invested by the utilities and the city, that we are knowingly investing it in the wisest way possible. Our next panel is organizations on the front line dealing with delinquencies. Liz Robinson of the Energy Coordinating Agency, Liz Hersh of the Tenants' Action Group, and Val Bullock of Community Legal Services. Our next people to testify after that will be Drew Hyman from Penn State University, and then we will have a panel of concerned citizens and community groups. Why don't we begin with Miss Robinson. You already had a chance to lay out some issues. But any other points that you did not discuss that you thought should be highlighted, and then we have your full testimony.
Great. Much of my testimony has already been covered by the utilities 108 RESOLUTION 960757 who spoke, so I am not going to repeat anything that's already on the record. One of the ways that -- just to identify myself, I am Liz Robinson. I am the Executive Director of the Energy Coordinating Agency. One of the ways that we look at this problem is to look at the energy bills of low-income people, which are detailed in this testimony. The average energy cost per year is approximately $2,327 for a gas-heated household and $2,616 for an oil-heated household. For the average Philadelphia with a median income of 24,603, energy constitutes 9.4 percent of the household's income. But for the average low-income Philadelphian, with an income of $7,500, energy lays claim to 33 percent of the annual income. Clearly that is not a percentage that the average household -- that the low-income household can afford. So the basic problem is that energy costs, compared to income, are too high. Looking, then, at how this plays out, 109 RESOLUTION 960757 we make certain assumptions here. In this testimony I am making certain assumptions about what people can afford to pay. We are assuming that people can afford to pay a total of percent of their income 7 for energy, 5 percent for electric, 7 percent for 8 space and water heat, and 5 percent for water. 9 Again, these are assumptions. 10 But if you make those assumptions, we 11 are assuming that of the total energy costs for the 12 population of 165,000 low-income households, that 13 the total bill, the energy bill, if you will, is 14 $407,715,000 every year. 15 Of that, customers can afford to pay, 16 on the basis of 17 percent of their income, slightly 17 more than half of that, or $210,375,000. We then subtract the total available assistance, all of the cash and bill payment assistance that comes into the city. And that amount -- this is a rough number. Some of this is projections versus based on historical patterns -- we are projecting that number this year to be $107 million. That total, then, subtracted from the 110 RESOLUTION 960757 energy cost itself, leaves us with a shortfall this year of $90 million. So we just heard a great deal of testimony about terminations. Most of that shortfall ends up in this uncollectables you were just trying to get pinned down, and that's where it is. So no mystery here. CHAIRWOMAN FERNANDEZ: That's interesting. I have never seen it broken out like this.
I wanted to talk a little bit about trends that we are seeing. And some of this has already been covered, so I will summarize what is new here. With regard to payment agreements, terminations, homelessness, and fire deaths, the news is mixed. The latest report from the Public Utility Commission, which is in the 1996 Utility Consumer Activities Report and Evaluation, reflects that justified consumer complaints are on the rise all across the state. PECO Energy's rate is -- has risen, and is now the highest in the state. 111 RESOLUTION 960757 Unfortunately, the response rate to complaints is also worsening. Here again, PECO is leading the electric utilities with the slowest response time. Payment agreements are also on an upward swing, indicating that increasing numbers of Pennsylvanians are having difficulty paying their bills. So it is not just a problem in Philadelphia. Looking at terminations, we might expect to see an increase here, also, as a result of these other indicators, but the news is actually mixed. Of the three Philadelphia utilities, PGW's terminations have steadily declined over the last three years. In the last year -- this has already been covered -- PGW should off 32,600 households, which is a decrease of 4,000 from the previous years. In contrast, PECO Energy's terminations in Philadelphia County reached a high of 20,275, an increase of almost 2,000 from the previous year. 112 RESOLUTION 960757 And the Water Department also saw an increase in terminations from 15,869 in the current year, from 9,184 last year. Thus, Philadelphia experienced a total of 68,744 utility terminations for nonpayment last year. This may well be the highest level of terminations we have ever experienced. It is difficult to pin these numbers down because there is a period of two years in which PECO did not disaggregate the county, Philadelphia County. The real story of terminations is not the numbers. But I think this has already been covered very well in the previous testimony of Dr. Culhane and Deputy Commissioner McCrory. I won't repeat any of this. So where are we, then, with resources? What are the resources available? While it is a struggle every single year to hold on to the resources which Philadelphia has, particularly the federal dollars, we seem to be reasonably successful this year, with one important exception. And that exception is in the Basic Systems Repair Program. 113 RESOLUTION 960757 Basic Systems Repair has been cut this year from a high of million in 1995, to 12 4 and a half million in the current year. 5 This is not good news for us because 6 BSRP is the only program through which major home 7 repairs, including the replacement of heating 8 systems, can be provided to low-income homeowners. 9 CHAIRWOMAN FERNANDEZ: That 16 or 12 10 million, is that out of the Office of Housing and 11 Community Development? 12
Yes, it is. Right. 13 As the administrator of the Heater 14 Hotline Program ECA, seeing a surge in the number of 15 callers whose heating systems cannot be repaired, 16 but must be replaced. While these cases can be referred to PHDC, we are finding that PHDC is not always able to respond in a timely fashion. We now have cases which we referred over in April, last spring, which still have no 22 heat. And one of the problems with these is that a very, very percentage of these are elderly. And they are particularly susceptible to hypothermia 114 RESOLUTION 960757 and other illnesses which can be brought on by extremely cold conditions. ECA is also experiencing a dramatic increase in the number of callers concerned about carbon monoxide in their homes. And while we can do chimney repair and replacement through Heater Hotline, the demand for services is going to exceed our resources this year. So while the resources are not inconsiderable, a total of $107,670,000 is available for energy-related home repair, the vast majority of these resources are only going to have a short-term impact. Fully, 80 percent of these dollars go to pay this year's bills or the arrearages. Only 18 percent of this funding is dedicated to solving the 19 underlying problem of high bills through 20 conservation and home repair. This has always been a problem. And it is one which this year has actually gotten a little worse. In ECA's experience, bill payment assistance is absolutely needed. It is absolutely 115 RESOLUTION 960757 essential. But, frankly, it is even more important to attack the source of the problem itself, which is usage at levels which low-income people cannot afford. As our very old housing stock continues to age, and in many cases continues to deteriorate, the energy consumption only rises. So one other thing I wanted to touch on is major trends and issues which impact the energy poverty problem in Philadelphia. We have entered a period of enormous change in both energy and in low-income people's lives. In fact, the next three to five years will be a period of unprecedented change in my lifetime. The first, Welfare reform, affects a huge number of Philadelphians. Of the total of 159,394 TANF -- this is now TANF, instead of AFDC -- TANF households subject to work requirements in Pennsylvania, 44 percent, or 69,775, live right here in Philadelphia. As these households lose eligibility for Welfare benefits, certainly a large percentage of them will not be successful in their initial 116 RESOLUTION 960757 efforts to obtain full-time employment. We can anticipate that utility collections problems will worsen as a result. It will come as no surprise that a majority of those who are currently on the payment assistance programs, such as PECO's CAP, and PGW's CRP, and the Water Department's WRAP program are now TANF recipients. In order to help these customers make an early and successful transition from Welfare to the work force, the utilities need to think about tying the intake for their bill payment assistance programs directly to employment services. The best way to do this would be to contract with community-based organizations which can provide both budget counseling and job development services. In this way, the customers who are having trouble paying their bills now, while they still have a stable income, will not face disaster down the road when they lose their benefits. Encouraging and enabling customers to increase their incomes would make these programs far more successful and cost effective than they will be 117 RESOLUTION 960757 otherwise. Through our Homelessness Prevention Program, ECA and the Neighborhood Energy Centers are working with exactly this population. Many of these households are no 7 longer eligible for public assistance and are now facing utility termination and/or the loss of housing through eviction or foreclosure. We have been able to assist more than 300 of our total of 1500 clients to find full-time employment.
