VIII. Comments on Draft Decision

The draft decision of the ALJ in this matter was mailed to the parties in accordance with Section 311(g)(1) of the Public Utilities Code and Rule 77.7 of the Rules of Practice and Procedure. Comments on the draft decision were filed by Bay Area Poverty Resource Council (BAPRC) and Association of California Community and Energy Services (ACCES), East Los Angeles Community Union (TELACU) and Maravilla Foundation, ORA, PG&E, SDG&E/SoCalGas, and SCE.

The comments raise the following issues, which we discuss in no particular order:

· Rate case recovery vs. recovery from PGC funds. SDG&E/SoCalGas reiterate assertions they made in their applications that they should recover the cost of appliance safety testing and certain call center personnel from the PGC charge rather than in their general rates. For the reasons already cited in the draft decision, we reject these arguments.

· Franchise Fees and Uncollectibles (FF&U): The IOUs assert that our discussion of FF&U does not have an adequate record to sustain it. While the IOU proposed budgets include items for FF&U, which would allow us to address the issue, it appears the item requires further study. We omit the discussion from the final decision.

· Budget tables and mathematical errors. The IOUs and ORA point out errors in a few tables and other numerical citations in the draft decision. The ALJ asked the IOUs, in consultation with ORA, to provide revised versions of the tables and other numbers. We have now corrected the tables and other errors. SCE and SoCalGas request two changes we do not allow. First, they seek to add their "indirect costs" into their budgets, but do not break those costs down, and they separate them in a way the other two IOUs do not. We have directed the IOUs many times to standardize their budgeting, and reiterate this requirement. Second, SDG&E/SoCalGas seek to have us allocate the amounts we disallow for NGAT testing to othe r LIEE activities. Our budget disallowance is just that, and does not permit the SDG&E/SoCalGas to reallocate the disallowed amounts.

· Reinstatement of cooling measures in climate zone 10. SDG&E points out that it serves customers in climate zone 10, in which the draft decision ordered reinstatement of cooling measures for SCE. We agree that both SCE and SDG&E should reinstate room air conditioning and evaporative cooling in zone 10, as discussed in the draft decision, and so order.

· Energy education workshops. TELACU/Maravilla question the draft decision's referral to the Standardization Team of energy education workshops not conducted in individual homes. In comments on the original SDG&E/SoCalGas applications, ORA questioned whether energy education workshops conducted outside individual customers' homes were an effective use of PGC funds. The decision refers the issue to the Standardization Team for evaluation. The Standardization Team's process shall be open to the public and invite input from diverse interests, including those of the CBO community. The Standardization Team should make a recommendation about the effectiveness of energy education conducted outside customers' homes.

· Go-backs. Both TELACU/Maravilla and BAPRC/ACCES question the draft decision's analysis of PG&E's request that the Commission impose a time limit on customers' ability to re-enter the LIEE program for additional measures or services for which they were not eligible or which were not available the first time their homes were treated. All the decision does is refer the issue to the Standardization Team for analysis. We therefore do not change the status quo or the draft decision.

· Third party contractor data. TELACU/Maravilla and BAPRC/ACCES question the draft decision's requirement that when IOUs submit their cost information, they also submit underlying cost data from their contractors. TELACU/Maravilla assert that the non-profits that contract with the IOUs to provide LIEE/CARE-related services on a fee for service basis, and point to other programs in which the Commission does not require third-party cost data. Contrary to the assertion, one of the cited programs, the non-low-income Energy Efficiency program, does in fact require third party contractors to file detailed cost information. Indeed, the Commission maintains a website containing each third party Energy Efficiency provider's budget, including detailed cost breakdowns. The website appears at http://www.cpuc.ca.gov/static/industry/electric/energy+efficiency/rulemaking/proposals/index.htm. Thus, it is not correct that we are "singl[ing] out" the low income program contractors for this type of onerous requirement," as TELACU/Maravilla allege. We retain the draft decision's requirement.

· Timeline for implementation of collection of third party contractor data. PG&E asks that if we retain the requirement that third party contractors provide cost data (which we do), we delay implementation of the requirement until January 2006.

