BILL ANALYSIS �
AB 724
Page 1
Date of Hearing: April 25, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 724 (Bradford) - As Introduced: February 17, 2011
SUBJECT : Electric and gas utility service: master-meter
customers.
SUMMARY : This bill requires the California Public Utilities
Commission (PUC) to open an appropriate proceeding to evaluate
when an owner of a mobile home park should transfer gas or
electric systems with unsafe or substandard conditions to the
utility. Specifically, this bill :
1)Requires the PUC to open an investigation or other appropriate
proceeding by February 1, 2012, to evaluate and report to the
Legislature, by July 1, 2013, when an owner of a
master-metered gas or electric service mobile home park should
transfer responsibility for service to the gas or electric
utility.
2)Requires the PUC to include in the report a classification of
mobile home parks and manufactured housing communities based
on the degree to which the park or community acts as the
primary or permanent residence of those who use the park or
community.
3)Repeals these provisions on January 1, 2018.
EXISTING LAW :
1)Requires public utilities to provide and maintain such
adequate, efficient, just and reasonable service as are
necessary to promote the health and safety of its patrons, and
the public.
2)States that whenever residential light, heat, or power is
furnished through a submeter system by a master-meter customer
for sale to users who are tenants of a mobile home park,
apartment building, or similar residential complex, the
master-meter customer is responsible for maintenance and
repair of its submeter facilities beyond the master-meter.
3)Requires the PUC to direct the gas or electric corporation
furnishing service to the master-meter customer to establish
uniform rates for master-meter service at a level that will
provide a sufficient differential to cover the reasonable
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average costs to master-meter customers providing submeter
service. These costs shall not exceed the average cost that
the corporation would have incurred in providing comparable
services directly to the users of the service.
4)Allows the owner of a master-metered mobile home park or
manufactured housing community that provides gas or electric
service to residents to transfer ownership and operational
responsibility to the gas or electric corporation providing
service in the area in which the park or community is located
under certain conditions.
5)Requires that residents of mobile home parks and manufactured
housing communities constructed after January 1, 1997, be
individually metered and served by gas and electric
distribution facilities owned, operated and maintained by the
gas or electric corporation providing the service in the area
where the new park or community is located.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to ensure residents of master- metered/submetered mobile home
parks are provided with safe and reliable gas or electric
service at reasonable rates while at the same time improving
public safety and grid reliability.
1)Background : Over 1,500 mobile home parks owners in the state
provide electricity to their
tenants through a master-meter. In such cases, the park owner
receives electricity from the utility at a master-meter. The
electricity is then distributed to tenants through
infrastructure owned by the park owner and a submeter is located
at each tenant's mobile home. The tenants are then billed by
the park owner for the electricity they use in the same way that
a utility would if the tenant was being directly served by a
utility.
Current law requires that the utility company give the park
owner a discount (differential) in order to recover the costs of
operating the system. The differential is set as an amount per
occupied space. In 2004, the PUC resolved issues regarding the
types of costs avoided by the utilities when the mobile home
park owner provides the submetered service. Determining these
costs is necessary to determine the discount provided by the
utility to the mobile home park owner. The PUC decision
(D.04-04-043) was a joint recommendation by the interested
parties. In a subsequent 2004 decision, the PUC determined the
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discount formula, requiring that the discount be set "at the
average cost that the utility would have incurred in providing
comparable services to the tenant directly, which is avoided
when the mobile home park is submetered".
2)Transfer requirements : For more than a decade, state policy
has disfavored the continuation
of master-meter/submeter systems. Public Utilities Code Section
2791(c) requires the direct-metering of electric and/or natural
gas service in mobile home parks constructed after January 1,
1997. For those mobile home parks constructed prior to 1997, a
transfer is a voluntary process. To be transferable, a mobile
home park submeter system must meet certain criteria such as it
being a safe and reliable source of electric or natural gas, it
must comply with the PUC's general orders and be compatible with
the utility's design and construction standards and it must be
capable of serving the expected load at the mobile home park.
Upon receipt of a mobile home park owner's request to transfer
the submeter system, the utility must perform an inspection of
the system to determine its condition and develop an appraisal
of the system's value. If the park owner accepts the utility's
proposal, they can proceed with a transfer of the system. Thus,
in most cases, there is disagreement among both parties about
the cost to transfer the submeter system which leads to the park
owner deciding to retain ownership of the system.
Responsibilities and Oversight : Mobile home park
master-meter/submeter systems are private distribution systems
interconnected with the larger electricity grid and with natural
gas transmission facilities. Because the utilities do not own
or maintain the mobile home park submeter systems, they do not
have the same maintenance or safety responsibilities as for
their own distribution systems. Maintenance and primary safety
responsibility for the mobile home park submeter systems lies
with park owners/operators.
Governmental oversight and enforcement authority at the mobile
home park submeter systems is more highly structured for natural
gas than for electricity. Generally, as part of its broad
authority over health and safety issues that arise in the
housing context, the California Department of Housing and
Community Development (HCD) may perform inspections of mobile
home park electric or natural gas submeter systems when it
inspects the mobile home parks where those systems exist. In
some instances, HCD has delegated mobile home park inspection
authority to the cities or counties where the mobile home parks
are located.
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Federal law charges the PUC with inspection and enforcement to
ensure compliance with the federal pipeline standards by mobile
home park operators. The Utility Safety and Reliability Branch,
located within the Commission's Consumer Protection and Safety
Division, carries out the actual inspection and initial
enforcement activities and is empowered to issue citations, as
necessary.
3)Issue : This bill directs the PUC to open an investigation or
proceeding to evaluate when
a park owner that provides master-metered gas or electric
service should be required to transfer service to the utility.
Essentially, park owners who are master-meter customers are
acting as a public utility. Park owners are responsible for the
same functions as utilities including maintaining, repairing and
replacing the distribution systems. This raises two issues.
First, the park owner may not necessarily have the expertise,
financial ability or equipment to provide these services
adequately. Lastly, the PUC's authority to regulate utility
infrastructure ends at the master-meter. Consequently, the lack
of regulation of privately-owned distribution systems could
impose a significant threat to public safety and overall grid
reliability.
4)Regulatory action : On February 24, 2011 the PUC opened a
rulemaking, at the petition of
Western Manufactured Housing Communities Association (WMA), to
examine what the PUC can and should do to encourage the
replacement by direct utility service of the
master-meter/submeter systems that supply electricity, natural
gas, or both to mobile home parks and manufactured housing
communities located within the franchise areas of electric
and/or natural gas corporations. The proceeding will also
consider safety and reliability, transfer prioritization and
reasonableness of cost allocation of the master-meter/submeter
systems. This proceeding essentially mirrors the author's
intentions for this bill. Some parties represented that this
bill may unintentionally disrupt the PUC proceeding that is well
underway.
5)Suggested amendments : This bill requires the PUC to include
in the report a classification of mobile home parks and
manufactured housing communities based on the degree to which
the park or community acts as the primary or permanent
residence of those who use the park or community. Since the
PUC will be examining all mobile home parks and manufactured
housing communities located within the service territories of
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the utilities, the author and this committee may wish to
strike this provision in the bill .
6)Related legislation : This bill is similar to AB 1108
(Fuentes) in the 2009-10 Regular
Session. This bill died in the Senate.
REGISTERED SUPPORT / OPPOSITION :
Support
California Public Utilities Commission (CPUC)
Opposition
None on file.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083