Amended in Assembly April 23, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 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 amended, 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 customersbegin insert, but would require the commission, in establishing rates for CARE program participants, to ensure that low-income ratepayers are not jeopardized or overburdened by monthly energy expenditures and to adopt CARE rates in which the level of discount for low-income electricity and gas ratepayers correctly reflects their level of need, as determined by a specified needs assessmentend insert. 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 tobegin delete consider specified principles in approving any changes to electric service ratesend deletebegin insert ensure that any changes made to electric service rates are made consistent with specified principlesend insert. 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:

P3    1

SECTION 1.  

Section 739.1 of the Public Utilities Code is
2amended to read:

3

739.1.  

(a) The commission shall continue a program of
4assistance to low-income electric and gas customers with annual
5household incomes that are no greater than 200 percent of the
6federal poverty guideline levels, the cost of which shall not be
7borne solely by any single class of customer. The program shall
8be referred to as the California Alternate Rates for Energy or CARE
9program. The commission shall ensure that the level of discount
10for low-income electric and gas customers correctly reflects the
11level of need.

begin insert

12(b) The commission shall establish rates for CARE program
13participants, subject to both of the following:

end insert
begin insert

14(1) That the commission ensure that low-income ratepayers are
15not jeopardized or overburdened by monthly energy expenditures
16pursuant to subdivision (b) of Section 382.

end insert
begin insert

17(2) That the level of the discount for low-income electricity and
18gas ratepayers correctly reflects the level of need as determined
19by the needs assessment conducted pursuant to subdivision (d) of
20Section 382.

end insert
begin delete

21(b)

end delete

22begin insert(c)end insert The commission shall work with electrical and gas
23corporations to establish penetration goals. The commission shall
24authorize recovery of all administrative costs associated with the
25implementation of the CARE program that the commission
26determines to be reasonable, through a balancing account
27mechanism. Administrative costs shall include, but are not limited
28 to, outreach, marketing, regulatory compliance, certification and
29verification, billing, measurement and evaluation, and capital
30improvements and upgrades to communications and processing
31equipment.

begin delete

32(c)

end delete

33begin insert(d)end insert The commission shall examine methods to improve CARE
34enrollment and participation. This examination shall include, but
35need not be limited to, comparing information from CARE and
36the Universal Lifeline Telephone Service (ULTS) to determine
37the most effective means of utilizing that information to increase
38CARE enrollment, automatic enrollment of ULTS customers who
P4    1are eligible for the CARE program, customer privacy issues, and
2alternative mechanisms for outreach to potential enrollees. The
3commission shall ensure that a customer consents prior to
4enrollment. The commission shall consult with interested parties,
5including ULTS providers, to develop the best methods of
6informing ULTS customers about other available low-income
7programs, as well as the best mechanism for telephone providers
8to recover reasonable costs incurred pursuant to this section.

begin delete

9(d)

end delete

10begin insert(e)end insert (1) The commission shall improve the CARE application
11process by cooperating with other entities and representatives of
12California government, including the California Health and Human
13Services Agency and the Secretary of California Health and Human
14Services, to ensure that all gas and electric customers eligible for
15public assistance programs in California that reside within the
16service territory of an electrical corporation or gas corporation,
17are enrolled in the CARE program. To the extent practicable, the
18commission shall develop a CARE application process using the
19existing ULTS application process as a model. The commission
20shall work with public utility electrical and gas corporations and
21the Low-Income Oversight Board established in Section 382.1 to
22meet the low-income objectives in this section.

23(2) The commission shall ensure that an electrical corporation
24or gas corporation with a commission-approved program to provide
25discounts based upon economic need in addition to the CARE
26program, including a Family Electric Rate Assistance program,
27utilize a single application form, to enable an applicant to
28alternatively apply for any assistance program for which the
29applicant may be eligible. It is the intent of the Legislature to allow
30applicants under one program, that may not be eligible under that
31program, but that may be eligible under an alternative assistance
32program based upon economic need, to complete a single
33application for any commission-approved assistance program
34offered by the public utility.

begin insert

35(f) It is the intent of the Legislature that the commission ensure
36CARE program participants receive affordable electric and gas
37service that does not impose an unfair economic burden on those
38 participants.

end insert
begin delete

39(e)

end delete

P5    1begin insert(g)end insert The commission’s program of assistance to low-income
2electric and gas customers shall, as soon as practicable, include
3nonprofit group living facilities specified by the commission, if
4the commission finds that the residents in these facilities
5substantially meet the commission’s low-income eligibility
6requirements and there is a feasible process for certifying that the
7assistance shall be used for the direct benefit, such as improved
8quality of care or improved food service, of the low-income
9residents in the facilities. The commission shall authorize utilities
10to offer discounts to eligible facilities licensed or permitted by
11appropriate state or local agencies, and to facilities, including
12women’s shelters, hospices, and homeless shelters, that may not
13have a license or permit but provide other proof satisfactory to the
14utility that they are eligible to participate in the program.

