BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
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|SB 1217 - Polanco |Hearing Date:April 27, | S|
| |1999 | |
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|As Amended:April 21, 1999 | | B|
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DESCRIPTION
Current law requires the California Public Utilities
Commission (CPUC) to administer six telecommunications
programs, created pursuant to statute and paid for by
consumers via their telephone bills. The CPUC appoints
advisory boards to each of these programs to assist in the
administration.
This bill codifies the advisory boards for each of the six
programs and creates accounts in the state treasury to hold
the program funds.
Current law establishes programs to finance cost-effective
energy efficiency and conservation activities and low
income rate assistance which are funded by ratepayers and
administered by utility companies.
This bill transfers the low income rate assistance program
and the low income energy efficiency program to the
Department of Community Services and Development on June 1,
2000.
This bill designates San Diego Gas & Electric Company,
Southern California Edison Company, Pacific Gas & Electric
Company, and Southern California Gas Company as
administrators of the remaining programs through December
31, 2001. This bill requires the CPUC, by January 1, 2002,
to study the feasibility of administering these activities
through a nonprofit public benefit corporation.
This bill requires the Department to utilize the
contractors in place as of April 1, 1999.
This bill requires the Department to utilize the policies,
procedures, and eligibility requirements in effect on April
1, 1999, and permits the Department to alter those
policies, procedures, and eligibility requirements after
considering public input.
KEY QUESTIONS
1)Should administration of low income energy efficiency and
rate assistance programs be transferred to the Department
of Community Services and Development?
2)Should the current contractors for these programs be
retained indefinitely pursuant to statute?
BACKGROUND
The CPUC has implemented six statutorily authorized
programs, funded by utility customers, whose aggregate
revenues exceed $1 billion annually. The funds are held in
trust. According to the CPUC, both the Attorney General
and the Department of Finance have informally expressed
their preference that the funding for these programs be
kept with the state and that the advisory boards be
codified.
The specific advisory boards and funds created by this bill
include:
a) The California High-Cost Fund-A Administrative
Committee and Fund, designed to keep rates for rural
telephone companies low.
b) The California High Cost Fund-B Administrative
Committee and Fund, designed to keep rates for rural
customers low.
c) The Universal Lifeline Telephone Service Trust
Administrative Committee and Fund, designed to
provide low cost telephone service to low income
households.
d) The Deaf and Disabled Telecommunications
Program Administrative Committee and Fund, designed
to provide discounted telephone service and
equipment to the deaf and disabled.
e) The Payphone Service Providers Committee and
Fund, designed to provide consumer protection to pay
telephone customers.
f) The California Teleconnect Fund Administrative
Committee and Fund, designed to fund advanced
communications services for schools, libraries, and
community organizations.
This bill doesn't create any new programs or raise any
fees; it simply formalizes the current programs by
codifying the CPUC-created advisory boards and creates
funds in the state treasury to hold the monies from each
program. This part of the bill is substantially similar to
AB 2461 (Campbell) of last year, which passed this
committee 8-0 but was vetoed by the Governor because it
provided for additional civil service positions.
The remaining provisions of the bill deal with the
administration of the California Alternate Rates for Energy
program (CARE), a discount energy rate program for low
income customers, and the Low Income Energy Efficiency
program (LIEE), an energy efficiency program for low income
customers. The CARE program costs $125 million annually and
provides eligible low income gas and electric customers
with a 15% credit against their bill. The LIEE program
costs $60 million annually and provides home weatherization
and energy efficiency devices, such as energy efficient
lighting, to qualifying customers, whether they are
property owners or renters. The LIEE programs are
contracted out to numerous community-based organizations
usually, but not exclusively, on a competitive-bid basis.
Both the CARE and LIEE programs, which are currently
administered by the utilities, will be transferred to the
Department of Community Services and Development
(Department) under this bill. The Department currently
administers a similar program for the federal government.
COMMENTS
1)Sponsored by the CPUC, this bill creates a continuous
appropriation of the program funds to ensure these
programs aren't interrupted by the unpredictability of
the state budget process and make the funding less
susceptible to diversion for other purposes. The CPUC is
not the sponsor the language contained in the April 21
amendments to the bill.
