BILL ANALYSIS Ó 1 SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE ALEX PADILLA, CHAIR AB 2218 - Bradford Hearing Date: June 23, 2014 A As Amended: April 24, 2014 FISCAL B 2 2 1 8 DESCRIPTION Current law requires the California Public Utilities Commission (CPUC) to establish the California Alternate Rates for Energy (CARE) program to discount rates for low-income gas and electric customers whom are defined as those with incomes no greater than 200 percent of the federal poverty level. The average effective CARE discount is limited to a range of 30 to 35 percent of the revenues that would have been produced for the same billed usage by non-CARE customers. (Public Utilities Code § 739.1) Current federal law creates the Emergency Food Assistance Program (EFAP), administered by the United States Department of Agriculture (USDA), and, at the state level, by the state Department of Social Services (CDSS), to provide low-income individuals and households with surplus commodities donated by USDA. This bill would require electrical and gas corporations to provide rate assistance to food banks that participate in the EFAP administered by the Food and Nutrition Service of USDA. BACKGROUND California Alternate Rates for Energy (CARE) - The CARE program was designed to provide a 20% discount on monthly gas and electric bills to income-qualified customers at their primary residence and is funded through a rate surcharge paid by all other utility customers. The income cap on CARE eligibility is up to 200% above Federal Poverty Guidelines, which are updated annually in June. Electric rates for tier 1 and 2 investor-owned utilities (IOU) customers were frozen in 2001 as a result of the electricity crisis. Consequently the effective CARE discount increased two to three times what was intended. In a 2013 rate reform bill the discount was re-set to 30 to 35 percent. The CPUC has a proceeding underway to implement the legislation. CARE programs are reviewed and modified by the CPUC every three years for the subsequent three-year cycle. The CPUC completed its last review of the program in August 2012 and at that time approved a $3.8 billion program budget for the four IOUs for the 2012-2014 cycle. Other 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 and energy efficiency assistance to the extent the customer meets the program eligibility requirements. The following is a breakdown of select programs: The Family Electric Rate Assistance 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 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; and The Department of Community Services and Development administers Federal low-income home energy assistance, energy crisis intervention, and low-income weatherization programs. These programs are funded by federal grants to provide weatherization services and financial assistance to help low-income customers pay their energy bills. Emergency Food Assistance Program (EFAP) - The EFAP provides low-income individuals and households with surplus commodities donated by the USDA. The CDSS is responsible for overseeing EFAP and ensures that USDA commodities are provided and distributed to eligible individuals and households in all 58 California counties. Program-eligible recipients may receive commodities through congregate feeding sites which serve meals, or through distribution sites, which distribute food for household consumption. There are 48 food banks that coordinate distribution to more than 2,300 food banks in their regions. The Department of Social Services defines an EFAP eligible food bank, to which this bill applies, as: A public or charitable institution that maintains an established operation involving the provision of food or edible commodities, or the products of food or edible commodities, to food pantries, soup kitchens, hunger relief centers, or other food or feeding centers that, as an integral part of their normal activities, provide meals or food to feed needy persons on a regular basis. COMMENTS 1. Author's Purpose . Electricity costs to house perishables such as fruits, vegetables, and dairy products is a common concern for food banks across the state. More so now as a number of food banks are anticipating an increase in assistance due to the impact our water crisis will have on the farming community. Ultimately, energy costs will limit a food banks ability to provide fresh and healthy food to our struggling California families. 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. In recent years, food banks have steadily seen an increase in families seeking out assistance due to the economic crisis and the subsequent home foreclosure. California's drought crisis, with no end in sight, will only further strain existing resources. Smaller operations such as Trinity County Food Assistance Program, average an annual energy bill of approximately $18,000; while the San Francisco Food Bank averages around $144,000 per year. 2. Ratepayer Impact . Food banks provide a very critical service to the communities they serve. The CDSS reports that there are more than 2,300 organizations eligible for the EFAP program. Electric and gas ratepayers currently current provide more $1 billion a year for the CARE program alone and much more when the weatherization, solar and other programs are included. The committee may wish to consider the impacts on ratepayers of additional support for community-based programs and whether this is affordable at this time. ASSEMBLY VOTES Assembly Floor (66-1) Assembly Appropriations Committee (13-0) Assembly Utilities and Commerce Committee (10-0) POSITIONS Sponsor: Author Support: Alameda County Community Food Bank California Emergency FoodLink Community Action Partnership of Kern Community Action Partnership of Orange County California Association of Food Banks Food Bank of El Dorado County Food for People Food Share, Inc. FoodLink for Tulare County Independent Energy Producers Association Los Angeles Regional Food Bank Redwood Empire Food Bank Second Harvest Food Bank of Santa Clara & San Mateo Counties SF-Marin Food Bank Oppose: None on file Kellie Smith AB 2218 Analysis Hearing Date: June 23, 2014