Which not only lifts them out of this emergency, but puts them on the road to self-sufficiency. Many of our clients are no longer low income and no longer need these bill payment assistance programs. Utility restructuring. The other really huge issue now engulfing us is utility restructuring or, as it is sometimes called, customer choice, or more specifically right now electric competition. This massive change is now underway in Pennsylvania. In the short term, in the electric industry, restructuring will bring about price 118 RESOLUTION 960757 reductions, that is certain. Exactly how deep the savings will be we won't know until the PUC makes a decision in the PECO case next month. However, it is not certain that we will continue to see price reductions in coming years. Neither is it at all certain that all customers will benefit equally from competition. In fact, it is a certainty that the largest customers, industrial and commercial customers, will reap greater benefits than will residential customers and small commercials. Pennsylvania's Electric Competition Act contains a number of protections for residential customers in general and low-income customers in particular which need to be protected with vigilance in the years to come. Consumer protections, known affectionately in Pennsylvania as Chapter 56, are under enormous pressure. The new suppliers would rather not have to abide by Chapter 56. Under current law, they have to. However, they continue to mount a steady campaign to erode these protections in order 119 RESOLUTION 960757 to reduce their costs of service to residential customers. The other mixed blessing is universal service. While the Act does provide for low-income protections and programs through universal service, the law does not require that these services actually reach all low-income households. Again, we won't know how extensive these programs will be or who will actually pay for them until the commission makes a final ruling at the end of this year. Given that two of the three Philadelphia utilities are allied with city government, PGW is a municipal utility, and the water utility is a department of city government. The City of Philadelphia has an enormous amount at stake in the current wave of utility restructuring. Apparently PGW is assuming that the legislation, which has been introduced at the state level, will not only restructure the gas industry, but will require existing municipal utilities to be subject to competition; that is that they, PGW, will not have the option to remain a monopoly in its own 120 RESOLUTION 960757 service territory. Actually, just the opposite occurred with the electric cooperatives. The Electric Competition Act allows the rural electric co-ops to continue to have the exclusive right to their service territory, so long as they make no attempt to sell generation at the retail level outside of their territory. Given the importance of this issue to the city, both to city government through its annual revenue through PGW and to the citizens of Philadelphia, it is imperative that both City Council and the Administration understand precisely what are the benefits and drawbacks of competition and municipalization. Is it preferable for the municipal utility to continue to remain a municipal utility and, in addition to its current provision of gas, to be able to also provide electricity, or is it preferable for this utility to seek to compete with other suppliers outside the city limits, and, therefore, to open itself up to competition within the city limits? ECA would strongly urge that Council 121 RESOLUTION 960757 and the Administration jointly convene a high-level task force of experts to research these questions and to develop a report and recommendation within the next six months, at maximum. So in summary, I would like to summarize my recommendations.
First, in light of Welfare reform, utilities should tie the intake for their bill 10 payment assistance programs to job development and job placement programs. Two, we need to see greater coordination of all energy services. And there is actually a new opportunity to do this. ECA is the recent recipient of a federal grant from the Department of Health and Human Services under a program called REACH. And this pilot, as we have proposed it, is one which would fully -- which would involve the full cooperation and coordination of existing resources. So that may be one opportunity to test coordination of services. Thirdly, the city should increase its funding of both heater hotline and basic systems repair to enable these programs to meet the needs of 122 RESOLUTION 960757 energy heating and chimney repair and replacement, particularly for the elderly. Fourth, City Council and the Administration should convene a task force of experts who will examine the pros and cons of municipalization in the context of both electric and gas restructuring. This task force should be charged with issuing a report to Council within the next six months, at the latest. I would be happy to entertain any questions. CHAIRWOMAN FERNANDEZ: Thank you very much for your comprehensive testimony. Why don't we move on to Liz Hersh of the Tenants' Action Group.
I am going to let Bob Lang from our Homelessness Prevention Program speak. But I just want to say one thing before he does so. Which is that, in the last several weeks we have been getting an average of about a thousand phone calls into our offices, particularly at the beginning of the week. 123 RESOLUTION 960757 And, in fact, our phone system crashed about two weeks ago. And the repairman told us it couldn't be resurrected because of the volume of the calls. I tell you this because we are having the same experience that ECA is having, which is the number of people who can't make ends meet, who can't -- don't have any place to live, who are getting tossed out of where they are, or who don't have heat, and particularly at this time of year as the weather gets colder, or who can't pay their utility bills has really increased dramatically, to the point we have truly never seen anything like it. So it is a graphic example, I think, of the numbers that everybody is talking about. And this is a very serious problem in people's lives. And about 30 percent of the calls that we're getting are heat and electricity, and an increasing number of water-related calls. CHAIRWOMAN FERNANDEZ: Could you please identify yourself for the record.
Good morning. I am Bob Lang. I am a graduate intern with the Tenants' 124 RESOLUTION 960757 Action Group. I wanted to share with you this morning some human side to the utility problems. We appreciate the statistical data of Dr. Culhane and the previous testimony. So there is really no need to go over that. We also know that these hearings have happened before and that we have plenty of information to develop a program on. I wanted to tell you, just briefly, about four special programs of the Tenants' Action Group and the problems that they are facing because of people who are in these programs with large delinquent utility bills, or who come to these programs from shelter systems with no ability to get utilities connected. The first of these programs is a special needs housing program, deals with people with chronic debilitating illnesses, using grants from OHCD and other HUD sources provides a level of assistance, a tenant-based rental assistance to people. What we are discovering is that people with debilitating illnesses require a relatively constant environment in order to help 125 RESOLUTION 960757 maintain their health. It requires that the environment be relatively warm in the winter and reasonably cool in the summer. CHAIRWOMAN FERNANDEZ: Mr. Lang, would you excuse me one moment. I would like to welcome the students from the fourth grade of Rhodes School in West Philadelphia. And just so the students know what we are talking about, this is a public hearing where we are hearing testimony, ideas, from people about how to help people pay their gas, electric, and water bills in the City of Philadelphia, in case the students are wondering what we are talking about. Go ahead, Mr. Lang.
I am really glad the students are here. It is a good experience. More than 90 percent of the individuals currently receiving assistance from the special needs housing unit have monthly incomes of approximately $500 or less. Also, these are Supplemental Security Incomes. Approximately 30 percent of this income must now be committed to utility costs. And 126 RESOLUTION 960757 the major reason why people are failing to stay in this program, or require additional assistance, is because of their delinquent utility bills. And while we attempt to monitor these on a monthly basis, we are finding that people are just unable to afford the basic cost of caring for themselves and paying for this, their utilities, despite the fact that they are dealing with a debilitating illness. The second program that TAG operates, which I think is important today, is the Transitional Housing Program. It is a program that works with people who are coming, and families and individuals, coming from the city shelter system, designs a program for independent living and self-sufficiency. The shelter system has a program where families and individuals are able to save a small amount of money -- and in fact they require them to save money -- before they leave the shelter. These funds are intended to help them establish themselves in a new apartment or a new residency. 127 RESOLUTION 960757 What the Transitional Housing Program is discovering is, is that that is not how people are able to use these funds. Instead of providing for basic necessities, they are forced to use the small amount of money that they have saved in the shelter system to either reconnect utilities or to pay large delinquent utility accounts before their utilities can be reconnected. These delinquent utility bills hamper these families. And the kinds of assistance we provide to these families assures that we are really looking for diligent families, families that are interested in changing their lives and making things better for themselves and for their children. But the utility bills seriously hamper our efforts and their attempts to provide a decent home for their children, to hold jobs, and contribute to the prosperity of this city. This year TAG was selected to participate in the citywide expansion of the Homelessness Prevention Program. And, as Liz said, we are receiving approximately a thousand phone calls a week from individuals -- a day, a thousand 128 RESOLUTION 960757 phone calls a day. It is an enormous number. In fact, it has pretty much overwhelmed over system and the small number of staff that we have to handle this program. One of the requirements of this program, it is a good requirement, is case management. In that in order to qualify for assistance, people need to have an increased level of services. The case management means that we are going to be able to provide services to approximately 300 fewer families this winter than under the old program. But case management has allowed us to spend more time with families. And it has allowed us the privilege of working with low-income residents who need more than just a check, who need more than just a payment for their utilities. They really need the encouragement. As we have heard here several times the problem is not always utility bills; it is low income, it is lack of income. So helping people to access additional education or additional employment or the 129 RESOLUTION 960757 first job at all that they may have had is really an important job of this problem. What we are discovering from just a basic review of the data from the first few weeks of our operation of this program is that more than a third of the calls we are receiving are from families seeking assistance with their utility bills. And in just kind of some rough data collection we have been doing we have discovered that the majority of these families have delinquent accounts in excess of $1,000.
So the small amount of money that we are able to provide through the Homelessness Prevention Program is not going to significantly change their utility picture. Most of these families have income which barely covers the cost of their rent. So we are seeing that even the amount we are providing is not going to be of great assistance in the long term. In almost a quarter of a century of working with low-income residents of Philadelphia in search of better housing, we know that the vast 130 RESOLUTION 960757 majority of Philadelphia residents strive to live within their means. They attempt to pay their rent and their utility bills. It is not uncommon, and it is increasingly distressing to our staff, to discover families that sacrifice food, medical care, decent clothing for their children to maintain a place to live and pay for their gas, electric, and their water. There are solutions. And TAG has probably been one of the most vocal advocates for solutions in this city. We have worked hard to bring solutions to the attention of the City Council and to the utility companies. Over the past several years numerous hearings have provided workable solutions to the problems of high utility costs in Philadelphia. Competition may help, but then there is a question about whether competition will, in turn, within a few years increase utility costs for people in the city. We believe there are more human policies to ensure that all residents to the city 131 RESOLUTION 960757 have access to utilities. We believe many of the problems we face could be helped by a genuine conservation program, additional money that is helping to replace worn-out utility systems, furnaces, electrical wiring, those kinds of problems which really are eating up a lot of utility costs for individuals. And these programs need to be available to tenants and owners alike, so that there can be basic repairs made to dwellings. And, finally, we believe that another important form of assistance would be a uniform utility assistance fund that will help those who are truly poor to pay for their utilities. Thank you. CHAIRWOMAN FERNANDEZ: Thank you very much, Mr. Lang.
