3. Low-Income Discount Proposal
Pub. Util. Code § 739.8 establishes the general principle that access to safe and affordable water is a basic human right. The code section provides further that the "commission shall consider and may implement programs to provide rate relief for low-income ratepayers" in order to facilitate "access to an adequate supply of healthful water." In recent years, the Commission has authorized water utilities to develop low-income ratepayer assistance programs. (See, e.g., D.05-05-015, authorizing a low-income assistance program for San Gabriel Valley Water Company (San Gabriel), and D.05-12-020, adopting a California Alternative Rates for Water (CARW) program for Park's subsidiary Apple Valley Water Company (Apple Valley).)
Park recommends that the Commission authorize a CARW program that is largely patterned after Apple Valley's CARW program. Under the program, the service charge for a 5/8" x 3/4" meter on bills issued to eligible customers will be discounted by 25%. This subsidy will be funded by a surcharge on non-eligible customers. Furthermore, Park's proposal calls for a balancing account to track the difference between the actual discounts extended to low-income customers and the revenues generated by the surcharge on non-eligible customers. Finally, Park recommends a memorandum account to monitor the actual implementation and administrative costs for the CARW program.
3.1 Assessment of Need and Eligibility Criteria
Park's service area covers parts of seven cities located in southeast Los Angeles County. Park concludes that 10,912, or 44%, of the 25,067 households that Park serves would qualify for a low-income assistance program, based on 2000 Census data and the qualifying guideline adopted in D.05-10-044 (qualifying income of up to 200% of the federal poverty level). Because some low-income households are not direct customers of Park, Park estimates that 36% of its residential customers will participate in a low-income program. Park notes that Southern California Edison Company (SCE) reports a 40% participation rate in its California Alternative Rates for Energy (CARE) program for its customers in the areas served by Park, based on the qualifying guideline previously in effect (qualifying income of up to 175% of the federal poverty level).
Park recommends that residential customers who receive water service through a 1" or smaller meter, and meet the CARE eligibility requirements should qualify for monthly assistance equal to 25% of the 5/8" x 3/4" meter service charge, which is equal to $3.76. Park also proposes that non-profit group living facilities that participate in CARE or that comply with all the CARE criteria except energy usage should be eligible for fixed monthly CARW assistance of $20.00.
Park states that, although it would like to extend discounts to residential sub-metered customers who receive water from a mater-metered customer, at present it has no means of ensuring that CARW credits reach them.
3.2 Funding
Park recommends a volumetric surcharge of $0.094 per hundred cubic feet (Ccf) to fund the CARW program. This differs from the fixed rate design adopted by the Commission to fund the San Gabriel and Apple Valley CARW programs. Park points out that a volumetric surcharge rate design is consistent with proposals by DRA and California Water Service Company and California American Water Company in their respective GRCs pending before the Commission. Park suggests that a volumetric surcharge rate design is more equitable than a fixed rate, which would charge a residential customer who is slightly over the CARW eligibility requirements the same as a large industrial customer. Park further suggests that a volumetric surcharge will promote water conservation.
3.3 Accounting Practices
Park asks the Commission to approve a balancing account to track the actual discounts granted through the low-income program, as well as the actual revenues generated by the surcharge. Furthermore, Park asks the Commission to authorize a memorandum account to record the initial and ongoing expenses of a low-income assistance program. Park projects an initial cost of $40,000 to launch the CARW program.
Park asserts that these accounting practices are necessary to ensure that the implementation of the CARW program does not adversely affect its ability to meet the revenue requirements authorized by the Commission. These accounting practices are consistent with those approved in association with the CARW programs adopted for Apple Valley and San Gabriel.
3.4 Reporting to Commission
Park proposes to provide data, including surcharge and discount amounts, program costs and participation levels, in its Annual Report to the Commission. The Commission should then reevaluate the CARW program in Park's next GRC and make any necessary adjustments to ensure that the program adequately fulfills its purpose and that it does not negatively affect non-qualifying ratepayers in the Park water system.
