BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          AB 2218 (Bradford) - Electricity and natural gas rates.
          
          Amended: April 24, 2014         Policy Vote: EU&C 9-1
          Urgency: No                     Mandate: Yes (see staff comment)
          Hearing Date: August 14, 2014                     Consultant:  
          Marie Liu     
          
          SUSPENSE. AS AMENDED.
          
          
          Bill Summary: AB 2218 would require that electrical and gas  
          corporations develop and implement a program of rate assistance  
          to eligible food banks.

          Fiscal Impact (as approved on August 14, 2014): 
              Onetime costs of $150,000 for one year from the Public  
              Utilities Reimbursement Account (special) for the creation  
              of a rate assistance program.
              Potential and unknown costs, but likely minor, to the  
              General Fund and various special funds to the state as an  
              electricity and gas ratepayer.

          Background: The California Public Utilities Commission (CPUC) is  
          required under current law to establish a program to discount  
          rates for low-income gas and electric customers. This program is  
          known as the California Alternative Rates for Energy, or CARE,  
          program. The state and federal governments have over the decades  
          had many programs to assist low income customers with discounts  
          on their utility bills and energy efficiency assistance.

          Proposed Law: This bill would require an electrical and gas  
          corporation to develop and implement a program for rate  
          assistance to food banks that participate in The Emergency Food  
          Assistance Program administered by the United States Department  
          of Agriculture.

          The CPUC would be permitted to identify the funding source for  
          the rate assistance program and would be allowed to direct and  
          supervise the electrical and gas corporations' programs.

          Staff Comments: The CPUC would incur additional onetime workload  
          of approximately $150,000 to develop and provide guidance to the  








          AB 2218 (Bradford)
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          electrical and gas corporations on the required program and  
          identify funding. Ongoing costs of approximately $115,000 would  
          be needed to provide oversight and to assist with rebalancing  
          rates for other customer classes to create funding for food bank  
          discounts.

          This bill allows the CPUC to determine the funding source for  
          rate assistance. Staff notes that many of the rate assistance  
          programs are paid by ratepayers. Should ratepayer funds be  
          chosen as the funding source for these programs, the state as a  
          gas and electricity customer will be responsible for a  
          proportionate share of the program costs. Staff notes that the  
          state accounts for approximately 1% of the state's electricity  
          usage and 3.8% of the state's natural gas usage. If the rate  
          assistance provided in the programs developed pursuant to this  
          bill result in millions of dollars in ratepayer costs, the state  
          would see increased costs in the tens of thousands of dollars.

          This bill is a state-mandated local program as the bill would  
          add a requirement under the Public Utilities Act and violations  
          of that act are crimes. However, under the state California  
          Constitution, this mandate is not reimbursable.

          Author Amendments: Restrict eligibility to food banks that have  
          an agreement with the State Department of Social Services. There  
          are 41 food banks that would meet this requirement.