3. Discussion

3.1. Introduction

As the Commission indicated in the OIR, the objective of this proceeding is to reduce the number of residential disconnections due to nonpayment while avoiding the imposition of undue cost burdens on all customers. It appears that there has been some success in achieving the first part of this objective. PG&E reports that its annual disconnections declined from 272,943 in 2009 to 179,071 in 2010.6 SCE reports that its disconnection rate for residential customers has steadily decreased over the past two years.7 While we are encouraged by these reports, we remain concerned that too many customers are facing the hardship of disconnection. In the first ten months of 2011, 158,920 PG&E customers and 203,542 SCE customers experienced disconnection.8 In comparison, 179,701 PG&E customers experienced a disconnection in 2010 (151,042 in the first ten months of that year)9 and 245,877 SCE customers experienced a disconnection in 2010 (215,155 in the first ten months of that year).10 Even though disconnection counts have been reduced, the fact remains that tens of thousands of California utility customers experience the hardship of disconnection every month. It even appears there is an uptick in disconnections for PG&E in 2011 based on ten-month counts in 2010 and 2011. Accordingly, we are not ready to conclude that the disconnection problem no longer warrants our attention and concern.

The keys to achieving the objective of reduced disconnections include preventing customers from being at risk of possible disconnection in the first place as well as ensuring that customers who are at risk have an opportunity to act to prevent that outcome and are fully informed of their options for such action. As we review the comments and proposals before us, we will focus on such measures. While we agree with arguments that rate levels and rate design impact affordability and ultimately are important to addressing the disconnection problem, those matters are beyond the noticed scope of this rulemaking. We encourage parties to advance their concerns about affordability in all appropriate proceedings, and look forward to addressing those concerns.

Sections 3.2 through 3.9 below are generally organized consistent with the designation of eight issues set forth in the April 19, 2011 ALJ ruling that provided for a second round of Phase II comments. As noted above, the August 26, 2010 ALJ ruling had previously asked for comments on three issues. The first of those issues, allowing customers to select their own billing date, is addressed in Section 3.7. Comments on waiver of deposit exceptions are addressed in Section 3.12. Comments on the definition of "sensitive customer" are addressed in Section 3.5. Sections 3.10 through 3.14 address other Phase II issues.

In D.10-07-048 the Commission expressed concern that low income customers enrolled in the CARE rate program were continuing to experience higher rates of disconnection than non-CARE customers, notwithstanding a decrease in the discrepancy. The decision adopted certain measures to address the problem, such as waiving for CARE and FERA customers reestablishment of credit deposits for slow payment or nonpayment following a disconnection. D.10-07-048 also provided for further review of the discrepancy in Phase II, with a view to identifying the causes and determining any further corrective measures.

The CARE/non-CARE discrepancy observed in D.10-07-048 has continued. As DRA notes, in March 2011 CARE customers of PG&E and SCE were disconnected more than twice as often as non-CARE customers. Specifically, 0.27% of PG&E's CARE customers and 0.13% of its non-CARE customers were disconnected, and 0.84% of SCE's CARE customers and 0.40% of its non-CARE customers were disconnected. In the ensuing seven months (April through October 2011), DRA's observation that both PG&E's and SCE's CARE customers were disconnected more than twice as often as non-CARE customers generally held true. For PG&E, the CARE/non-CARE disconnection rates in those six months were 0.45%/0.22%, 0.52%/0.25%, 0.49%/0.24%, 0.46%/0.21%, 0.53%/0.25%, 0.49%/0.25%, and 0.60%/0.29%.11 For SCE, the CARE/non-CARE rates in those seven months were 0.68%/0.34%, 0.69%/0.34%, 0.74%/0.34%, 0.61%/0.28%, 0.79%/0.37%, 0.75%/0.35%, and 0.71%/0.34%.12

Customer representatives, including CforAT, DRA, and NCLC, identify affordability as an underlying issue leading to CARE customer disconnections. PG&E finds that CARE customers have a higher disconnection rate than non-CARE customers because they have higher payment delinquency rates. In 2010, the delinquency rate among PG&E's CARE customers was 31.4%, compared to 14.9% for non-CARE customers, even though CARE customers have smaller bill amounts. SCE finds that two related factors underlie the higher disconnection rates of its CARE customers. First, SCE notes, the percentage of customers on CARE rates has increased dramatically in the last two years. Second, SCE finds that the process it uses to identify non-CARE customers who are eligible for CARE rates inherently leads to customers who are at higher risk of missing payments and becoming at risk for disconnection.

