BILL ANALYSIS Ó AB 922 Page 1 Date of Hearing: May 24, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 922 (Patterson) - As Amended: May 8, 2013 Policy Committee: Utilities and Commerce Vote: 15-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill 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 California Alternative Rates for Energy (CARE) program regardless of the means by which the participant was first enrolled into the program. This bill also prohibits the PUC from establishing penetration goals. FISCAL EFFECT Increased costs to the PUC of over $150,000 to fulfill the required post-enrollment verification. COMMENTS 1)Purpose . According to the author, California ratepayers spent $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. 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 to 49% of those audited being dropped. This bill is intended verify ratepayers are not overpaying for these subsidies, and that those individuals and families who are truly in need are the ones being served. 2)Background. 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 a 20% discount on their electric and AB 922 Page 2 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, CARE has delivered much-needed energy-related bill savings through the 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. Over the past three years, the investor-owned utilities spent a combined total of $3.3 billion in CARE discounts. 3)PUC Decision 12-08-044. In 2012, the PUC issues a decision awarding approximately $5 billion to continue low-income programs. The PUC found the CARE program had a high attrition rate and that the program may need to be modified to ensure the discount rates are not unlawfully diverted to ineligible customers. During the proceeding, the PUC considered removing the 90% penetration goal but received objection from consumer advocate groups concerned that investor-owned utilities would reduce marketing efforts to low-income customers without the goal. Analysis Prepared by : Jennifer Galehouse / APPR. / (916) 319-2081