Advisory Committee

The Commission created the Universal LifeLine Telephone Service (ULTS) Trust in D.87-10-088 for the receipt and investment of the program surcharge monies. In the same order, the Commission also created the ULTS Trust Administrative Committee (ULTSAC) charged with administering the ULTS Trust and disbursement of the program funds. In 2002, the Commission issued D.92-04-059 restructuring the ULTSAC pursuant to legislation requiring the Commission to transition LifeLine Trust monies into the State Treasury.31 The committee advises the Commission regarding the development, implementation and administration of the California LifeLine program. In addition, ULTSAC provides recommendations and changes to the California LifeLine Marketing Plan as part of its advisory role, and monitors and CBO education and outreach activities.

b. Summary of Federal Changes

In April 2004, the FCC adopted the Lifeline and Link-Up Report and Order and Further Notice of Proposed Rulemaking ( the FCC Lifeline Order), which ordered changes to the Universal Service Lifeline and Link-Up program to improve the effectiveness of the low-income support mechanism. In particular, the FCC Lifeline Order requires states to document a customer's income qualifications when a customer's participation in the program is based on level of income, in order to continue to receive subsidies from the federal Lifeline/Link-Up program. Specifically, the FCC Lifeline Order made the following changes to the federal Lifeline/Link-Up Program:

Certification of Income-Based Eligibility

In order for carriers in any state to continue to receive federal Lifeline/Link-Up support, the FCC Lifeline Order requires the state to adopt certification procedures to document a customer's eligibility for Lifeline/Link Up enrollment when that customer's eligibility is based on income.32 A customer's certification of income-based eligibility must be accompanied by supporting documentation.33 States that develop their own certification procedures must establish a certifying entity(s), whether it is a state agency or an ETC.34

The FCC Lifeline Order requires all consumers in all states qualifying under an income-based criterion to self-certify, under penalty of perjury, their eligibility to participate and that the presented documentation accurately represent their annual household income. Additionally, applicants in all states must self-certify, under penalty of perjury, the number of individuals in their households.35

Where states mandate and operate their own state Lifeline/Link-Up programs, such as California, an officer of the ETC must certify that the ETC is in compliance with state Lifeline/Link-Up income certification procedures and that, to the best of his or her knowledge, all Lifeline customers have presented documentation of income.36

Certification of Program-Based Eligibility

A customer may also qualify for federal Lifeline/Link-up support based on the customer's participation in one of several means-tested programs. To be eligible under this criterion, a customer must certify, under penalty of perjury, that the customer participates in at least one of the federal programs on the FCC's list of qualifying programs, such as Medicaid, Food Stamps, Low Income Home Energy Assistance Program (LIHEAP) etc. In the FCC Lifeline Order, the FCC added two new programs to its list -- the Temporary Assistance to Needy Families Program (TANF) and the National School Lunches program (NSL).

A state that has its own state LifeLine program may adopt a program-based criterion as an alternative option for eligibility for the state program. In response to the FCC Lifeline Order, the Commission adopted a program-based criterion for LifeLine eligibility in addition to an income-based criterion.

Verification of Continued Eligibility Under Program-Based and Income-Based Eligibility

The FCC Lifeline Order requires all states to establish procedures to verify consumers' continued eligibility for the Lifeline/Link-Up program under both program-based and income-based criteria. Verification procedures can include random beneficiary audits, periodic submission of documents, or annual self-certification.37

Other FCC Mandates

The FCC also adopted an appeal process for the termination of Lifeline benefits which includes a 60-day advance notice to give the customer time to appeal. However, the FCC did not require adoption of these termination procedures by states that have existing dispute resolution procedures between telephone companies and consumers governing termination of telephone service that could apply to termination of Lifeline benefits. The FCC stated that if a state's procedures, at a minimum, include written customer notification of impending termination thus giving customers time to appeal, then the state may develop its own appeal process. The FCC ordered that states make their own determination as to whether the state's existing law could apply to termination of Lifeline benefits.38