The reported causes of higher levels of CARE disconnections do not appear to be mutually exclusive. It is reasonable to conclude that the affordability gap is a very significant underlying cause of higher rates of CARE disconnections, and the explanations proffered by PG&E and SCE also strike us as reasonable. In particular, it is not surprising that customers with higher delinquency rates tend to be disconnected more frequently than other customers.

To mitigate the discrepancy between CARE and non-CARE disconnections, several of the consumer representatives recommend a "benchmarking" approach.13 CforAT supports disconnection benchmarks similar to those adopted for SDG&E and SoCalGas in this proceeding. DRA recommends the use of benchmarks targeted at CARE customer disconnections rates. Greenlining supports DRA's proposal to benchmark low income disconnections. CforAT also believes that consideration should be given to requiring the utilities to adopt arrearage management plans, contending that these plans have been useful in other states for reducing both arrearages and disconnections. PG&E points to numerous low cost strategies that it has implemented that stem from the first phase of this proceeding as well as its own internal initiatives. These measures include a focus on communication and education outreach, suspension and waiver of deposit requirements, more flexible payment plans, and the Relief for Energy Assistance through Community Help program. PG&E and SCE support the use of unspent CARE funds designated for the Temporary Energy Assistance for Families (TEAF) program to assist customers in need. SCE also suggests continuing targeted marketing to inform CARE customers who are struggling to pay their bills how SCE can assist them, including information about assistance options and education regarding usage reduction. NCLC similarly argues for systematically targeting low income households, especially those at risk of disconnection, with new and existing assistance programs.

We address proposals for benchmarking and arrearage management plans later in this decision. The remaining suggestions for addressing the higher level of CARE disconnection rates center on notice, outreach, education, and flexibility in the application of deposit requirements. Those suggestions generally appear to be well aligned with our objective for reducing disconnections. Except with respect to the specific measures addressed elsewhere in this decision, we encourage the utilities to continually assess the effectiveness of these and other low-cost strategies, and to adjust their disconnection practices accordingly.

In ordering the option of three-month minimum payment plans, the OIR addressed the role of CSRs in working with customers to resolve arrearages. D.10-07-048 determined that in Phase II we would examine another role for CSRs-educating customers about assistance programs and assisting them in completing CARE applications.

In 2010 SCE expanded to all of its CSRs a 2009 pilot program in which a limited number of CSRs identified CARE-eligible customers in their telephone discussions and enrolled them on the CARE rate. SCE`s CSRs also provide information about all types of available financial assistance, including the Home Energy Assistance Program (HEAP), and SCE's TEAF, which is funded by voluntary donations from shareholders, employees, and customers. Additionally, SCE's CSRs provide information about conservation and energy efficiency. SCE indicates that having its CSRs perform online CARE enrolments during calls improves the overall customer experience. SCE considers the program to be highly effective and proposes to continue it.

CforAT supports SCE's efforts to have CSRs assist customers with the CARE application process, and it supports expanding the efforts to other utilities. Noting that in the 2009 SCE pilot, enrolling customers in CARE increased call times by 237 seconds for successful enrollment and by 110 seconds for failed enrollment, and that utilities generally work to keep customer service calls as short as possible, CforAT recommends that if the Commission expands efforts to have CSRs directly enroll customers in CARE and/or have CSRs provide customers with additional information regarding assistance programs, it should ensure that CSRs are not pressured to avoid these responsibilities.

Greenlining likewise supports having CSRs assist in completing CARE applications. Greenlining notes that CSR assistance in completing CARE applications increased enrollment compared to the old mailing process by 12% for the SCE pilot and by 50% when expanded to all SCE representatives in 2010. At the same time, according to Greenlining, SCE's processing cost for phone enrollment is only $0.89 per enrollment greater than the $2.77 cost for mail applications. Greenlining agrees with SCE that the extra assistance creates a more positive customer experience, and suggests that the benefits, which include quicker access to program benefits, immediately answering customer questions and concerns, and building trust, justify the added cost.

