Amended in Senate August 12, 2013

Amended in Senate July 8, 2013

Amended in Assembly April 23, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 327

Introduced by Assembly Member Perea

begin insert

(Coauthors: Assembly Members Bigelow, Bonilla, Buchanan, Daly, Eggman, Fox, Beth Gaines, Garcia, Gray, Olsen, Pan, and Wagner)

end insert begin insert

(Coauthors: Senators Cannella, Correa, and Fuller)

end insert

February 13, 2013

An act to amend begin delete Section end delete begin insert Sections 382 and end insert 739.1 of, and to repeal and add Sections 739.9 and 745 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 begin delete specified end delete low-income electric and gas customers, referred to as the California Alternate Rates for Energy (CARE) program. begin insert The CARE program provides lower rates to low-income customers that are financed through a separate rate component, which is required to be a nonbypassable element of the local distribution service and collected on the basis of usage. Eligibility for the CARE program is for those electric and gas customers with annual household incomes that are no greater than 200% of the federal poverty guideline levels. end insert

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, 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 assessment. begin insert The bill would require that this needs assessment be performed not less often than every 3rd year. The bill would revise the CARE program eligibility requirements to provide that for one-person households, program eligibility would be based on 2-person household guideline levels. end insert The bill would require the commission, when establishing the CARE discounts for an electrical corporation with 100,000 or more customer accounts in California, to ensure that the average effective CARE discount be no less than 30% and no more than 35% of the revenues that would have been produced for the same billed usage by non-CARE customers and that the entire discount be provided in the form of a reduction in the overall bill for the eligible CARE customer. The bill would require that increases to rates and charges in rate design proceedings, including any reduction in the CARE discount, be reasonable and subject to a reasonable phase-in schedule relative to the rates and charges in effect prior to January 1, 2014. The bill would authorize the commission to approve new, or expand existing, fixed charges begin insert , as defined, end insert for an electrical corporation for the purpose of collecting a reasonable portion of the fixed costs of providing service to residential customers. The bill would require the commission to ensure that any new or expanded fixed charges reasonably reflect an appropriate portion of the different costs of serving small and large customers, do not unreasonably impair incentives for conservation and energy efficiency, and do not overburden low-income and moderate-income customers. The bill would impose a $10 limit per residential customer account per month begin insert for customers not enrolled in the CARE program, would impose a $5 per month limit per residential customer account per month for customers enrolled in the CARE program, end insert and would authorize the commission to adjust this maximum allowable charge by no more than the annual percentage begin delete change in authorized residential class revenue requirements. end delete begin insert increase in the Consumer Price Index for the prior calendar year. The bill would authorize the commission to consider whether minimum bills are an appropriate substitute for any fixed charges. end insert

Existing law prohibits the commission from requiring or permitting an electrical corporation to do any of the following: (1) employ mandatory or default time-variant pricing, as defined, with or without bill protection, as defined, for residential customers prior to January 1, 2013, (2) employ mandatory or default time-variant pricing, without bill protection, for residential customers prior to January 1, 2014, or (3) employ mandatory or default real-time pricing, without bill protection, for residential customers prior to January 1, 2020. Existing law authorizes the commission to authorize an electrical corporation to offer residential customers the option of receiving service pursuant to time-variant pricing and to participate in other demand response programs. Existing law requires the commission to only approve an electrical corporation’s use of default time-variant pricing for residential customers, beginning January 1, 2014, if those residential customers have the option to not receive service pursuant to time-variant pricing and incur no additional charges, as specified, as a result of the exercise of that option. Existing law exempts certain customers from being subject to default time-variant pricing.

This bill would delete these provisions and instead prohibit the commission from requiring or permitting an electrical corporation from employing mandatory or default time-variant pricing begin insert , as defined, end insert for any residential begin delete customer prior to January 1, 2020. end delete begin insert customer, except that beginning January 1, 2018, the commission may require or authorize an electrical corporation to employ default time-of-use pricing to residential customers, subject to specified limitations and conditions. end insert The bill would permit the commission to authorize an electrical corporation to offer residential customers the option of receiving service pursuant to time-variant pricing and to participate in other demand response programs. The bill would provide that begin delete through December 31, 2019, any end delete begin insert a residential end insert customer would have the option to not receive service pursuant to time-variant pricing and not incur any additional charge as a result of the exercise of that option. begin delete Beginning January 1, 2020, the bill would authorize the commission to require or permit an electrical corporation to employ mandatory or default time-of-use pricing for residential customers subject to specified conditions. end delete begin insert Unless the commission has authorized an electrical corporation to employ default time-of-use pricing, the bill would require the commission to require each electrical corporation to offer default rates to residential customers with at least 2 usage tiers and would require that the first tier include electricity usage of no less than the baseline quantity established by the commission. The bill would authorize the commission to modify the baseline seasonal definitions and applicable percentage of average consumption for one or more climate zones. end insert

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

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 382 of the end insert begin insert Public Utilities Code end insert begin insert is
amended to read: end insert

382.  