2)While portions of this bill are substantially similar to
AB 2461 (Campbell) of 1998, it differs slightly in the
appointment of the advisory board members. Both bills
require the CPUC to appoint the board members and to
attempt to achieve balanced public participation for each
board. This bill additionally calls for the membership
of the board to reflect, to the extent possible and
consistent with existing law, the ethnic and gender
diversity of the state.
3)Some provisions in this bill were dealt with when the
committee heard SB 1194 (Sher) on April 13. The
committee may wish to making conforming amendments to
this bill by deleting the language contained on page 11,
lines 10-21.
4)The bill transfers responsibility for the CARE and LIEE
programs from the utilities to the Department. The goal
is to ensure that the current delivery mechanism for low
income energy assistance programs remains intact,
including the ability to deliver systems through
community-based organizations. According to the author,
community-based organizations have demonstrated the
ability to effectively deliver energy assistance programs
to underserved communities. Supporters of the bill argue
that such a transfer is appropriate because the
Department has over 14 years of experience administering
energy assistance and weatherization programs for low
income families. They argue that the Department will be
able to coordinate the provision of the energy efficiency
programs they administer on behalf of others with the
energy efficiency programs transferred from the
utilities, thereby avoiding duplication of effort and
increasing program efficiency.
The Office of the Ratepayer Advocate opposes this part of
the bill, contending this provision fixes something that
is not broken. The CPUC is currently in the process of
reviewing the administration of the LIEE program and this
bill prejudges that process. ORA notes that the CPUC
recently rejected shifting the program to a state agency
because of concerns that it could complicate the process
and procedures for fund administration and may give rise
to program oversight issues.
Shifting the CARE program also raises particular concerns
because the current program is a credit on the utility
bill. If such a program were administered by a state
agency the administration would be much more complicated
and costly. Rather than a relatively straightforward bill
credit where real money doesn't change hands, a
state-administered program would probably require money
to be transferred from the utility to the state agency,
significantly complicating the accounting. If the
concern is that the CPUC and the utilities have done an
inadequate job of reaching out to low income households
then a more direct approach might be for the CPUC and
utilities to consult with the Department to improve its
outreach effort.
5)The bill also requires the Department to use the LIEE
program contractors which were in place as of April 1,
1999 to ensure that the current delivery mechanism for
low income energy assistance programs remains intact,
including the ability to deliver systems through
community-based organizations.
This provision is also opposed by the ORA, which sees no
reason to lock in the current set of contractors, and
believes such action provides no incentive to assure that
low-income customers are receiving the most benefit for
the least cost. By locking in the existing set of
contractors the opportunity to competitively bid this
work is lost, and any inefficiencies resulting from this
lock-in will either a) reduce the benefits available to
low income customers, or b) cost the general body of
ratepayers more. The author and committee may wish to
consider amending the bill by requiring the program
administrators to consider the experience of the
contractor when evaluating the contractor bids and to
consider whether the contractor was a community-based
organization, without locking the current contractors in
place indefinitely. This would provide an alternate
means of recognizing the value of existing contractors
and community based organizations while preserving the
benefits of competitive bidding.
6)At least two other bills deal with this same issue, SB
1194 (Sher) and AB 1393 (Wright), so the committee will
consider this subject matter again soon.
POSITIONS
Support:
ASCEEP
Bay Area Poverty Resource Council
California Department of Community Services and Development
Campesinos Unidos, Inc.
Community Enhancement Services
CPUC
Eddie Dillen Companies
MAAC Project
Maravilla Foundation
Pacific Asian Consortium in Employment
Pacific Bell
Riverside County Department of Community Action
San Bernardino County Community Services Department
Santa Barbara County Community Action Commission
Spectrum Community Services, Inc.
Inter-City Energy Systems, Inc.
Ventura County Commission on Human Concerns & Community
Development
Veterans in Community Service, Inc.
Oppose:
Office of Ratepayer Advocates
Randy Chinn
SB 1217 Analysis
Hearing Date: April 27, 1999