PG&E states that its CSRs are trained and expected to educate and inform customers of available assistance programs. If, during any call, the CSR determines that the customer needs financial assistance, the CSR is expected to offer all assistance programs, including CARE, FERA, HEAP, Medical Baseline, Balance Pay Plan, etc. However, PG&E takes a different approach to CARE enrollment. In addition to paper enrollments in CARE, PG&E uses an automated phone system designed specifically for CARE applications. Calls are made to potential CARE-eligible customers, including customers who have requested a payment plan, new service starts, customers with a medical baseline allotment, customers who requested but did not return a CARE application, customers who start service at an address where the previous customer had CARE, customers with a third-party notification arrangement, and customers in demographically low-income zip codes. PG&E's automated system makes repeated attempts to call such customers and leaves a voicemail after the final attempt. It provides customers with a toll-free number for the customer to call and enroll using the automated system. It also includes information about the CARE program website where customers can apply online. PG&E has redesigned its contact center phone system to automatically transfer customers to the automated phone enrollment option, with an expected completion date of June 2011. This allows customers to call and enroll in CARE over the phone, and it allows CSRs to transfer customers to the automated system to complete the CARE application. In 2010 PG&E processed 58,000 CARE enrollments through the CARE phone system.

PG&E does not believe that live CSR enrollments would prove to be a better option. Using time data from SCE's pilot program, PG&E estimates that live CSR enrollments would have cost $455,909 in 2010, whereas the annual cost for the automated enrollment system is estimated to be $15,000 to $20,000 after an initial setup cost of approximately $80,000.

We are encouraged by the reported success of SCE's CARE enrollments by CSRs, including in particular the 50% increase in CARE enrollment compared to mail-in enrollment, coupled with its modest incremental cost of $0.89 per enrollment. We approve SCE's recommendation to continue the practice. While PG&E's automated system appears to be a potentially cost-effective alternative means of accommodating enrollments, its prospects for success in improving the overall customer experience are not as clear cut, at least at this time. Our primary concern is that there may be a subset of potential CARE enrollees who are not able to interface the system successfully. As NCLC points out, low income consumers may not succeed in enrolling because application procedures can be complicated, and it is unclear whether a customer may be required to repeat the steps of auto-enrollment if the process is interrupted. Also, as CforAT notes, customers who cannot use standard forms of communication, primarily those who are deaf or hard-of-hearing and use specialized telephone devices, may not be able to use automated systems. Finally, we note SCE's observation that customers are able to get through the application process more efficiently by having a CSR available to answer questions that may have prevented the customer from enrolling in the past. We believe that customers should be given the option of enrollment through a live discussion with a CSR. We therefore direct PG&E to have its CSRs offer the option of live CARE enrollment in addition to automated, paper, and online options. We note that to the extent that customers choose the automated system alternative, the cost to PG&E would be less than the $455,909 that it estimated for 2010.

In addition to CARE enrollments, the utilities should continue to ensure that their CSRs offer information and assistance regarding the wider range of available programs. CforAT notes that in listing the assistance programs that CSRs are trained and expected to offer to customers, PG&E did not include the Energy Savings Assistance Program (ESAP). Since ESAP assists customers in lowering their bills on an ongoing basis, thereby increasing affordability, we agree with CforAT that information about this program should be offered by CSRs.

Finally, CforAT asks that steps be taken to ensure that CSRs are not pressured to avoid their CARE-related responsibilities out of concern for the incremental time required. SCE responds that this is not needed because it has already taken steps to provide full support and training to both CSRs and external call center vendors to facilitate integration of CARE phone enrollment. We commend this practice, and urge that PG&E undertake similar actions to the extent it has not already done so.

D.10-07-048 addressed concerns that because of language barriers, communications directed at some customers faced with potential disconnection may be either ignored or not understood. Reviewing then-current practices, the Commission noted with approval SCE's practice of identifying customers' language preferences and providing them with relevant information in the preferred language. D.10-07-048 provided for further review of language options in Phase II, focusing on whether utilities should provide an opportunity for customers to select a language for utility communications and on the associated costs. As noted earlier, the ALJ asked parties to comment on whether PG&E's and SCE's current language options are sufficient to meet their customers' needs, and, if not, whether third-party programs like CHANGES provide a viable alternative.