Just on a somewhat unrelated topic of collections, particularly where the landlord in a tenant-occupied property has the delinquency, this is a big problem that we hear about. And one of the areas that we have had success in coordinating is when people file for 132 RESOLUTION 960757 eviction. And I am wondering if that's some place where it might be able to be cross-checked. It is computerized. We have had good luck with the Health Department, if places are lead poisoned and they have been condemned, in preventing the landlord from evicting until they make some repairs. And it always concerns us that we end up with tenants whose landlords have large, unpaid water, electric, and gas bills. And we work with USTRA at a variety of other things. But very often the first real indicator is bankruptcy. And I think there are maybe some different places. You have talked a lot about coordination. I know that you have been instrumental in getting computer transfers of names and addresses between PGW and the Water Department. But I think that L & I, code violations, and equity cases, and evictions may be another place. I don't think rental licenses are going to work. And I don't know if you have access to get approval for mortgages or building permits or that kind of thing, which are other access points, I 133 RESOLUTION 960757 think. But I think that evictions might be one place where you might be able to coordinate within the city bureaucracy relatively easily to red flag people with landlords with delinquent accounts. Thank you. CHAIRWOMAN FERNANDEZ: Good idea. Thank you. Our next witness, Val Bullock from Community Legal Services.
Good morning. My name, for the record, is Valeria C. Bullock. I am the Coordinator of the Energy Project of Community Legal Services. Also, I am a voting member of the Lower Income Home Energy Assistance Advisory Committee to the Pennsylvania Department of Public Welfare. I was appointed by the current -- reappointed by the current secretary. I am also the Vice-Chair of the Pennsylvania Public Utility Commission's Consumer Advisory Council. I was appointed by agreement of all five commissioners. 134 RESOLUTION 960757 And the reason why I am taking some time for the record to explain my background, frequently in these types of hearings, Community Legal Services' experiences are assumed to focus just on low-income people. I believe that this issue of terminations and homelessness goes well beyond low-income people. One of the terms that arose a couple of years ago was the new poor. And that's the individual who was out, who is working, but whose income is not substantial enough to cover their expenses. And we are beginning to see those households. I am not going to read my testimony because I believe you received it yesterday by fax. I was in Harrisburg. But in listening to the testimony of the utilities and other persons giving testimony, I would like to highlight and respond to some of the questions, Councilwoman, that you referred to. One is, I think coordination is very important among utilities. But I am not so sure the type of coordination and leveraging of resources is 135 RESOLUTION 960757 going to happen, given the new environment of competition. And the reason why I am saying that is that the human services demand is so great, that I don't believe that the utilities will have the resources to do that. So what I did, in my thinking in preparing for today, is tried to identify some missing players. And I think there are two. One is the Commonwealth of Pennsylvania, particularly the Department of Public Welfare. And the districts have changed their name. It used to be the Department of Community Affairs, but it recently changed their names, Community and Economic Development, which managed the weatherization program. I attached to my testimony a report given to the LIHEAP Advisory Committee members regarding resources that were identified by the utility companies and charitable organizations that were used by the Department of Public Welfare to leverage federal grant money under the energy assistance, the Low-Income Energy Assistance Program. 136 RESOLUTION 960757 If you look at those numbers, you will see that the Philadelphia utilities, PECO Energy and PGW, have contributed greatly to that, in addition to the Utility Emergency Service Fund. However, when you look at the implementation of the Low-Income Home Energy Assistance Program, you will notice that in last year's program and this year's program, that these utilities are considered regulated and do not have access to the emergency money, the crisis money, because their LIHEAP-eligible customers are usually found in low-income payment programs or have discount rates and are not subject to termination. In my testimony, I tried to highlight that what this does, it creates an environment where terminations are warranted, or the threat of termination, in order to draw down resources. And I believe that the problem is great enough that the City of Philadelphia, I would like to place that responsibility, with my limited power, on the City of Philadelphia to initiate some conversation with the state Department of Welfare to modify that, particularly as we get close to the end of the crisis program. 137 RESOLUTION 960757 I have raised a question with the Department of Public Welfare regarding termination notices that are issued in May, even though the utilities cannot terminate prior to April 1.
It is my understanding from the Department of Public Welfare that they will not acknowledge those termination notices, particularly if the program is -- the crisis component of LIHEAP is closed at March 17. So there is a resource that we are not going to be able to tap, even though the utilities contribute greatly to the department's receiving additional funds from the feds. I wanted to point that out. Also, probably contrary to popular demand, I think budget counseling is good, particularly if the household has income. But what I am finding more and more is that low-income people and moderate-low-income people do budget their money. They do have a system of priorities. We as professionals might not find it acceptable, but for some households it works. Those top items on their budget is 138 RESOLUTION 960757 rent or mortgage. After that, you will find electricity is top on the utility bills that they pay. I find that 99 percent of my customers will pay that electric bill prior to paying gas or water. This will probably haunt me at a later time, but that's okay. And then the next in line is water, if that tenant or homeowner is responsible for those services. And gas is on the bottom of the list. " And that's because they have an alternative to gas in cooking and hot water and heating. They will use -- relate to electric space heaters and hot plates. I have had some clients who have even used hot plates to assist in heating bedrooms. And we at -- CHAIRWOMAN FERNANDEZ: What is their bill, about $4,000 a month?
Yes. 139 RESOLUTION 960757 In my testimony I relate to what I see as the bills. And very seldom do I see a bill, a delinquent bill, $1,000 or lower. At one time that used to be common. But three and four thousand dollars, in those cases I make referrals for bankruptcies. I, as an individual staff person at CLS, for the past year have been making more referrals to our CBAP, which is a pro bono bankruptcy unit within Community Legal Services. I am averaging now three per day. And that concerns me because I believe that bankruptcy should be a last resort. Also in collections, frequently I see, within people who are coming to us seeking legal assistance, is that they have made some contact with the utility company, and the response is somewhat punitive. Punitive being that the person is being asked for dollars that they cannot produce. Even though I understand the payment program designs for low-income people, they do not work for the entire population. And I believe that, at the appointed time, there will be more 140 RESOLUTION 960757 discussions on that, as we get closer to the assessment of PGW's CRP program. Also I am finding that our numbers of individuals requesting assistance is increasing. I am averaging now a day. 7 These are individuals who make 8 contact with the utility and was unsuccessful in 9 maintaining their service, unsuccessful in entering 10 into a payment agreement, or unsuccessful in meeting 11 the utility company's demand and need intervention. 12 Also I am finding that more 13 coordination and leveraging of resources is needed. 14 Because the individual consumer, residential 15 consumer, is unable to do that because they are not 16 aware of the resources available. 17 In assessing why I am more needed in 18 what I consider a more social service way, I came to 19 realize that one of the services that used to be 20 available to the citizens of Philadelphia is not as available. And that's the Mayor's Office of Community Affairs. About ten years ago there were 12 neighborhood offices. And a citizen can go into these offices and could identify for themselves all 141 RESOLUTION 960757 the resources that were available through city and state programs. And we have lost those resources. One of the programs that the MOCA office did have was Project Self-Sufficient. And I believe it to have been a very comprehensive program because it dealt not only with consumer debt responsibilities, but also began to change the behavior of the individual. It had as one of its components education and job development, and also motivated the participant of the program. And there was reward. The reward was safe and decent housing and also support services when that individual failed. So that identifies for me that the City of Philadelphia could play an increasing role in leveraging and coordinating the available resources so that we can maximize them. One of the difficulties in coordinating the resources that are available is that each program, grant program or payment program, has a different requirement. And the residential consumer is becoming completely confused as to what payment program requires what. So that does need 142 RESOLUTION 960757 coordination. CHAIRWOMAN FERNANDEZ: I get confused, too.
I believe that ECA has taken on the first tackle by distributing ECA's Energy Directory, which is assistance. In the area of conservation and housing repair, you will find that some of the programs require homeowners to be current in all their utility bills, which sends that person out on what I consider a wild goose chase in an attempt to get affordable payment agreements. If the residential consumer is unable to pay the initial downpayment, they are without a payment agreement and are subject to termination. There are many elements in the city that remind a residential consumer that they must pay their utility bills. One which I believe is frequently overlooked -- and I think TAG would agree with me -- is the language in the lease for Section 8 tenants. Not to pay utility bills is grounds for eviction by that Section 8 landlord. Also, I find myself increasingly 143 RESOLUTION 960757 involved in activities with the Department of Human Services, which CLS has a contract to represent natural parents when their natural parental rights are being threatened. They are demanding that parents within the system pay utility bills. In addition to, I am finding myself coordinating with area hospital social workers, attempting to identify resources, and matching resources, and minimizing the administrative hurtles that individuals must overcome. CHAIRWOMAN FERNANDEZ: Can I interrupt one moment? I would like to welcome another group of students from Rhodes School in West Philadelphia. And so the students understand what's going on, this is a public hearing where a Committee of Council is hearing the ideas and information from community groups and neighborhood advocates, and also the gas, electric, and water utilities. So it might sound boring to you, but it is important in terms of the city and what we are trying to do to help people pay their utility bills. 144 RESOLUTION 960757 Proceed.
