BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 3X - Wright Hearing Date:
March 27, 2001 A
As Amended: March 21, 2001 FISCAL/URGENCY B
X
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DESCRIPTION
Current law establishes a low-income energy assistance program
for electric and natural gas service customers of the
investor-owned utilities (IOUs), known as California Alternate
Rates for Energy (CARE), which is funded by a surcharge on
energy bills. The CARE program includes both discounts of 15%
on electric and natural gas bills, as well as a residential
weatherization program.
This bill requires the California Public Utilities Commission
(CPUC) to adopt regulations which provides for retroactive
enrollment to the effective date of this bill for those who
enroll in the CARE program no later than August 1, 2001.
This bill requires the CPUC to adopt the same income and
eligibility requirements for the CARE program that are in place
for the Universal Lifeline Telephone Service (ULTS) program, a
statutory low-income rate discount program.
This bill requires the utilities to offer payment arrangements
to customers having trouble paying their bills and prohibits the
IOUs from disconnection CARE customers if the customer is in
compliance with the payment arrangements.
This bill provides for expanded notification of the availability
of the CARE program and requires the CPUC to conduct targeted
outreach to low-income and senior households.
This bill has an urgency provision.
BACKGROUND
Current regulations limit CARE eligibility to those households
earning less than 150% of the federal poverty level, which is an
annual income of $25,800 for a family of four. The CARE
discount, which is established by the CPUC, is 15% of a family's
monthly electric or natural gas bill. The cost to ratepayers
for the CARE program is about $180 million annually.
The percentage of eligible customers who participate in the CARE
program varies widely throughout the state. In Pacific Gas &
Electric's (PG&E) service area, 36% of the eligible customers
participate, while in Southern California Edison's (SCE) service
area, 59% of those eligible are participating. Between PG&E,
SCE, and San Diego Gas & Electric (SDG&E), a little more than
one million households participate in CARE.
CARE program eligibility is based on self-certification. If the
CARE customer certifies that he or she meets the program
eligibility requirements, then he or she is eligible to receive
the discounts provided by the program.
COMMENTS
1)Retroactive Enrollment . The bill states that anyone who
enrolls in the CARE program before August 1, 2001 is actually
deemed to have enrolled on the effective date of this bill,
providing customers with a retroactive rate reduction. If
this bill were to be signed and take effect on April 1, 2001,
this provision would provide him or her with up to a
four-month retroactive rate reduction (depending on when the
customer actually signs up for the program) that would be paid
for by existing non-CARE customers.
Unfortunately, this retroactivity may also provide sufficient
incentive for ineligible customers to sign up for the CARE
program which, because the program relies on
self-certification, will be easy to do. One of the hallmarks
of the CARE and ULTS programs is a self-certification process
that diminishes the stigma of the program, reduces
administrative costs, and makes it easy to participate. At
least with the ULTS program, studies in the mid-1990's found
the number of ineligible participants was very low. If
providing for retroactivity increases ineligible participation
and leads to an end to the self-certification aspect of the
program, then many of the goals of this program could be
thwarted.
Furthermore, given that the CPUC is scheduled to take up a
significant rate hike proposal at its meeting today, there
will be plenty of incentive for those eligible to participate
in CARE to sign up for it. As such, the author and committee
may wish to consider deleting the retroactive provision of
this bill
2)Will This Increase or Decrease The Number of Eligible CARE
Participants? In its proposed order that its scheduled to
take up today, the CPUC suggests raising the eligibility
threshold for CARE participants from 150% to 175% of poverty
level. However, this bill statutorily requires the CPUC to
adopt the same income and eligibility requirements for the
CARE program that are in place for ULTS program, which is set
at 150% of the federal poverty level. The author and
committee may wish to consider the wisdom of tying CARE
program eligibility to ULTS program eligibility.
3)Increasing Outreach to Encourage CARE Program Participation .
The bill requires the IOUs to provide customer information
about CARE on virtually all contacts between the utility and
its customers, including all calls to customer service, as
well as calls for making payment arrangements, collections,
and reconnections.
Page 3, Line 30 of the bill requires that a message describing
the CARE program be played on all calls made by customers to
the IOUs customer service lines. Unfortunately, this message
requirement is bound to delay customer response and perhaps
even irritate customers who may call their utility frequently.
As such, the author and committee may wish to consider if the
goals of the legislation would be better met if the message
requirement were simply limited to calls where the customer is
establishing service.
4)Payment Plans . The payment arrangement requirements beginning
on Page 4 of the bill generally codify a current utility
practice. Page 4, Line 19 of the bill requires the utility to
offer priority payment arrangements to customers who spend a
disproportionate portion of their income on energy costs.
This section may be difficult to administer and intrusive to
customers because it will require the utility to determine the
customer's income to administer this provision. The author
and committee may wish to consider whether this provision
serves the purposes of this bill, given that other parts of
the bill require that payment arrangements be offered.
5)Technical Amendment. Page 4, Line 38 appears to be a
vestige of a prior version of the bill. As such, the author
and committee may wish to consider deleting this language.
6)Related Legislation . SB 5X (Sher), which recently was
approved by the full Senate, provides $100 million in General
Fund money to "increase and supplement CARE discounts and to
increase enrollment in the CARE program." While this bill
doesn't technically conflict with SB 5x, the author and
committee may wish to consider whether and how to coordinate
the SB 5X funds with the requirements of this bill and the
changes to the CARE program proposed by the CPUC decision.
ASSEMBLY VOTES
Assembly Floor (75-0)
Assembly Appropriations Committee (19-0)
Assembly Energy Costs and Availability Committee
(17-0)
POSITIONS
Sponsor:
Author
Support:
None on file
Oppose:
None on file
Randy Chinn
AB 3X Analysis
Hearing Date: March 27, 2001