California Legislature—2013–14 Regular Session

Assembly Bill No. 327

Introduced by Assembly Member Perea

February 13, 2013

An act to amend Section 739.1 of, and to repeal and add Section 739.9 of, the Public Utilities Code, relating to energy utility rates.

LEGISLATIVE COUNSEL’S DIGEST

AB 327, as introduced, Perea. Electricity: natural gas: rates.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical and gas corporations, as defined. Existing law authorizes the commission to fix the rates and charges for every public utility, and requires that those rates and charges be just and reasonable. Existing law requires the commission to designate a baseline quantity of electricity and gas necessary to supply a significant portion of the reasonable energy needs of the average residential customer and requires that electrical and gas corporations file rates and charges, to be approved by the commission, providing baseline rates. Existing law requires the commission, in establishing the baseline rates, to avoid excessive rate increases for residential customers. Existing law requires the commission to establish a program of assistance to specified low-income electric and gas customers, referred to as the California Alternate Rates for Energy (CARE) program.

Existing law revises certain prohibitions upon raising residential electrical rates adopted during the energy crisis of 2000-01, to authorize the commission to increase the rates charged residential customers for electricity usage up to 130% of the baseline quantities by the annual percentage change in the Consumer Price Index from the prior year plus 1%, but not less than 3% and not more than 5% per year. Existing law additionally authorizes the commission to increase the rates in effect for CARE program participants for electricity usage up to 130% of baseline quantities by the annual percentage increase in benefits under the CalWORKs program, as defined, not to exceed 3%, and subject to the limitation that the CARE rates not exceed 80% of the corresponding rates charged to residential customers not participating in the CARE program. Existing law states the intent of the Legislature that CARE program participants be afforded the lowest possible electric and gas rates and, to the extent possible, be exempt from additional surcharges attributable to the energy crisis of 2000-01.

This bill would repeal the limitations upon increasing the electric service rates of residential customers, including the rate increase limitations applicable to electric service provided to CARE customers. When the commission approves changes to electric service rates charged to residential customers, the bill would require the commission to determine that the changes are reasonable, including that the changes are necessary in order to ensure that the rates paid by residential customers are fair, equitable, and reflect the costs to serve those customers. The bill would require the commission to consider specified principles in approving any changes to electric service rates. The bill would require the commission to report to the Legislature its findings and recommendations relating to tiered residential electric service rates in a specified rulemaking by January 31, 2014. The bill would delete the statement of Legislative intent that CARE program participants be afforded the lowest possible electric and gas rates and, to the extent possible, be exempt from additional surcharges attributable to the energy crisis of 2000-01.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 739.1 of the Public Utilities Code is
amended to read:

begin delete

739.1.  

(a) As used in this section, the following terms have
the following meanings:

(1) “Baseline quantity” has the same meaning as defined in
Section 739.

(2) “California Solar Initiative” means the program providing
ratepayer funded incentives for eligible solar energy systems
adopted by the commission in Decision 05-12-044 and Decision
06-01-024, as modified by Article 1 (commencing with Section
2851) of Chapter 9 of Part 2 and Chapter 8.8 (commencing with
Section 25780) of Division 15 of the Public Resources Code.

(3) “CalWORKs program” means the program established
pursuant to the California Work Opportunity and Responsibility
to Kids Act (Chapter 2 (commencing with Section 11200) of Part
3 of Division 9 of the Welfare and Institutions Code).

(4) “Public goods charge” means the nonbypassable separate
rate component imposed pursuant to Article 7 (commencing with
Section 381) of Chapter 2.3 and the nonbypassable system benefits
charge imposed pursuant to the Reliable Electric Service
Investments Act (Article 15 (commencing with Section 399) of
Chapter 2.3).

(b) (1) 

end delete

begin insert

begin insert 739.1. end insert   

end insert

begin insert (a) end insert begin insert   end insert The commission shall begin delete establish end delete begin insert continue end insert a program
of assistance to low-income electric and gas customers with annual
household incomes that are no greater than 200 percent of the
federal poverty guideline levels, the cost of which shall not be
borne solely by any single class of customer. The program shall
be referred to as the California Alternate Rates for Energy or CARE
program. The commission shall ensure that the level of discount
for low-income electric and gas customers correctly reflects the
level of need.

begin delete

(2) The commission may, subject to the limitation in paragraph
(4), increase the rates in effect for CARE program participants for
electricity usage up to 130 percent of baseline quantities by the
annual percentage increase in benefits under the CalWORKs
program as authorized by the Legislature for the fiscal year in
which the rate increase would take effect, but not to exceed 3
percent per year.

(3) Beginning January 1, 2019, the commission may, subject
to the limitation in paragraph (4), establish rates for CARE program
participants pursuant to this section and Sections 739 and 739.9,
subject to both of the following:

(A) The requirements of subdivision (b) of Section 382 that the
commission ensure that low-income ratepayers are not jeopardized
or overburdened by monthly energy expenditures.

(B) The requirement that the level of the discount for
low-income electricity and gas ratepayers correctly reflects the
level of need as determined by the needs assessment conducted
pursuant to subdivision (d) of Section 382.