The Lifeline/Link-Up Order codified the requirement that all ETCs must maintain records to document compliance with FCC and state requirements governing the Lifeline/Link-Up programs and provide that documentation upon request to the FCC or Universal Service Administrative Company (USAC), which processes federal Lifeline claims. All ETCs must retain such documentation for the three preceding calendar years.39 The FCC also clarified that non-ETC resellers who purchase Lifeline-discounted wholesale services from ETCs in order to offer discounted services to low-income consumers, must also comply with the applicable federal or state Lifeline/Link-Up requirements, including certification and verification procedures.40

c. California LifeLine Program After Federal Changes

On April 7, 2005, the Commission adopted D. 05-04-026 amending the LifeLine program to comport with the FCC Lifeline Order in order to maintain the $330 million annual federal Lifeline/Link-Up funding. The Commission:

The Commission also ordered CD to conduct two workshops to discuss various issues relating to the CertA41 and GO 153 revisions.42 and 43

On December 12, 2005, the Commission adopted D. 05-12-013 approving a revised GO 153 and providing for the adoption of enrollment forms, the effective date of the GO and a standard customer notification notice through the Commission's resolution process. In Resolution T-16996, the Commission adopted the enrollment forms for the new LifeLine program, effective July 1, 2006, and a uniform customer notification sent as a bill insert by all carriers to their residential and LifeLine customers (other than customers of foreign exchange or farmer lines) in monthly bills rendered from June 1- 30, 2006.44

Third Party Certifying Agent to Perform Certification and Verification Functions

In D. 05-04-026, the Commission decided that the certifying agent would perform the certification and verification functions as part of its implementation of the new federal changes. The Commission determined that having a centralized certifying agent would ensure consistency in review of documents, assure privacy of personal documents, and be more cost effective than having 40 different carriers all performing the same function as occurred prior to the federal changes. With a single data base, customers would be able to move from one carrier to another, or to another part of the state, and not have to go through the LifeLine eligibility process again. The Commission however did not adopt the use of a certifying agent to process customer applications where the customer resides on tribal lands.45

The Commission required the certifying agent to establish a web-based system to be used for program-based certification and annual verification processes.46 The Commission also directed the certifying agent to develop a mechanized process for the exchange of information with carriers.47

Initial Program Set-up

After a competitive bid process, the Commission awarded Solix, Inc. the certifying agent (Cert A) contract. On July 1, 2006, CPUC began implementing the new process of qualifying new LifeLine customers and verifying the continued participation of existing customers. Under the new process, the CertA (Solix) is responsible for:

The CertA (Solix) is required to:

Program Suspension

On November 1, 2006, Commissioner Grueneich issued an Assigned Commissioner's Ruling (ACR)49 temporarily suspending for a period not to exceed six months, portions of GO 153 relating to the annual LifeLine verification process because the low response rate of customers returning LifeLine verification forms resulted in significant numbers of current Lifeline customers being removed from the program. Staff and interested parties were ordered during the suspension to determine the reasons for the low response rate and to take steps to solve the problem. In August 2006, 29.43% of LifeLine customers returned the verification forms; currently just over 49% return the forms. Telephone carriers who conducted the LifeLine process prior to the federal changes report response rates of over 70%. (See section VI of this report for additional discussion of this data).

Since adoption of the new federal requirements, customer complaints and appeals regarding the LifeLine program have increased dramatically. Under the new process, those customers who do not return verification forms are sent a letter disqualifying them from the LifeLine program and notifying them that they will be required to pay regular telephone rates. Disqualified customers may appeal the decision to the CAB at the Commission. Customers also find out about their Lifeline disqualification via their monthly bills when their telephone service is regraded to regular rates. The LifeLine disqualifications and related phone bill regrading resulted in an increased volume of letters received by CAB (up to 300-500 per day) from customers appealing their elimination from the Lifeline program. At the same time, the number of phone calls from these customers has deluged both the CAB offices as well as the consumer representatives for the telephone carriers.

