STATE OF CALIFORNIA * GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

May 28, 2002

TO: PARTIES OF RECORD IN RULEMAKING 01-08-027

This is the draft decision of Administrative Law Judge (ALJ) Meg Gottstein. It will be on the Commission's agenda at the meeting on June 27, 2002. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Pursuant to Rule 77.7(f)(9), comments on the draft decision shall be filed by June 10, 2002 and reply comments shall be filed by June 17, 2002.

In addition to service by mail, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, including ALJ Gottstein at meg@cpuc.ca.gov. Finally, comments must be served separately on the Assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious methods of service.

/s/ CARL K. OSHIRO

Carl K. Oshiro, Interim Chief

Administrative Law Judge

LTC:k47

Attachments

ALJ/MEG/k47 DRAFT Agenda ID # 712

6/27/2002

Decision DRAFT DECISION OF ALJ GOTTSTEIN (Mailed 5/28/2002)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Proposed Policies and Programs Governing Low-Income Assistance Programs.

Rulemaking 01-08-027 (Filed August 23, 2001)

INTERIM DECISION: STATUS OF RAPID DEPLOYMENT, CARE PENETRATION GOALS, AUTOMATIC ENROLLMENT

AND RELATED PROGRAM PLANNING ISSUES

TABLE OF CONTENTS

Title Page

INTERIM DECISION: STATUS OF RAPID DEPLOYMENT, CARE
PENETRATION GOALS, AUTOMATIC ENROLLMENT
AND RELATED PROGRAM PLANNING ISSUES 1

1. Summary 3

2. Background and Issues 10

3. Status of Rapid Deployment 14

3.1 PG&E 16

3.2 SDG&E 17

3.3 SCE 18

3.4 SoCal 19

4. CARE and ULTS Penetration Rates - Methodological Issues 20

5. Interim CARE Penetration Benchmarks 27

6. Automatic Enrollment 31

6.1 Partner Agencies 32

6.2 Eligibility Requirements 34

6.3 Other State and Utility Data Matching Programs 34

6.4 Impact of Automatic Enrollment on CARE Penetration 37

6.5 Commission Administration and Customer Confidentiality 37

6.6 Recertification of Automatic Enrollment Customers 39

6.7 Monitoring Program Effectiveness 40

6.8 Bill Insert 41

6.9 Program Costs and Funding 42

6.10 Coordination with ULTS 45

7. Program Planning For 2002 and Beyond 47

8. Need for Expedited Consideration 50

Findings of Fact 51

Conclusions of Law 56

ORDER 57

Table 1 Rapid Deployment Program Statistics

Attachment 1 List of Abbreviations/Acronyms

Attachment 2 CARE Enrollment and Drop Off History

Attachment 3 Rapid Deployment Status For PG&E

Attachment 4 Rapid Deployment Status For SCE

Attachment 5 Rapid Deployment Status For SoCal

Attachment 6 Rapid Deployment Status For SDG&E

Attachment 7 Penetration Rate Methodologies

Attachment 8 Preliminary Annual Cost Estimates for Automatic Enrollment

INTERIM DECISION: STATUS OF RAPID DEPLOYMENT, CARE PENETRATION GOALS, AUTOMATIC ENROLLMENT

AND RELATED PROGRAM PLANNING ISSUES

1. Summary¹

By Decision (D.) 01-05-033, issued on May 3, 2001, we adopted a rapid deployment strategy for the low-income assistance programs administered by Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison Company (SCE) and Southern California Gas Company (SoCal). Low-income assistance programs consist of direct weatherization and energy efficiency services under the Low-Income Energy Efficiency (LIEE) programs and rate assistance under California Alternative Rates For Energy (CARE). In addition to providing increased funding for CARE and LIEE program activities, D.01-05-033 authorized the following: expanded use of LIEE funds to leverage the programs provided through the Department of Community Services and Development's (DCSD) network of community-based organizations, "capitation fees" to low-income assistance organizations of up to $12 per CARE enrollee, increased non-English radio and print advertising for CARE and new LIEE measures on a pilot basis (e g., high efficiency air conditioners and water heaters).

We find that the rapid deployment strategy adopted in D.01-05-033 has been successful in substantially increasing the deployment of low-income assistance services to those that have needed it the most during the energy crisis. As of February 2002, PG&E, SCE, SoCal and SDG&E have added approximately 420,000 new customers to the CARE program on a net basis since the inception of the rapid deployment in May 2001.² Under the LIEE program, these utilities have collectively weatherized 50,440 homes and have treated a minimum of 50,000 additional homes with other energy efficiency measures during 2001. Given the success of our rapid deployment strategy, we authorize the continuation of the rapid deployment programs adopted in D.01-05-033 until further Commission order. We plan to reexamine rapid deployment programs and budgets for program year (PY) 2003, and make modifications as appropriate, later this year. The utilities will be filing their applications for PY2003 LIEE and CARE program plans and budgets on July 1, 2002.

By today's decision, we examine more closely the manner in which we measure program achievements in the CARE program. CARE penetration rates represent the number of low-income customers that actually participate in the CARE program, divided by an estimate of the number of customers eligible for the program. We find that some improvements are need to the methods currently used by PG&E, SCE, SDG&E and SoCal to measure CARE penetration rates. In particular, these utilities need to order the special tabulations of 2000 Census data when they are available this fall to update demographic information on the joint relationship between household size and income. The June 1, 2003 update of CARE penetration rates should reflect this information. We also direct Energy Division to ensure that Phase 2 of the Needs Assessment Study is designed to obtain income and household size data specific to Avista Utilities' (Avista) service territory for the purpose of estimating the number of CARE eligible homes. We find the methods currently used by Southwest Gas Company (Southwest) to be reasonable, without modification.