· SCE LIEE budget increase. ORA asks us to make clear that our allowance of SCE's LIEE budget increase is not precedential, and to require very detailed explanations for such increases in the future. We clarify that the IOUs should not use our allowance of an increase here to justify increases in the future. We do not believe it necessary to specify how any utility presents its budgets in the future, except to note that the utilities are always required to support their budget requests, especially significant increases.

· Timetable for 2006-07 LIEE/CARE applications. Several parties, including ORA, note that the draft decision's proposed timetable for the IOU 2006-07 LIEE/CARE applications is no longer feasible because of when the decision mailed. We revise the schedule to reflect the passage of time.

· Cool Centers. ORA and SCE question aspects of the draft decision's discussion of Cool Centers. We make a few minor wording changes to the discussion, but do not reverse our decision to disallow expenses other than those for the cooling itself that SDG&E and SCE provide at their centers. ORA recommends that the Commission order the utilities to file a proposal for evaluation of the Cool Centers within 60 days of the effective date of the decision. We agree that we need to obtain further information about Cool Center program goals and define evaluation criteria for the centers, and therefore adopt ORA's recommendation. We direct these IOUs to work with the Energy Division in defining the evaluation criteria for the centers.

· Public comment on IOU compliance filings. This decision requires the IOUs to make several compliance filings to fill gaps in their applications and otherwise comply with the decision. ORA requests that we establish a 20-day comment period for each of these compliance filings, in the event any party has concerns about the IOUs' filings. We agree that allowing comment is appropriate, and add the relevant provision to the decision.

· Schedule for implementing migrant housing requirements. ORA asks us to clarify the schedule for PacifiCorp to enroll the one Office of Migrant services farmworker housing center in its territory so that the decision matches the ordering paragraph. We clarify that PacifiCorp shall implement the discount for the Modoc County OMS-run center immediately. Otherwise, it has the same 90-day period as the other SMJUs to use best efforts to enroll non-OMS-run centers.

· LIEE Impact Evaluation. Several parties note that the LIEE Impact Evaluation, which the draft decision notes was would reflect 2004 data, was ordered by an Assigned Commissioner's Ruling to reflect 2005 data. We make this change in the decision.

· LIOB terms. We clarify that the utility representative on the LIOB shall hold a one-year term that rotates among the IOUs annually.

· PG&E electric/gas surcharge allocation. In light of PG&E's new information, we allow its allocation of collected PGC funds to be allocated on a 70%/30% basis among its electric and gas LIEE activities. PG&E shall report in its annual filing its current gas and electric allocation.

· NGAT testing for non-utility-fueled appliances. PG&E states that the draft decision should be modified to address the issue of PG&E's continued provision of combustion appliance safety testing and infiltration measures to homes with non-utility-fueled (e.g., propane- or kerosene-fueled combustion appliances). It states while D.03-11-020 mandated that the IOUs provide such testing, the Standardization Team has since "recommended that homes with IOU space heating but which use non-IOU combustion fuels for other end uses not be provided infiltration reduction measures under the LIEE program, and that these homes be referred to other non-IOU entities, such as LIHEAP agencies for installation of infiltration-reduction measures." As the Standardization Team is examining this issue, we deem it premature to address it here. We will decide the issue in a future decision.

· Custody of PGC funds. PG&E objects to language in Ordering Paragraph 31 of the draft decision requiring that IOUs hold LIEE and CARE funds "in trust solely for the benefit of the Commission" as an unnecessary anachronism from the energy crisis. PG&E states that this language stems from the time of PG&E's bankruptcy, when there was concern that LIEE funds would be allocated pro rata among PG&E's creditors. We revise the language to state, "All CARE and LIEE funding authorized in this decision, including funds collected through the public purpose surcharge, are ratepayer funds collected solely for the purpose of deploying the approved CARE and LIEE programs for the benefit of low income customers."

· Other minor changes. We make other minor changes to the draft decision as requested in the comments. If we do not make a change, the parties may assume we considered the comment and opted against any change.

Findings of Fact

1. SCE proposes to increase the number of customers it serves from approximately 20,000 in 2004 to approximately 49,000 in 2005, an increase of more than 100 percent.

