BILL ANALYSIS Ó AB 2218 Page 1 Date of Hearing: April 21, 2014 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Steven Bradford, Chair AB 2218 (Bradford) - As Amended: April 10, 2014 SUBJECT : Electricity and natural gas rates. SUMMARY : Requires electrical and gas corporations to develop and implement a program of rate assistance to eligible food banks, subject to discretion and supervision by the California Public Utilities Commission (PUC). EXISTING LAW : 1)States the PUC has regulatory authority over public utilities, including electrical corporations and gas corporations. (Public Utilities Code §701) 2)Grants the PUC authority to fix rates charged by public utilities under its jurisdiction. (Article XII, Section 6, California Constitution). 3)Requires the PUC to establish a program of rate assistance to low-income electric and gas customers, referred to as the California Alternative Rates Energy Program (CARE). (Public Utilities Code §739.1) FISCAL EFFECT : Unknown. COMMENTS : According to the author, "California's food banks stabilize our most underserved and economically challenged families from all across the state. However, many find it costly to maintain their refrigeration units to house perishables such as fruits, vegetables, and dairy products. Electricity costs are a common concern for food banks across the state. Currently, the Fresno Community Food Bank, which serves four counties, sees a summer cost of approximately $9,000 - $11,000 per month and a winter cost of approximately $5,000-$6,000 per month to provide assistance to the most in need in the Central Valley." 1)Background : The Department of Social Services operates the Emergency Food Assistance Program (EFAP), which contracts with 48 food banks servicing 58 counties in California and approximately 2,300 distribution sites. Some food banks operate in more than one county, while others have more than one food bank. Each contracted food bank distributes commodities received from United States Department of AB 2218 Page 2 Agriculture (USDA). These food banks must follow USDA and EFAP guidelines. These food banks may also distribute non-EFAP food that was donated or purchased. EFAP has contracted with these 48 food banks for a number of years and this number has not grown. Each of the EFAP-contracted food banks are required to submit a performance plan which demonstrates its capability and capacity to distribute the USDA commodities in accordance with the federal rules and EFAP policies. These food banks also service food pantries for distribution. These pantries must adhere to the USDA federal regulations and EFAP policies for distributing EFAP food products. 2)California ratepayer assistance programs : For decades, the state and federal governments have overseen low income programs to provide low income customers discounts on their utility bills to the extent the customer meets the program eligibility requirements. The following is a breakdown of select programs: The California Alternative Rates for Energy (CARE) Program offers eligible customers a 20% discount on their electricity and natural gas bill. The Family Electric Rate Assistance (FERA) Families offers assistance to families whose household income slightly exceeds the low-income energy program allowances by billing some of their electricity usage at a lower rate. The Energy Savings Assistance Program (ESAP) provides no-cost weatherization services to low-income households who meet the CARE income guidelines. Services provided include attic insulation, energy efficient refrigerators, energy efficient furnaces, weather stripping, caulking, low-flow showerheads, water heater blankets, and door and building envelope repairs which reduce air infiltration. The Department of Community Services and Development administers Federal low-income home energy assistance, energy crisis intervention, and low-income weatherization programs (LIHEAP). These programs are funded by federal grants to provide weatherization services and financial assistance to help low-income customers pay their energy bills. AB 2218 Page 3 1)Rising electricity and natural gas costs impact food banks : This bill directs the electrical and gas corporations to develop and implement a program of rate assistance to EFAP-certified foods banks subject to the direction and supervision by the PUC. According to the author, in recent years, food banks have steadily experienced an increase in families seeking out assistance due to the economic crisis and the subsequent home foreclosure. With no end in sight to California's drought crisis, this will only further constrain existing resources. The need to house more perishable foods to distribute to needy families has drawn more concern about energy costs for food banks. Average utility bill costs for these food banks vary by county. Smaller operations, such as Trinity County average approximately $150 per month, while San Francisco County estimates $12,000 per month. Mendocino County, for instance, found that their costs increased exponentially around the holiday months when they generally have more meat to store in the freezer. Seven food banks reported they were using some form of renewable technology to offset their electricity bills. 2)How will this program be funded : The bill is silent on the funding mechanism for the proposed new program. Currently most, if not all, of California's ratepayer assistance programs are included in the rate base of the regulated utility companies. It is the author's intention to allow the PUC to determine how this program will be funded. Therefore, the author and this committee may wish to add the following amendment: 739.3. Subject to direction and supervision by the commission, electrical corporations and gas corporations shall develop and implement a program of rate assistance to eligible food banks. " The funding source for this rate assistance program is subject to the approval of the California Public Utilities Commission ." For purposes of this section, "eligible food bank" means a public or charitable institution that participates in The Emergency Food Assistance Program administered by the Food and Nutrition Service of the United States Department of Agriculture. AB 2218 Page 4 REGISTERED SUPPORT / OPPOSITION : Support Food Bank of El Dorado County FoodLink Food Share, Inc. Independent Energy Producers (IEP) Opposition None on file Analysis Prepared by : DaVina Flemings / U. & C. / (916) 319-2083