Thank you. For those homeowners who are eligible for some of the weatherization conservation programs, if they do not have clear title of their property, meaning their name is not on the deed of record, they are not eligible, and frequently that issue cannot be resolved immediately. We find the situation in the heir property. Often individual homeowners -- and I would say in the grass root definition, not in the traditional definition -- have difficulties in interacting with Water Revenue Bureau in becoming customers of record because they are not able to document or can afford the fees that it takes to change titles of properties when one family member passes on. Also, in the definition of low-income people I am finding that those households where there are illnesses, long-term illnesses, or disabilities, frequently that household is supporting the extended family. For an example, I had a grandmother who was receiving SSI, who was medically disabled, 145 RESOLUTION 960757 who were given her children by the Department of Human Services because their mother -- her grandchildren because the mother had abandoned them. However, it took approximately nine months for her to receive benefits from the Department of Public Assistance, to receive income for those households. When she did, and reported her income to -- she is a member of the -- a participant of the CAP program, and reported her income, it was held against her, and she was told that she was no longer eligible and was suspended from that program. However, with intervention with the proper persons within the company, PECO did agree to restore that person into the CAP program. I wish the problem was as simple as numbers will prevail, but coordination is key. Intervention by the city in seeing that customer service regulations are adhered to would be a help. Another problem area, I believe, I would label under collections is that when the individual residential consumer of a utility company 146 RESOLUTION 960757 has some money to offer, it should be taken at that point. It might not be the full amount that the utility would like to have, but I believe it should be taken. There is existing competition for low-income dollars. And what I say to PECO and PGW, Water Revenue Bureau, if your company doesn't take it, the next company will take it. If PECO couldn't take it, PGW will take it. And frequently I will ask my clients, what monies do you have available? And usually it is less than $200. And I will try to maximize the dollars that they do have among the utilities that they owe. Very seldom now do I have a client who does not have -- who is having a problem with one utility, does not have a delinquency problem with all three. They may express the one that they feel is most important, and usually that's heat related, and will put aside the others simply because they are not able to meet the demand of the utility. 147 RESOLUTION 960757 So in looking at the uncollectables and in looking at collection practices, I believe we need to improve our communications to those residential consumers who are robbing Peter to pay Paul and to assist the middle management of all three companies as they attempt to coordinate the limited resources. And I believe that any task force that is formed, it would be very important to ask the utilities to include their middle management, who deal with the individuals on a daily basis. Because they see where the policies may be lacking in collections and payment agreements. Thank you very much. CHAIRWOMAN FERNANDEZ: Thank you very much for your testimony. Knowing the hour is getting close to noon, and we have been going since 9:00, I think I want to thank you for your testimony, and we will find ways to follow up in specific ways. Our next person to testify is Drew Hyman from Pennsylvania State University. And I do appreciate him driving all the way this morning.
It probably would have been most 148 RESOLUTION 960757 appropriate to have him begin, but he didn't want to get up at 2:00 in the morning to get here by 9:00. So welcome to our hearings. And as I had said earlier, Mr. Hyman is our next witness, and then we have a number of people from the community.
Thank you. It was a beautiful drive. Chairwoman Fernandez and members of the Committee on Transportation and Public Utilities, thank you for the invitation to meet with you and to address this significant issue facing Philadelphia, Pennsylvania, and states throughout the United States. I am Drew Hyman, a faculty member in the College of Agricultural Sciences at Penn State. I have worked with issues related to citizen and consumer problems and complaint handling since 1968 and with utility consumer complaints and payment problems since 1978. I have been asked to testify about some of my research in Pennsylvania regarding overdue utility bills and consumers who have payment problems. 149 RESOLUTION 960757 My comments today are based on analysis of data from a representative statewide sample of utility customers and my professional judgment about how the findings relate to policies and programs for dealing with consumers with utility payment problems. While the survey was taken several years ago, these are the latest data available. And I believe the policy implications apply today. The Penn State study, using data collected for the Pennsylvania Public Utility Commission, identifies five profiles of consumers based on how they handle monthly payments when they are short of cash and whether they had utility payment problems in the last year. We used a statistical method called Cluster Analysis to identify the profiles. Cluster Analysis sorts people who are similar on a group of variables or characteristics into groups. Thus, the five clusters we identify in the analysis are made up of people who are similar on the characteristics. And the clusters themselves are different from each other in significant ways. Some of the clusters have 150 RESOLUTION 960757 characteristics that Americans usually believe deserve public help and support; others, do not. I will talk about the profiles of the clusters shortly. But first I want to explore a logical fit between major sets of beliefs Americans have about wealth and poverty -- and which are probably implicit in some of the testimony that you receive here -- the different policy models or approaches we use in Pennsylvania for dealing with people with utility payment problems, and then the different types of customers. I will talk first about the major sets of beliefs or metatheories of Americans about the causes of wealth and poverty. "Metatheories" may sound overly academic here. " Similarly, I believe all policies begin in the mind, before they are put into law. Our ideas and beliefs about problems determine what possible actions we will consider. So we begin by looking at what people believe, about who should get public help and 151 RESOLUTION 960757 support, and under what conditions this should occur. A study in The Sociological Quarterly identifies four metatheories or broad sets of beliefs that are prevalent in our political culture about the causes of wealth and poverty. They are individualism, fatalism, culturalism, and structuralism. I will review them very briefly. Individualism is the idea that individuals are responsible for themselves and their family in the marketplace. Those who are diligent and hard-working will be able to pay their bills. People looking at utility payment problems from this perspective would say that people who don't pay their bills are just irresponsible. They have the ability to pay, and/or the ability to work and get money to pay, but don't. You have heard this before. This is the ultimate free market perspective, pay or be shut off. "Only deadbeats don't pay," say many proponents of this perspective. Fatalism is the belief that attributes such as wealth and poverty are responses 152 RESOLUTION 960757 to events that are usually beyond the control of the individuals involved. The Horatio Alger stories are good examples. From this perspective, neither Bill 6 Clinton nor Bill Gates were predestined to fame.
No 7 one could predict the Hula Hoop or Cabbage Patch dolls as successes. Events happen unpredictably. People looking at utility payment problems from this perspective tend to see unforeseen events such as illness, umemployment, et cetera, as leading to family or personal disruption and frequently economic problems. In such temporary emergency situations, it may be appropriate to give them some outside help. Culturalism, or what social scientists call the cultural poverty, attributes wealth and poverty to social events outside the individual, as well. This perspective suggests that many people are raised in situations that lead them to be dependent on others and to expect society to take care of them. As a result, many people are not motivated to work and support their families. They 153 RESOLUTION 960757 may not use their money wisely, and they may need to seek outside help. Structuralism, the final metatheory, involves beliefs that the economy and society are structured to favor some and to disadvantage others. From this perspective, social and economic systems fail to provide equal opportunity for all. The powerful and wealthy control society's major social and economic institutions and use their positions to increase their own well-being, when some redistribution could decrease poverty and increase the quality of life of all. This approach suggests that our social and economic systems, not individual attitudes and work behavior, decide who is poor and who is not. These theories about the causes of poverty are not simply academic abstractions. They represent systems of values through which their believers view social and economic issues and, in turn, people with problems. These ideas in the mind are 154 RESOLUTION 960757 foundations on which public and private policies and programs are built. Several different programs for dealing with utility nonpayment illustrate this point. Figure 1 illustrates the three sets of ideas that I am trying to link today: The metatheories, the policy models, and then the actual people we identify or the clusters of people we identify in the research. The ovals at the top of Figure 1 identify the four metatheories. Next I have identified five types, or models, of policies used in Pennsylvania to deal with utility payment problems. As depicted in Figure 1, I believe each is a logical application of principles of one or more of the metatheories. For example, the collections model for policies views utility payment problems as strictly a market economic issue. No pay, no 22 service. This is a logical extension of individualism. Under this model utility companies typically rely on overdue notices, threats of 155 RESOLUTION 960757 termination, and eventual shutoff to deal with consumers who cannot or do not pay their bills. The second, the amortization model, is based more on the ideas of fatalism. It assumes that utility payment problems exist because of some sort of a temporary emergency, such as job loss or a health crisis or consequent cash-flow reduction. In Pennsylvania statutes require utility companies and the PUC to provide arrangements for paying off overdue bills in multiple payments over time. This model is based on the idea that when temporary problems or emergencies occur -- when temporary problems or emergencies are over, each month consumers will be able to pay both their current bills, as well as a payment toward the overdue amount. Two financial aid models, short term and long term, provide energy assistance for eligible low-income consumers who are unable to pay the full market costs of their service. They reflect the widely shared belief that public utilities are necessities of life that should be provided, even if people can't pay the 156 RESOLUTION 960757 full amount. Short term and long term forms of assistance, such as you have been hearing about today, are logical extensions of this approach.
