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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/06/2012 - FIRST READING OF ORDINANCE NO. 022, 2012, AMENDINGDATE: March 6, 2012 STAFF: Lance Smith Patty Bigner AGENDA ITEM SUMMARY FORT COLLINS CITY COUNCIL 20 SUBJECT First Reading of Ordinance No. 022, 2012, Amending Section 26-464 of the City Code to Establish a Medical Discount Program for Electric Customers. EXECUTIVE SUMMARY The medical life support discount program is a new program which is targeted at customers who are in the tiered residential electric rate class and who have electric medical equipment in their homes. There are three eligibility requirements for participation in the program: (1) a household income ceiling, (2) an affidavit from a physician that affirms the listed equipment is approved by Medicare and medically necessary, and (3) a lawful presence affidavit. BACKGROUND / DISCUSSION On December 6, 2011, City Council adopted Ordinance No. 166, 2011, increasing the residential class electric rates, effective February 1, 2012. The new rates incorporated two significant changes to the rate structure. First, the rate structure was changed to reflect the new seasonal purchase power charges from Platte River Power Authority. Second, in order to better align the rate structure with the conservation values of the City, the rate structure was changed to a 3-tiered inclining block rate structure. In the discussion before the vote to adopt the ordinance, City Council directed Fort Collins Utilities to develop a medical life support discount program so as not to impose any additional economic hardship on those customers who may have sufficient monthly energy usage to have some of that energy fall into the second or third tiers. The medical life support discount program is the result. Initial research indicated there are a number of discount programs related to alleviating potential hardship on customers faced with medical issues around the country. Comparisons of the programs in the western United States served as a basis for the development of this program. While the energy usage equivalent of the discount varied by program and was generally higher than the 150 kWh in the proposed program, staff believes this is an adequate level for the medical devices that are approved by Medicare. The comparison showed monthly discounts between $5 and $17 across the programs, with this proposed program providing a $12 discount to a qualifying customer per month. In determining a reasonable household income ceiling, the Area Median Income (AMI) used by the Federal Housing Authority provided an independent source of income information based on the number of people in a household. The AMI is specifically formulated for Larimer County and factors in local cost of living. Without more detailed information than the median income, it was necessary to take some portion of this AMI as the program is designed to help those customers who will see the rate increase as a substantial economic hardship. The income table included in the application shows the income ceiling as 60% of the Larimer County AMI. The affidavit from a physician verifies the need for a Medicare-approved medical device. The lawful presence affidavit is required by Colorado state law because participation in the program is considered a local public benefit. FINANCIAL / ECONOMIC IMPACTS It is estimated that there will be fewer than 150 residential accounts enrolled in this program annually. Assuming 150 households are enrolled, the total annual revenue being lost as a result of this program is not expected to exceed $25,000. This revenue shortfall will be accommodated within the Light and Power reserves until the next cost of service study. While it is hard to estimate the economic impacts of a new program, this program is not increasing electric rates for customers and is providing a reduction for the eligible customers. Thus, it is not expected that this program will have any substantial economic impact on the community as a whole but it will provide some relief for customers participating in the program. It is expected that the savings seen by these customers will be spent elsewhere within the local community. ENVIRONMENTAL IMPACTS March 6, 2012 -2- ITEM 20 This program does not have any foreseeable negative environmental impacts. This program in conjunction with the new tiered rate structure has the potential to help customers be more aware of their personal energy usage and may be an opportunity in the future to expand on energy efficiency education programs. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BOARD / COMMISSION RECOMMENDATION The medical life support discount program was presented to the Energy Board on February 2, 2012. It was presented for their information and Fort Collins Utilities staff did not ask for action. Energy Board members expressed support for the program and indicated support of similar programs that are structured to assist low-income community members and others in situations of hardship. Fort Collins Utilities staff also spoke with a representative from the Senior Advisory Board to explain the intent of the program. PUBLIC OUTREACH Communication that has already been distributed regarding the change in rates has included information that Fort Collins Utilities is considering medical conditions and is working on a program to address the potential impacts. Two of these communication brochures have already been distributed and staff members are keeping track of interested customers. A training session will be offered to customer service representatives so that they are able to answer questions about the new program. Information regarding the medical life support discount program and how to apply will be distributed to the customers that are already a part of our life support notification program. It will be posted on the Fort Collins Utilities website and a simple brochure describing the program requirements and eligibility will be created and distributed at community outreach events. Notice of the proposed change to the City Code establishing this program was published in the Coloradoan on February 19, 2012 and a mailing was sent to City electric customers outside of the city limits in accordance with PUC requirements. ATTACHMENTS 1. Program Application Form 2. Powerpoint presentation 1 1 Medical Life Support Discount Program for Residential Electric Customers City Council Meeting March 6, 2012 2 Background • 2012 Residential electric rate form has two significant changes: – Seasonal adjustment – 3-tiered inclining block • Citizen and Council concerns about the impacts of these changes on customers with medical equipment ATTACHMENT 2 2 3 Program Intent • Program Intent: Provide no undue economic burden from the seasonal tiered rates on residential customers with durable medical equipment in their household 4 Program Overview • The program provides a 30% discount on electric usage charges for the first 500 kWh • Three eligibility requirements: – Household income ceiling – Physician affidavit – Lawful presence affidavit 3 5 Discussion and Questions ORDINANCE NO. 022, 2012 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING SECTION 26-464 OF THE CODE OF THE CITY OF FORT COLLINS TO ESTABLISH A MEDICAL DISCOUNT PROGRAM FOR ELECTRIC CUSTOMERS WHEREAS, on December 6, 2011, the City Council adopted Ordinance No. 166, 2011, increasing the residential energy electric rate effective February 1, 2012; and WHEREAS, the revised residential energy electric rate included significant rate structure modification to a tiered seasonal rate in order to better align the rate structure with the energy conservation values of the City and with purchase power charges assessed to the City by Platte River Power Authority; and WHEREAS, the City Council directed City staff to develop a medical discount program that would reduce the impact that the rate structure modification and rate increase would have on customers who have below average income and who use medically necessary equipment at a Fort Collins electric customer address; and WHEREAS, City staff has developed a medical discount program that will reduce the monthly electric bill of qualifying electric customers. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That Section 26-464 of the City Code is hereby amended to add a new subsection (p) which reads in its entirety as follows: Sec. 26-464. Residential energy service, schedule R. . . . (p) Medical life support discount program. (1) The rates described above shall be discounted for those electric customers to whom this rate schedule applies, and who apply for such discount, as long as such customers meet the requirements of paragraph (2) below. Such discount shall not exceed an administratively set amount that is consistent with the average monthly energy expense associated with typical medically necessary equipment. (2) Discounted electric rates shall be available under this program only to those applicants whose annual household income falls below an income level established by the Utilities Executive Director and whose application is accompanied by the following: (a) a signed statement from a licensed physician that medical equipment used at the residential premises is medically necessary; and (b) a sworn affidavit from the applicant verifying that the information provided is true and correct. Section 2. That the amendments to Chapter 26, Section 464 of the City Code contained herein shall go into effect when this ordinance becomes final and customers will become eligible to receive a medical discount on bills issued after customers apply and qualify for the medical discount. Introduced, considered favorably on first reading, and ordered published this 6th day of March, A.D. 2012, and to be presented for final passage on the 20th day of March, A.D. 2012. _________________________________ Mayor ATTEST: _____________________________ Interim City Clerk Passed and adopted on final reading on the 20th day of March, A.D. 2012. _________________________________ Mayor ATTEST: _____________________________ Interim City Clerk