BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2218
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          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  





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            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.





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           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. 





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           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