BILL ANALYSIS Ó
SB 1207
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Date of Hearing: June 25, 2012
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
SB 1207 (Fuller) - As Amended: May 25, 2012
SENATE VOTE : 39-0
SUBJECT : California Alternate Rates for Energy program.
SUMMARY : Authorizes investor owned utilities (IOUs) to take
certain actions on participants of the California Alternate
Rates for Energy (CARE) program. Specifically, this bill :
1)Authorizes IOUs to require proof of income eligibility for
CARE customers whose usage exceeds 400% of baseline.
2)Authorizes IOUs to require CARE customers whose usage exceeds
400% of baseline to participate in an energy savings
assistance program that includes a residential energy audit.
3)Authorizes IOUs to condition continued participation in an
energy savings assistance program if CARE customer usage
exceeds 400% of baseline.
4)Authorizes the IOUs to require CARE customers to notify the
utility of whether the residence is rented, and identify the
landlord. The IOU may share any evaluation and recommendation
relative to the residential structure that is made as part of
an energy audit, with the landlord of the CARE customer.
5)Authorizes IOUs to require CARE customers whose usage exceeds
600% of baseline to participate in an energy savings
assistance program that includes a residential energy audit.
6)Makes participation in the energy savings assistance program
mandatory if a CARE customer's usage exceeds 600% of baseline.
7)Authorizes IOUs to remove a CARE customer from the program,
after the completion of a residential energy audit, if the
customer's monthly usage exceeds 600% of baseline.
EXISTING LAW :
1)Specifies the California Public Utilities Commission (PUC) has
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regulatory authority over public utilities, including investor
owned utilities.
2)Authorizes the PUC to fix the rates and charges for every
public utility, and requires that those rates and charges be
just and reasonable.
3)Requires the PUC to establish the CARE program which provides
a discount for electric and gas service for customers whose
incomes are below 200% of the federal poverty guideline levels
and limits the rate structure for CARE customers to no more
than three tiers.
4)Authorizes the PUC to set penetration rates for the IOUs and
examine methods to improve enrollment and participation.
FISCAL EFFECT : Unknown.
COMMENTS : The author states that "SB 1207 seeks to reduce the
amount of costs that are shifted to non-CARE customers by
reducing the fraud within the program and providing incentives
to CARE customers to conserve. It maintains the essence of the
CARE program for those low-income individuals who are
legitimately qualified for the program and provides the
utilities with a tool to recognize and identify high energy
users who may need energy efficiency assistance."
1)Background : The CARE program offers income-qualified
customers a discount of 20% or
more off their monthly gas and electric bill at their primary
residence. The program is fully funded through a surcharge paid
by non-CARE customers. Qualifications for the discount are
based on the number of persons living in your home and your
total annual household income.
Current income guidelines are effective June 1, 2012 through May
31, 2013 as follows:
---------------------------------------------------
| | CARE & Energy Savings |
| Household Size |Assistance Programs (200% of |
| | Federal Poverty Guidelines) |
|---------------------+-----------------------------|
| 1 | $22,340 |
|---------------------+-----------------------------|
| 2 | $30,260 |
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|---------------------+-----------------------------|
| 3 | $38,180 |
|---------------------+-----------------------------|
| 4 | $46,100 |
|---------------------+-----------------------------|
| 5 | $54,020 |
|---------------------+-----------------------------|
| 6 | $57,700 |
|---------------------+-----------------------------|
| 7 | $62,940 |
|---------------------+-----------------------------|
| 8 | $77,780 |
|---------------------+-----------------------------|
| Each add'l person |$ |
| |7,920 |
---------------------------------------------------
Utility customers can enroll by self-certifying through the
utility's internet-website, mail, or over the telephone.
Customers may be automatically enrolled if they are enrolled in
a public assistance programs such as Medicaid, Medi-Cal, or
Temporary Assistance for Needy Families (TANF). Community based
organizations are also paid capitation fees, under the
Capitation Fee Project, up to $15 per enrollment.
Due to the large number of CARE customers, the IOUs conduct
post-enrollment verification (PEV) annually for 1-5% of the
enrolled CARE customers. These customers are selected either
randomly or based on a computer stratified selection model that
targets certain customers. As part of the PEV process, CARE
customers are asked to provide all the pertinent income
documentation. If the customer fails to provide the required
documentation, they are removed from the CARE program without
having to pay any back-charges or penalties.
