BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
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|SB 1217 - Polanco |Hearing Date:May 11, 1999 | S|
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|As Amended:May 6, 1999 | | B|
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DESCRIPTION
Part 1:
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.
Part 2:
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 makes legislative findings that the Department of
Community Services and Development (Department) has
administered federal low income energy assistance and
weatherization programs and has successfully collaborated
with community service providers in administering these
programs. This bill states the intent of the Legislature
to strengthen the current network of community service
providers by transferring California's low income energy
assistance programs to the Department. This bill further
states that it is the intent of the Legislature that any
evaluation of the effectiveness of such programs be based
on the degree to which the provision of the services allows
maximum program accessibility to low-income communities by
agencies that have effectively delivered services to those
communities.
This bill transfers the low income rate assistance program
and the low income energy efficiency program to the
Department on June 1, 2000.
This bill requires the Department to utilize the
contractors currently under contract with the utilities.
This bill requires the policies, procedures, and
eligibility requirements in effect on April 1, 1999 to
remain in effect. The Department is permitted to change
contractors and alter those policies, procedures, and
eligibility requirements after considering public input.
In selecting new contractors the Department is required to
give special consideration to local public and private
nonprofit organizations currently doing similar work.
This bill requires the Department to contract out the
outreach efforts for the low income rate assistance
program.
This bill requires the Bureau of State Audits to conduct a
performance and financial audit of the Department with
regard to its administration of these programs no later
than July 1, 2002 and every two years thereafter.
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 outreach for low income rate assistance programs
be contracted out?
3) Should competitive bidding for low income energy
efficiency programs be delayed?
BACKGROUND
Part 1:
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 portion of the bill 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.
Part 2:
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
which costs $4 million annually.
COMMENTS
1)Part 1 of the bill is sponsored by the CPUC to create 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 of the language contained in the May 6
amendments to the bill.
2)While portions of this bill (Part 1) are substantially
similar to AB 2461 (Campbell) of 1998, this bill 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)Part 2 of the bill transfers responsibility for the CARE
and LIEE programs from the utilities and the CPUC 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 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 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 Southern California Edison, Sempra Energy, the Office
of the Ratepayer Advocate, and the Latino Issues Forum
oppose this part of the bill, contending it fixes
something that isn't broken. The CPUC is currently
reviewing the administration of the LIEE program and this
bill prejudges the outcome of 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. Sempra
opposes the transfer, arguing that current program
administration is efficient and transferring it raises
accountability issues, may decrease administrative
efficiency, and may let non-utility customers benefiting
from a program paid for by utility ratepayers. Southern
California Edison, ORA, and the El Dorado County
Department of Community Services raise questions as to
the ability of the Department to efficiently administer
these programs.
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 or community
service organizations to improve its outreach effort.
4)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. The CPUC has required the
utilities to propose plans for competitively bidding the
LIEE programs. Transferring the programs to the
Department will delay the competitive bid effort. While
the bill permits the Department to change contractors,
there is no mandate or timeframe to do so.
5)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:
El Dorado County Department of Community Services
Inyo Mono Advocates for Community Action, Inc.
Latino Issues Forum
Office of Ratepayer Advocates
Southern California Edison
Sempra Energy
Randy Chinn
SB 1217 Analysis
Hearing Date: May 11, 1999