The November ACR:

¬ Ordered CPUC Staff to hold a workshop including telephone carriers, Solix, and other interested parties to discuss solutions to the verification form response rate problem; and

¬ Directed Solix to send letters to all customers who were sent verification notices since July 1, 2006, but did not return the forms. The letter informed those customers of their temporary reinstatement in LifeLine program, with full reinstatement pending later action.

The Commission later approved D.06-11-017 ratifying the ACR.

Workshops and Establishment of Working Groups

In compliance with D. 06-11-017, Staff convened workshops on November 13 and 14, 2006. Problems associated with the verification process were identified and Staff established two working groups: the Implementation Working Group and the Marketing Working Group. The Implementation Working Group began meeting weekly on November 16, 2006, to further discuss and find solutions to the low response rate in the verification process. The Marketing Working Group convened on November 30, 2006, and meets regularly to develop marketing strategies and improve customer recognition of LifeLine changes.

d. Growing Issue with Certifications

While the November ACR and associated decision (D.06-11-017) suspended the verification process for existing LifeLine customers, it did not suspend the certification process for new LifeLine customers because it did not appear problematic at that time.

However, Commission Staff has since determined that customers are also experiencing problems with the certification process similar to those that occurred with the verification process. In fact, the percentage of certification forms returned stands at about 46%, compared with about 49% for verification forms.50

One contributing factor to the low certification response rate may be problems with the carrier-customer interaction when new LifeLine customers are signed up. Since January 29, 2007, CAB Staff has conducted approximately 50 calls to Verizon and AT&T call centers to determine whether customers receive correct and complete information regarding the California LifeLine program. Nearly half of the AT&T and Verizon call center representatives provided incomplete or inaccurate information on the program to customers, a direct noncompliance with GO 153.

Further, AT&T's customers who applied for the LifeLine discount but were rejected were being charged a conversion/regrade charge when they are placed back onto a non-LifeLine residential service rate. This also does not comply with GO 153, Section 5.4.4. As a result of these findings, on February 28, 2007 Commissioner Grueneich issued another ACR directing carriers to comply immediately with GO 153 and D. 06-11-017 and set follow-up actions. The ACR requires carriers to hold customers harmless from the imposition of all charges that would otherwise not accrue pursuant to the certification process of GO Section 5.4.4, and directs carriers to charge customers only those charges specified in the GO, which are previously waived or discounted charges, service initiation charges, end user common line charges, taxes, and surcharges associated with ULTS discounts. The GO also states the customer will be subject to the utility's rules applicable to the establishment of credit, including any deposit requirement. Moreover, Commissioner Grueneich issued a third ACR on March 28, 2007 with further clarification and direction on the billing problem.

III. Federal Rules Allow Substantial Flexibility

The FCC Lifeline Order gives states with their own state-mandated low-income universal service support programs, such as California, a great deal of flexibility in how these states implement the federally-mandated changes to their programs. The Order also permits these states to determine the certifying entity they will use to administer the program (state agency, ETCs or a third party).51 This flexibility, as outlined in more detail below, gives the CPUC adequate leeway to make the necessary changes to California's LifeLine program to improve the response and enrollment rates.

a. Certifying New Customers

In states that have their own state-mandated Lifeline programs, the consumer must meet the eligibility criteria established by the state, consistent with sections 54.409(a) and 54.415(a) of the FCC's rules.52

Section 54.409 (a) of the FCC's rules states: "To qualify to receive Lifeline service in a state that mandates state Lifeline support, a consumer must meet the eligibility criteria established by the state commission for such support. The state commission shall establish narrowly targeted qualification criteria that are based solely on income or factors directly related to income...."

Section 54.415(a) of the FCC's rules states: "In a state that mandates state Lifeline support, the consumer qualification criteria for Link-Up shall be the same as the criteria that the state established for Lifeline qualification in accord with Sec. 54.409(a)."

