5. Interim CARE Penetration Benchmarks

As discussed in Section 3, the utilities have dramatically increased the number of CARE enrollments during 2001. However, all parties agree that further improvements in program penetration are needed. The utilities have proposed the following goals for CARE enrollments over the next four years:

		Utility Proposed Penetration Goals
	PG&E	SCE	SDG&E	SoCal	Avista	Southwest
2002	63%	88.0%	75.0%	70.0%	50.0%	89.0%
2003	74%	88.0%	78.0%	76.0%	57.0%	90.0%
2004	83%	88.0%	82.0%	81.0%	59.0%	92.0%
2005	84%	88.0%	85.0%	85.0%	61.0%	94.0%

In their December 19, 2001 filings the utilities discuss the types of outreach activities they plan to employ to reach these penetration rates, which include the continued use of community outreach contractors, targeted non-English language media marketing, and bill inserts. More specific information regarding PY2002 CARE outreach activities has been submitted in A.02-02-034 et al.

We note that no party has raised objections to the utility proposals for penetration goals, either in written comments, during public workshops or at the February 8, 2002 status conference. However, we do not believe that these proposals recognize that, fundamentally, the goal for this program should be to reach 100% of low-income customers that are eligible for, and desire to participate in, the CARE program. The utilities report that over one million low-income customers meet the CARE eligibility criteria but are not currently participating in the program. Our goal is to enroll each and every one of these customers that wants to participate.

We recognize that the utilities will not reach this goal at the same pace, given differences in demographic characteristics and the magnitude of the eligible low-income population within each service territory, as well as differences in where each utility stands today with respect to program penetration. We also recognize that the law of diminishing returns applies to CARE outreach efforts over time, i.e., it becomes increasingly difficult to enroll additional customers, the closer the utility moves towards achieving 100% participation.

In consideration of these factors, we establish the following minimum benchmarks for program penetration rates between now and the end of 2005, which will allow the utilities to move at a meaningful pace towards our goal:

		Adopted CARE Penetration Rate (Minimum) Benchmarks
	PG&E	SCE	SDG&E	SoCal	Avista28	Southwest
2002	63%	88.0%	75.0%	70.0%	50.0%	89.0%
2003	74%	90.0%	78.0%	76.0%	60.0%	90.0%
2004	83%	91.0%	82.0%	81.0%	70.0%	92.0%
2005	84%	92.0%	85.0%	85.0%	80.0%	94.0%

We increase SCE's benchmark to 92% by 2005 because we believe that SCE should improve on, and not just maintain, its current 88% penetration rates. The higher benchmarks we establish for Avista are predicated on the availability of updated data regarding eligible population from the Needs Assessment Study, as discussed above.

Today's decision reflects our continued commitment to improve CARE enrollment and participation, consistent with SBX2 2 and the program objectives we have articulated in prior Commission decisions. This commitment is not without additional costs to ratepayers. Energy Division estimates that achieving the goal of 100% CARE penetration for PG&E, SCE, SDG&E, and SoCalGas will increase CARE rate subsidy and administrative costs by approximately $182.8 million, for annual bill savings of $174.7 million per year, or $174 per year per CARE customer year. This estimate assumes that current energy prices continue relatively unchanged over the next four years. The subsidy costs will be higher if energy prices increase and, conversely, lower if they decrease relative to today's levels. They include the 20% electric and gas discount, exemption from the 1-cent and 3-cent electric rate surcharges (PG&E and SCE), and exemption from and exemption from paying over 6.5 cents for consumption in excess of 130% of baseline (SDG&E). They do not include the costs associated with exempting the additional CARE enrollees from the CARE component of the PGC.

We do not pretend that these costs are insignificant. Nonetheless, increases in program costs are unavoidable if we are to meet the needs of low-income customers and the intent of the Legislature.

The benchmarks described above are interim in nature. They are a starting point for our PY2003 program planning process. We will revisit and revise these benchmarks, as appropriate, in future program planning cycles. They may need to be revised periodically based on further experience with CARE outreach efforts, including the automatic enrollment process discussed below. The benchmarks may also need to be revisited when the results of the Low Income Needs Assessment Study currently underway are available.

In addition, the utilities' penetration benchmarks may need to be refined to respond to changes in demographics, as suggested at the February 8, 2002 prehearing conference (PHC). Several parties recommended that, in the consideration of CARE penetration goals, we should look at penetration levels in terms of ethnic and elderly demographic groups. The issue was raised out of a concern that the utilities' penetration and outreach efforts might not be in line with changes in demographics over time. By ruling dated May 9, 2002, the Assigned Commissioner directed that the Needs Assessment Study address this issue, and that it be considered by the LIOB.