Finally, the physical environment model seeks to decrease utility costs through weatherization, conservation, and usage reduction. A combination of climate, weather, poorly insulated housing, and the need for conservation education are seen as the causal forces which drive up heating and cooling costs beyond the affordability of many customers. Each of these five models or types of policies has its supporters. And these supporters tend to have observations and beliefs about the causes of problems which lead them to favor one or more approaches and to oppose others. I believe that trying to find a single approach to deal with utility payment problems may not be the wisest way to go about solving utility payment problems. This belief comes in part from the research, which reveals the diverse nature of the people who encounter utility payment problems in 157 RESOLUTION 960757 Pennsylvania. Let's consider the five clusters or groups of consumers derived from the cluster analysis. Please refer to Table 1 on the previous page. For ease of discussion, I have named the groups to reflect what I see as main characteristics of their members. I call them the established interests, system managers, marginal households, conscientious seniors, and struggling survivalists. All five clusters have people who experience utility payment problems. The established interests tend to experience the lowest rate of utility payment problems, as might be expected; while the struggling survivalists experience the highest rate. The other groups fall in between. A close look at the statistics on the five profiles shown in Table reveals that these consumers have different life situations, different ways of dealing with paying bills, and different levels of utility payment problems. I believe these differences may have 158 RESOLUTION 960757 significant meaning for policies and programs about nonpayment of bills. I give some additional statistics in Tables to at the end of my testimony. The established interests represent about one in five consumers in the statewide study. For the most part these are well-established professionals, with a low rate of payment problems. Economically and socially those who report having payment problems and those without payment problems are generally similar. They do tend to be younger than the other groups, with a majority between the ages of 30 and 44. They have average incomes of about 68,000, and more than half own their homes with no 17 mortgage. Approximately 64 percent of those in this group who report a payment problem are not able to give a reason for not paying their utility bill. The established interests clearly have the ability to pay their bills, and most do so on time. Perhaps the collection model is most appropriate for them. The systems managers are another one 159 RESOLUTION 960757 in five consumers. These individuals have fairly high incomes, yet percent report experiencing one 4 or more overdue utility bills during the last year. 5 A majority are 45 or younger and have average incomes of about 42,500. They may use nonpayment as a way to manage their family budget, although 65 percent do cite some factors such as illness, unemployment, high bills, or other financial problems associated with instances of nonpayment. For them, perhaps, the amortization model may be most appropriate. The marginal households have almost one in three consumers, about 29 percent. Although most of these individuals can be considered average in terms of mean income, 26,700, a majority are over 45, and more than one in three are single, divorced, or widowed. They give a number of reasons for their inability to make timely bill payments. For instance, 17 percent report that the main earner was unemployed during all of the previous year, the year before the study, and nearly 20 percent have a disabled person living in the 160 RESOLUTION 960757 household.
With these factors in mind, it may not be surprising that nearly 30 percent of this cluster experienced an overdue bill and percent 6 received a termination notice during the year before 7 the study. 8 On the surface these consumers appear 9 to be middle class; it would seem to be expected to 10 keep up with their bills. There is a typo. 11 However, many cite budget management, household or 12 personal factors for their payment problems. 13 They may need credit counseling for some, long-term or budget arrangements for others, and short-term financial aid where extreme hardship or disability exists. This is a group where we really need to tailor and identify the situation of them, and ask what is most appropriate for the situation of the family. 4 percent of the consumers in its sample. About half of them are over the age of 69. And despite their limited mean annual income of just over 14,000, they have about the same rate of payment 161 RESOLUTION 960757 problems as the systems managers who are much better off. Moreover, if one considers such factors as their high unemployment rate -- 48 percent report that the head of the household was unemployed for all of the previous year -- a high percentage who have disabled persons living in the household, and low educational attainment, it is surprising that the level of payment problems is not higher. Policies that provide long-term payment assistance, lifeline rates, or usage reduction measures and weatherization may be appropriate for these people. Then, finally, the survivalists constitute about one in ten consumers. This is the smallest group. And by virtually any standard the median income of $6,125 a year means that these people are living in severe poverty. Not surprisingly, they also have the highest rate of payment problems. The factors contributing to this situation are neatly summarized by the following statistics: 70 percent of the main earners were 162 RESOLUTION 960757 unemployed during all of the previous year. Approximately 36 of the households have disabled members, about 60 percent derive most of their income from Social Security and/or pensions. While about percent rely on public assistance. 7 Of those who report overdue bills, 8 almost 87 percent cite some combination of 9 unemployment, illness, lack of money, unusually high 10 utility bills, or other financial problems. These people need policies which either improve their economic situation or substantial ongoing assistance to survive. Looking again at Figure 1, I suggest we can see how beliefs about wealth and poverty lead to establishment of different policy models for utility payment problems. And the clusters of utility consumers can be logically related to the first two. I believe the main message is that we should have different policies and courses of action to deal with different people in different situations. There is no single program, no magic bullet, no one-size-fits-all approach to deal with 163 RESOLUTION 960757 utility payment problems. Different people have different problems. Different problems require different solutions. The popular saying, "Different strokes for different folks," says it well. Think about it. You can apply the theory of individualism and the collections model to a single mom, who has two pre-schoolers, who works in a minimum-wage job, who has to pay rent, child care, and utilities, who dropped out of high school to keep work and keep her kids, and who lost her job just because she stayed home to keep her kids when they were sick and daycare wouldn't keep them. You can apply the collections model forever and ever, and it won't work. You can give her amortization agreements over and over and over, and it won't work. You can give her budget counseling and motivation training and send social workers to her house every day, and it won't work. This woman is faced with structural problems. She needs a good job and quality child care or money to pay her utility bills.
7 percent system managers that have overdue bills, about percent of whom get termination 9 notices from their utility company. 10 In other words, such programs will help low-income people, but they will not deal with all of those people who for some reason or other do not pay their bills on time. In conclusion, I believe that when there is a good fit between the beliefs we bring to establishing policies and carrying out programs, and the policy models that are built into laws and programs that you create and that are created by state and federal officials and by nonprofit agencies and by utility companies, when the laws and programs actually address the actual people and problems to whom they are applied, then the policies will work. Conversely, when pet theories or beliefs lead to policies that are applied to people 165 RESOLUTION 960757 who don't fit the mold, then we can expect programs to fail. In the case of utility payment problems, economic, social, and personal costs increase for companies and society when the theories and policies do not fit the actual situations of the consumers involved. Turning this idea around, we would also expect both cost efficiency and program effectiveness to increase where there is a good fit between the situations of the consumers and the policies and theories being applied. Thank you. CHAIRWOMAN FERNANDEZ: Thank you, Dr. Hyman. You certainly covered the topic very well. I read your newsletter, but it was interesting to see it in the longer form. Could Mr. Nadol and Mr. Martin and Mr. Donaghy -- you are from PGW, too. Who is here from PECO? Miss Lillian Ross, would you come forward. I would just love your reaction to these comments from Mr. Hyman and wondered, you know, what you think applies and doesn't apply to 166 RESOLUTION 960757 the situation we face here in Philadelphia. I know you weren't prepared for this. But did you have any initial reactions to what he was saying, and whether it fits or doesn't fit with what we are facing here?
Yes. CHAIRWOMAN FERNANDEZ: Just officially identify yourself for the record, and also for Mr. Hyman.
I am Lillian Ross from PECO Energy. I do believe that a one-size-fits-all approach does not address our problems. And at PECO Energy we are looking at different ways to address our customers who are delinquent in their bills, as well as the low-income customers, while trying to provide different alternatives to help them with the affordability of their bills. So my reaction to the comments is that it is linked with something that PECO Energy is pursuing at this time. CHAIRWOMAN FERNANDEZ: Were you aware of this research that had been done? 167 RESOLUTION 960757
Mike Nadol, Water Department. I think to some degree the array of programs that we already offer does serve to target our resources in some of the ways that this presentation outlined. This is the first time I have seen this particular categorization, as well. And I think it does merit further review and reflection than I have had time to do in the last ten minutes, to really see how well we are aligned with the different categories that Dr. Hyman has identified. And I would also imagine that these statewide breakdowns, in terms of how customers fall into these different categories, might be very different from that that we would experience in a place like Philadelphia, where there is, unfortunately, such a high concentration of poverty. But I do think, to some degree, the senior citizens' discount that we offer very broadly does target one of the groups that the doctor identified. The Conservation Assistance Program 168 RESOLUTION 960757 targets yet another. Our participation in other programs with income eligibility guidelines serves to target others still. Again, I think based on some of what we have heard this morning from some of the advocacy and nonprofit groups, we might do a better job of partnering with them to particularly address those people who, and those customers who, have the greatest hardships of all. But I guess I would also like to note that I think that is a problem well beyond the resources of utilities and our rate bases to solve. In also listening to Professor Culhane's testimony this morning, I was struck that it is interesting to identify a correlation between utility shutoffs and homelessness. And, indeed, utility shutoffs may be a precipitant, in some instances, but utility terminations don't cause homelessness. CHAIRWOMAN FERNANDEZ: Right.
They are both symptoms of much bigger problems of poverty, of social dysfunction, of inadequate daycare, of a whole host 169 RESOLUTION 960757 of social ills that we struggle with, particularly in urban America. And we are certainly already devoting tremendous resources to try to be part of the solution. And we are certainly prepared to work with the other parties who have been here this morning to do an even better job of focusing those resources. But there is no way that the resources of the Philadelphia Water Department, or PGW, or even PECO are ever going to solve these kinds of problems. CHAIRWOMAN FERNANDEZ: Or, I would add, even the city.
I would agree, as well. CHAIRWOMAN FERNANDEZ: We face the same issue. The money we are investing, how do we use it wisely. And we always ask, do we need to be investing a little more or a little more wisely? But there is not an endless source of money to deal with, basically, the poverty issues in our city. Mr. Martin, did you have any reactions? I know you weren't around in 1991, or 170 RESOLUTION 960757 you were not around in Philadelphia in 1991.
