BILL ANALYSIS                                                                                                                                                                                                    1
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   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:As proposed to be  |                          | B|
|amended                       |                          |  |
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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  requires the Bureau of State Audits to  conduct a  
performance and financial audit of the Department of  
Community Services and Development (Department) to consider  
the efficiency of the Department's administration of  
federal low income energy assistance programs.  A report is  
to be presented to the Legislature by July 1, 2000.

  This bill  requires the California Public Utilities  
Commission (CPUC), if it elects to competitively bid the  
state's low income energy assistance program, to evaluate  
the bids based on cost and quality criteria.  The quality  
criteria shall include whether the bidder has experience  
and is effective at doing similar work, has knowledge of  
the targeted communities, and has an ability to reach  
targeted communities.

                         KEY QUESTION
  
If low income energy assistance programs are subject to  
competitive bid, should an organization's ability to  
deliver high quality of service be a bid criteria?

                          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.   
The bill requires that if the CPUC contracts out the LIEE  
programs on a competitive-bid basis, the bid criteria shall  
include quality of service criteria.  The bill also  
requires an audit of the Department to see if they would be  
an appropriate entity for administering these programs in  
the future.

                           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 calls for an audit of the capabilities  
  of the Department.  The purpose of the audit is to see if  
  the Department would be an appropriate organization for  
  administering existing low income energy efficiency  
  programs.  Currently the utilities administer these  
  programs under the guidance of the CPUC.  This part of  
  the bill also requires the CPUC to consider quality of  
  service criteria if it elects to put the low income  
  energy efficiency programs out to competitive bidding.   
  These quality of service criteria include experience,  
  effectiveness at doing similar work, knowledge of the  
  effected communities, and an ability to reach the  
  effected communities.

4)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 (prior version):
  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 (prior version):
  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