BILL ANALYSIS �
SB 1207
Page 1
SENATE THIRD READING
SB 1207 (Fuller)
As Amended August 20, 2012
Majority vote
SENATE VOTE :39-0
UTILITIES & COMMERCE 12-0
APPROPRIATIONS 17-0
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|Ayes:|Bradford, Fletcher, |Ayes:|Gatto, Harkey, |
| |Buchanan, Fong, Gorell, | |Blumenfield, Bradford, |
| |Roger Hern�ndez, Knight, | |Charles Calderon, Campos, |
| |Ma, Nestande, Skinner, | |Davis, Donnelly, Fuentes, |
| |Swanson, Valadao | |Hall, Hill, Cedillo, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
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SUMMARY : Authorizes investor owned utilities (IOUs) to take
certain actions on participants of the California Alternate
Rates for Energy (CARE) program. Specifically, this bill :
1)Authorizes IOUs to require proof of income eligibility for
CARE customers whose usage exceeds 400% of baseline.
2)Authorizes IOUs to require CARE customers whose usage exceeds
400% of baseline to participate in an energy savings
assistance program (ESAP) that includes a residential energy
assessment.
3)Authorizes IOUs to condition continued participation in an
ESAP if CARE customer usage exceeds 400% of baseline.
4)Authorizes IOUs to require CARE customers to notify the
utility of whether the residence is rented, and identify the
landlord. The IOU may share any evaluation and recommendation
relative to the residential structure that is made as part of
an energy assessment, with the landlord of the CARE customer.
5)Authorizes IOUs to require CARE customers whose usage exceeds
600% of baseline to participate in an ESAP that includes a
residential energy assessment.
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6)Makes participation in the ESAP mandatory if a CARE customer's
usage exceeds 600% of baseline.
7)Authorizes IOUs to remove a CARE customer from the program,
after the completion of a residential energy assessment, if
the customer's monthly usage exceeds 600% of baseline. CARE
customer may appeal to the IOU to demonstrate usage levels are
legitimate.
8)Exempts CARE gas customers from the provisions of this bill.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, any costs to the PUC will be minor and absorbable.
COMMENTS : The author states that "SB 1207 seeks to reduce the
amount of costs that are shifted to non-CARE customers by
reducing the fraud within the program and providing incentives
to CARE customers to conserve. It maintains the essence of CARE
program for those low-income individuals who are legitimately
qualified for the program and provides the utilities with a tool
to recognize and identify high energy users who may need energy
efficiency assistance."
Background : CARE program offers income-qualified customers a
discount of 20% or
more off their monthly gas and electric bill at their primary
residence. The program is fully funded through a surcharge paid
by non-CARE customers. Qualifications for the discount are
based on the number of persons living in your home and your
total annual household income.
Current income guidelines are effective June 1, 2012 through May
31, 2013 as follows:
---------------------------------------------------
| | CARE & Energy Savings |
| Household Size |Assistance Programs (200% of |
| | Federal Poverty Guidelines) |
|---------------------+-----------------------------|
| 1 | $22,340 |
|---------------------+-----------------------------|
| 2 | $30,260 |
|---------------------+-----------------------------|
| 3 | $38,180 |
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|---------------------+-----------------------------|
| 4 | $46,100 |
|---------------------+-----------------------------|
| 5 | $54,020 |
|---------------------+-----------------------------|
| 6 | $57,700 |
|---------------------+-----------------------------|
| 7 | $62,940 |
|---------------------+-----------------------------|
| 8 | $77,780 |
|---------------------+-----------------------------|
| Each add'l person |$ |
| |7,920 |
| | |
---------------------------------------------------
Utility customers can enroll by self-certifying through the
utility's internet-website, mail, or over the telephone.
Customers may be automatically enrolled if they are enrolled in
a public assistance programs such as Medicaid, Medi-Cal, or
Temporary Assistance for Needy Families (TANF). Community based
organizations are also paid capitation fees, under the
Capitation Fee Project, up to $15 per enrollment.
