BILL ANALYSIS 1 1 SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE DEBRA BOWEN, CHAIRWOMAN ------------------------------------------------------------ |SB 1217 - Polanco |Hearing Date:May 11, 1999 | S| |------------------------------+--------------------------+--| |As Amended:May 6, 1999 | | B| |------------------------------+--------------------------+--| | | | | |------------------------------+--------------------------+--| | | | 1| |------------------------------+--------------------------+--| | | | 2| |------------------------------+--------------------------+--| | | | 1| |------------------------------+--------------------------+--| | | | 7| |------------------------------+--------------------------+--| | | | | ------------------------------------------------------------ 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