That's correct. I was around in Pittsburgh. And, interestingly enough, Pittsburgh and Philadelphia are similar in many respects. But, in any event, I find the research report interesting. I think it merits further consideration, more, as Mike noted, than the time that I have had this morning. But some of the statements and conclusions that were made, I would have to say that, off the cuff, I believe have some merit. Certainly one size does not fit all; that we have to customize our strategies, our policies, to the circumstances of the individuals. Even within the various clusters that the Professor indicated, there are going to be differences among individuals. One thing that I would note out of his chart was that I noted that the marginal group tends to have a mean income of around $26,700. And as I noted to you from a very brief analysis of our own customer base here in Philadelphia -- and by no means is it completely 171 RESOLUTION 960757 scientific; it was sort of an artful kind of thing -- but we found also that $27,000 was about the break point where families were finding themselves in difficulty and becoming delinquent. And, so, I would like to take a look at this research a bit more and see what -- CHAIRWOMAN FERNANDEZ: Could you pull your mike up a little closer.
I would like to look at this research a bit more, evaluate it, and try to understand to what extent that there are concepts that apply to our situation here in Philadelphia and for PGW. CHAIRWOMAN FERNANDEZ: Thank you. I was not aware of this in '91, when we had our earlier hearings. I read a different PUC report. But I think it does raise the whole question of, for the amount we are investing and need to invest, how can we be as smart and wise about it as possible. So I think it raises a lot of interesting issues. And I am very pleased that you came all the way to personally share your research 172 RESOLUTION 960757 with us. There are a couple of people from the community and citizen groups that wanted to testify. I have listed here Lance Haver from CEPA; Lucy Merrick from Action Alliance; B.B. Walker, a landlord; Theodore Lee, a landlord; and Margaret Martin, a landlord. Land property owner, maybe. Landlord is maybe an outdated phrase. So would any of those people who are here, would you come forward, please. What I would like to request, first, if each person would identify themselves for the record. And I know sometimes at public hearings people come with individual case problems. And if that is the situation in any of these cases, if you wanted to briefly summarize your point, but then I would like you to talk directly with whatever utility might be involved. Because we can't solve individual case problems here. Is Lucy Merrick here from Action Alliance?
Right here. 173 RESOLUTION 960757 CHAIRWOMAN FERNANDEZ: Go ahead. Would you like to begin, please.
Okay. Good morning, Chair Fernandez. I am Lucy Merrick. We have had a long, long friendship. CHAIRWOMAN FERNANDEZ: Nice to have you here.
And I am very happy to be here. And I am an Action Board Member and also Acting Chairperson of the Utilities Committee. I would like to thank you for letting us speak here this morning. Members of Action Alliance of Senior Citizens of Greater Philadelphia have a difficult time paying all our bills and remaining economically independent. Many of our members need and enjoy the discount of water and gas, and yearn for the same for their electric bills. Our members have low or modest fixed incomes. The costs of utilities is a very large percentage of their income. I don't want to be redundant and go 174 RESOLUTION 960757 back over the Theresa Stephens situation. We all have heard it so much. And it was a very tragic and horrendous situation, for this poor soul who had paid her electric bills over the years and was cut off for just two months. It was really unnecessary. And, of course, it is tragic. And it is going to be exacerbated again and again and again over the winter, when people can't pay their bills or live conveniently. And we must remember, with all of the downsizing and whatnot, possibly it was her problem. Families have moved in, again, on their older members. With their Social Security, it just cannot comply. It just cannot work that far. And, who knows. We are seeing it all the time. And I can say for PECO -- I am close to PECO. My first grandson was downsized from PECO. He was just married a year. But of course, fortunately, he was able to have to go out of the city and get a job. He just got married for one year. I was the only grandmother. But, fortunately, he has found something in another city. He is away from home for the first time. 175 RESOLUTION 960757 And this did not happen only to him. He was in a group for over 400 people, many of them with 25, 30 years and over. Where are they going? Where are they going this time in their life? And this was not the first time. PECO has downsized over a thousand some people in the year, yet they can do all of this outstanding advertising in the newspaper, on the radio, on the TV, and come out with all of these things that they feel that they are being a good employer and a good energy -- I don't see it. We are the ones. The consumer is paying the price. We are the ones. And the elderly people, we have had to take in some of our families to help see them through. Therefore, we can't pay our bills. We can't keep our head above water. We are trying. I come from the generation -- and I know you know -- where we paid our bills. Old folks paid their bills; that was their main characteristic. You pay your bills first. And then if you can eat or get your medicine, that comes next. 176 RESOLUTION 960757 And this is being done now. We can't do it, when we are labored and we are holding on to help our young people, which we have sacrificed to see them go on and be able to take care of themselves. We can't do it. And PECO wants to keep its stockholders at our expense? No thank you. Now, the titles of the gas company, we have had many experience with Mr. Gas Company. Remember back some years ago, when Mr. Vignola was our Controller, and the gas company -- the meter readers were really something. And we all was in here. I was in here then. We filled this place. Some of our meters were -- our bills was 4,000-and-some dollars, some of our heating bills was 1 over 1,000. My daughter got a heating bill, I mean a regular service bill, of over a thousand and some dollars for one month. She don't eat that much. CHAIRWOMAN FERNANDEZ: But now with the automatic meter reading, that will help.
Yes. So that finally 177 RESOLUTION 960757 come about, something. At that time it was really horrendous. Our President, Joe Coleman, told us to get out, there was no need to stay any further. But you see, the gas company has had a poor reputation with their billing. We know that. And then when we came through with the strike a couple of years ago, I was caught up in that. As old as I am, I didn't have to go down to that trucking market and wind and wind and wind in that terrible place to pay my bill. And it was dangerous. It was dangerous with one way in and one way out. And then after that -- three months they were on strike -- when they came back, they raised our bill $16 without a hearing. That's against the law. I know it. Everybody knows it. But this is some of the problems that the gas company did. I was here. I been around a long time. CHAIRWOMAN FERNANDEZ: Do you feel it 178 RESOLUTION 960757 has gotten better?
Yes. I have been around a long time. I am three score and ten and over. And I always had a home. My father made a home. My husband made a home. And my children are grown up; now they are making homes. So, you see, the city is taking care of -- we are paying the city. We have no problem. But when you get these exorbitant rates, it is a disgrace and it is hard on the consumer. I really think it is very bad. And PECO is really showing that he is not very concerned, he cares less. And I think all of this problem is coming about. It is going to be horrendous here in the city. All through the winter coming up, it is going to be terrible. People cannot pay it, and we know we can't pay it. So thank you for your time. I hope we can be friends again. CHAIRWOMAN FERNANDEZ: Thank you very much. 179 RESOLUTION 960757
I hope Mr. PECO hears me. CHAIRWOMAN FERNANDEZ: I am very pleased that you are referring to him as Mr. PECO and Mr. PGW.
That's my age. Thank you. CHAIRWOMAN FERNANDEZ: Thank you very much for coming and for your testimony. Our next witness, the gentleman sitting next to you.
Good morning. My name is Theodore Lee. And I am addressing this letter to voice my anger and frustration over what I consider to be a very unfair law which turns out to be a lose/lose situation for all involved. Now, enclosed in this letter you will find documents which will explain how my mother is being held responsible by the Philadelphia Water Department for a water bill incurred by tenants she was renting her home to. In 1990 her tenants signed a lease for the property of record and agreed to pay all 180 RESOLUTION 960757 utilities, including the water. Needless to say, her tenants didn't pay the water bill. In 1992 when we received a bill from the Water Department in the approximate amount of $400, we went to the Water Department and tried to explain to them that we were renting the property to tenants, and that they had agreed to pay their own water bill. After all, didn't they have to bring the Water Department a copy of the lease to get the bill turned under their names? Which they did. We were told by the Water Department that that didn't matter; the owner of the property was still responsible for the water bill. So my mother and I said, "Fine. If we are responsible for the bill, shut the water off." The Water Department refused flat out to shut the water off. And they told us that they shut the water off at their discretion, not the customer's. The water stayed on. The tenants never paid the bill, nor any other utility. And in the eight months it took us to get them evicted, the 181 RESOLUTION 960757 Water Department let the bill grow to a whopping $1300. My mother went to court because we knew that this was grossly unfair, because they were holding us responsible when they had an opportunity to recoup some, if not all, of their money before it got totally out of control. But the judge, even though he claimed that he understood where we were coming from, ruled against us. So we are currently in appeal of the judge's decision. And this is costing us hundreds of dollars. But it may be worth it if it will make the deadbeat tenant pay his water bill and make the Water Department responsible for taking appropriate action against the deadbeat tenant, who won't pay a water bill because they know that they don't have to. Hence, millions of dollars in water fees go uncollected. And people who are not responsible for such horrendous bills have liens unfairly placed against their homes and credit ratings due to negligence on the part of the Water Department, who finds it very easy to go after the 182 RESOLUTION 960757 person renting out their house, and totally ignore the lease which the bad tenant had to use to get a water bill turned on in the first place. So we the small-time landlords pay all manner of real estate taxes, rental taxes, licensing fees, business privilege taxes yearly. What sort of protection do homeowners and small-time landlords, or people living on fixed incomes who use the rental property to supplement their incomes, such as my mother, have when it comes to situations like this? What sort of redress do we have, the tax-paying, tax-and-license-paying homeowners have against an arrogant utility and an unsympathetic court? CHAIRWOMAN FERNANDEZ: Since your case is going before court, we won't comment on that. But I am glad you are here to raise that specific issue. I see the other witness here shaking her head. Do you have similar concerns? Identify yourself for the record.