2. SCE seeks a revenue increase of $13.4 million for its LIEE program.

3. SCE's blend of LIEE offerings has changed from an emphasis on CFLs to a broader range of measures.

4. SCE needs additional funding to serve customers located in the joint SCE and SoCalGas service area.

5. Cool Centers are programs to subsidize air conditioning bills at locations where seniors and low-income persons congregate, such as senior centers and community centers. Subsidies for such persons do not fit precisely under the LIEE or CARE rubric, since they are not energy efficient appliances and measures (LIEE) or direct rate assistance to utility customers (CARE).

6. Cool Centers provide an important measure of comfort to LIEE and CARE customers who live in hot climates around the state.

7. Existing community and senior centers serving as Cool Centers cannot feasibly bar their existing clients from the cooled portions of their facilities unless the clients show proof of LIEE or CARE eligibility.

8. All electric and gas IOUs should exclude surcharge revenues in calculating their franchise fee payments.

9. Go-backs may in some cases cause record-keeping or other problems.

10. CO/NGAT testing is a basic utility service that should be funded by base rates, and not by public purpose funds.

11. LIEE funding is limited in amount and is designed to fund activities that help low-income customers save energy. Safety, on the other hand, is something the utilities owe all customers, whether they are low-income or not. Appliance safety testing should not depend on a separate stream of funding, but should be guaranteed for any customer receiving utility service.

12. The IOUs receive reimbursement on a dollar-for-dollar basis of all CARE bill subsidies, so the primary issue before us with regard to the CARE applications is the level of administrative costs each IOU seeks.

13. It is important for the IOUs to estimate each year the level of CARE subsidies they expect to provide to customers. An estimate of the subsidy is helpful in estimating the total CARE budgets and calculating appropriate CARE surcharge costs.

14. The Commission has cancelled the contract for the CARE Management and Financial Audit ordered in D.02-09-021.

15. Shareholder incentives for low-income assistance programs are beyond the scope of this proceeding, June 24, 2004 Scoping Memo.

16. While SoCalGas and SDG&E seek call center costs from PGC funds, the other large utilities do not.

17. Recruitment for CARE from an ever-smaller pool of eligible but not enrolled CARE customers may require greater effort and an increase in budget.

18. LIOB expenses are absorbed in the Commission's budget.

19. In D.04-09-060, the Commission adopted annual and cumulative goals for energy savings over the next decade, and recognized the LIEE program and its part in meeting the aggressive energy savings goals we adopted.

20. During July and August of 2003, the City of Ontario in San Bernardino County, located in climate zone 10, experienced 29 days of temperatures exceeding 100° out of a total of 62 days.

21. During July and August of 2003, the City of Hemet in Riverside County, located in climate zone 10, experienced 31 days above 100° out of a total of 62 days.

22. Based on the data in the Baseline proceeding, the means (SCE data) and averages (PG&E data) in climate zones 10-16 are approximately as follows:

· Zone 10 ranges from 473-1539 (with a mean of 1227)

· PG&E zone R (comprising parts of CEC zones 11 and 12) ranges from 1495-2109 (and averages 1767)

· PG&E zone S (comprising parts of CEC zones 11 and 12) ranges from 949-1628 (and averages 1322)

· Zone 13 ranges from 1386-1793 (with a mean of 1557)

· Zone 14 ranges from 1196-2805 (with a mean of 1797)

· Zone 15 ranges from 2938-3786 (with a mean of 3183)

· Zone 16 ranges from 4-2398 (with a mean of 674)

23. SCE's CARE "General Administration" costs are reasonable.

Conclusions of Law

1. This proceeding does not require hearings.

2. There is no legal requirement of a hearing on SCE's proposed rate increase.

3. The ratemaking treatment of each IOU's LIEE and CARE funding should not change from the status quo.

4. The IOUs should recover in rates a level of LIEE program funding and CARE costs commensurate with the funding we authorize in this decision.

5. SCE's proposed LIEE budget increase is reasonable given SCE's prior focus on CFLs and movement toward a broader range of measures, and its leveraging with SoCalGas. However, no party should use our approval of the increase in this decision to justify future requests for budget increases.

6. SCE's $560 LIEE average cost per home is reasonable.

7. We should disallow from the budget of any IOU operating a Cool Center/Cool Zone costs for rent; utilities; insurance; janitorial services; other overhead costs; transportation (bus passes, vehicle rental, fuel costs); staffing at Cool Centers; and snacks and beverages because these costs are not appropriate CARE outreach costs.

