Arrearage Forgiveness Program

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Arrearage ForgivenessProgram
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Who we are!

• is the largest Massachusetts-based,
  investor-owned electric and gas utility, with
  revenues of approximately 3 billion and assets
  totaling approximately 6 billion. NSTAR
  transmits and delivers electricity and gas to 1.1
  million electric customers in 81 communities and
  245,000 gas customers in 51 communities. NSTAR
  employs more than 3,300 employees in its
  regulated business.
• NSTAR Electric NSTAR Gas
• Residential Customers 967,000 Residential
  Customers 225,000
• Business Customers 156,000 Business
  Customers 20,000 
• Total 1,368,000

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Arrearage Forgiveness Program

• The Arrears Forgiveness Program offers
• Budget counseling
• Payment plans
• Arrears forgiveness
• Energy efficiency initiatives
• Links to other financial grants and assistance.

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Arrearage Forgiveness Program

• The Arrears Forgiveness Program timeline
• July 2005, a research project
• August 2005, AFP Team created
• November 2005, HEAT bill
• December 2005, codified in D.T.E. 05-85
• May 2006, Manual Process begins
• Today

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Customer Qualifications

• To qualify for AFP
• Be an NSTAR Low-Income customer of record for the
  account
• Have a minimum of 300 in gas arrears and/or 100
  in electric arrears
• Be in arrears at least 60 days
• Not shutoff
• Not a landlord account

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Current Low-Income Status

• Qualifying customers as of May 1, 2006
• 20,683 customers
• 5,894 gas, 14,969 electric
• 13,122,643 in arrears
• 4.5M gas, 8.5M electric
• Average Arrearage
• 763 gas, 567 electric

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How will NSTAR do this?

• Working with select Community Action Agencies
  (CAAs)
• Customer will participate in a budget analysis
• Customer will link to grants and cost reduction
  programs
• NSTAR will reward the customer for positive
  behavior

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Why do this?

• Are we just giving away money?
• Consider two NSTAR Gas customers, Bert Ernie.
  Both qualify for AFP and
• Owe 900 in arrears
• Have a 150 a month winter gas bill
• Learn of a new program from NSTAR that may help
  them pay their bill

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Ernie chooses to ignore the problem

• NSTAR tries to collect, incurring OM costs.
• Collection personnel, internal external
• Shut off costs (field personnel, Sheriff, etc.)
• Mailings
• Cost of money
• Company image government relations
• Eventually we write off or sell the bad debt for
  pennies on the dollar.

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Ernie chooses to ignore the problem

• The cost?
• 900 in arrears
• Collection costs
• Additional lost revenue
• But that is not all! Ernie moves to another
  apartment, supplying false information to
  establish an account. Ernie builds up another
  debt and the process repeats.

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Bert chooses to solve the problem

• Bert contacts NSTAR
• We direct Bert to his CAA
• Together they develop a workable budget,
  including his gas bill.
• Bert applies for AFP and is accepted
• Bert pays his gas bill in full on time
• NSTAR pays off his arrears

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Bert chooses to solve the problem

• The cost?
• 900 in arrears
• Administration costs
• No additional lost revenue
• A better customer
• Weve broken the cycle!

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AFP Benefits

• For our customer
• A way out of utility debt
• Links to other opportunities
• For NSTAR
• Enhanced relationship with the customer
• Reduce lost revenue

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Arrearage Forgiveness Program Status

• AFP program as of October 1, 2006
• 341 Eligible applications submitted
• 221 electric, 120 gas
• 53 ineligible
• 261 Active applications (77 of Eligible)
• 164 electric, 97 gas

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Arrearage Forgiveness Program Status

• Active Electric AFP customers average
• 104.40 monthly payment
• 36.89 monthly Arrears Forgiveness
• 19.8 months
• Active Gas AFP customers average
• 144.93 monthly payment
• 39.10 monthly Arrears Forgiveness
• 21.6 months

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Arrearage Forgiveness Program Status
65
90
98
57
56
May June July
August September
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Thank you!
Questions?