Department of Mathematics

Consumers Energy Co.

Proposed Project for the MSU Industrial Math Students

Problem: Evaluating the Low-Income Assistance Program Against the Budget Plan Option

Background:

Consumers Energy provides customers with a lot of information on special payment plans and programs that may help customers meet their energy needs and protect them from natural gas and electric service shut-off. The Winter Protection Plan (WPP) under the Income Qualified Programs is one of such plans that may protect low-income customers and seniors age 65 and older from service shut-off and high payments during the winter from November 1st to March 31st. Customers are responsible for electricity and natural gas used, but some of the costs can be deferred. According to the WPP Income Guidelines eligible low-income and senior low-income and senior customers may sign up for the WPP beginning on November 1st. Participation does not relieve customers from the responsibility for paying for electricity and natural gas usage, but may prevent shut-off during the winter months. At the end of the protection period, both low-income and senior citizens participating in the plan must make arrangements with their utility company to pay any money owed before the start of the next protection period.

Consumers Energy also offers customers the Budget Plan option in the General Energy Assistance Programs. With this option, the customers can count on the Consumers Energy Budget Plan to keep their energy costs steady year-round. It is a great way to help manage customers’ household budget by spreading out their annual energy costs into equal payments. The exact amount will vary from customer to customer. Customers must have their bill payments up to date to enroll and they may enroll in the Budget Plan at any time. The company projects customers’ energy bills for the coming year based on their past energy use, weather trends and projected energy costs. At the same time, the company monitors the customers’ energy use throughout the year and makes adjustments, if needed, and helps keep customers’ energy bills affordable and predictable.

Project:

The objective of the project is to determine the effectiveness of the Winter Protection Plan for the low-income and senior customers. Customers participating in some payment assistance plans such as the WPP are not eligible for the Budget Plan option. Another objective of the study is to evaluate success and advantages of the WPP against the Budget Plan option. Consumers Energy will supply data on approximately 12,600 customers and a like number of low-income customers and seniors on the Budget Plan. If a WPP customer has a past due balance, then what percentage were successful in addressing that past due balance? What is the “breakpoint” where the customer becomes unsuccessful (by range)? How many customers had either an increased past due balance or accrued unpaid usage during their WPP plan and what was the extent of the arrearage (range). What was the success of the WPP customer’s payment of this arrearage (one-time payment or payment arrangement)? After comparing/contrasting to the data set of low-income/senior customers on the Budget Plan would WPP customers be better off on the Budget Plan? The company will also supply consumption and billing data as well as open balances.

Top of Page