BILL ANALYSIS Ó
AB 1331
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Date of Hearing: April 27, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
AB 1331
(Obernolte) - As Introduced February 27, 2015
SUBJECT: California Alternate Rates for Energy program: income
verification
SUMMARY: This bill permanently bars participants in utility
low-income rate programs as specified. Specifically, this bill:
Provides that a participant in the California Alternate Rates
for Regulatory (CARE) program is permanently barred from
participation from self-certified enrollment if that participant
fails to respond to a request to verify income.
EXISTING LAW:
Provides a discount on electricity and natural gas bills for
qualified low-income customers of electric and gas corporations.
(Public Utilities Code Section 739.1)
FISCAL EFFECT: Unknown.
AB 1331
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COMMENTS:
1)Author's statement. "AB 1331 is a small, but important step
toward reducing the amount of fraud in the CARE program. This
bill will not only help safeguard ratepayers from assisting
individuals who do not qualify, it will also protect the
integrity of the CARE program and ensure that energy
assistance is available for those who need it most."
2)CARE Program Enrollment. The CARE Program provides two ways
for a potential enrollee to enroll in the program, (1)
Categorical Eligibility and Enrollment process and (2)
self-certification process. The Categorical Eligibility and
Enrollment process enables low income customers to enroll in
the CARE Program through an expedited process such that if the
applicant is enrolled in an approved low income program that
has already verified the applicant's income, then by providing
such proof, they are automatically deemed eligible for and
enrolled in CARE. Similarly, the self-certification process
allows the CARE applicants to enroll by attesting to their
income eligibility. In both instances, income verification
occurs after the enrollment; and that verification process is
generally referred to as Post Enrollment Verification.
In addition, the investor owned utilities (IOUs) require
enrollees to self-recertify their continued program
eligibility to renew their enrollment, every two or four
years, and those renewed enrollees thereafter maybe subject to
similar post re-certification income verification. Enrollees
with fixed income sources at the time of enrollment are on
four-year re-certification cycle and other enrollees are on a
two-year re-certification cycle.
3)CPUC requires verification. In a CPUC proceeding reviewing
proposed IOU budgets for CARE and the Energy Savings
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Assistance Program for eligible low income customers, the IOUs
identified a concern and presented evidence that the
Categorical Eligibility and Enrollment process may lead to
CARE subsidies being diverted from legitimate CARE eligible
customers and ratepayers to some potential ineligible
households, in part, because some of the programs on the
Categorical Eligibility and Enrollment Program have different
income requirements. Other parties in the proceeding noted
that the second of the two CARE enrollment process, the
self-certification process, likewise may lead to enrollment of
potentially ineligible households.
In its decision in this proceeding, in 2012 (D. 12-08-044<1>),
the CPUC directed the IOUs to begin a targeted Post Enrollment
Verification and Post Re-certification Income Verification
probability model by incorporating the following basic factors
in their modeling, as well as any other territory specific
factors:
High energy use (including customers with usage above
400% baseline in any monthly billing cycle and above),
Annual bill amounts,
Household size,
PRIZM or ZIP code,
Enrollment method,
---------------------------
<1> http://www.liob.org/docs/ACF265.pdf
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Previously indicated customer ineligibility,
Customers previously de-enrolled from the CARE Program,
Length of Program Enrollment, and
Length of time lapse since previously income
verification.
The CPUC also directed the IOUs to report in the results,
including a summary of what reasons account for each
de-enrollment during the verification process.
1)The Winter of 2005-2006 . During the winter of 2005-2006
forecasts for residential energy bills expected increases on
the order of 40% to 60%. The CPUC ordered the IOUs to submit
proposals to the CPUC on the best ways for reducing the
impacts of those increases on low income customers. As a
result, CARE participation substantially increased. CARE
participation also increased during the Great Recession.
2)Fraud and abuse? According to the author, utility filings
with the CPUC indicate that there is widespread fraud, which
may be costing ratepayers hundreds of millions of dollars per
year to provide subsidies to ineligible persons. As an
example, when Pacific Gas and Electric (PG&E) conducted random
audits of its CARE enrollees in 2010, it discovered that 56%
of those selected could not establish their eligibility, and
AB 1331
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they were dropped from CARE. Note that this study was
prepared prior to the CPUC decision that established a program
for re-verification of CARE eligibility.
In 2012, 68% of those randomly audited by PG&E were found to
be ineligible. Most of those who were dropped had failed to
respond to multiple communications from PG&E, and made no
attempt to prove their eligibility. A survey conducted for
PG&E found that the primary reason that CARE enrollees ignored
requests to verify their income was because their income was
too high to qualify.
Additionally, a 2013 CARE report conducted by Southern
California Edison (SCE) found that of the 68,419 CARE
customers asked to show proof of their income eligibility,
41,700 (60.95%) failed to do so and were dis-enrolled. Of
that number, 39,684 did not respond to the request.
As noted above, the CPUC ordered the IOUs to examine those
CARE customers who might no longer be eligible for CARE. Thus
the data referenced by the author is not necessarily an
indication that the CARE program has widespread fraud. It may
be that the results targeted a population that was likely to
be found ineligible.
3) A Harsh Penalty . Currently, if someone does not respond to
the IOU request for income verification, they are removed from
the self-certification enrollment into CARE until such time as
they can provide verification. AB 1331 would permanently bar
CARE self-enrollment program participation for those customers
who fail to respond to an income verification request.
For various reasons customers might fail to respond to income
verification, from as simple as the request was never
delivered or not noticing that the document required a
response. Other reasons could be because a person moved, was
no longer in the same living arrangement (a divorce, for
example).
AB 1331
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A permanent ban for a person who might actually be low-income,
and in need of this simplified method of gaining CARE
assistance, is a harsh penalty.
4)Support and opposition .
The Placer County and Sacramento Taxpayers Associations
support AB 1331 as a means to prevent fraud in the CARE
program.
The Office of Ratepayer Advocates opposes AB 1331 because
there is no evidence to suggest that there are significant
numbers of customer who fraudulently sign up for CARE, wait to
get de-certified, and after the required waiting period,
re-enroll fraudulently via self-certification.
5)Related legislation .
AB 327 (Perea, 2013) This bill, among several other
provisions, requires the commission to ensure that electricity
rates are affordable for qualified low-income ratepayers and
would require electrical corporations to offer discounts or
other ratepayer subsidies. Chapter 611, Statutes of 2013.
AB 1755 (Perea, 2012) This bill would have required the
commission to ensure that electricity rates are affordable for
qualified low-income ratepayers and would require electrical
corporations to offer discounts or other ratepayer subsidies.
Held in Senate.
REGISTERED SUPPORT / OPPOSITION:
Support
AB 1331
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Sacramento Taxpayers Association
Opposition
Office of Ratepayer Advocates
Analysis Prepared by:Sue Kateley / U. & C. / (916) 319-2083