8. SCE and SDG&E's Cool Centers should be pilot programs for 2005, funded as part of their CARE outreach budgets.

9. The evidence supports PG&E's request to allocate 70% of its LIEE budget on electric programs and 30% on gas programs.

10. As part of its next phase of work, the Standardization Team should develop a standardized policy for "go-backs" that balances the premise that all customers should receive all measures for which they are currently eligible (even if they received prior services) against concerns regarding administrative burden. Such burden may include the IOUs' need to budget accurately for go-backs, close projects, count treated homes, and excessive refrigerator replacement. The Team should also determine how to calculate the 10-year period during which program re-entry is prohibited.

11. We should disallow any amounts the IOUs seek in their LIEE applications for performance incentives, as such incentives are beyond the scope of this proceeding.

12. All low-income program costs funded from the public goods charge shall be incremental costs - i.e., not provided for in the utility's base rates. Where a cost is one the utility would have to incur regardless of the presence of the low-income program, it should be funded in base rates, rather than by the public goods charge.

13. D.89-09-044 does not stand for the proposition that an IOU may recover customer call center costs from PGC funds.

14. IOUs should account for low-income program costs consistently.

15. A utility must have call center staff in place regardless of whether it offers LIEE/CARE services. Thus, the cost of call center staff should be recovered in a utility's base rates, rather than as part of public purpose funding.

16. SoCalGas should be allowed to increase its budget in 2005 for CARE outreach as it requests, without increasing its overall CARE budget from the 2004 level.

17. Safety testing (including the cost of testing devices) should be funded by utilities' base rates.

18. We should not change the status quo and move funding for LIEE-related CO testing from base rates to PGC funding.

19. The IOUs' CO settlement meets the requirements of Rule 51, in that it is reasonable in light of the whole record, consistent with law, and in the public interest.

20. Nothing in the CO settlement restrains the Commission from changing the IOUs' post-testing CO flue threshold levels or should be construed to constitute a Commission statement of what the appropriate levels should be.

21. The Standardization Team should analyze the LIOB's recommended pilot air conditioning maintenance measure for cost effectiveness, unless the same proposal is made by another entity and considered by the Team, in which case the LIOB's proposal will be moot.

22. The LIOB members' terms should be staggered as set forth in the body of this decision.

23. Under AB 868's "deemed eligible" language, a few residents who barely miss the CARE income cut-off will no longer disqualify the whole farm worker housing center for the CARE discount.

24. The OMS should ensure that savings from the CARE subsidy are passed onto migrant housing center residents.

25. Non-profit migrant housing centers not managed by OMS should receive the CARE discount. For-profit centers should not receive the discount.

26. The IOUs covered by this decision should immediately offer qualifying low-income customers all LIEE measures set forth in their respective 2005 applications (except as disapproved in this decision), until further Commission order.

27. We should reinstate LIEE funding for 2005 for high efficiency room air conditioners and evaporative coolers in climate zone 10.

28. We should not reinstate LIEE funding for 2005 for high efficiency room air conditioners in climate zone 16.

29. SDG&E's energy education programs - and any other IOU's energy education program that delivers the educational message at a location other than the customer's home - should be assessed as part of the next Standardization Team measure assessment process.

30. The LIEE impact evaluation budget should be approved without increasing the IOU's 2005 budgets.

INTERIM ORDER

IT IS ORDERED that:

1. Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison Company (SCE) and Southern California Gas Company (SoCalGas), collectively referred to as investor owned utilities (IOUs or utilities), shall immediately offer qualifying low-income customers all Low Income Energy Efficiency (LIEE) measures set forth in their respective 2005 applications (except as disapproved in this decision), until further Commission order.

2. The utilities are authorized to recover in rates the amounts shown below in Tables 15 and 16 for 2005 LIEE and California Alternate Rates for Energy (CARE) activities.

3. The IOUs shall manage their authorized budgets for 2005 in a manner that maintains program service throughout the year.  If any IOU believes it will have to discontinue its LIEE program during 2005 (and continuing until our next order authorizing LIEE programs), due to budgetary or other constraints, it shall immediately notify the Energy Division and the assigned Administrative Law Judge (ALJ) in writing. 

4. We approve the CARE administrative budgets for 2005 for the large IOUs in the following tables. No party shall rely on our decision here to increase SCE's budget to justify future increases.

