Statement of William F. Hecht Before the U.S. Senate Special Committee on Aging

January 6, 2005

Mr. Chairman and members of the Senate Special Committee on Aging, thank you for the opportunity to appear before you today. My name is Bill Hecht. I am Chairman and Chief Executive Officer of PPL Corporation.

PPL is a Pennsylvania-based company, with headquarters in Allentown. Through its subsidiaries, PPL generates and sells electricity in Pennsylvania and other U.S. markets, and delivers energy to about 5 million homes and businesses on three continents, including more than 1.3 million electricity customers and 75,000 natural gas customers here in Pennsylvania.  

PPL’s 12,000 employees in the United States, the United Kingdom and Latin America understand that the company’s success is built on outstanding operations, good corporate citizenship and a commitment to customer service.

PPL’s power plants generate competitively priced electricity, and PPL will invest more than $1.5 billion through 2010 in environmental projects, including the installation of scrubbers at all its major coal-burning power plants in Pennsylvania.

PPL’s domestic and international utility operations have earned numerous awards for customer service. PPL Electric Utilities has received more awards from J.D. Power and Associates for customer satisfaction than any utility in the United States.

Our Pennsylvania utility operations are of particular interest for this hearing. PPL Electric Utilities serves 1.3 million Pennsylvania homes and businesses in the eastern and central parts of the state – including the communities of Allentown, Bethlehem, Harrisburg, Lancaster, Wilkes-Barre, Scranton and Williamsport. PPL Gas Utilities, which PPL acquired in the 1990s, serves 75,000 natural gas customers in parts of 34 Pennsylvania counties.

Today’s topic is one of critical importance to PPL’s utility operations because Pennsylvania has one of the largest elderly populations of any state.

According to figures from the 2000 Census, more than 15 percent of Pennsylvania’s population is age 65 or older. Only Florida has a higher percentage of elderly residents.

Looking strictly at areas of Pennsylvania served by PPL’s utility operations, the percentage of the population 65 or older is about 28 percent, which is more than double the national average of 12 percent. This statistic reflects the tendency of PPL service area residents to remain in the communities where they were born and raised.

Given the older customer base we serve, PPL has a particular interest in addressing the special needs of the elderly, many of whom must meet necessities such as food, medicine and heat with limited or fixed incomes.

Today’s hearing is focused on the impact of higher energy costs on the elderly. It should be noted that the recent increases in energy costs have been predominately related to the prices of home heating oil and natural gas. The price PPL customers pay for electricity has been essentially stable while prices of oil and natural gas have risen significantly over the last four years.

Because of the way Pennsylvania structured electricity deregulation in the mid‑1990s, the rates that customers of PPL Electric Utilities pay for the energy portion of their bills, which make up about half of the total bill, were established for each year through 2009.

Even though electricity rates in Pennsylvania have remained essentially stable, we recognize that electricity is a necessity, and that high prices for other fuels will place an added financial burden on customers with limited means, who now may be less able to afford electric service.

PPL’s utility companies offer a variety of programs and services to assist the most vulnerable residents of the communities we serve, particularly the elderly.  These programs and services include:

• Payment assistance for people with limited financial means.
• Payment options that offer flexibility and convenience.
• Notification services that provide extra protection from shut-offs.

Through the presence and involvement of PPL employees in the communities we serve, we remain alert and sensitive to the needs of consumers, particularly the elderly, so that we can adjust and expand programs as needs change. We continue to evaluate the effectiveness of our programs over time, to ensure that they are targeted to help those with the greatest needs. Assisting us in this effort is a network of community-based, social service organizations, such as Community Action Committee of the Lehigh Valley, with which we have maintained productive relationships for over two decades.

LIHEAP

Before I describe PPL’s programs in more detail, I would like to address the vital importance of the Federal Government’s Low-Income Home Energy Assistance Program, or LIHEAP, which is available to elderly people with limited or fixed incomes.

As a large, cold-weather state, Pennsylvania is the second largest recipient of LIHEAP funding. Last winter, nearly 450,000 Pennsylvania households received $115 million in LIHEAP assistance. About 24,000 PPL electric and gas customers received $6.3 million in LIHEAP assistance. About 30 percent of those recipients were over the age of 60.  

This winter, with heating oil and natural gas prices at record levels, the need for LIHEAP is even more compelling.

LIHEAP has done a great deal to help the elderly and other customers in need, but it can do more. At the current level of funding, LIHEAP reaches less than a quarter of eligible customers. 

Federal guidelines for LIHEAP allow states to serve households up to 150 percent of the poverty level, but Pennsylvania has chosen to lower the eligibility guidelines to 135 percent because of limited funding. As a result, thousands of Pennsylvanians, including some of our elderly residents, who could benefit from LIHEAP, do not have access to funds because their income is between 135 percent and 150 percent of the poverty level.

PPL is pleased with the increased authorization level in the Energy Policy Act of 2005 and remains hopeful that Congress will fully fund LIHEAP at the $5.1 billion level. 

We recognize and appreciate Senator Rick Santorum’s long-standing support for LIHEAP funding, as well as that of Senator Arlen Specter. In addition, we acknowledge that many other members of the Special Committee on Aging have been active in pushing for increased LIHEAP funding.

Operation HELP

For more than 20 years, PPL has offered assistance programs that meet the needs of customers, including the elderly, with limited or fixed incomes. We have been an industry leader in that regard.