(a) Programs provided to low-income electricity
customers, including, but not limited to, targeted energy-efficiency
services and the California Alternate Rates for Energy program
shall be funded at not less than 1996 authorized levels based on
an assessment of customer need.

(b) In order to meet legitimate needs of electric and gas
customers who are unable to pay their electric and gas bills and
who satisfy eligibility criteria for assistance, recognizing that
electricity is a basic necessity, and that all residents of the state
should be able to afford essential electricity and gas supplies, the
commission shall ensure that low-income ratepayers are not
jeopardized or overburdened by monthly energy expenditures.
Energy expenditure may be reduced through the establishment of
different rates for low-income ratepayers, different levels of rate
assistance, and energy efficiency programs.

(c) Nothing in this section shall be construed to prohibit electric
and gas providers from offering any special rate or program for
low-income ratepayers that is not specifically required in this
section.

(d) Beginning in 2002, an assessment of the needs of
low-income electricity and gas ratepayers shall be conducted
periodically by the commission with the assistance of the
Low-Income Oversight Board. begin insert A periodic assessment shall be
made not less often than every third year. end insert The assessment shall
evaluate low-income program implementation and the effectiveness
of weatherization services and energy efficiency measures in
low-income households. The assessment shall consider whether
existing programs adequately address low-income electricity and
gas customers’ energy expenditures, hardship, language needs,
and economic burdens.

(e) The commission shall, by not later than December 31, 2020,
ensure that all eligible low-income electricity and gas customers
are given the opportunity to participate in low-income energy
efficiency programs, including customers occupying apartments
or similar multiunit residential structures. The commission and
electrical corporations and gas corporations shall make all
reasonable efforts to coordinate ratepayer-funded programs with
other energy conservation and efficiency programs and to obtain
additional federal funding to support actions undertaken pursuant
to this subdivision.

These programs shall be designed to provide long-term
reductions in energy consumption at the dwelling unit based on
an audit or assessment of the dwelling unit, and may include
improved insulation, energy efficient appliances, measures that
utilize solar energy, and other improvements to the physical
structure.

(f) The commission shall allocate funds necessary to meet the
low-income objectives in this section.

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

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

739.1.  

(a) The commission shall continue 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. begin insert For one end insert begin insert -person
households, program eligibility shall be based on two-person
household guideline levels. end insert 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.

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

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

(2) 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.

(c) In establishing CARE discounts for an electrical corporation
with 100,000 or more customer accounts in California, the
commission shall ensure all of the following:

(1) The average effective CARE discount shall not be less than
30 percent or more than 35 percent of the revenues that would
have been produced for the same billed usage by non-CARE
customers. The average effective discount determined by the
commission shall reflect any charges not paid by CARE customers,
including payments for the California Solar Initiative, payments
for the self-generation incentive program made pursuant to Section
379.6, payment of the separate rate component to fund the CARE
program made pursuant to subdivision (a) of Section 381, payments
made to the Department of Water Resources pursuant to Division
27 (commencing with Section 80000) of the Water Code, and any
discount in a fixed charge. The average effective CARE discount
shall be calculated as begin delete an end delete begin insert a weighted end insert average of the CARE discounts
begin delete offered end delete begin insert provided end insert to individual customers.

(2)  begin delete The end delete begin insert If an electrical corporation provides an average effective
CARE discount in excess of the maximum percentage specified in
paragraph (1), the end insert electrical corporation shall not begin delete annually reduce
its end delete begin insert reduce, on an annual basis, the end insert average effective CARE
discount by more than a reasonable percentage decrease below begin delete its
average effective CARE percentage end delete begin insert the end insert discount in effect on
begin delete December 31, 2013. The commission shall determine what is a
reasonable percentage decrease. end delete begin insert January 1, 2013, or that the
electrical corporation had been authorized to place in effect by
that date. end insert

(3) The entire discount shall be provided in the form of a
reduction in the overall bill for the eligible CARE customer.

(d) 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.

(e) 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.

(f) (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. begin insert end insert begin insert The commission may determine
that gas and electric customers are categorically eligible for CARE
assistance if they are enrolled in other public assistance programs
with substantially the same income eligibility requirements as the
CARE program. end insert 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
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.

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

(h) 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.

(i) (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.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Section 739.9 of the Public Utilities Code is repealed.

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

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

739.9.  

(a)  begin insert “Fixed charge” means any fixed customer charge,
basic service fee, demand differentiated basic service fee, demand
charge, or other charge not based upon the volume of electricity
consumed. end insert

begin insert (b) end insert begin insert   end insert Increases to begin insert electrical end insert rates and charges in rate design
proceedings, including any reduction in the California Alternate
Rates for Energy (CARE) discount, shall be reasonable and subject
to a reasonable phase-in schedule relative to the rates and charges
in effect prior to January 1, 2014.

begin insert

(c) Except as provided in subdivision (c) of Section 745, the
commission shall require each electrical corporation to offer
default rates to residential customers with at least two usage tiers.
The first tier shall include electricity usage of no less than the
baseline quantity established pursuant to paragraph (1) of
subdivision (d) of Section 739.

end insert begin insert

(d) Consistent with the requirements of Section 739, the
commission may modify the seasonal definitions and applicable
percentage of average consumption for one or more climatic zones.

end insert begin delete

(b)

end delete

begin insert (e) end insert  The commission may adopt new, or expand existing, fixed
charges for the purpose of collecting a reasonable portion of the
fixed costs of providing begin insert electric end insert service to residential customers.
The commission shall ensure that any approved charges do all of
the following:

(1) Reasonably reflect an appropriate portion of the different
costs of serving small and large customers.