5. We approve the following LIEE budgets for 2005 for the large IOUs:

6. We disapprove the following aspects of the IOUs' 2005 applications:

TABLE 17 BUDGET DISALLOWANCES
Utility	Description of Request	Disallowance ($)	Reason for Disallowance
SCE	Cool Center	<$142,500>	Fixed costs are too high
SCE	Cool Center Transportation	<$42,750>	PGC not designed to fund
SCE	Cool Center Personnel	<$175,750>	The program should only fund personnel that directly support Cool Center activity
SCE	Cool Center Snacks	<$19,000>	Ratepayer funds should only be used to fund the energy efficiency measures themselves
SoCalGas	Carbon Monoxide (CO) Testing	<$1,245,000>	CO testing should be funded from base rates
SoCalGas	CO Testing	<$555,000>	CO testing should be funded from base rates
SoCalGas	Care Audit	<$141,000>	Audit cancelled
SDG&E	Performance Incentives	<$222,000>	Outside the scope of this proceeding
SDG&E	CO Testing	<$150,000>	CO testing should be funded from base rates
SDG&E	CO Testing	<$353,100>	CO testing should be funded from base rates
SDG&E	LIOB	<1,000>	LIOB expenses are absorbed by CPUC
SoCalGas	LIOB	<1,000>	LIOB expenses are absorbed by CPUC

7. SCE and SDG&E's Cool Centers shall be funded as 2005 pilot projects from these IOUs' CARE outreach budgets.

8. Cool Center budgets shall not include costs for rent; utilities; insurance; janitorial services; other overhead costs; transportation (bus passes, vehicle rental, fuel costs); staffing at Cool Centers; or snacks and beverages.

9. In future low-income applications, any IOU seeking Cool Center funding shall address how to ensure that public goods charge funds are devoted only to LIEE and CARE eligible customers. Within 60 days of the effective date of this decision, SCE and any other IOU offering Cool Center programs shall file and serve a proposal for evaluation of the effectiveness of the programs. The IOUs shall work with the Energy Division in defining the evaluation criteria for the Centers.

10. The energy education programs of SDG&E, SoCalGas, and any other IOU that delivers the educational message at a location other than the customer's home, shall be assessed as part of the Standardization Team's next measure assessment process. The Team shall evaluate the effectiveness of such programs vis-à-vis in-home energy education programs, in a process that is open to the public. The Team shall invite input from diverse interests, including community based organizations.

11. Within 60 days of the effective date of this decision, SCE shall evaluate its budget request for automatic enrollment to ensure that the budget only includes amounts for transactions involving Department of Community Services and Development (DCSD) records. If SCE has budgeted more for automatic enrollment than expenses related to DCSD enrollments, it shall furnish this information to the Energy Division. We authorize the Assigned Commissioner to approve a revised budget for this item, if appropriate.

12. Except as provided herein, the ratemaking treatment of each IOU's LIEE and CARE funding shall not change from that authorized in prior decisions.

13. Within 60 days of the effective date of this decision, SDG&E and other IOUs with similar budgets that include expenditures for the CARE Management and Financial Audit for 2005, shall file a compliance advice letter backing out such funding.

14. In future CARE applications, all IOUs shall estimate with as much precision as possible the amount they expect to incur in CARE subsidies in the coming program period, by year.

15. The LIEE Standardization Team shall evaluate the LIOB's proposal for a pilot air conditioning maintenance measure as part of the next phase of its work, unless it is already evaluating the same proposal submitted by another party.

16. The IOUs' settlement of the CO thresholds for natural gas appliance testing shall be approved.

17. All gas utilities identified in this decision shall recover their LIEE and CARE program expenses through the Natural Gas Surcharge specified in Pub. Util. Code § 890 and the procedures approved in D.04-08-010.

18. With regard to third party contractor cost data used to support IOUs' low- income budgets, the IOUs shall meet and confer and develop consistent budget templates for their contractors' use. The IOUs shall use their best efforts to include affected contractors in this process. To the extent any forms or templates developed in the context of other Commission proceedings - such as our Energy Efficiency proceeding, R.01-08-028 - are useful for this purpose, the IOUs may use them. The IOUs shall file and serve a report on the results of this meet and confer process no later than 120 days after the effective date of this decision. No third party contractor shall receive LIEE or CARE funding without agreeing to break out its costs consistently and in accordance with the templates the IOUs develop. The contractors shall furnish data pursuant to these templates no later than January 31, 2006.