One such program is Operation HELP, which PPL Electric Utilities established in 1983. Operation HELP provides cash grants for heating bill payments of any type – whether electric, gas, oil, propane or other fuel – to customers who earn less than 200 percent of the federal poverty level (about $19,700 a year for an individual living alone, nearly $26,000 for an elderly couple).

About 3,500 customers received Operation HELP assistance in 2005. The average grant amount was $225.

Fourteen community agencies administer Operation HELP funds in the 29 Pennsylvania counties served by PPL Electric Utilities. The agencies interview applicants, decide who receives Operation HELP grants, and refer customers to other programs and services.

Operation HELP was one of the first utility-sponsored heating assistance funds in the nation, and has raised nearly $14.5 million since its inception. Funding comes from PPL Electric Utilities, its employees, and its customers

This winter, PPL Electric Utilities has increased its Operation HELP contribution by 40 percent, to $700,000. Tax-deductible contributions from customers and employees amount to about $400,000 a year.

Operation Share

PPL Gas Utilities – one of Pennsylvania’s smaller gas companies, with only 65,000 residential customers and 10,000 business customers – provides heating assistance for low-income customers, including the elderly, through the Operation Share program.

This program is like Operation HELP in that the funding comes from voluntary contributions by employees, customers and the company. But unlike Operation HELP grants, which can be used for any type of heating bill payment, Operation Share grants are limited to gas bill payments. 

Because of high natural gas prices on the market today, PPL Gas Utilities has tripled its annual contribution to Operation Share this winter, from $50,000 to $150,000, increasing the level of assistance to customers, including the elderly, who need it most.

I would like to acknowledge the support of The Dollar Energy Fund, based here in Pittsburgh, which administers Operation Share for PPL Gas Utilities. The Dollar Energy Fund partners with 17 utility companies in Pennsylvania, New Jersey and New York to administer programs to help customers in need.

Customer Assistance Program

For elderly customers earning less than 150 percent of the poverty level ($14,355 for an individual senior citizen, $19,425 for an elderly couple) who are behind in their utility bill payments, both PPL Electric and PPL Gas have Customer Assistance Programs. These ratepayer-funded programs offer reduced bills, based on the customers’ ability to pay.

Recognizing the need to help customers cope with higher heating costs because of oil and natural gas prices, PPL Electric and PPL Gas have expanded these programs.

PPL Gas is increasing enrollment in its Customer Assistance Program by 10 percent this winter. PPL Electric – with approval of the Pennsylvania Public Utility Commission – has reallocated $3 million to its Customer Assistance Program from funds that were set aside in 1998 to help customers learn about electricity deregulation. 

Extended Protection from Shut-offs

As a further measure of protection that benefits the elderly, PPL Electric and PPL Gas have committed that they will not shut off service this winter to any customer who earns less than 300 percent of the poverty level (about $29,000 a year for an individual living alone, about $38,500 for an elderly couple), and to any household that includes an elderly resident.

Under Pennsylvania’s consumer-protection regulations, elderly customers receive added protection if they have a medical condition that could be made worse by shutting off the electric or gas service.

That protection lasts for a period of up to 90 days for customers who provide certification signed by a doctor or nurse practitioner. If the power or gas already has been turned off before we receive the signed medical certification, we will reconnect service within 24 hours.

Winter Relief Assistance Program

PPL Electric offers a Winter Relief Assistance Program to customers who earn less than 200 percent of the poverty level. Services available to eligible customers include home energy audits, energy conservation plans and home improvements that reduce energy use, such as insulation, caulking, weather-stripping and energy-efficient lighting and appliances.

This program serves about 2,500 households annually. In the last two years, about 700 elderly homeowners have benefited from PPL Electric’s Winter Relief Assistance services.

Customers who have electric home heating save an average of 10 percent a month on their electric bills as a result of these services.

Additional Programs and Services

PPL recognizes that not all elderly customers qualify for low-income programs. That’s why the services that PPL makes available to elderly customers extend beyond traditional payment assistance.

For example, electric and gas bills may be due on days before elderly customers receive their pension or Social Security checks. PPL Electric and PPL Gas provide the flexibility of due-date extension. We will change the scheduled payment date to make it easier on customers with fixed incomes.

Both companies also offer and promote Budget Billing as a payment option for elderly customers. Budget Billing divides the customer’s expected annual costs for electric or gas service into equal monthly payments, removing the seasonal differences that result from increased energy use, particularly in the winter.

Another option for PPL’s elderly customers is third-party notification. This service is useful for customers with health concerns and customers who are away from home for long periods of time. PPL sends copies of late-payment and shut-off notices to a third party, who is designated and approved by the customer. The third party could be a family member, neighbor, a clergy member or community agency.

The third party is not responsible for paying the bill, but can check on the customer to make sure he or she received and understood the notice. The third party can notify PPL of any problems, giving the elderly customer an added measure of protection from shut-offs.

PPL Electric also supports the special needs of hearing-impaired and vision-impaired customers. The company provides telephone communications for hearing-impaired customers through Telecommunications Devices for the Deaf. Through a partnership with local associations for the blind, PPL Electric offers Braille versions of its bills.

The investment by PPL and its customers in programs and services for low-income and elderly customers is considerable. In 2006, PPL Electric and PPL Gas expect to spend $26.5 million on initiatives that help low-income customers with bill payments, energy conservation and protection from shut-offs. The elderly are frequently the beneficiaries of these programs.

As the electric and gas service provider for an area with one of the largest percentages of elderly residents in the nation, PPL will continue a tradition of caring for the needs of our customers and communities.

In closing, I would like to commend the Committee and Senator Santorum for their attention to the needs of the elderly in Pennsylvania and across the country.