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