BILL ANALYSIS �
AB 922
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Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 922 (Patterson) - As Amended: April 24, 2013
SUBJECT : Public utilities: rates: California Alternative Rates
for Energy program: eligibility
SUMMARY : Enacts specific reforms to the California Alternative
Rates for Energy program (CARE). Specifically, this bill :
1)Requires the California Public Utilities Commission (PUC) to
authorize an electrical or gas corporation to verify, by the
submission of proof of income, the continuing eligibility of a
participant in the CARE program regardless of the means by
which the participant was first enrolled into the program.
2)Prohibits the PUC from establishing penetration goals for the
CARE program.
EXISTING LAW :
1)Establishes a program of assistance to low-income residential
customers with annual household incomes no greater than 200%
of federal poverty guidelines which reflects discounts based
on level of need and allows limited rate increase of up to 3%
annually, subject to limitations. CARE rates cannot exceed 80%
of the corresponding rates charged to non-CARE customers
(excluding nonbypassable charges). (Public Utilities Code
739.1(b)(4)
2)Allows low income customers to be exempt from paying
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. (Public Utilities
Code 739.1(g), 2851(d)(3), 379.6(h)
FISCAL EFFECT : Unknown.
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COMMENTS : According to the author," California ratepayers
spent an additional $1.3 billion in 2012 to provide subsidies to
CARE enrollees in 2012. PG&E's random audits of a sample of CARE
enrollees in 2010 led to the subsequent disenrollment for
ineligibility of 56.41% of those audited, and in 2012, 68.27% of
those audited were dropped for ineligibility. The other investor
owned utilities have had similarly high results in 2012 ranging
from 39-49% of those audited being dropped.
The self-certification process has diverted CARE subsidies being
from legitimate CARE eligible customers and ratepayers to
enrollment of ineligible households. The Categorical Eligibility
and Enrollment Program triggers concerns due to the fact that
these programs often have different income requirements than
CARE and are not subject to any kind of income verification at
any point-only to attest to their continued eligibility. The
evidence clearly shows that the program needs improvements in
order to ensure its continued integrity as well as to ensure
that ratepayers are not overpaying for these subsidies and that
those individuals and families who are truly in need are the
ones being served."
1)CARE overview : The CARE program is a low-income energy rate
assistance program that
dates back to 1980s and is aimed at providing eligible
low-income households with a 20% discount on their electric and
natural gas bills. The program is funded by non-participating
ratepayers as part of a statutory public purpose program
surcharge that appears on their monthly utility bills. Over the
years and particularly through the recent economically
challenging times, CARE has delivered the much needed
energy-related bill savings through CARE discount rate to a
significant number of low income households.
Eligibility for the CARE discount is based on the number of
persons living in the home and total annual household income.
Current enrollment practices rely on customer self-reporting of
income or self-reporting of enrollment by virtue of another
low-income public benefits program such as Temporary Assistance
for Needy Families, Medi-Cal or Medicaid. The IOUs require CARE
customers to recertify every two years (every four years if
applicant is on a fixed income) for the discount. Moreover, the
IOUs may randomly conduct a post enrollment/recertification
verification whereby a customer may be selected for income
verification. If selected the customer is required to provide
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income documents for every household member. Failure to comply
with the request could result in removal from the CARE discount
from the customer's account.
Over the past three years (2010-2012) the IOUs spent a combined
total of $3.3 billion in CARE discounts.
2)PUC CARE decision : In August 2012 the PUC issued Decision
12-08-044 on the IOUs
2012-2014 Energy Savings Assistance programs and CARE
applications. Approximately $5 billion was awarded to continue
these low-income programs. The CARE program budget total is
just under $4 billion for the IOUs next program cycle, as shown
below.
---------------------------------------------------------------
| | | | | |
| | 2012 | 2013 | 2014 | Cycle total |
|---------+-----------+------------+-------------+--------------|
|PG&E |$675,989,66|$647,446,512|$620,716,512 |$1,944,152,691|
| | 7 | | | |
|---------+-----------+------------+-------------+--------------|
|SCE |$342,557,00|$389,156,000|$429,212,000 |$1,160,925,000|
| | 0 | | | |
|---------+-----------+------------+-------------+--------------|
|SDG&E |$ |$ |$ |$ |
| | 79,108,350| 87,972,980| 89,010,739| 256,092,069|
|---------+-----------+------------+-------------+--------------|
|SoCalGas |$145,516,02|$145,870,266|$147,360,024 |$ |
| | 4 | | | 438,746,314|
|---------+-----------+------------+-------------+--------------|
|Total |$1,243,171,|$1,270,445,7|$1,286,299,27|$3,799,916,075|
| | 041 | 59 | 5 | |
---------------------------------------------------------------
The PUC also found that the CARE program experiences an
extremely high attrition rate and the program design may need to
be fine-tuned to ensure the CARE discount rate and subsidy are
not being unlawfully diverted to ineligible customers at the
expense of the ratepayers. The PUC made several changes for the
2012-2014 program cycle. For instance, the IOUs were ordered to
retain the 90% penetration rate goal. This goal is not a
mandate on the IOUs and they are not penalized if they do not
achieve this goal. Provisions in this bill prohibit the PUC
from establishing penetration goals. During this proceeding the
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PUC considered removing the 90% goal to focus on quality
enrollments rather than quality enrollments, but received
objection from certain consumer advocate groups that were
concerned that removing the goal might disincentive the IOUs in
aggressively marketing and outreaching the program. This could
potentially result in lower enrollments and less
re-certifications.
One IOU, in particular, has resorted to enlisting volunteers to
canvas neighborhoods in their service territories to sign up
customers for the CARE discount in order to reach the 90 percent
penetration goal. This could be perceived as a proactive
approach to reach customers who would otherwise not be reached.
On the other hand this approach could lead to enrolling
customers who are, in fact, ineligible for the discount.
The author may wish to consider an amendment that provides the
PUC with the flexibility to establish a penetration target when
unique circumstances such as when an economic event occurs .
Decision 12-08-044 allows the IOUs to post-enrollment verify a
small percentage of the CARE customers enrolled using a
stratified probability sampling and modeling approach. The IOUs
were directed to employ this verification probability modeling
to target those customers most likely to be ineligible for the
CARE Program. At a minimum, the model incorporates the following
basic factors as well as any other territory specific factors:
a. High energy use
b. Annual bill amounts
c. Household size
d. PRIZM or ZIP code
e. Enrollment method
f. Previously indicated customer ineligibility
g. Customers previously de-enrolled from the CARE Program
h. Length of Program Enrollment
i. Length of time lapse since previously income
verification
Provisions in the bill authorize the IOUs to post-enrollment
verify program participants regardless of how they were
initially enrolled. Decision 12-08-11-044 allows the IOUs to
post-enrollment verify customers regardless of how they were
initially enrolled as long as they are picked up in the above
mentioned model as customers that might have a likely chance of
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being ineligible. The Decision does not require 100%
post-enrollment verification of any specific enrollment method,
nor did it restrict the IOUs from post-enrollment verifying
customers that were enrolled by a specific method.
3)Related legislation :
SB 1207 (Fuller, Chapter 613, Statutes of 2012) authorizes
investor owned utilities (IOUs) to take certain actions on
participants of the California Alternate Rates for Energy (CARE)
program.
REGISTERED SUPPORT / OPPOSITION :
Support
California League of Food Processors (CLFP)
Opposition
California Rural Legal Assistance Foundation
Division of Ratepayer Advocates (DRA)
Western Center on Law & Poverty
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083