1. Innovative Rate Programs for the Entergy Jurisdictions Roger D. Colton Fisher, Sheehan & Colton Public Finance and General Economics Belmont, MA November 2002

2. The Need for a Toolkit Approach “When your only tool is a hammer, you tend to see every problem as a nail.”

3. Different Problems Require Different Solutions b b Slow pay: Pick-a-Date b b Can pay but don’t: Late fees b b Seasonal no-pays:levelized budget bills b b Marginal inability-to-pay: EITC b b Chronic poverty: IDA assistance

4. Low-income Rate Relief : Two Problems to be Addressed b b Payment troubles b b Paid but unaffordable bills

5. Payment problems: b b “Hopelessly behind” /irreducible arrearages b b Recurring pattern of disconnect/pay plan/reconnect b b Patterns of payment avoidance

6. Paid-but-unaffordable bills More than 12% reported going without food for at least one meal a week. More than 20% reported going without medical care, by either not filling prescriptions, taking prescription medicines in lower than prescribed doses, or by skipping or postponing doctor’s appointments. Nearly 10% reported not making their rent or mortgage payments in order to pay their home heating bills. Iowa Department of Human Rights

7. The “fixed credit” rate program b b Rate relief for current consumption b b Combined with arrearage forgiveness b b Combined with crisis component

8. The necessary components of a “fixed credit” program b b Target customer base: customers with bills as excessive burden of income. b b Affordable bill set at 6% of income b b Conservation incentive b b Combined with arrearage forgiveness/customer copayment b b Combined with crisis assistance

9. Illustration: Customer A b b Situation: Electric bill: $900 Income: $12,000 Affordable bill: $720 Beginning arrears: $100 b b Benefits: Fixed credit: $15/month ($900 - $720 / 12) Forgiven arrears (2 years): $0

10. Illustration: Customer B b b Situation: Electric bill: $500 Income: $9,000 Affordable bill: $540 Beginning arrears: $180 b b Benefits: ‘Fixed credit: $0/month ($500 - $540 / 12) Forgiven arrears (2 years): $5/month

11. Illustration: Customer C b b Situation: Electric bill: $840 Income: $6,000 Affordable bill: $360 Beginning arrears: $240 b b Benefits: ‘Fixed credit: $40/month($840 - $360 / 12) Forgiven arrears (2 years): $10/month

12. Sources of funding for innovative rate program b b Redirected current operating expenses b b Redirected bad debt/working capital expenses b b Redirected rate refunds b b Deferred cost recovery b b Program savings b b Rate revenue

13. The Concept of Net Back Without Rate Program $100Bill.75Collection rate $ 85Amount collected $ 50Cost of collection $ 35Net back With Rate Program $ 75Bill,85Collection rate $64Amount collected $15Cost of collection $49Net back

14. For more information: roger@fsconline.com