State certification procedures and outreach efforts can take into account existing state laws and budgetary limits.53

Program-Based Eligibility

For federal default states, the FCC only requires self-certification, under penalty of perjury, for certification of program-based eligibility. States operating their own programs are allowed to devise more strict measures as they deem appropriate.54

Under FCC rules, states with their own mandated Lifeline/Link-Up programs have the flexibility to consider federal and state-specific public assistance programs with high rates of participation among low-income consumers in the state for program-based qualification purposes.55 Eligibility under the program-based option is not subject to the FCC's income requirements.56

In its Lifeline Order, the FCC encourages states to adopt automatic enrollment as a means of certifying that consumers are eligible for the Lifeline/Link-Up program or the equivalent state program.57 The definition of automatic enrollment in this context is an electronic interface between a state agency and the carrier that allows low-income individuals to automatically enroll in Lifeline/Link-Up following enrollment in a qualifying public assistance program.58

The Commission considered adoption of automatic enrollment during the rulemaking process, but decided not to adopt automatic enrollment at that time. It deferred the issue to the Commission's current proceeding that is comprehensively reviewing California's universal service program.59

In D.05-04-026, the Commission required the CertA to establish a web-based system to be used as one alternative for customers applying for the LifeLine program based on program-eligibility60, as well as for the annual verification process.61 In that Decision, the CPUC deferred the details as to how such a web-based system should be structured to subsequent workshops and said it would finalize the parameters of the web-based system in a subsequent Commission decision.62 In D.05-12-013, the Commission reiterated its intent to develop a web-based system and ordered the Telecommunications Division [now the Communications Division] to work with the CertA to begin development of such a system within one year of the time when the CertA's contract is implemented. The Commission stated that the system should be operational within one year after work begins. In other words, the system would be operational within two years of CertA's contract implementation (by July 2008).63

Income-Based Eligibility

The FCC requires that income certification be accompanied by supporting documentation. However, the FCC stated that income certification from another means-tested program is not suitable documentation of household income because it could be difficult to verify that the means-tested program utilizes the same income eligibility threshold.64

The FCC also determined that states that operate their own Lifeline/Link-up programs should maintain the flexibility to develop their own certification procedures other than self-certification, including acceptable documentation to certify consumer eligibility under an income-based criterion, and to select the certifying entity, whether it is a state agency or an ETC. The FCC determined that this flexibility will permit states to develop certification procedures that best accommodate their own Lifeline participants based on the available resources of ETCs and state commissions, each state's eligibility criteria and local conditions. However, ETCs must be able to document that they are complying with state regulations and recordkeeping requirements.65

b. Verifying Existing Customers

Verification procedures can include random beneficiary audits, periodic submission of documents, or annual self-certification. However, verification must ensure that the low-income support mechanism is updated, accurate, and carefully targeted to provide support only to eligible consumers.66 Pursuant to D.05-04-026, GO 153 permits random audits as the Commission deems necessary.

The FCC Order allows states that administer their own programs the flexibility to design and implement their verification procedures to validate consumers' continued eligibility. The FCC stated that this flexibility will permit states to develop verification procedures that best accommodate their own Lifeline participants based on the available resources of ETCs and state commissions, each state's eligibility criteria, and local conditions. 67

The FCC also determined that states should develop on-line verification systems, where states can obtain and provide data to allow ETCs real-time access to a database of low-income assistance program participants or income reports. However the FCC did not mandate such on-line verification systems. As noted above in the discussion under "Certification of Program-based Eligibility" the CPUC required the CertA to establish a web-based system to be used for the annual verification process, to complement the paper system.68

IV. Short-Term Strategies for Improving LifeLine

Several strategies to improve customer response rates in the short-term are described below. These strategies include a contract amendment that outlines and funds changes in the administrative and marketing activities that Solix will conduct. Staff recommends amendments to GO 153 in order to improve the response rates and eligibility processing. Additional short-term improvements discussed below include: clarifying which documentation can be used to establish program eligibility, increasing program awareness through specific outreach efforts; continuing implementation and monitoring of the interface between Solix and carriers; and improving customer-carrier interface. The GO changes and documentation clarification require formal Commission action. All other short-term strategies are being handled by Staff.