begin delete

15(f)

end delete

16begin insert(h)end insert (1) In addition to existing assessments of eligibility, an
17electrical corporation may require proof of income eligibility for
18those CARE program participants whose electricity usage, in any
19monthly or other billing period, exceeds 400 percent of baseline
20usage. The authority of an electrical corporation to require proof
21of income eligibility is not limited by the means by which the
22CARE program participant enrolled in the program, including if
23the participant was automatically enrolled in the CARE program
24because of participation in a governmental assistance program. If
25a CARE program participant’s electricity usage exceeds 400
26percent of baseline usage, the electrical corporation may require
27the CARE program participant to participate in the Energy Savings
28Assistance Program (ESAP), which includes a residential energy
29assessment, in order to provide the CARE program participant
30with information and assistance in reducing his or her energy usage.
31Continued participation in the CARE program may be conditioned
32upon the CARE program participant agreeing to participate in
33ESAP within 45 days of notice being given by the electrical
34corporation pursuant to this paragraph. The electrical corporation
35may require the CARE program participant to notify the utility of
36whether the residence is rented, and if so, a means by which to
37contact the landlord, and the electrical corporation may share any
38evaluation and recommendation relative to the residential structure
39that is made as part of an energy assessment, with the landlord of
40the CARE program participant. Requirements imposed pursuant
P6    1to this paragraph shall be consistent with procedures adopted by
2the commission.

3(2) If a CARE program participant’s electricity usage exceeds
4600 percent of baseline usage, the electrical corporation shall
5require the CARE program participant to participate in ESAP,
6which includes a residential energy assessment, in order to provide
7the CARE program participant with information and assistance in
8reducing his or her energy usage. Continued participation in the
9CARE program shall be conditioned upon the CARE program
10participant agreeing to participate in ESAP within 45 days of a
11notice made by the electrical corporation pursuant to this paragraph.
12The electrical corporation may require the CARE program
13participant to notify the utility of whether the residence is rented,
14and if so, a means by which to contact the landlord, and the
15electrical corporation may share any evaluation and
16recommendation relative to the residential structure that is made
17as part of an energy assessment, with the landlord of the CARE
18program participant. Following the completion of the energy
19assessment, if the CARE program participant’s electricity usage
20continues to exceed 600 percent of baseline usage, the electrical
21corporation may remove the CARE program participant from the
22program if the removal is consistent with procedures adopted by
23the commission. Nothing in this paragraph shall prevent a CARE
24program participant with electricity usage exceeding 600 percent
25of baseline usage from participating in an appeals process with the
26electrical corporation to determine whether the participant’s usage
27levels are legitimate.

28(3) A CARE program participant in a rental residence shall not
29be removed from the program in situations where the landlord is
30nonresponsive when contacted by the electrical corporation or
31does not provide for ESAP participation.

32

SEC. 2.  

Section 739.9 of the Public Utilities Code is repealed.

33

SEC. 3.  

Section 739.9 is added to the Public Utilities Code, to
34read:

35

739.9.  

(a) In approving changes to the rates and charges to
36residential customers for electricity usage pursuant to this part, the
37commission shall determine that the changes are reasonable,
38including determining that the changes are necessary in order to
39ensure that the rates and charges paid by residential customers are
40fair, equitable, and reflect the costs to serve those customers.

P7    1(b) In approving any changes to the rates and charges to
2residential customers for electricity usage pursuant to this part, the
3commission shallbegin delete considerend deletebegin insert ensure that the rates are consistent withend insert
4 the following principles:

begin delete

5(1) Low income and medical baseline customers should have
6access to a supply of electricity that is sufficient to ensure basic
7 needs at an affordable cost, including a reasonable implementation
8schedule for changes in rates to ensure that the implementation of
9rate changes to residential customers do not unfairly burden low
10income customers and that sufficient outreach and education is
11provided to the customers affected by the changes.

12(2) Rates should be based on marginal cost and cost causation.

13(3) Rates should encourage conservation and energy efficiency,
14including reduction of both coincident and noncoincident peak
15demand.

16(4) Rates should be understandable to consumers and provide
17stability, simplicity, and customer choice.

18(5) Rates should avoid cross-subsidies, unless the cross-subsidies
19are reasonable, transparent to customers, and support explicit state
20residential electricity policy goals.

end delete
begin insert

21(1) Low-income and medical baseline customers should have
22access to enough electricity to ensure that basic needs, such as
23health and comfort, are met at an affordable cost.

end insert
begin insert

24(2) Rates should be based on marginal costs.

end insert
begin insert

25(3) Rates should be based on cost-causation principles.

end insert
begin insert

26(4) Rates should encourage conservation and energy efficiency.

end insert
begin insert

27(5) Rates should encourage the reduction of both coincident
28and noncoincident peak demand.

end insert
begin insert

29(6) Rates should be stable and understandable and provide
30customer choice.

end insert
begin insert

31(7) Rates should generally avoid cross-subsidies, unless a
32cross-subsidy appropriately supports explicit state policy goals.

end insert
begin insert

33(8) Incentives should be explicit and transparent.

end insert
begin insert

34(9) Rates should encourage economically efficient
35decisionmaking.

end insert
begin insert

36(10) Transitions to new rate structures should be accompanied
37by customer education and outreach that enhances customer
38understanding and acceptance of the new rates, and should
39minimize and appropriately consider the bill impacts on customers
40associated with the transition.

end insert

P8    1(c) By no later than January 31, 2014, the commission shall
2report to the Legislature its findings and recommendations relating
3to tiered residential electric service rates pursuant to its Order
4Instituting Rulemaking in Rulemaking 12-06-013.



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