BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 2672 (Perea) - Access to energy: disadvantaged communities:
San Joaquin Valley.
Amended: June 30, 2014 Policy Vote: EU&C 8-2
Urgency: No Mandate: No
Hearing Date: August 4, 2014 Consultant:
Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 2672 would require the California Public
Utilities Commission (CPUC) to study the economic feasibility of
extending gas pipelines to disadvantaged communities in the San
Joaquin Valley and increasing electricity subsidies for
individuals in those communities.
Fiscal Impact:
Annual costs of at least $300,000 from the Public Utilities
Reimbursement Account (special) for two years to the CPUC
for the cost of a proceeding and the workload associated
with conducting the required feasibility study.
One-time contract costs of $500,000 from the Public
Utilities Reimbursement Account (special) to the CPUC for
contract costs related to the feasibility study.
Unknown costs, possibly in hundreds of thousands, to the
General Fund and various special funds to the state as a
ratepayer for the state's cost share of subsidies or
necessary infrastructure to provide access to affordable
energy in the San Joaquin Valley.
Background: As required by PUC §739.1, the CPUC has established
the California Alternative rate 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.
Under existing orders of the CPUC, the cost of gas main or
pipeline extensions to serve new or existing customers must be
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borne by the customer or project developer.
Proposed Law: This bill would require a gas corporation that
provides natural gas in the San Joaquin Valley to identify
disadvantaged communities in the valley that do not have natural
gas service by January 31, 2015.
The CPUC would be required to, by March 31, 2015, initiate a new
proceeding to conduct an affordable energy feasibility study for
the identified disadvantaged communities. The study must cover
the economic feasibility of extending gas pipelines to the
identified communities, increasing subsidies for electricity for
individuals in those communities, and any other alternative that
could increase access to affordable energy that the CPUC feels
is appropriate.
If the CPUC identifies an option that would increase access to
affordable energy in an "economically viable manner," the CPUC
would be required to take appropriate action and determine
appropriate funding sources.
Staff Comments: To conduct the required proceeding and
feasibility study required by this bill, the CPUC will incur
increased workload to first develop the criteria to define a
disadvantaged community and then to identify and analyze
alternatives to increase access to affordable energy for those
communities. The CPUC would likely be required to hold several
public hearings to ensure potentially affected populations can
participate in the proceeding. The costs to complete these
activities are uncertain as the scope, and therefore cost, of
the feasibility study will be based on how the definition of
"disadvantaged community" is refined and interpreted by the
CPUC, how many communities are ultimately identified as
disadvantaged, and the particular needs of each of the
identified communities. At a minimum the CPUC costs are
anticipated to be $300,000 annually for two years.
Additionally, the CPUC will need to contract out aspects of the
study, particularly the economic analyses necessary to determine
whether any of the alternatives studied are economically viable.
Contract costs are estimated at $500,000 total.
The bill requires the CPUC to implement any option that is found
to be economically viable in the feasibility study and to
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determine an appropriate funding source. The cost to implement
an option is unknown as it depends on what that option is, but
costs could easily be in the millions of dollars if it involves
extending gas pipelines. The cost to increase subsidies would be
less but would be an ongoing cost. The costs of any of the
alternatives will most likely be borne by other ratepayers,
consistent with other subsidy programs. The state, as a
ratepayer of the relevant gas corporations, would share in a
portion of those costs.