I am Debra Lee Walker. I am a landlord, landlady, property owner 183 RESOLUTION 960757 in the Germantown area. My husband and I have been renovating properties for the past years. 4 My husband, by the way, still has a 5 full-time job because the revenue from our 6 renovations doesn't carry our family. So we 7 continue to work in a sort of grass roots way to 8 support Germantown. 9 I am on the Board of the GBA. I have 10 been on the Board of the Credit Union in Germantown, 11 on the Board of the Y. We actively try to support 12 our community and try to take renters and turn them 13 into homeowners to work in a small way. 14 But I am telling you -- and I have been before this Council Committee before -- every year I probably pay 10 to 15 thousand dollars of tenant delinquent water bills; bills that when I have to evict a tenant, I have to assume their bills. I have a difficult time getting tenants to come down and put the bills in their names. I have no control over it. The system is a problem. I don't see a representative from HAPCO here. The Homeowners Association of HAPCO is 184 RESOLUTION 960757 very divided. The older members believe that water should be included in the rent. Well, unfortunately, costs for water have become prohibitive to include that in the rent. If you assume that the tenant will use $30 worth of water a month, he uses 50. It is a no-win situation. Tenant Action, Community Legal Service, fought very hard for a tenant billing program. What the tenant billing program is, in the eyes of the Water Department, is merely a change of address. Where the tenant gets the bills, but ultimately the responsibility comes back to the landlord. And what I feel, quite honestly, happens is that there is a very -- there is reluctance to shut off. Tenants talk the meter people out of shutting their service off. I am legally not allowed to shut the water off, but I get the bills if they are delinquent. Or I have to go to court to collect from tenants after they have vacated, judgments that I will probably never see any revenue from. 185 RESOLUTION 960757 But it is a tax that I have no 3 control over. It is also an arbitrary amount. And if, in fact, for some reason -- and I have a handful of tenants over the years who have slipped through the system for three, four, five years. We are talking thousands and thousands of dollars. And I am one of -- this gentleman sits here. I am one of 30 small-rental-property owners that I can think of in my neighborhood in Germantown, not to mention larger managers and rental property owners, like Dennis McCarthy, who have 500 of these issues. And it is low on the list -- it is lower on the list in terms of rent collecting and trying to stay above water. But those of us who have been committed to Philadelphia for years and years, and find that every -- we are the tax base. We are also hit for everything. CHAIRWOMAN FERNANDEZ: Well, you are probably aware that, I think about two years ago, we got a bill passed in City Council that provides for notification of the landlord when the tenant's bill 25 becomes delinquent. 186 RESOLUTION 960757
Let me tell you, I was there at those hearings and I testified. That program was put in place voluntarily by Water Revenue. It is not executed with the kind of consistency that it needs to be, as it is in every other city in the state. There are legal -- the state has passed laws that make water departments totally responsible for notifying the landlord each and every -- 30 days after the first delinquency, and ever after. Philadelphia has no such protection. I have probably to delinquent 14 tenants a month. I may receive one or two letters. 15 CHAIRWOMAN FERNANDEZ: I don't want 16 to use this forum as a way to deal with individual 17 cases. 18
No. No. No. 19 CHAIRWOMAN FERNANDEZ: Right. And I 20 am really glad you are here to raise this issue. Because our office does periodically get calls from property owners who have rental properties. And I think we have to probably go on a case by case, working with the Water Department. But could we hear from a Water 187 RESOLUTION 960757 Department representative on what you feel you do about this and what your procedures are? And, again, I don't expect you all to go away satisfied today. Because I know it is a long and complicated issue. And, as Mr. Lee mentioned, you are already in court and appealing on this.
Yes. I am Denise Garrett, the Bureau Chief of the Water Revenue Bureau. I am very familiar with some of the circumstances that Mrs. Walker raises. In fact, I was worked very extensively with the Council's office in putting in place this landlord notification program, and continuously periodically check, because we did have a breakdown in that system about a year and a half, two years ago. But I am assured that the system is operating properly at this time. One of the things that drives the system is making sure that we have proper mailing information for the landlord when that goes into effect. Because a lot of times our landlords use the mailing address, which is the address of the 188 RESOLUTION 960757 property. So it is highly probable that happens in some instances. I am not sure that's the case for Mrs. Walker, because she is very diligent about giving us information. I have checked the system recently to verify that, in fact, these notices are going out. And, to the best of our ability to identify, they are going out. And I have seen some documented proof of those notices. The other point that I want to raise is the point where she states and the gentleman here, I didn't get his name, states that the landlords are held responsible for the water service. Until the public movement that caused us to begin billing tenants directly for the water services, water service is a property-based assessment, or rent on the property, which is the responsibility of the landlord owner. Prior to that change in roughly 1990, those services were being covered by the landlords. Unfortunately, they were not being paid for because we were not able to effect an effective collection 189 RESOLUTION 960757 against those landlords to pay for those services. So a lot of them came into the program with delinquent charges. At this point the Water Revenue Bureau does take tenant applications. We notify the landlord that the application has been taken. And the landlord has the ability to state at that time that they do not wish for that tenant to have service in their name. If that landlord chooses for that tenant not to have service directly billed to them, then we will leave the service on, obviously, but we will begin moving that property through an USTRA process in order to terminate services. We cannot arbitrarily terminate services because we are governed, obviously, by state law and Philadelphia Code on how we move forward in enforcing those accounts. So we have some limitations of our own. I empathize with some of the dilemma that the landlord owners face in this particular situation. But prior to this system going into effect, they were totally responsible for providing services to those properties. 190 RESOLUTION 960757 And, again, we are governed by other laws; such as License & Inspections laws, for maintaining services at properties. CHAIRWOMAN FERNANDEZ: But, essentially, I think it is something where the Water Revenue Department needs to be very, very vigilant to make sure you are doing all you can to make sure the property owner gets the notice.
Yes, we are vigilant. And one of the things that we are attempting to do is to develop a new system that allows us to identify demographic information on individuals. Our system has been property based for any number of years. And we do not have personal data -- or I should say we do not have the capability of capturing personal data and using that as a means to effect collections. We are making those dramatic changes to our system, but they will not be in place for several years.
Perhaps their bottom line issue is that it is a property-based system, but we have community groups asking for a customer-based system, which is what the Tenant 191 RESOLUTION 960757 Billing Program was supposed to be, a customer-based system. I don't think anybody at TAG or CLS or any of the community groups expected the landlord to have to be the backup for the tenant who didn't pay. I don't think that that was in the focus at all when this happened. The other part of this is that tenants who are delinquent and that are evicted because of delinquent water bills can leave your property, take a lease in from another property, go into the Water Department and become new customers and start the process all over again, with no checks and balances. This is -- CHAIRWOMAN FERNANDEZ: That was a point I had read earlier in your testimony. That might be something you would want to look into, Miss Garrett.
It is something we have looked into. And that's part of our new development effort and requirements, to track demographics on individuals, not on properties. We do not have Social Security numbers, which is the clearest identification for 192 RESOLUTION 960757 tenants. And even given that, there is still a lot of limitation, as the other two utilities will find because they are consumer based. CHAIRWOMAN FERNANDEZ: But if a tenant currently comes in and says, "I want to be the person paying the bill," don't they have to give a Social Security number when they apply?
They can give the information, but our system has no way of tracking that into another situation because we, basically, only track properties and owners. We don't have a system that will allow us to track forward for someone who leaves that property and goes somewhere else. When they leave that property, they are gone, they disappear. And if a new tenant comes in, that new tenant then takes over at that point. CHAIRWOMAN FERNANDEZ: But how many tenants do you have who have the water in their name instead of --
Approximately 14,000. CHAIRWOMAN FERNANDEZ: Well, by cards would be difficult, but it would seem like -- 193 RESOLUTION 960757 how long did you say it is going to take you to get your computer systems --
About two years. It required a major system overhaul. It was not just a program change, but a complete system overhaul, change of logic and everything else. Because the system has been in place for quite a number of years, and it is completely driven on a property basis.
How diligent can the Water Department be in my particular case, when you can let a bill go from $400 to over $1,300? I mean, where is the diligence there in collecting that payment? And if the customer didn't pay the bill at $400, how do you expect them to pay it at $600 or $1,600, or $2,000, which is where the bill 20 is right now, with court fines and all of that. My other point is, if you are going to say that a water bill is a property-based bill, okay, well, that's fine, it's a property-based tax. Let's take it to the extreme level. Let me drive your car, okay, and I 194 RESOLUTION 960757 will drive your car, and all maintenance, all car payments, all insurance, you pay for that; I just drive the car. That's what we are talking about here. It is the same thing, except it is a utility. I feel that people should pay for their own utilities. I pay for mine.
A utility is -- CHAIRWOMAN FERNANDEZ: I don't think that is the thing at stake here. The longstanding legal arrangement is that it was a property-based utility.
Right. But maybe that needs to be rethought. CHAIRWOMAN FERNANDEZ: I think some adjustments have been made to now allow tenants to have that in their name. And I think your point about tracking tenants, so that they can't just jump from property to property and continue to not pay their bills, is well taken.
