NCLC Energy, Utilities & Telecom Blog

Low Income Consumers Won’t Pay for MA Solar Programs

Across the country, advocates for low-income energy customers are grappling with rate design and fair solar power policies. The Massachusetts Department of Public Utilities (DPU) recently issued a decision that could help guide other successful advocacy work.

In late 2015, National Grid asked the Massachusetts DPU to raise the electricity rates that it can charge to its customers. The Massachusetts Low Income Weatherization and Fuel Assistance Network (or Low Income Network), which is represented by NCLC, intervened in this rate case to advocate for the rights of low-income ratepayers, and to support programs that benefit low-income ratepayers, such as the low-income discount rate and the Arrearage Management Program (AMP) to help manage overdue bills.

The Low Income Network advocated for, and won, utility consumer protections in three key areas:

  • Rates: a fair rate design that would not unfairly burden low-income customers;
  • Arrearages: better implementation of the AMP program by National Grid, and retention of the method that already was used successfully to compensate utilities for operating the AMP program; and
  • Solar Charges: an adjustment to the rates paid by low-income people to effectively exempt them from paying for renewable energy incentives that almost exclusively benefit higher income customers


National Grid asked to raise charges for low-income customers in two phases. Phase I would have raised prices, and Phase II would have then introduced tiered charges, where customers would pay a higher monthly charge ranging from $6 to $20 depending on their electricity usage. Under the Phase II method, one sample month would be used to lock in the household’s monthly charge for the following year. Then the customer would then continue paying that monthly charge for the next year with no opportunity to lower their rate through energy efficiency or other conservation measures until the year was up.

The Low Income Network introduced testimony from NCLC senior energy policy analyst John Howat and argued that the increased fixed monthly charge should be rejected for three reasons. The increased charge would disproportionately burden low income ratepayers, with some customer bills increasing by as much as 60%. This increase would be particularly unfair since low income households tend to use less electricity than higher income households. Finally, higher fixed charges are coupled with lower volumetric rates, and this arrangement weakens the financial incentive to adopt energy efficiency measures.

The DPU concluded that there were a number of problems with the company’s tiered charge proposal, including concerns about energy efficiency incentives, customer confusion, and unnecessary complexity. The DPU rejected the utility company’s tiered charge proposal entirely.


After analyzing utility company data, NCLC found that National Grid had a level of AMP participation that was well below the state average. The Low Income Network presented this evidence and an analysis by NCLC researcher Marina Levy, and questioned National Grid witnesses on the workings of its AMP. The Low Income Network requested that National Grid examine its AMP policies and practices, report on these to the DPU in six months, and put forth a plan to improve its AMP enrollment rates. National Grid did not dispute the evidence or proposed remedy.

The DPU agreed with the Low Income Network on the need to remedy the low AMP enrollment rate and ordered the company to submit the report requested by the Low Income Network. The DPU also agreed to continue to allow National Grid to collect AMP recovery costs using the same method that had been used successfully in past years, through the Residential Assistance Adjustment Factor (or RAAF).

Solar Charges

Massachusetts law contains a unique consumer protection for low-income utility ratepayers. The DPU must consider the impact of distributed generation on low-income customers, and must make adjustments to keep rates affordable for low-income households. In this rate case, the DPU applied this section of the law for the first time.

The Low Income Network presented evidence to show that all customers pay through their electric bills for certain renewable energy subsidies, including costs associated with net metering for solar power customers and costs of complying with the Massachusetts Renewable Energy Portfolio Standard (a requirement that electricity suppliers must obtain a certain percentage of electricity from solar power and other renewable sources). Low-income customers pay for these subsidies as well, and have absorbed an unaffordable 6% increase in their electric bills. Yet it is unlikely that many low income customers would be able to benefit from the renewable energy subsidies themselves. The Low Income Network argued that, given this impact on the bills of low income ratepayers, the DPU must adjust the low-income discount rate to make sure that low-income customers are not paying for subsidies and programs that they cannot use.

The DPU found that the deployment of renewable energy has grown, causing growth in the renewable energy subsidies. Bills for low-income households have increased as a result. Applying Massachusetts law, the DPU agreed that the correct remedy was to order a reduction in the rates charged to qualifying low-income households, and directed National Grid to make this adjustment and include it with the utility company’s compliance filings. The DPU also noted that other utility companies should do the same when they return to the DPU to seek increased rates.

The decision in this case, DPU 15-155, and the DPU’s acknowledgment of the impact of renewable energy subsidies on low-income ratepayers, represent a victory for low-income Massachusetts households who struggle to pay their electric bills. NCLC can assist advocates in other states who are interested in trying to get similar legislation adopted elsewhere, or otherwise seek similar rate adjustments through their utility commissions.

For more information, please contact This email address is being protected from spambots. You need JavaScript enabled to view it.,

This email address is being protected from spambots. You need JavaScript enabled to view it. or This email address is being protected from spambots. You need JavaScript enabled to view it. at the National Consumer Law Center.

Payday Loan Stores Shouldn't be Utility Bill Payment Centers

Last month, the Missouri Public Service Commission joined Arizona and Nevada as states where utilities, as a result of pressure from consumer advocates, have been compelled or voluntarily agreed to cut contractual ties with payday lenders. Some utilities enter into contracts with payday and other short-term predatory lenders to accept bill payment from customers. Payday lending practices entrap lower-income individuals into a long-term cycle of exorbitantly-priced debt that often brings serious financial security consequences.