(4) Tier 1, tier 2, and tier 3 CARE rates shall not exceed 80
percent of the corresponding tier 1, tier 2, and tier 3 rates charged
to residential customers not participating in the CARE program,
excluding any Department of Water Resources bond charge
imposed pursuant to Division 27 (commencing with Section 80000)
of the Water Code, the CARE surcharge portion of the public
goods charge, any charge imposed pursuant to the California Solar
Initiative, and any charge imposed to fund any other program that
exempts CARE participants from paying the charge.

(5) Rates charged to CARE program participants shall not have
more than three tiers. An electrical corporation that does not have
a tier 3 CARE rate may introduce a tier 3 CARE rate that, in order
to moderate the impact on program participants whose usage
exceeds 130 percent of baseline quantities, shall be phased in to
80 percent of the corresponding rates charged to residential
customers not participating in the CARE program, excluding any
Department of Water Resources bond charge imposed pursuant to
Division 27 (commencing with Section 80000) of the Water Code,
the CARE surcharge portion of the public goods charge, any charge
imposed pursuant to the California Solar Initiative, and any other
charge imposed to fund a program that exempts CARE participants
from paying the charge. For an electrical corporation that does not
have a tier 3 CARE rate that introduces a tier 3 CARE rate, the
initial rate shall be no more than 150 percent of the CARE baseline
rate. Any additional revenues collected by an electrical corporation
resulting from the adoption of a tier 3 CARE rate shall, until the
utility’s next periodic general rate case review of cost allocation
and rate design, be credited to reduce rates of residential ratepayers
not participating in the CARE program with usage above 130
percent of baseline quantities.

(c)

end delete

begin insert (b) end insert  The commission shall work with electrical and gas
corporations to establish penetration goals. The commission shall
authorize recovery of all administrative costs associated with the
implementation of the CARE program that the commission
determines to be reasonable, through a balancing account
mechanism. Administrative costs shall include, but are not limited
to, outreach, marketing, regulatory compliance, certification and
verification, billing, measurement and evaluation, and capital
improvements and upgrades to communications and processing
equipment.

begin delete

(d)

end delete

begin insert (c) end insert  The commission shall examine methods to improve CARE
enrollment and participation. This examination shall include, but
need not be limited to, comparing information from CARE and
the Universal Lifeline Telephone Service (ULTS) to determine
the most effective means of utilizing that information to increase
CARE enrollment, automatic enrollment of ULTS customers who
are eligible for the CARE program, customer privacy issues, and
alternative mechanisms for outreach to potential enrollees. The
commission shall ensure that a customer consents prior to
enrollment. The commission shall consult with interested parties,
including ULTS providers, to develop the best methods of
informing ULTS customers about other available low-income
programs, as well as the best mechanism for telephone providers
to recover reasonable costs incurred pursuant to this section.

begin delete

(e)

end delete

begin insert (d) end insert  (1) The commission shall improve the CARE application
process by cooperating with other entities and representatives of
California government, including the California Health and Human
Services Agency and the Secretary of California Health and Human
Services, to ensure that all gas and electric customers eligible for
public assistance programs in California that reside within the
service territory of an electrical corporation or gas corporation,
are enrolled in the CARE program. To the extent practicable, the
commission shall develop a CARE application process using the
existing ULTS application process as a model. The commission
shall work with public utility electrical and gas corporations and
the Low-Income Oversight Board established in Section 382.1 to
meet the low-income objectives in this section.

(2) The commission shall ensure that an electrical corporation
or gas corporation with a commission-approved program to provide
discounts based upon economic need in addition to the CARE
program, including a Family Electric Rate Assistance program,
utilize a single application form, to enable an applicant to
alternatively apply for any assistance program for which the
applicant may be eligible. It is the intent of the Legislature to allow
applicants under one program, that may not be eligible under that
program, but that may be eligible under an alternative assistance
program based upon economic need, to complete a single
application for any commission-approved assistance program
offered by the public utility.

begin delete

(f)

end delete

begin insert (e) end insert  The commission’s program of assistance to low-income
electric and gas customers shall, as soon as practicable, include
nonprofit group living facilities specified by the commission, if
the commission finds that the residents in these facilities
substantially meet the commission’s low-income eligibility
requirements and there is a feasible process for certifying that the
assistance shall be used for the direct benefit, such as improved
quality of care or improved food service, of the low-income
residents in the facilities. The commission shall authorize utilities
to offer discounts to eligible facilities licensed or permitted by
appropriate state or local agencies, and to facilities, including
women’s shelters, hospices, and homeless shelters, that may not
have a license or permit but provide other proof satisfactory to the
utility that they are eligible to participate in the program.

begin delete

(g) It is the intent of the Legislature that the commission ensure
CARE program participants are afforded the lowest possible
electric and gas rates and, to the extent possible, are exempt from
additional surcharges attributable to the energy crisis of 2000-01.

