Affordability

Background

All consumers should receive service that meets their daily needs at a reasonable price. The rates for these services should be fair, reasonable, and affordable. And no one should have to choose between necessities—such as medicine and food—and needed telecommunications and utility services. Providing essential and affordable telecommunications and utility services for all consumers is also referred to as universal service. Sometimes the government provides service to ensure access for all. Municipal utilities and community broadband are two examples.

Federal, state, and some local utility assistance programs help qualified customers afford telecommunications and utility services. These programs aid households with lower incomes with bill payment and weatherization (see also Low-Income Assistance Programs—General).

Universal Service

Telecommunications: Federal law established universal service as a goal more than 80 years ago. The Telecommunications Act of 1996 updated that goal. It included advanced telecommunications and information services. The act attempted to ensure access to those services through fair, reasonable, and affordable pricing. Since then, high-speed internet has become more essential to society and the economy. In 2011, ubiquitous high-speed internet service became a universal service goal (see also High-Speed Internet Services). The federal Universal Services Fund subsidizes telecommunications service. It helps extend service to high-cost areas, consumers with low incomes, schools, libraries, and rural health care facilities. The fund is supported by a surcharge to telecommunications companies. That cost is then passed on to consumers. The size of the fund and the resulting surcharge on bills have grown dramatically in recent years. Most states also have their own funds.

In 2016, the Federal Communications Commission overhauled the universal service program. This included the Lifeline program, which provides discounted service for consumers with low incomes. The ruling expanded the Universal Services Fund’s support mechanism to include voice and high-speed internet service in the Lifeline program.

Energy: An explicit universal service policy for household energy services is needed. It is particularly clear during difficult economic times. When energy prices are high or volatile, the size of home energy bills can increase dramatically. Households can accrue past-due penalties, which place them at risk of disconnection. Public health, safety, and welfare are compromised when customers are unable to pay energy bills, and utilities respond by disconnecting service. In states that have opened retail energy markets to competition, consumers are more at risk. However, in most of these states, regulation ensures the option of standard offer service at stable rates. This is also known as “provider of last resort service” or “default service.”

Water: Similar to energy, there is no explicit universal service policy for access to clean, potable water (see also Water and Sewer).

Assistance Programs

Telecommunications: The federal Lifeline program provides discounts on eligible services to households with low incomes. These discounts apply to certain wireless, voice, and data bundles and to fixed and mobile high-speed internet services. Some states supplement the Lifeline program, increasing the amount of the overall discount.

Energy: There are two primary federal energy assistance programs. The Low Income Home Energy Assistance Program helps households with low incomes pay for their heating and cooling costs. The program is administered by the Department of Health and Human Services in coordination with the states.

The Weatherization Assistance Program helps households with low incomes make their homes more energy-efficient. It also helps these households reduce energy expenditures and improve health and safety. Funds are provided to states and distributed through local organizations. Grants are allocated to states and territories. In turn, they provide funds to community-based nonprofits or local government agencies with expertise in delivering program services. Preference is given to people over age 60.

Some states and municipal utilities also sponsor assistance and weatherization programs, often funded through utility rates.

Water: Affordable access to clean water sources is essential. However, the federal government has not established a rate-assistance program for water. Several states and municipalities have adopted water rate-assistance programs for customers with low incomes (see also Low-Income Assistance Programs—General).

AFFORDABILITY: Policy

AFFORDABILITY: Policy

Affordable services for all

Policymakers should ensure affordable and reliable access to essential communications and utility services for all.

Utilities and telecommunications should be offered at just and reasonable rates.

Telecommunications Universal Service Fund

Policymakers should ensure that universal service funds are calculated fairly and distributed equitably.

Policymakers should ensure that only fully qualified providers capable of and committed to providing universal service receive support. Cost recovery should occur in a manner that is fair and equitable to all consumers, including those with low incomes.

The federal government should require fair and equitable universal service contributions from all providers of telecommunications or information services that benefit from the public network and universal service programs and that compete with existing universal service contributors.

Federal policymakers should conduct a thorough audit of all service providers that receive high-cost funding.

Federal and state policymakers should apply a revenue-based methodology to determine a provider’s contribution to the preservation and advancement of universal service.

Policymakers should encourage the deployment of WiFi kiosks and other innovative technologies to replace aging payphone infrastructure and otherwise ensure that public communications access points are available where needed for public health, safety, or welfare.
 

Universal service for energy

Policymakers should establish a definition of “universal service” for the energy industry that is similar to the one in the Telecommunications Act of 1996. It should explicitly state that rates must be just, reasonable, and affordable. Energy assistance programs should be available to households with low incomes.

Policymakers should consider expanding public power when doing so would create significant and measurable benefits for residential customers (see also Community Broadband).
 

Assistance programs

Regulators and lawmakers should ensure that consumers with low incomes can afford their utilities. This includes telecommunications, energy, and water. Utility assistance programs should ensure that all who qualify can receive assistance (see also Low-Income Assistance Programs: General).

Policymakers should increase funding for energy and telecommunications assistance programs to ensure that all households can afford basic services. They should also strengthen outreach and education for these programs.

Policymakers should create and implement and fully fund assistance programs to ensure that households with low incomes can afford adequate water and sewer service (see also Water and Sewer).

Policymakers should:

  • strengthen outreach and education programs to increase awareness of and participation in the Low Income Home Energy Assistance Program (LIHEAP), Lifeline, and other energy and telecommunications assistance programs; and
  • create and implement water and sewer assistance programs. These programs should be fully funded to ensure that households with low and moderate incomes can afford adequate water and sewer service.

Telecommunications assistance

Regulators and lawmakers should ensure that financing for Lifeline and any other telecommunications assistance programs is preserved and funded in a competitively neutral manner.

The Federal Communication Commission and state public utility commissions should ensure that Lifeline customers can apply their Lifeline discount to any offering from an eligible telecommunications carrier that includes voice service.

 

Energy assistance

Congress and the states should provide enough funding for the LIHEAP and the Weatherization Assistance Program (WAP) to ensure that all who qualify can receive assistance. States should supplement LIHEAP and WAP. They should also fund assistance programs for utility bill payment if necessary to ensure that all who qualify receive assistance.

When energy crises prematurely exhaust funds, Congress should promptly pass supplemental emergency appropriations to replenish LIHEAP.

Policymakers should:

  • require an annual study to document the energy assistance needs of consumers with low incomes;
  • require a performance-based evaluation of LIHEAP;
  • encourage companies that supply LIHEAP households to plan and coordinate service with the responsible state agency to reduce the adverse impact of delayed federal funding for other critical state programs and services until all federal funds are available; 
  • create and fully fund statewide electric and natural gas bill-payment assistance programs for residential customers with low incomes, automatically enroll electric and natural gas customers in state low-income energy assistance programs when they apply for other income-based financial assistance programs; and
  • prohibit utilities from disconnecting or refusing to reconnect utility service when weather conditions or a public health emergency threaten health or safety

 

Water assistance

Policymakers should:

  • create and fully fund water bill-payment assistance programs for residential customers with low incomes;
  • automatically enroll customers in any available low-income water payment assistance programs when they apply for other income-based financial assistance programs;
  • prohibit utilities from disconnecting or refusing to reconnect water service to households with low incomes when weather conditions or a public health emergency threaten health or safety; and
  • provide financial assistance for plumbing repairs and efficiency measures for households with lower incomes.