13. CARE Administrative Budgets

Bear Valley: Bear Valley seeks a more than 15-fold jump in its CARE administrative budget - from $3,500 to $52,720, as shown in the following table:

Bear Valley Electric Service 2009-2011 CARE Program Annual Budget
Description	Total Units	Average Cost per Unit	Total Cost
Capitation Fees	100	$ 15.00	$ 1,500
Direct mail and doorhangers	8,700	$ 1.35	$ 11,745
Print Media	4	$ 500.00	$ 2,000
Program Materials (forms and customer material)	2,000	$ 1.00	$ 2,000
Reporting and regulatory (outside services/hourly)	20	$ 125.00	$ 2,500
Program management (outside services/hourly)	225	$ 125.00	$ 28,125
Travel (assumes 1 SF and 2 LIOB meetings)			$ 1,350
Program database and information systems			$ 3,500
			$ 52,720

Bear Valley analyzed its office and customer service staffing needs to support its daily operations. Bear Valley estimates that approximately 2,700 customers will be eligible for CARE after the income eligibility requirement increases to 200% of the federal poverty limit. It estimates 2,132 eligible customers by the end of 2008 if it remains at 175%. Thus, it anticipates an addition of 568 eligible customers - from 2,132 to 2,700 - just from the change in percentage, which requires little outreach effort.

DRA questions Bear Valley's plan to reach 100% penetration, noting that it has not identified any significant outreach activities. DRA asks us to require Bear Valley to submit a detailed outreach strategy for 2009-2011. DRA also contends that Bear Valley has failed to comply with earlier outreach enhancements ordered in D.06-12-036 and the 2005 Energy Division Report (e.g., use of a webpage as an outreach source). DRA does not otherwise object to Bear Valley's funding request. In reply comments, Bear Valley agrees to develop the outreach plan.

Discussion: Bear Valley's 55% CARE penetration rate is unacceptably low, especially in light of the requirement contained in this decision that all SMJUs reach a 90% penetration rate. However, Bear Valley has not justified its full $52,720 CARE administrative budget request, which represents a $49,220 increase from its current $3,500 budget. If approved as requested, Bear Valley's administrative budget would far exceed the proportionate CARE administrative budgets of the other three largest SMJUs, an increase Bear Valley does not justify. The chart below illustrates this difference:

While Southwest, Sierra, and PacifiCorp's CARE administrative budgets are 3% and 4% of CARE subsidies, Bear Valley proposes amounts ranging from 23% in 2011 to 32% in 2009. Further, since we have raised Bear Valley's income eligibility guideline to 200% of the federal poverty limit - the same percentage as Southwest's for the same geographic area - Bear Valley's ratio should be similar to Southwest's. With a CARE administrative budget of $8,520, Bear Valley still exceeds the expense ratio of the other utilities ($8,520/$163,900 = 5%). Thus, we decline Bear Valley's requested CARE administrative budget increase beyond the amount we grant here.

If Bear Valley increases its penetration to 2,700 customers, its proposed budget would allow approximately $35.41 per new customer. The capitation fee for adding a new customer - the amount a CBO receives if it delivers a new CARE customer to the SMJU - is in the $12 range. Further, as noted above, many of Bear Valley's proposed new customers will come almost automatically when it increases its income eligibility to 200% of the federal poverty limit.

Thus, we find Bear Valley has failed to justify the amount of its increase. However, given that we have asked it to increase its penetration rate significantly, we award it an amount equivalent to $15 per new customer ($15 x 568 customers), or $8,520. Bear Valley shall seek approval of its CARE outreach plan from the Energy Division by Tier 2 Advice Letter no later than 90 days after the effective date of this decision. Energy Division may approve the program by letter, after asking DRA to comment.³⁰

³⁰ Bear Valley submitted its plan in a September 30, 2008 amendment to its application, after parties had an opportunity to protest.