end delete begin delete

(h)

end delete

begin insert (f) end insert  (1) In addition to existing assessments of eligibility, an
electrical corporation may require proof of income eligibility for
those CARE program participants whose electricity usage, in any
monthly or other billing period, exceeds 400 percent of baseline
usage. The authority of an electrical corporation to require proof
of income eligibility is not limited by the means by which the
CARE program participant enrolled in the program, including if
the participant was automatically enrolled in the CARE program
because of participation in a governmental assistance program. If
a CARE program participant’s electricity usage exceeds 400
percent of baseline usage, the electrical corporation may require
the CARE program participant to participate in the Energy Savings
Assistance Program (ESAP), which includes a residential energy
assessment, in order to provide the CARE program participant
with information and assistance in reducing his or her energy usage.
Continued participation in the CARE program may be conditioned
upon the CARE program participant agreeing to participate in
ESAP within 45 days of notice being given by the electrical
corporation pursuant to this paragraph. The electrical corporation
may require the CARE program participant to notify the utility of
whether the residence is rented, and if so, a means by which to
contact the landlord, and the electrical corporation may share any
evaluation and recommendation relative to the residential structure
that is made as part of an energy assessment, with the landlord of
the CARE program participant. Requirements imposed pursuant
to this paragraph shall be consistent with procedures adopted by
the commission.

(2) If a CARE program participant’s electricity usage exceeds
600 percent of baseline usage, the electrical corporation shall
require the CARE program participant to participate in ESAP,
which includes a residential energy assessment, in order to provide
the CARE program participant with information and assistance in
reducing his or her energy usage. Continued participation in the
CARE program shall be conditioned upon the CARE program
participant agreeing to participate in ESAP within 45 days of a
notice made by the electrical corporation pursuant to this paragraph.
The electrical corporation may require the CARE program
participant to notify the utility of whether the residence is rented,
and if so, a means by which to contact the landlord, and the
electrical corporation may share any evaluation and
recommendation relative to the residential structure that is made
as part of an energy assessment, with the landlord of the CARE
program participant. Following the completion of the energy
assessment, if the CARE program participant’s electricity usage
continues to exceed 600 percent of baseline usage, the electrical
corporation may remove the CARE program participant from the
program if the removal is consistent with procedures adopted by
the commission. Nothing in this paragraph shall prevent a CARE
program participant with electricity usage exceeding 600 percent
of baseline usage from participating in an appeals process with the
electrical corporation to determine whether the participant’s usage
levels are legitimate.

(3) A CARE program participant in a rental residence shall not
be removed from the program in situations where the landlord is
nonresponsive when contacted by the electrical corporation or
does not provide for ESAP participation.

SEC. 2.  

Section 739.9 of the Public Utilities Code is repealed.

begin delete

739.9.  

(a) The commission may, subject to the limitation in
subdivision (b), increase the rates charged residential customers
for electricity usage up to 130 percent of the baseline quantities,
as defined in Section 739, by the annual percentage change in the
Consumer Price Index from the prior year plus 1 percent, but not
less than 3 percent and not more than 5 percent per year. For
purposes of this subdivision, the annual percentage change in the
Consumer Price Index shall be calculated using the same formula
that was used to determine the annual Social Security Cost of
Living Adjustment on January 1, 2008. This subdivision shall
become inoperative on January 1, 2019, unless a later enacted
statute deletes or extends that date.

(b) The rates charged residential customers for electricity usage
up to the baseline quantities, including any customer charge
revenues, shall not exceed 90 percent of the system average rate
prior to January 1, 2019, and may not exceed 92.5 percent after
that date. For purposes of this subdivision, the system average rate
shall be determined by dividing the electrical corporation’s total
revenue requirements for bundled service customers by the adopted
forecast of total bundled service sales.

(c) This section does not require the commission to increase
any residential rate or place any restriction upon, or otherwise
limit, the authority of the commission to reduce any residential
rate.

end delete

SEC. 3.  

Section 739.9 is added to the Public Utilities Code, to
read:

739.9.  

(a) In approving changes to the rates and charges to
residential customers for electricity usage pursuant to this part, the
commission shall determine that the changes are reasonable,
including determining that the changes are necessary in order to
ensure that the rates and charges paid by residential customers are
fair, equitable, and reflect the costs to serve those customers.

(b) In approving any changes to the rates and charges to
residential customers for electricity usage pursuant to this part, the
commission shall consider the following principles:

(1) Low income and medical baseline customers should have
access to a supply of electricity that is sufficient to ensure basic
needs at an affordable cost, including a reasonable implementation
schedule for changes in rates to ensure that the implementation of
rate changes to residential customers do not unfairly burden low
income customers and that sufficient outreach and education is
provided to the customers affected by the changes.

(2) Rates should be based on marginal cost and cost causation.

(3) Rates should encourage conservation and energy efficiency,
including reduction of both coincident and noncoincident peak
demand.

(4) Rates should be understandable to consumers and provide
stability, simplicity, and customer choice.

(5) Rates should avoid cross-subsidies, unless the cross-subsidies
are reasonable, transparent to customers, and support explicit state
residential electricity policy goals.

(c) By no later than January 31, 2014, the commission shall
report to the Legislature its findings and recommendations relating
to tiered residential electric service rates pursuant to its Order
Instituting Rulemaking in Rulemaking 12-06-013.