BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 3X - Wright Hearing
Date: May 1, 2001 A
As Amended: April 26, 2001
FISCAL/URGENCY B
X
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3
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 makes findings regarding high energy prices and
the burden of such prices on low-income consumers, and
articulates legislative intent to protect low-income and
senior customers from skyrocketing energy rates.
This bill permits any existing gas customer who enrolls in
the CARE program before October 1, 2001 to be deemed to
have enrolled in the program as of the effective date of
this bill. As a consequence, the customer will receive a
discount equal to the pro-rated average monthly CARE
discount for that gas corporation from October 2000 to
March 2001.
This bill requires the California Public Utilities
Commission (CPUC) to annually adjust the income eligibility
level for CARE customers to account for inflation.
This bill requires the utilities to offer payment
arrangements to customers having trouble paying their
bills, with payments spread over not more than 12 months.
This bill prohibits the IOUs from disconnecting CARE
customers if the customer is in compliance with the payment
arrangements or if the IOU has been provided with
notification that an energy assistance provider is
forwarding payment sufficient to prevent disconnection.
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, and limits associated expenditures to $500,000.
This bill has an urgency provision.
BACKGROUND
Current regulations limit CARE eligibility to those
households earning less than 175% 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.
CARE costs are recovered through a surcharge on energy
bills and the cost to ratepayers for the CARE program is
about $195 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, 44% of the
eligible customers participate, while in Southern
California Edison's (SCE) service area, 68% of those
eligible are participating. Statewide, roughly 1 in 5
residential customers is eligible for CARE, but only about
60% of eligible CARE customers participate.
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 October 1, 2001 is
actually deemed to have enrolled on the effective date of
this bill with respect to natural gas service, providing
customers with a one-time retroactive rate reduction.
The calculation of the discount is as follows: The gas
corporation determines its average CARE discount for each
month from October 2000 through March 2001. For
illustrative purposes, that amount is $7. If this bill
becomes effective June 1, 2001 then each gas customer for
that utility that enrolls in the CARE program before
October 1, 2001 will receive a one-time credit equal to
$7 for each month from June 1, 2001 to the date the
customer enrolls.
The CARE discount for natural gas is relatively small,
averaging around $7 per month for Southern California Gas
Company (Gas Company). It estimates this retroactive
feature will cost customers about $400,000. (By
comparison the total Gas Company CARE costs are around
$30 million annually.)
2.Inflation Adjustment . This bill requires the CPUC to
annually adjust the income eligibility level for CARE
customers to account for inflation. This requirement
mirrors the Universal Lifeline Telephone Service (ULTS)
program, which adjusts income eligibility annually.
3.Reaching Out To Drive Up Enrollment . Enrollment
percentages in the CARE program have been relatively
poor. While about one million households participate in
CARE, enrollment in the ULTS program for telephone
service (which uses a slightly expanded income criteria)
has 3.3 million participants. This bill seeks to improve
CARE participation by requiring additional outreach using
census block data. The bill limits the amount of money
available to be spent on this outreach effort to
$500,000, with the money coming from ratepayers via the
public purpose program surcharge imposed on each non-CARE
customer electric and natural gas bill.
4.Related Legislation . SB 5X (Sher), Chapter 7, Statutes
of 2001, provided $100 million in General Fund money to
"increase and supplement CARE discounts and to increase
enrollment in the CARE program."
SB 2X (Alarcon), which is pending before this committee,
provides for some revisions to the CARE program including
expanded outreach, periodic adjustments to the discount
level, and a rate rollback and freeze for CARE customers.
ASSEMBLY VOTES
Assembly Floor (75-0)
Assembly Appropriations Committee (19-0)
Assembly Energy Cost and Availability Committee(17-0)
POSITIONS
Sponsor:
Author
Support:
Advisory Council of the Los Angeles County Area Agency on
Aging
American Association of Retired Persons
California HIV Advocacy Coalition/Southern California
Region
Los Angeles County Board of Supervisors
Western Center on Law and Poverty
Oppose:
None on file
Randy Chinn
AB 3X Analysis
Hearing Date: May 1, 2001