Per Pub. Util. Code § 739.1, as modified by Senate Bill No. 2 from the Second Extraordinary Session (referred to as SBX2 2), we also establish today our goal for CARE program penetration. Simply put, our goal is 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:

		Benchmarks-Percentage Penetration
	PG&E	SCE	SDG&E	SoCal	Avista3	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%

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 enrolling one million CARE-eligible customers will increase CARE rate subsidy and administrative costs by approximately $182.8 million. This translates to increased annual bill savings of $174.7 million, or $174.00 per year per CARE customer. 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 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 Public Goods Charge (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 minimum 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.

To assist us in reaching 100% of the low-income customers that are eligible for CARE, we adopt an automatic enrollment program that will enroll customers of PG&E, SCE, SoCal and SDG&E into CARE when they participate in the following partner agency programs: Medi-Cal and Women, Infants and Children administered through the California Department of Health Services (DHS), Healthy Families administered by the Managed Risk Medical Insurance Board (MRMIB), or the Energy Assistance Programs administered by DCSD.

As described in this decision, the Commission will administer the agency data exchange for automatic enrollment, in order to ensure confidentiality of all client information provided through our agency partnerships with DHS, MRMIB, and DCSD. The Commission will serve as a clearinghouse to identify electronic matches between agency and utility customer records, by comparing non-CARE data provided by the utilities with client information from the DHS, MRMIB, and DCSD programs. Once a match is made, the Commission will forward the customer's name and address to the utility for provisional enrollment. CARE customers who are automatically enrolled will receive the CARE discount for two years, and may recertify either through continued participation in our partner agency programs or through the utility's automatic two-year recertification process.

The utilities, the Commission and the partner agencies will all incur one-time and ongoing costs for program start-up and implementation. Administrative and clearinghouse costs will be higher initially due to program start-up costs, but are expected to decrease and level out for program years 2003 through 2005. Combined utility and Commission non-recurring clearinghouse administrative costs will total $900,000 for the first program year. Combined recurring utility and Commission clearinghouse costs are estimated at $648,000 for the first program year and for each subsequent year (See Table 6.1). Subsidy costs will also increase substantially as we enroll the majority of eligible customers into CARE during the first few months of the program. Subsidy costs will vary depending on the number of enrollments, ranging from $17.1 million to enroll 100,000 customers, to $172.4 million to enroll one million customers into CARE. The utilities will incur additional administrative costs that will also vary by the number of customers enrolled into CARE, as described in Attachment 8.

We are moving forward with automatic enrollment on an expedited schedule. The Commission's Executive Director will begin immediate efforts to obtain partnership agreements with DHS, MRMIB, and DCSD. As soon as practicable after these agreements are finalized, the Assigned Commissioner will issue a ruling outlining additional implementation tasks and a schedule for completing them. Within 30 days from the effective date of this decision, the Assigned Commissioner will issue a ruling setting forth the text for a bill insert to provide customers with advance information about the automatic enrollment program. Energy Division, in consultation with the Public Advisor's Office, will prepare the bill insert language for the Assigned Commissioner's consideration.

We direct the utilities to submit names and addresses of customers who are not enrolled in CARE to the Commission on a monthly basis, beginning 90 days from today. The utilities are also expected to track those customers who are automatically enrolled in CARE, and report on the number of customers successfully matched, enrolled and re-certified. This information should be included in the utilities' monthly rapid deployment reports until further notice. We further direct each utility to file annual status reports on the automatic enrollment program. This information will allow us to track the number of new enrollees and evaluate the contribution of automatic enrollment to our penetration goals.

Due to the disparities between Universal Lifeline Telephone Service (ULTS) and CARE described in this decision, we do not include ULTS in the automatic enrollment program we adopt today. In particular, the record in this proceeding raises concerns over the extent to which ineligible customers may currently be enrolled in ULTS. However, we direct the Low Income Oversight Board (LIOB) to solicit public input and develop recommendations for coordinated customer outreach between the ULTS and CARE programs. The LIOB report is due within 90 days from the date of this decision, with comments due 30 days thereafter. We also refer Energy Division's recommendations for improvement to ULTS penetration rate calculations and eligibility verification to the Assigned Commissioner in the ULTS proceeding, R.98-09-005.

Today's decision also describes the program planning process we envision for the remainder of 2002 and beyond. The utilities report that there is sufficient SBX1 5 and program carryover funding to continue LIEE rapid deployment activities through the end of the year without any modifications to authorized funding levels or ratemaking. In contrast, CARE program costs will greatly exceed the amounts currently authorized in rates and remaining from SBX1 5 appropriations as we continue rapid deployment through 2002. Accordingly, we have directed the utilities to file separate applications to address the funding of CARE rapid deployment activities, and associated ratemaking treatment, through December 31, 2002.⁴ We will consider these applications by subsequent Commission decision. We authorize the utilities to track costs related to automatic enrollment in a memorandum account or in an existing CARE balancing account, as appropriate, pending our determinations in A.02-04-031 et al.

Finally, as outlined in the Assigned Commissioner ruling dated February 27, 2002, we have initiated a planning process to consider program design improvements for PY2003. As part of this review, we may need to reassess program budgets and funding levels, particularly for CARE outreach efforts, in light of our goal for CARE participation, minimum penetration rate benchmarks and the automatic enrollment program we adopt today. The utilities shall include in their PY2003 CARE program plans (due July 1, 2002) a proposed scope of study for evaluating the results of automatic enrollment, and associated budget.