19. SDG&E and SoCalGas may recover in base rates the call center costs we disallow in this decision.

20. The IOUs may request LIEE/CARE funding on a two-year cycle for 2006-07. The utilities shall file their 2006-07 applications no later than June 1, 2005. The utilities shall list separately their budgets and program goals for each year and participate in workshops to develop other application and reporting requirements. The IOUs shall schedule and conduct workshops within 60 days of filing their applications, and invite the LIOB members, ORA, the Energy Division, and the public to attend the workshops. The parties, ORA, the Energy Division and a majority of the LIOB members may opt to proceed without the workshop(s), but all must agree.

21. The Low Income Oversight Board's terms shall be staggered as set forth in the body of this decision and continuing into the future.

22. LIOB expenses shall be excluded from the CARE budget.

23. Any IOU that can document that its LIEE electric/gas budget allocation has changed may seek reallocation by advice letter.

24. Due to the presence of the "deemed eligible" language in Assembly Bill 868, the IOUs shall create a new application for migrant housing centers that does not include the previous requirement that 100% of California Office of Migrant Service (OMS) farm worker housing center residents be eligible for CARE.

25. Non-profit farm worker housing centers, even if not managed by the OMS, shall receive the CARE discount.

26. The IOUs shall use their best efforts to enroll all residents of OMS and non-profit migrant housing centers in the CARE program within 60 days of the effective date of this decision.

27. Small and Multijurisdictional Utilities (SMJUs) (Sierra Pacific Power Company, Bear Valley Electric Service Company/Southern California Water Company, PacifiCorp, Southwest Gas Corporation, Alpine Natural Gas Company Operating Company No. 1 LLC, Avista Utilities, and West Coast Gas Company) shall investigate, with OMS or DCSD assistance if necessary, where OMS and other non-profit migrant farm worker housing centers are located and enroll them in the CARE program. The SMJUs shall use their best efforts to complete this enrollment task no later than 90 days after the effective date of this decision, with the exception that PacifiCorp shall enroll the OMS center in Modoc County immediately.

28. For 2005 and until further order of the Commission, SCE and SDG&E shall reinstate as LIEE measures high efficiency air conditioners and evaporative coolers in California Energy Commission climate Zone 10.

29. The Energy Division and the IOUs shall immediately begin to address tracking and reporting needs related to LIEE's contribution to the Commission `s adopted goals with regard to D.04-09-060 and Executive Order S-20-04.

30. Wherever we order an IOU to make a compliance filing in this decision, all other parties may submit comments on the filing within 20 days.

31. The Assigned Commissioner may, for good cause, modify the due dates set forth in this decision.

32. All CARE and LIEE funding authorized today, including those funds collected through the public purpose surcharge, is the property of the Commission and not of the IOUs. With respect to such funds, these utilities shall serve as collection and remittance agents only and have no beneficial interest whatsoever in the monies. The utilities shall segregate all CARE and LIEE funding authorized today from all other utility funds and not use that funding for any purposes other than as provided for in this decision. All CARE and LIEE funding authorized in this decision, including funds collected through the public purpose surcharge, are ratepayer funds collected solely for the purpose of deploying the approved CARE and LIEE programs for the benefit of low income customers. The utilities shall remit funds to the persons or entities with whom they enter into contracts or memoranda of understanding, for the performance of the activities authorized by the Commission for the CARE and LIEE programs, within 30 days of the receipt of invoices for the satisfactory completion of those activities.

33. SCE shall document that it actually hires the new employees and installs the planned new computer equipment and upgrades it has budgeted for in its CARE administrative budget. During 2005, but in no event after the end of the year, SCE shall make a compliance filing documenting its new hires and computer upgrades once these processes are near completion.

34. Proceedings Application (A.) 04-07-010, A.04-07-011, A.04-07-012 and
A.04-07-013 are closed.

This order is effective today.

Dated April 21, 2005 at San Francisco, California.

MICHAEL R. PEEVEY

President

GEOFFREY F. BROWN

SUSAN P. KENNEDY

DIAN M. GRUENEICH

Commissioners