Due to the large number of CARE customers, IOUs conduct
post-enrollment verification (PEV) annually for 1-5% of the
enrolled CARE customers. These customers are selected either
randomly or based on a computer stratified selection model that
targets certain customers. As part of the PEV process, CARE
customers are asked to provide all the pertinent income
documentation. If the customer fails to provide the required
documentation, they are removed from CARE program without having
to pay any back-charges or penalties.
In 2008, PUC directed IOUs in D.08.11.031 to achieve a 90%
penetration rate for participation of eligible customers in the
CARE program, which are approximately 4.9 million households.
According to a May 4, 2012 PUC Proposed Decision (PD) - on IOUs
2012-2014 Energy Assistance Savings Program and CARE, IOUs
submitted reports showing extraordinarily high CARE Program
penetration rates as follows:
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CARE Enrollments and Penetration Rate (December 2011)
-------------------------------------------------
| IOU |Participants | Eligible |Penetration|
| | Enrolled |Participants| Rate |
| | | | |
|----------+-------------+------------+-----------|
|PG&E | 1,532,692 | 1,699,660 | 90.2% |
|----------+-------------+------------+-----------|
|SCE | 1,437,537 | 1,451,325 | 99% |
|----------+-------------+------------+-----------|
|SoCalGas | 1,716,495 | 1,847,296 | 92.9% |
|----------+-------------+------------+-----------|
|SDG&E | 308,596 | 362,551 |85.1% |
| | | | |
-------------------------------------------------
Problems with CARE : IOUs conduct a PEV of eligibility for 1-5%
of CARE customers.
In some cases, nearly half of the customers fail to respond to
the PEV on a timely basis which ultimately results in their
termination from the program. PG&E conducted a PEV on 161,000
customers in 2011 which represented about 11% of customers.
According to PG&E data, about 42% of customers who go through
their PEV process are removed from CARE. Reasons for
termination range from documentation showing they are
ineligible, requests to be removed instead of providing
qualifying documentation, and failure to respond.
Moreover there are approximately 12,700 CARE customers in PG&E
territory with usage greater than 600% of baseline amounting to
$69 million in discounts which equates to about 10% of all CARE
program discounts. There are 10,600 PG&E CARE customers in the
400-600% range and $36 million in discounts and 27,600 customers
in the 300-400% range for $65 million in discounts.
IOUs and other stakeholders presented evidence in the 2012-2014
CARE Budget Applications proceeding A.11-05-017 which
demonstrated that a small percentage of customers may be
consuming large amounts of energy under CARE rate for
illegitimate reasons.
Off-ramps : Recent amendments to SB 1207 allow CARE customers
with usage over 600% to appeal to the IOU to demonstrate that
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their usage is legitimate. The bill also prohibits a CARE
customer from being removed from the program if their landlord
is non-responsive to contact by the IOU or does not provide for
ESAP participation.
CARE impacts on Non-CARE customers : The 2001-02 energy crisis
had an impact on Tier
1 and 2 electricity rates. The Legislature froze these rates
during the energy crisis and it wasn't until January 1, 2010,
they were allowed to increase. During that time, legislation
was passed authorizing up to 5% annual rate increases for Tier 1
and 2 non-CARE customers until 2019. CARE increases are linked
to increases in CalWORKs and cannot exceed 3% per year.
CALWORKs has not increased, which means CARE customer rates
remain frozen. As a result, the CARE discount is slightly
higher than 20%. According to PG&E estimates, CARE households
in the next program cycle will receive discounts on their
electric usage charges that range from approximately 30% for
Tier 1 usage to 55% for Tiers 3-5 usage.
The chilling effect of the rate freezes and limits on rate
increases is that non-CARE customers in tiers 3, 4 and 5 bear
the burden of all of the electric rate increases, public purpose
charges, and transmission and distribution cost increases.
Analysis Prepared by : DaVina Flemings / U. & C. / (916)
319-2083
FN: 0005124