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
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<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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