(2) Not unreasonably impair incentives for conservation and
energy efficiency.

(3) Not overburden low-income begin delete and moderate-income end delete
customers.

begin delete

(c) The

end delete

begin insert (f) end insert begin insert   end insert begin insert For the purposes of this section and Section 739.1, the end insert
commission may authorize fixed charges that do not exceed ten
dollars ($10) per residential customer account per begin delete month. The end delete
begin insert month for customers not enrolled in the CARE program and five
dollars ($5) per residential customer account per month for
customers enrolled in the CARE program. Beginning January 1,
2015, the end insert maximum allowable fixed charge may be adjusted by
no more than the annual percentage begin delete change in authorized residential
class revenue requirements. This end delete begin insert increase in the Consumer Price
Index or the prior calendar year. This subdivision applies to any
default rate schedule, at least one optional tiered rate schedule,
and at least one optional time variant rate schedule. end insert

begin insert (g) end insert begin insert   end insert begin insert This end insert section does not require the commission to approve
any new or expanded fixed begin delete customer end delete charge.

begin insert

(h) The commission may consider whether minimum bills are
appropriate as a substitute for any fixed charges.

end insert

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section 745 of the Public Utilities Code is repealed.

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

Section 745 is added to the Public Utilities Code, to
read:

745.  

(a) For purposes of this section, “time-variant pricing”
includes time-of-use rates, critical peak pricing, and real-time
pricing, but does not include programs that provide customers with
discounts from standard tariff rates as an incentive to reduce
consumption at certain times, including peak time rebates.

(b) The commission may authorize an electrical corporation to
offer residential customers the option of receiving service pursuant
to time-variant pricing and to participate in other demand response
programs. The commission shall not establish a mandatory or
default time-variant pricing tariff for any residential customer
except as authorized in subdivision (c).

(c) Beginning January 1, begin delete 2020, end delete begin insert 2018, end insert the commission may
require or authorize an electrical corporation to employ begin delete mandatory
or end delete default time-of-use pricing for residential customers subject to
all of the following:

(1) Residential customers receiving a medical baseline allowance
pursuant to subdivision (c) of Section 739, customers requesting
third-party notification pursuant to subdivision (c) of Section 779.1,
begin delete and end delete customers who the commission has ordered cannot be
disconnected from service without an in-person visit from a utility
representative (Decision 12-03-054 (March 22, 2012), Decision
on Phase II Issues: Adoption of Practices to Reduce the Number
of Gas and Electric Service Disconnections, Order 2 (b) at page
55), begin insert and other customers designated by the commission in its
discretion end insert shall not be subject to begin delete mandatory or end delete default time-of-use
pricing begin insert without their affirmative consent end insert .

(2) The commission shall ensure that any time-of-use rate
schedule does not cause unreasonable hardship for senior citizens
or economically vulnerable customers in hot climate zones.

(3) The commission shall begin delete authorize end delete begin insert strive for end insert time-of-use rate
schedules that utilize time periods that are appropriate for at least
the following five years.

(4) A residential customer shall not be subject to a begin delete mandatory
or end delete default time-of-use rate schedule unless that residential customer
has been provided with not less than one year of interval usage
data from an advanced meter and associated customer education
begin insert and, following the passage of this period, is provided with no less
than one year of bill protection during which the total amount paid
by the residential customer for electric service shall not exceed
the amount that would have been payable by the residential
customer under that customer’s previous rate schedule end insert .

begin insert

(5) Each electrical corporation shall provide each residential
customer, not less than once per year, using a reasonable delivery
method of the customer’s choosing, a summary of available tariff
options with a calculation of expected annual bill impacts under
each available tariff. The summary shall not be provided to
customers who notify the utility that they choose not to receive the
summary. The reasonable costs of providing this service shall be
recovered in rates.

end insert begin insert

(6) Residential customers have the option to not receive service
pursuant to a time-of-use rate schedule and incur no additional
charges as a result of the exercise of that option. Prohibited
charges include, but are not limited to, administrative fees for
switching away from time-of-use pricing, hedging premiums that
exceed any actual costs of hedging, and more than a proportional
share of any discounts or other incentives paid to customers to
increase participation in time-of-use pricing. This prohibition on
additional charges is not intended to ensure that a customer will
necessarily experience a lower total bill as a result of the exercise
of the option to not receive service pursuant to a time-of-use rate
schedule.

end insert