BILL ANALYSIS                                                                                                                                                                                                    




                                                                  AB 3 X1
                                                                  Page A
          CONCURRENCE IN SENATE AMENDMENTS
          AB 3 X1 (Wright)
          As Amended May 8, 2001
          2/3 vote.  Urgency
           
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          |ASSEMBLY:  |75-0 |(March 12,      |SENATE: |37-0 |(May 9, 2001)  |
          |           |     |2001)           |        |     |               |
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           Original Committee Reference:    E. C. & A.  

           SUMMARY  :  Takes numerous measures to increase the penetration  
          level of the California Alternative Rates for Energy (CARE)  
          program to help minimize the impacts of energy rate increases on  
          low-income and senior households.   

           The Senate amendments:   

           1)Effect technical clarifications regarding annual  
            cost-of-living adjustments to qualifying income levels for the  
            CARE program.

          2)Clarify that a one-time credit applies for newly enrolled CARE  
            customers of gas corporations during a specified period of  
            time. 
           
          EXISTING LAW  authorizes the CARE program to provide discounted  
          electric and gas service to qualified low-income households and  
          is funded by a rate surcharge on energy bills.  The current  
          level of discount is 15%.  CARE customers were exempted from the  
          November 2000 rate increase order of the California Public  
          Utilities Commission (CPUC), so CARE rates are effectively  
          22-23% lower than other residential rates for these services.   
          The current program provides for a dollar amount administrative  
          cost recovery for all utilities participating in the program,  
          but provides for no unified, specific outreach.

          AS PASSED BY THE ASSEMBLY  , this bill:  

           1)Required CPUC to immediately adopt regulations to deem a  
            customer enrolled in the CARE program before August 1, 2001,  
            to be enrolled retroactive to the effective date of the  
            measure, notwithstanding Public Utilities Code Section 453 et  
            al. 









                                                                  AB 3 X1
                                                                  Page B
          2)Required energy utilities to send out information about the  
            CARE program, in a distinctive fashion, on customer bills for  
            three consecutive bill cycles beginning after the effective  
            date of this bill.  

          3)Required that they include CARE subscription forms in the bill  
            envelope and refer to them in the bill information notice so  
            those customers can mail in the subscription with their bill  
            payments.  

          4)Required CPUC to administer a program of targeted outreach  
            about the CARE program to low-income and senior communities.

          5)Provided for extended informal payment arrangements for of up  
            to 12 months for CARE and residential customers, to prevent  
            disconnection of gas and electric services.  The extended  
            payment applies for customers that have experienced  
            significant rate increases.

           FISCAL EFFECT  :  None

           COMMENTS  :  The current energy crisis and the steep increases in  
          natural gas rates, combined with recent increases in electric  
          service rates, have hit low-income and senior households very  
          hard.  Senior and low-income households pay a disproportionate  
          amount of their income out for energy costs and do not have the  
          flexibility to absorb significant energy cost increases over  
          prolonged periods of time.  The CARE program can be very helpful  
          in minimizing the effects of recent rate increases, as it  
          provides direct rate discounts on gas and electric service to  
          qualified low-income households.  

          Unfortunately, the CARE program accounts for only about 6% of  
          residential electric and gas service subscribers currently.   
          Compared to Universal Lifeline Telephone Service (ULTS), which  
          provides reduced rate basic telephone service to about 22% of  
          all residential telephone lines in California, the CARE program  
          lags behind in getting all qualified households subscribed.  It  
          is estimated that 95% of eligible households have ULTS service,  
          but as few as 45%-55% of households are receiving CARE program  
          rates for electric and gas services<1>.   Increasing the number  
          of subscribers on the CARE program gets rate relief to qualified  
          user groups.  Making electric and gas service more affordable by  
          getting qualified customers subscribed to the program may  

          ---------------------------
          <1> Subscriber data provided by Sempra, Southern California  
          Edison, PG&E, Verizon and Pacific Bell.







                                                                  AB 3 X1
                                                                  Page C
          actually reduce uncollectibles to electric and gas service  
          providers.

          This bill directly addresses both the low enrollment rates for  
          the program and the current affordability problems associated  
          with steep energy rate increases.  This bill orders direct  
          outreach through customer bills and targeted outreach to  
          low-income and senior households under the auspices of the CPUC.  
            This bill also orders energy companies to provide information  
          on all customer service lines, on all disconnect calls, payment  
          arrangement calls, and other types of calls about electric and  
          gas service rates and bills.  This type of broad outreach should  
          result in significantly increased enrollment for the CARE  
          program and should help minimize the effects of gas and electric  
          rate increases on low-income and senior customers, the two  
          hardest hit groups.   

          This bill also addresses a short-term solution to keeping  
          customers in these groups from being disconnected by prohibiting  
          disconnection of CARE and residential customers who have agreed  
          to partial payment arrangements for a period not to exceed  
          twelve months.  This bill also requires energy providers to tell  
          customers about rate levelizing as an additional prevention  
          against disconnection.  Rate levelizing, especially if begun in  
          the summer months, can save customers on monthly bills by  
          minimizing differences in peak rates and usage.  Rate levelizing  
          allows customers to pay averages over twelve months of the total  
          year's energy costs, and over the course of the year it makes  
          utilities whole with regard to revenues.

          This bill should result in increased penetration for the CARE  
          program at a time when customers are being especially hard hit  
          by large rate increases that conservation alone cannot mitigate.  
            For the long term, this bill ensures that more qualified  
          customers have access to reduced rates for energy services.

           
          Analysis Prepared by  :  Kelly Boyd / E. C. & A. / (916) 319-2083 

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