In June of this year the Consumer Financial Protection Bureau issued a draft proposed rule intended to rein in the most egregious payday lending practices and require that these lenders conduct basic ability to repay analysis before making loans. However, NCLC, Center for Responsible Lending, National Council of La Raza, NAACP, People's Action Institute, Consumer Federation of America, and numerous other advocacy groups issued a statement urging CFPB to close various loopholes and address other concerns with the proposed rule. There is the additional concern that the proposed rule may be weakened prior to adoption of final regulation over payday lenders. Unfortunately, state level advocates interested in working to keep utilities from using predatory loan storefronts as payment centers may not be able to fully rely on federal regulation to effectively address this problem.

Here are some payday lending stats and facts:

  • Payday lenders typically offer their borrowers high-cost loans, typically with a short, 14-day term. The loans are marketed as a quick fix to household financial emergencies with deceptively low fees that appear be less than credit card or utility late fees or check bounce fees. (National Consumer Law Center, Consumer Credit Regulation, 2012, p. 403.) The loans are marketed to those with little or no savings, but a steady income.
  • The cost usually ranges from $15 to $30 for every $100 borrowed. Fifteen dollars per $100 borrowed is common among storefront payday lenders. The payday loan business model entails the borrower writing a post-dated check to the lender – or authorizing an electronic withdrawal equivalent – for the amount of the loan plus the finance charge. On the due date (payday), the borrower can allow the lender to deposit the check or pay the initial fee and roll the loan over for another pay period and pay an additional fee. The typical loan amount is $350. The typical annual percentage rate on a storefront payday loan is 391%. (Saunders, et al., Stopping the Payday Loan Trap: Alternatives that Work, Ones that Don’t, National Consumer Law Center, June, 2010, p. 4.)
  • Rollover of payday loans, or the “churning” of existing borrowers’ loans creates a debt trap that is difficult to escape: The Consumer Financial Protection Bureau found that over 75% of payday loan fees were generated by borrowers with more than 10 loans a year. And, according to the Center for Responsible Lending, 76% of all payday loans are taken out within two weeks of a previous payday loan with a typical borrower paying $450 in fees for a $350 loan. (Consumer Financial Protection Bureau, “Payday Loans and Deposit Advance Products: A White Paper of Initial Data Findings,” April 24, 2013, p. 22; “Payday Loan Quick Facts: Debt Trap by Design,” Center for Responsible Lending, 2014.)
  • A 2008 Detroit Area study compared payday loan borrowers with low-to moderate income households that did not use payday loans. In that study researchers found that payday loan borrowers experienced nearly three times the rate of bankruptcy, double the rate of evictions, and nearly three times the rate of utility service disconnections. (Barr, “Financial Services, Savings and Borrowing Among LMI Households in the Mainstream Banking and Alternative Financial Services Sectors,” Federal Trade Commission, October, 2008.).

For general information on payday lending, visit NCLC's website. For more information about engaging in a state campaign to break utility-payday lender links, contact John Howat at This email address is being protected from spambots. You need JavaScript enabled to view it..

Prepaid Utility: Subpar Service for Cash-Strapped Families?

The More Things Change, the More They Stay the Same
While prepaid metering and service technologies have changed -- utilities now use smart meters, cell phones and the internet rather than prepayment meters that had to be fed with cash or a debit card to avoid loss of service -- the ugliest truths about prepaid service remain constant. Everywhere in the Western world where it has been implemented, prepaid service is concentrated among lower-income households and disconnection rates far exceed those of customers getting regular service. It remains a second-class service with utility and vendor proponents preying upon financially-strapped households. It obscures the need for utilities and regulators to implement bill payment assistance, deposit assistance, arrearage management, energy efficiency, and other consumer protection programs and policies to help ensure real home energy security for all households.

Free Choice or Hobson's Choice?
The aspect of prepaid service marketing that may be the most troublesome and challenging to overcome is that participation is described as voluntary, the free choice of the utility customer. Of course, those who have worked with utility customers have seen time and again low-income households faced with loss of necessary utility service doing whatever it takes to keep the lights and refrigerator going. We've seen households - to avoid disconnection - accept to last-minute payment "agreements" that are hopelessly unaffordable. In the case of prepaid service, a utility customer struggling to keep their household going may forfeit vital consumer protections and choose prepaid service rather than pay an unaffordable security deposit or deal with a looming disconnection.

The Prepaid Service - Predatory Lending Connection
Getting into the high-interest/high fee payday loan trap is a "free choice" exercised by about 12 million lower-income adults in the US each year. While proponents argue that payday lending helps underserved people solve temporary cash-flow problems, the practice preys on overburdened people in financial crisis. Similarly, prepaid service proponents promise greater control over electricity bills and energy savings, while preying on the vulnerability of low-income households juggling the financial impossibility of paying for basic necessities and keeping the lights on. Millions around the country and more recently the Consumer Financial Protection Bureau have come to recognize payday loans and other sub-prime lending as predatory. Hasn't the time come for prepaid utility service to be viewed and regulated in a similar manner?

For more information, please see this NCLC report or contact National Consumer Law Center Senior Energy Analyst John Howat at This email address is being protected from spambots. You need JavaScript enabled to view it..