PG&E maintains that its current language options are sufficient for the majority of its customers' needs. It offers several outlets for non-English speaking and reading customers. Its website is available in English, Spanish, and Chinese. It contracts with Language Line Services and Language Service Associates, which provide access to 98.6% of customer requests for assistance in 6,912 languages. It offers Spanish-speaking assistance without the use of an interpreter. PG&E's CARE applications are available in English, Spanish, Chinese, and Vietnamese. It has proposed a "Reformatted Customer Energy Statement" that would provide bill translation and communicate energy usage information to non-English speaking customers. PG&E's bill inserts are fully or partially translated in at least one of three languages. As one example, the CARE/FERA Program Application that is disseminated to 3.2 million non-CARE/FERA customers is fully translated in Spanish.

SCE likewise believes that its current communications language options are sufficient to meet the needs of its customers. Its call centers provide customer assistance in the seven most common languages in its territory, enabling SCE to communicate in-language with 95% of its customer base. SCE also offers translation services in over 190 languages through a third-party vendor. In addition to call center language support, SCE offers in-language options in print and online. CARE recertification letters are provided in-language to customers who have specified their preferred language. Advertising and outreach campaigns are executed in multiple languages and targeted to specific communities where those languages are common. As SCE's smart meters are deployed, pre-installation letters are sent in English and the top two languages in the area, and door hangers are left behind after the installation are in English, Spanish, and Mandarin. SCE's website is available in English, Spanish, Cantonese, Mandarin, Korean, Vietnamese, and Cambodian.

CforAT finds that effective communication can be an obstacle not only for language minorities but also for individuals with disabilities that impact hearing or vision. CforAT recommends that any written communication concerning the risk of service disconnection must provide key information, including the fact that service is at risk and a way to follow up for additional information, in at least 14 point sans serif font. For customers who have previously been identified as disabled and have identified a preferred form of communication, CforAT believes that all information concerning the risk of disconnection should be provided in the preferred format. Finally, CforAT recommends that for households identified as using non-standard forms of telecommunication, outgoing calls regarding the risk of disconnection should be made by a live person. In response, SCE explains that it provides both a written notice and a telephone call to notify hearing impaired customers if they are at risk for disconnection. Additionally, SCE profiles customers who use teletype/typewriter (TTY) and contacts those customers using TTY.

Greenlining recommends that the utilities translate all printed forms into the top six most frequently spoken languages as determined by Senate Bill (SB) 120.14 At a minimum, Greenlining would apply this practice to all forms related to disconnections. SCE responds that its billing system cannot currently generate bills or notices with individual customer information in foreign languages and that system modifications to include this capacity would be extremely costly. SCE however does include with its bills and notices a section that directs Cambodian, Chinese, Korean, Vietnamese, and Spanish speaking customers to specified customer service lines.

From the utilities' own program descriptions, it is apparent that their current language assistance options are comprehensive. Our interest here is whether there are additional cost-effective steps that might be taken to provide language options to assist customers and thereby reduce the risk of disconnection. We decline to order the utilities to translate all printed forms into the languages specified in SB 120 because we are not persuaded that this approach is cost-effective. We approve SCE's current practice of including with its bills and notices a section that directs customers speaking certain languages to specified customer service lines. SCE should review and determine whether it would be appropriate to expand the list of languages for which this service is provided to include all those listed in SB 120. PG&E should undertake a review to determine whether it would be cost-effective to include such contact information with its bills and notices.

To accommodate the needs of vision- and hearing-impaired customers, we concur with and adopt CforAT's recommendations for communications with those customers. First, any written communication concerning the risk of service disconnection must provide key information, including the fact that service is at risk and a way to follow up for additional information, in large print such as 14 point sans serif font. Second, for customers who have previously been identified as disabled and who have identified a preferred form of communication, all information concerning the risk of disconnection should be provided in the preferred format. Third, for households identified as using non-standard forms of telecommunication, outgoing calls regarding the risk of disconnection should be made by a live representative. We note that neither PG&E nor SCE raised concerns about the costs of these measures.