Well, part of the reason that I originally was interested in having tenants put the water bill in their name is that I do rent 195 RESOLUTION 960757 to low-to-moderate-income folks, who might have been eligible for the Water Revenue Assistance Program. However, the way the Water Revenue Bureau has that program set up, my tenants can't participate because I end up subsidizing that program. Their delinquent bill that comes into the program is set aside in a separate account. The difference between what they're supposed to pay, what the Water Revenue determines that the tenant can pay, is set aside in a separate account. The charges mount over the year in that third account. If the tenant moves out or if the tenant inherits a house, I then get the old delinquent bills, I get whatever charges or missed payments that the tenant has accrued. Many times, originally, landlords didn't even know that their tenants had applied for WRAP. But originally, naively, I thought that my tenants could profit from assistance. I didn't know it was assistance that I was paying for. It was a -- I was subsidizing the 196 RESOLUTION 960757 Water Revenue Bureau, not the Water Revenue Bureau -- CHAIRWOMAN FERNANDEZ: Have you had this conversation with Miss Garrett?
Oh, sure. Yes. And individually, individually I have had great support from the folks that work in the Water Revenue Bureau. It is the policies that repeatedly persecute property owners. And that really has to change, because we are the tax base. And it makes us want -- it burns us out fast and furiously. I get to the point where I want to sell it all and run away. And I have many tenants that have purchased homes from me. I mean, that's how we try to keep our community together. And I believe -- pardon me, but it is a pet peeve, not only a pet drain, to my own... CHAIRWOMAN FERNANDEZ: I see Miss Bullock from CLS. And then I think, because some other hearings are starting, I would like to pull this to a close. It is not a problem we can solve today. 197 RESOLUTION 960757 Did you have one comment?
I have one little short comment. I am dealing with this situation constantly, like daily. And there are two parts to the problem. One is, frequently -- and no 9 reflection to the property owners here -- property owners will attempt to avoid payment at the point of termination or at the point of receiving written correspondence or a phone call from the NCO, which serves as a collection agent for Water Revenue Bureau, and will coerce the tenant into placing service on in their name. The other part of the problem is that frequently property owners who do have properties that are tenant occupied will have the tenant to pay the usage charge, while the property owner will fail to pay the service charge. So I just want to caution this committee to resist the urge to include this as part of the termination/homelessness issue. I think there are some serious issues there. I think both sides, including tenants, have 198 RESOLUTION 960757 some real extreme experiences. But it is all not just Water Revenue Bureau. Part of it is management and systems. But then, also, it is how we interact with landlords and tenants in this city, and the policies. And I think the Fair Housing Commission staff should be part of any dialogue, including Community Legal Services. It is a very serious problem, but it is leading to terminations. CHAIRWOMAN FERNANDEZ: Thank you. I think you have certainly raised this issue and gotten my attention on it. Exactly how to proceed from here, I think we will have to dig a little deeper. But thank you very much for your testimony. Councilman Rizzo, had you wanted to add a comment?
Yes. My comment is to Water Revenue Bureau, Denise Garrett. In my work trying to assist people with problems and, as a matter of fact, experienced even a family member with a problem trying to 199 RESOLUTION 960757 communicate with the Water Revenue Bureau, Miss Walker used a word that I think describes it best, frustration. I personally experienced trying to communicate with the Water Revenue Bureau to try to get some information about my account, and also some other people have communicated to me. And I have tried myself to call. And Denise Garrett, you know that you have, through Ben Hayllar, has sent me some information about the performance. And, again, I think, Miss Walker's statement, it is not you folks that work there; it is the product or the system that you are constrained to work under. I cannot believe the numbers I see when I look at abandonment rate, people trying to call the Water Department. And what that means is, how many people hold on the telephone for 10, 15, 20 minutes and finally hang up the telephone. So that, to me, is the very basic problem that we need to deal with in this government, is to fix a problem that I think is 200 RESOLUTION 960757 disastrous. I look at abandonment rates and customer service performance from other utilities, PECO Energy, PGW. I can't believe you are in business, with the performance of your Customer Service Department.
Councilman, I would like to speak to that issue. And I do know that you have been very interested in that particular topic, and so have we. We have installed a new system, a new automatic call distribution system, approximately two years ago. And at that time we abandoned an old system, which we were experiencing those kinds of abandonment rates. We had a large, a large outflow of staff from that area due to a program that was being run in our court systems. And we were making an attempt to bring those people in. There were some administrative changes, and we were not able to secure our personnel. We are in the process of putting more people into our call center at this particular point 201 RESOLUTION 960757 in time, which will take our abandonment rates back to where we were experiencing them about a year ago, roughly percent. 5 Right now we are experiencing abandonment rates that can run sometimes as high as 40 percent. As our campaigns change -- because obviously we have a seasonal demand for services, which is shutoff activity during the shutoff season -- and that also adds to the level of abandonment rate. We are also looking at combining our customer service groups with our Water Department customer service operations so that we can off-load some of those calls that are not so detailed to representatives who can handle quick-turn-around calls, while the representatives who need to deal with the intensive calls can do that successfully. We hope to be able to make those changes within the next six months. We certainly have a reprieve here with our moratorium, because we don't have as much of a demand for our services during this time period. And we hope that we will be able to change 202 RESOLUTION 960757 that number. I have seen the rate drop to as low as percent. I am now on almost a daily 5 monitoring of that particular rate. And, yes, that 6 is very frustrating. Not only for you, but also for 7 us. 8
Well, I am glad to 9 hear that you are addressing that issue on a 10 day-to-day basis. 11 But I have had constituents -- and I 12 don't know whether this is good for you or bad for 13 you -- but I have had constituents say to me, 14 "Frank, I am so frustrated. I am just paying the 15 bill. I am not going to try to communicate any longer with Water Revenue." Because one gentleman told me he hung on for 45 minutes, and finally his lunch hour expired and he hung up the phone, went and got a money order, and paid it. I think that's not really what we are here for. We are here to provide service. Are you satisfied with the time line that you just described?
I am not satisfied at 203 RESOLUTION 960757 all. In fact, I am totally dissatisfied. Because we were able to achieve a change when we put in our new system. But until we can secure the personnel and have them trained, brought on board -- because we have been moving from different areas. We have been moving them from our correspondence area, which creates a problem with our customers who have written in to us. We have been moving them from our intake area, which creates a problem for customers who are sitting in our intake waiting for services. So we are very diligently working on this problem, in addition to looking at changes in the way we do business, which Deputy Commissioner Nadol will speak to, in terms of combining our two customer service areas so that we can offer more -- offer services much more quickly than what we have been doing. We are not satisfied at all. CHAIRWOMAN FERNANDEZ: Before we get into a long discussion of customer service, which is a topic of another whole hearing, these hearings are focused on the issue of delinquencies across the 204 RESOLUTION 960757 utilities. I think we have had some excellent testimony to give us, first, an update on what has happened since 1992, when this Committee held hearings on this topic of utility delinquencies. I think there has been some significant positive steps forward taken by the various utilities. We stand here today, however, with delinquencies, particularly among low-income customers, as a very serious and perhaps a potentially even growing problem in our city. And so I think today we have had some excellent testimony telling us where we are, how far we have come, and maybe some issues we need to be very aware of as we look toward the future. There have been some very specific recommendations that I would like to follow up probably with some roundtable discussions and continued meetings, to see if there are ways in which the utilities could cooperate with each other. And then for us in the city to make sure that we are working with the utilities. And, 205 RESOLUTION 960757 also, wherever the city is investing taxpayer dollars, to try to keep our utility rates low and to keep people from losing their homes and becoming homeless. I think we all need to take a very careful look at the amount of money that's being invested, and then how could we invest it even more wisely than we are, to make sure that we are serving all citizens well, keeping our utility rates down, but also providing assistance to those who really need it. So I think there has been very productive discussion. I would like to thank all the officials from the three utilities for being here and preparing the information, and staying to listen to the issue brought up by other groups and by citizens. I would also like to thank my staff, David Ford and Linda Bischette, who have worked very hard in pulling these hearings together. And instead of adjourning the hearings, I would like to recess the hearings in case there is a need at a later date to get an 206 RESOLUTION 960757 update from the utilities and other groups about how we can continue to first recognize and face up to the problems we have, but then find even more creative ways to meet that challenge.
Before you recess the hearings, may I finish my statement? CHAIRWOMAN FERNANDEZ: Well, is it on the delinquency problem or is it on the general issue of customer service?
Before you interrupted me, I was about to say that if you cannot communicate with the utility company efficiently and effectively, that can lead to delinquencies. So I think it is a very appropriate comment to bring up here today. Thank you very much. CHAIRWOMAN FERNANDEZ: I think it is well taken. Again, we started here at 9:00, and I was trying to move us toward adjournment.
I'm sure they are 207 RESOLUTION 960757 interested in what I had to say. CHAIRWOMAN FERNANDEZ: I am not denying that. I just did not want to get off into a whole discussion of customer service issues, which I think is a topic of another hearing. So thank you all for your testimony. On that note, I would like to recess these hearings to the call of the Chair. (Public Hearing adjourned at 1:00 p.m.) - - - 208 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Wednesday, November 19, 1997, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COMMITTEE ON TRANSPORTATION AND PUBLIC UTILITIES _____________________________________ DEBRA A. WHITEHEAD, RPR