In 2008, the PUC directed the IOUs in D.08.11.031 to achieve a
90% penetration rate for participation of eligible customers in
the CARE program, which are approximately 4.9 million
households. According to a May 4, 2012 PUC Proposed Decision
(PD) - on the IOUs 2012-2014 Energy Assistance Savings Program
and CARE, the IOUs submitted reports showing extraordinarily
high CARE Program penetration rates as follows:
CARE Enrollments and Penetration Rate (December 2011)
-------------------------------------------------
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| IOU |Participants | Eligible |Penetration|
| | Enrolled |Participants| Rate |
| | | | |
|----------+-------------+------------+-----------|
|PG&E | 1,532,692 | 1,699,660 | 90.2% |
|----------+-------------+------------+-----------|
|SCE | 1,437,537 | 1,451,325 | 99% |
|----------+-------------+------------+-----------|
|SoCalGas | 1,716,495 | 1,847,296 | 92.9% |
|----------+-------------+------------+-----------|
|SDG&E | 308,596 | 362,551 |85.1% |
| | | | |
-------------------------------------------------
2)Problems with CARE : The IOUs conduct a PEV of eligibility for
1-5% of CARE customers.
In some cases, nearly half of the customers fail to respond to
the PEV on a timely basis which ultimately results in their
termination from the program. PG&E conducted a PEV on 161,000
customers in 2011 which represented about 11% of customers.
According to PG&E data, about 42% of customers who go through
their PEV process are removed from CARE. Reasons for
termination range from documentation showing they are
ineligible, requests to be removed instead of providing
qualifying documentation, and failure to respond.
Moreover there are approximately 12,700 CARE customers in PG&E
territory with usage greater than 600% of baseline amounting to
$69 million in discounts which equates to about 10% of all CARE
program discounts. There are 10,600 PG&E CARE customers in the
400-600% range and $36 million in discounts and 27,600 customers
in the 300-400% range for $65 million in discounts.
The IOUs and other stakeholders presented evidence in the
2012-2014 CARE Budget Applications proceeding A.11-05-017 which
demonstrated that a small percentage of customers may be
consuming large amounts of energy under the CARE rate for
illegitimate reasons.
3)CARE impacts on Non-CARE customers : The 2001-02 energy crisis
had an impact on Tier
1 and 2 electricity rates. The Legislature froze these rates
during the energy crisis and it wasn't until January 1, 2010,
they were allowed to increase. During that time, legislation
was passed authorizing up to 5% annual rate increases for Tier 1
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and 2 non-CARE customers until 2019. CARE increases are linked
to increases in CalWORKs and cannot exceed 3% per year.
CALWORKs has not increased, which means CARE customer rates
remain frozen. As a result, the CARE discount is slightly
higher than 20%. According to PG&E estimates, CARE households
in the next program cycle will receive discounts on their
electric usage charges that range from approximately 30% for
Tier 1 usage to 55% for Tiers 3-5 usage.
The chilling effect of the rate freezes and limits on rate
increases is that non-CARE customers in tiers 3, 4 and 5 bear
the burden of all of the electric rate increases, public purpose
charges, and transmission and distribution cost increases.
4)Pending PUC activity : The IOUs file applications with the PUC
for approval of program
budgets for CARE and other low-income programs every three
years. The applications are subject to public review and
comment through an open proceeding. Many of the provisions in
this bill are very similar to the proposals in PG&E's
application for the next program cycle. For example, PG&E
proposes that customers with usage levels between 400%-600% must
undergo a PEV and participate in the Energy Savings Program or
be removed from the program. The PUC is expected to vote on the
PD at its July 12 business meeting.
The PUC recommends that SB 1207 be amended to comport with the
pending PD so that any changes made in the statute are
consistent with PUC rulings. Recommended amendments include
limiting the bill's provisions to electricity service only,
striking the provisions requiring the CARE program participant
to notify the utility of whether the residence is rented,
striking the provisions pertaining to sharing evaluations and
recommendations with the landlord, and striking the provision
allowing IOUs to remove a CARE program participant from the
program.
The Division of Ratepayer Advocates (DRA) supports verification
of program eligibility for customers who use large amounts of
electricity or gas to receive the CARE discount and assisting
them in lowering their usage through energy efficiency.
REGISTERED SUPPORT / OPPOSITION :
SB 1207
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Support
California Chamber of Commerce
California Public Utilities Commission (CPUC) (if amended)
County of Humboldt
Division of Ratepayer Advocates (DRA)
Greenlining Institute (Greenlining) (if amended)
Pacific Gas and Electric Company (PG&E)
PacifiCorp
Redwood Empire Division of the League of California Cities
San Diego Gas & Electric Company (SDG&E)
Sempra Energy Utilities
Southern California Edison (SCE)
Southern California Gas Company (SoCalGas)
The Utility Reform Network (TURN) (if amended)
Opposition
None on file.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083