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STATE OF CALIFORNIA

Public Utilities Commission

San Francisco

M e m o r a n d u m

Date:

March 5, 2008

   

To:

The Commission

(Meeting of March 13, 2008)

     

From:

Bryan Crabb, Legislative Liaison

Office of Governmental Affairs (OGA) - Sacramento

   

Subject:

AB 1763 (Blakeslee) - Energy: disclosures on billing statements.

As introduced: January 8, 2008

 

LEGISLATIVE SUBCOMMITTEE RECOMMENDATION: SUPPORT WITH TECHNICAL AMENDMENTS

SUMMARY OF THE BILL:

This bill would require each electric and gas corporation to disclose and itemize the charges for each rate block (tier) above the baseline rate on customers' billing statements.

SUMMARY OF SUPPORTING ARGUMENTS FOR RECOMMENDATION:

This bill would provide customers with detailed information and monthly documentation regarding the cost of their energy use by rate tier and the potential for positive financial gains from further conservation efforts.

SUMMARY OF SUGGESTED AMENDMENTS:

The proposed amendments would clarify that charges be detailed by each rate block including the first (baseline) tier. We also suggest adding further definition to the requirement that utilities provide line item delineation of (1) number of kWh or gas therms used specific to each tier above (and including) baseline; (2) the rate at which kWh or gas therm use is charged within each tier; (3) the total line item charge for kWh or gas therm use within each tier resulting from (1) multiplied by (2), and (4) the total commodity charge resulting from the sum of each line item. Legislation should be limited to the state's largest utilities: PG&E, SCE, SDG&E, SoCalGas and Southwest Gas Corporation.

Energy Division's suggested amendments are bold italicized and are confined to the third paragraph, first page of the proposed legislation. The suggested edits consist of inserted text, and no other text within the paragraph was eliminated:

· This amendment would cause no material change to existing law, policy and practice. However, this would be an improvement and provide clarification in comparison to existing billing methodologies.

DIVISION ANALYSIS (Energy Division):

· This requirement and resulting documentation provide reinforcement and affirmation of conservation efforts.

· Proposed legislation amends Section 739 of the Public Utilities Code, which provides for baseline quantities of gas and electricity necessary to supply a significant portion of the reasonable energy needs of the average residential customers.

· Various California utility companies itemize customer use by stating kWh or gas therm use and associated cost per kWh/therm, but do not show the corresponding subtotal cost for use within that tier. Proposed amendments to legislation would establish customer billing uniformity, and would provide immediate information to customers regarding the resulting financial impact of conservation efforts.

· Legislation is most likely necessary to facilitate this billing improvement rather than depending on California utilities to independently and uniformly undertake these billing improvements on their own.

· Itemization of customer use by tier helps accomplish the California Public Utilities Commission's objectives regarding conservation measures and providing reasonable rates to customers.

PROGRAM BACKGROUND:

Current policy requires tiered billing rates for gas and electricity associated with baseline allowances and geographical baseline territories, but has not established uniformity for California's four major electric/gas utilities (PG&E, SCE, SDG&E, SoCalGas) re: line-itemization of energy use, corresponding cost by tier, and subtotaled cost for each tier.

LEGISLATIVE HISTORY:

AB1X legislation (2001) froze rates for electric use in the first two tiers of consumption, consisting of use up to 100% of baseline plus a second block equal to 30% above baseline. The large utilities (PG&E, SCE, and SDG&E) established an "increasing block" rate structure for electric use with either four or five tiers, with cost increasing as a customers' total use graduated to the next tier of consumption. Previous to and separate from this legislation, California mandated "baseline" allowances (P.U. Code 739) requiring utilities to provide 50% to 60% of the average customer's kWh or gas therm needs at a "baseline" rate.

FISCAL IMPACT:

None. Bill enactment does not change existing work duties, and the changes neither enhance nor hinder the California Public Utilities Commission's ability to perform its existing work load.

STATUS: AB 1763 is pending hearing in the Assembly Committee on Utilities & Commerce.

SUPPORT/OPPOSITION: None on file.

