BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1393 - Wright Hearing
Date: June 22, 1999 A
As Amended: June 16, 1999 FISCAL B
1
3
9
3
DESCRIPTION
This bill requires certain low-income energy assistance
programs to be administered by the electric and gas
utilities that participate in the California Alternative
Rates for Energy (CARE) program (Pacific Gas & Electric,
Southern California Edison, Southern California Gas and San
Diego Gas & Electric companies).
The bill further establishes specific factors to be
included in the bidding criteria for any low-income energy
assistance services contracted out by the utilities. The
factors include the bidder's experience in delivering
programs and services to and ability to reach targeted
communities, ability to utilize, employ and provide job
training to local people, and other attributes that benefit
local communities. The California Public Utilities
Commission (CPUC) is authorized to modify these criteria
based on public input.
KEY QUESTIONS
1.Should utilities continue to administer energy assistance
programs for low-income customers and, if so, should
utility administration be fixed in statute?
2.Should the bidding criteria for contracts associated with
these programs include non-cost factors designed to
advantage bidders with local experience?
3.How should the policy conflict between this bill and SB
1217 (Polanco), which requires the Bureau of State Audits
to study transferring administration of these programs to
the Department of Community Services and Development, be
reconciled?
BACKGROUND
AB 1890 (Brulte), Chapter 854, Statutes of 1996, required
low-income energy assistance programs for electricity
customers to be continuously funded at not less than 1996
levels, subject to a CPUC assessment of customer need.
Funds for these, and similar low-income programs for gas
customers, are collected through a surcharge on gas and
electric utility bills. Current funding for these programs
is about $180 million per year for all utilities.
The programs include CARE, a 15% rate discount, and
targeted energy efficiency services, such as weatherization
to improve the energy efficiency of low-income homes. The
programs are currently administered by the utilities,
although on-the-ground delivery of the energy efficiency
services is often contracted out to community-based
organizations.
Prior to AB 1890, the CPUC required utilities to administer
the various services provided by these programs as part of
their regulated service. In the wake of AB 1890, the CPUC
established the Low Income Governing Board (LIGB) to
oversee the administration of these programs. The intent
was for the LIGB to preside over the transfer of the
programs to an independent administrator who would be
accountable to the LIGB. The proposed independent
administration of these programs, i.e. outside of state
government and civil service requirements, prompted the
California State Employees Association to intervene and
challenge the CPUC's proposal at the State Personnel Board
(SPB). The challenge led to a SPB ruling rejecting the
CPUC's creation of the LIGB as independent bodies.
In response to the ruling and to provide for continuing
administration of these and other energy efficiency and
conservation programs, the CPUC placed the programs under
utility administration through 2001. This bill would
permanently place the administration of energy assistance
programs for low-income customers with the utilities.
The bill also establishes non-cost factors to be included
in bidding criteria for contracts funded by these programs.
The factors relate to prospective bidders' familiarity
with and ability to benefit the communities targeted by the
programs. According to the author, inclusion of "quality
of service" (non-cost) criteria will lead to the best
qualified contractors, increase the effectiveness of the
programs and ensure that under-served communities are
better served.
COMMENTS
1.Should utility administration be assigned in statute?
Existing law does not explicitly address who administers
the low-income energy assistance programs described in
this bill, but they have historically been administered
by the utilities. The vast majority of the funding
(approximately $125 million of the $180 million annual
revenues) is devoted to the CARE program, which provides
rate assistance to qualified customers in the form of a
bill credit. Administration of this program by someone
other than the entity that handles billing would
complicate the procedure for issuing discounts and could
add to the costs. The utilities' ability to maintain
continuous service is another advantage for customers
that rely on the program. On the other hand, the CPUC is
in the process of reviewing options for administration of
these and other public purpose energy programs and a
better alternative to utility administration that might
emerge from that process would be foreclosed by this
bill.
2.Will the CPUC retain oversight? Currently, the CPUC
maintains some oversight over the administration of these
programs, such as assessing customer need and approving
allocation of the funds. It also has the authority to
change administrators. Generally, assuring permanent
utility administration will effectively reduce the CPUC's
leverage over program administration by eliminating its
authority to change administrators. In addition, by
assigning administration of the programs to the utilities
without defining what "administration" includes, this
bill may create some confusion about the CPUC's
continuing authority to broadly oversee allocation of
funds for the programs. The Committee may wish to
consider whether the bill should clarify that utility
administration is "subject to CPUC oversight."
3.Related legislation. SB 1217 (Polanco), approved by this
Committee on May 11, 1999 and currently awaiting referral
in the Assembly, contains provisions which are in
conflict with the policies proposed in this bill. The
first is intent language regarding the feasibility of
transferring administration of low-income energy
efficiency programs from the utilities to the Department
of Community Services and Development (CSD), which
currently administers a similar, but much smaller
federally-funded program. Secondly, SB 1217 requires the
Bureau of State Audits to assess the capacity of CSD to
assume administration of these programs and report to the
Legislature. Both are inconsistent with this bill's
objective of assigning administration of the programs to
the utilities.
4.Duplicative sections. This bill contains two separate
sections with essentially identical provisions, one
intended to apply to gas-related programs and the other
intended to apply to electric-related programs. The bill
could accomplish the same purpose by combining the two
sections into a single section that would apply to the
relevant gas and electric programs. In order to reduce
duplication, the Committee may wish to consider whether
these two sections should be combined.
ASSEMBLY VOTES
Assembly U & C Committee (11-0)
Assembly Appropriations Committee (21-0)
Assembly Floor (76-0)
POSITIONS
Support:
Office of Ratepayer Advocates
PG&E
Sempra Energy
Oppose:
None reported to Committee.
Lawrence Lingbloom
AB 1393 Analysis
Hearing Date: June 22, 1999