It is clear from the comments of both the utilities and the consumer representatives that the CHANGES program is a promising supplement to the utility language practices at issue here, but is not, at least at this time, a substitute for them.

When D.10-07-048 was issued, PG&E was the only respondent utility with remote shutoff capability through the use of smart meters.15 PG&E's reported cost of restoring a disconnection remotely using smart meter technology was about $8, whereas the reported cost of physically restoring a disconnected customer was about $66.50 during regular working hours. In view of (1) the cost savings from using smart meter technology to remotely shut off and restore service, (2) PG&E's practice of ensuring that customers on life support and medical baseline are protected by in-field visits before any disconnection, and (3) the fact that customers who have been remotely disconnected can have service restored more quickly than restoration through field personnel, the Commission declined to adopt a prohibition of the use of remote shutoff technology to disconnect customers, except those who are on medical baseline or life support. However, while the Commission declined to prohibit remote disconnections, it provided for a Phase II review of whether the utilities should be required to establish a uniform protocol for remote disconnections.

PG&E does not support a uniform protocol for remote disconnection. PG&E states that its disconnection procedure is the same whether a disconnection is performed remotely or by a field representative. All delinquent PG&E customers receive the same notices and calls, with the exception that additional steps are in place for delinquent medical baseline and life support customers. Most importantly, PG&E field representatives visit the premises of the latter category to disconnect service.

SCE opposes a uniform remote disconnection protocol that would place common limits on the categories of customers exempt from remote disconnection. SCE believes that the focus should be on identifying sensitive customer groups who should have a utility representative at the premises prior to and during disconnection to assess and monitor the situation for any risks to health and safety, regardless of whether the disconnection is performed remotely or by a field representative. Consistent with proposals it made in its 2012 GRC, SCE proposes to allow remote disconnections for all customers, but require that a utility representative be dispatched to the premises of "critical care" customers to monitor the situation for risks to health or safety.16 SCE believes that preserving the ability to remotely disconnect and reconnect customers can enhance service because remote reconnections can be performed more quickly and at lower cost.

The consumer representatives generally argue for adoption of a uniform remote disconnection protocol modeled on that approved for SDG&E and SoCalGas in this proceeding. Based on data showing that PG&E actually disconnects its smart meter customers who are issued a disconnect order more frequently than non smart meter customers, DRA finds it particularly important to have a standard protocol with enhanced consumer protections. NCLC similarly recommends that remote disconnection should only be implemented with enhanced protections, noting that customers have developed expectations based on customary disconnection practices and that customers who are subject to remote disconnection are more immediately vulnerable to the harmful consequences of utility error.

While the consumer groups' proposals for remote disconnections differ in their specifics, they would generally provide the following:

6 PG&E Second Round Opening Comments dated May 20, 2011 at 11. We note that PG&E calculates this as a 52% reduction. By our calculations it is a 34% reduction.

7 SCE Second Round Opening Comments dated May 20, 2011 at 1.

8 Monthly Disconnect Data Reports of PG&E and SCE for October 2011, filed on November 29, 2011 and November 23, 2011, respectively.

9 Id.

10 Monthly Disconnect Data Report of SCE for December 2010, filed on January 25, 2011.

11 Monthly Disconnect Data Report of PG&E for October 2011, filed November 29, 2011.

12 Monthly Disconnect Data Report of SCE for October 2011, filed November 23, 2011.

13 We describe benchmarking later in this decision.

14 Stats. 2009, Ch. 560. The languages are English, Spanish, Chinese, Vietnamese, Tagalog, and Korean.

15 SCE has since acquired the ability to perform remote disconnections through smart meter technology. In a ruling filed on October 14, 2011, the assigned Commissioner granted a motion by TURN requesting a delay in SCE's implementation of remote disconnections pending issuance of this Phase II decision. D.11-12-028 affirmed that ruling.

16 SCE's critical care designation is a subset of medical baseline customers who have indicated that they would suffer a risk to health or safety if left without electricity for two or more hours.

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