STAFF CONTACTS:

Bryan Crabb brd@cpuc.ca.gov

Office of Governmental Affairs (916) 322-8858

Sean H. Gallagher SHG@cpuc.ca.gov

Director - Energy Division (415) 703-2059

Felix Robles FVR@cpuc.ca.gov

Staff - Energy Division (415) 703-2818

Date: March 6, 2008

BILL LANGUAGE:

BILL NUMBER: AB 1763 INTRODUCED

INTRODUCED BY Assembly Member Blakeslee

JANUARY 8, 2008

An act to amend Section 739 of the Public Utilities Code, relating

to energy.

AB 1763, as introduced, Blakeslee. Energy.

Under existing law, the Public Utilities Commission has regulatory

authority over public utilities, including electrical corporations

and gas corporations, as defined. Existing law authorizes the

commission to fix the rates and charges for every public utility, and

requires that those rates and charges be just and reasonable.

Existing law requires the commission to designate a baseline quantity

of electricity and natural gas necessary for a significant portion

of the reasonable energy needs of the average residential customer

and requires that electrical corporations and gas corporations file

rates and charges, to be approved by the commission, providing

baseline rates that apply to the first and lowest block of an

increasing block rate structure. Existing law requires the commission

to establish an appropriate gradual differential between the rates

for the respective blocks of usage.

This bill would require each electrical corporation and each gas

corporation to disclose on the customer's billing statement, the

charges incurred by the customer under each block rate above the

baseline rate. The bill would declare the intent of the Legislature

that in order to enable electricity and gas customers to better

understand how undertaking efficiency measures will lower their

utility bills, electrical corporations and gas corporations should

disclose those charges incurred by the customer under each block rate

above the baseline rate.

Under existing law, a violation of the Public Utilities Act is a

crime.

Because the provisions of this bill would be a part of the act,

the bill would impose a state-mandated local program by creating a

new crime.

The California Constitution requires the state to reimburse local

agencies and school districts for certain costs mandated by the

state. Statutory provisions establish procedures for making that

reimbursement.

This bill would provide that no reimbursement is required by this

act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes.

State-mandated local program: yes.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. The Legislature finds and declares that in order to

enable electricity and gas customers to better understand how

undertaking efficiency measures will lower their utility bills,

electrical corporations and gas corporations should disclose those

charges incurred by the customer under each block rate above the

baseline rate.

SEC. 2. Section 739 of the Public Utilities Code is amended to

read:

739. (a) As used in this section:

(1) "Baseline quantity" means a quantity of electricity or gas

allocated by the commission for residential customers based on from

50 to 60 percent of average residential consumption of these

commodities, except that, for residential gas customers and for

all-electric residential customers, the baseline quantity shall be

established at from 60 to 70 percent of average residential

consumption during the winter heating season. In establishing the

baseline quantities, the commission shall take into account climatic

and seasonal variations in consumption and the availability of gas

service. The commission shall review and revise baseline quantities

as average consumption patterns change in order to maintain these

ratios.

(2) "Residential customer" means those customers receiving

electrical or gas service pursuant to a domestic rate schedule and

excludes industrial, commercial, and every other category of

customer.

(b) The commission shall designate a

baseline quantity of gas and electricity which is necessary to supply

a significant portion of the reasonable energy needs of the average

residential customer. In estimating those quantities, the commission

shall take into account differentials in energy needs between

customers whose residential energy needs are currently supplied by

electricity alone or by both electricity and gas. The commission

shall develop a separate baseline quantity for all-electric

residential customers. For these purposes, "all-electric residential

customers" are residential customers having electrical service only

or whose space heating is provided by electricity, or both. The

commission shall also take into account differentials in energy use

by climatic zone and season.

(b)

(c) (1) The commission shall establish a standard

limited allowance which shall be in addition to the baseline quantity

of gas and electricity for residential customers dependent on

life-support equipment, including, but not limited to, emphysema and

pulmonary patients. A residential customer dependent on life-support

equipment shall be given allocated a

higher energy allocation than the average residential customer.

