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