(2) "Life-support equipment" means that equipment which utilizes

mechanical or artificial means to sustain, restore, or supplant a

vital function, or mechanical equipment which is relied upon for

mobility both within and outside of buildings. "Life-support

equipment," as used in this subdivision, includes all of the

following: all types of respirators, iron lungs, hemodialysis

machines, suction machines, electric nerve stimulators, pressure pads

and pumps, aerosol tents, electrostatic and ultrasonic nebulizers,

compressors, IPPB machines, and motorized wheelchairs.

(3) The limited additional allowance

specified in this subdivision shall also be made available to

paraplegic and quadriplegic persons in consideration of the increased

heating and cooling needs of those persons.

(4) The limited additional allowance

specified in this subdivision shall also be made

available to multiple sclerosis patients in consideration of the

increased heating and cooling needs of those persons.

(5) The limited additional allowance

specified in this subdivision shall also be made available to

scleroderma patients in consideration of the increased heating needs

of those persons.

(6) The limited allowance specified in this subdivision

shall also be made available to persons who are being treated for a

life-threatening illness or have a compromised immune system,

provided that if a licensed physician

and surgeon or a person licensed pursuant to the Osteopathic

Initiative Act certifies in writing to the utility that the

additional heating or cooling allowance, or both, made

available pursuant to this subdivision is medically

necessary to sustain the life of the person or prevent deterioration

of the person's medical condition.

(c)

(d) (1) The commission shall require that every

electrical and gas corporation file a schedule of rates and charges

providing baseline rates. The baseline rates shall apply to the first

or lowest block of an increasing block rate structure which shall be

the baseline quantity. In establishing these rates, the commission

shall avoid excessive rate increases for residential customers, and

shall establish an appropriate gradual differential between the rates

for the respective blocks of usage.

(2) In establishing residential electric and gas rates, including

baseline rates, the commission shall assure that the rates are

sufficient to enable the electrical corporation or gas corporation to

recover a just and reasonable amount of revenue from residential

customers as a class, while observing the principle that electricity

and gas services are necessities, for which a low affordable rate is

desirable and while observing the principle that conservation is

desirable in order to maintain an affordable bill.

(3) At least until December 31, 2003, the commission shall require

that all charges for residential electric customers are volumetric,

and shall prohibit any electrical corporation from imposing any

charges on residential consumption that are independent of

consumption, unless those charges are in place prior to the

effective date of the act that added this paragraph

April 12, 2001 .

(d) As used in this section:

(1) "Baseline quantity" means a quantity of electricity or gas for

residential customers to be established by the commission based on

from 50 to 60 percent of average residential consumption of these

commodities, except that, for residential gas customers and for

all-electric residential customers, the baseline quantity shall be

established at from 60 to 70 percent of average residential

consumption during the winter heating season. In establishing the

baseline quantities, the commission shall take into account climatic

and seasonal variations in consumption and the availability of gas

service. The commission shall review and revise baseline quantities

as average consumption patterns change in order to maintain these

ratios.

(2) "Residential customer" means those customers receiving

electrical or gas service pursuant to a domestic rate schedule and

excludes industrial, commercial, and every other category of

customer.

(e) Each electrical corporation and each gas corporation shall

disclose on the billing statement of a customer, the charges incurred

by the customer under each block rate above the baseline rate.

(e)

(f) Wholesale electrical or gas purchases, and the

rates charged therefor, are exempt from this section.

(f)

(g) Nothing contained in this section shall be

construed to prohibit experimentation with alternative gas or

electrical rate schedules for the purpose of achieving energy

conservation.

SEC. 3. No reimbursement is required by this act pursuant to

Section 6 of Article XIII B of the California Constitution because

the only costs that may be incurred by a local agency or school

district will be incurred because this act creates a new crime or

infraction, eliminates a crime or infraction, or changes the penalty

for a crime or infraction, within the meaning of Section 17556 of the

Government Code, or changes the definition of a crime within the

meaning of Section 6 of Article XIII B of the California

Constitution.

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