a. General Order Changes and Decision Clarification69

The following discussion details Staff recommendations on formal action that the Commission should take to improve LifeLine processes in the short-term. First, Staff recommends amending GO 153 to allow more time for the return and evaluation of LifeLine forms due to current mailing and response delays. In addition, Staff recommends amending GO 153 to provide more reminders to customers from the LifeLine certifying agent and from carriers. Correspondingly, Staff proposes that the Commission delegate it authority to make further amendments to GO 153 via resolution as long-term solutions on the mailing and other issues are achieved. Furthermore, Staff recommends that any decision lifting the LifeLine suspension include guidance on the types of documentation permissible under the LifeLine program.

Address Mailing and Response Delays

Staff proposes that the Commission amend GO 153 regarding the timeline for the return and processing of LifeLine forms as follows.

Certification Form Return and Review

Verification Form Return and Review

LifeLine Form Corrections

Attachment 1 of this report details how these proposed changes can be specifically incorporated in GO 15371.

Staff also proposes that the Commission allow it to make further amendments to GO 153 via resolution as long-term solutions on the mailing issue are achieved and mail times are decreased.

Many proposed changes pertain to Solix mail delays. Both carriers and the CAB Staff report that LifeLine customers complain about delays in receiving or non-receipt of LifeLine certification and verification forms and associated correspondence from Solix. Solix uses standard mail to send Lifeline forms72. Recent information indicates that mail delivery of LifeLine forms and documents takes approximately 8 to 14 days to reach customers. Because standard mail delivery is not guaranteed, the US Postal Service assures neither the delivery of LifeLine forms and documents nor the return of undelivered mail to Solix. GO 153 does not specify a timeframe for the mailing of LifeLine forms and documents from the CertA to customers. When the Commission approved the decision adopting the GO, it did not anticipate mailing delays. The proposed changes would address these issues.

In addition, Solix reports untimely receipt of a significant number of certification and verification forms from LifeLine customers. Currently, GO 153 mandates that new customers return completed certification and verification forms to CertA within 30 days from the date they were mailed to customers. If a form is received after the 30-day period, the customer is disqualified from the LifeLine program for "non-response". During the suspension period, customers were allowed an additional four-day grace period before they were disqualified for the late receipt of LifeLine forms73. Between July 1, 2006 and December 17, 2006, Solix received a total of 22,783 certification forms and 58, 412 verification forms after 34 days. Of those late responses, 82% of the certification forms and 77% of verification forms were received within 60 days. Mailing delays appear to be a significant factor in untimely receipt of LifeLine forms from customers and resultant denials. Again, the proposed changes would address these issues.

Mailing delays may also impact the ability for LifeLine applicants to correct deficiencies on their form to avoid disqualification. GO 153 provides 15 days for customers to correct problems with their certification and verification forms, as identified by the CertA. If customers do not return the correction to the CertA in that time period, they are disqualified from the LifeLine program. Clearly, if the requests for correction are not getting to customers on a timely basis (with as much as 14-day mail delivery timeframe), LifeLine customers do not have sufficient time to make and return corrections to Solix within 15 days. (For a more detailed discussion of the mailing issue and long-term strategies for addressing it, see VI.a of this report.)

While the above changes to the GO do not address the problem that standard mail is not guaranteed to be delivered to customers, they will help remedy the problem of LifeLine customers being penalized with unwarranted disqualification due to untimely mail delivery. By augmenting the timeframe for customers to return LifeLine forms, the volume of LifeLine customers processed by Solix will hopefully increase and the number of customer complaints to CAB and carriers will be reduced. Nonetheless, expanding the timeframe in GO 153 to account for mailing delays has the potential trade-off of increasing the amount of regraded bills for customers who are ultimately disqualified from eligibility for LifeLine program.

Remind and Notify Customers

Staff has directed Solix to provide additional reminders and notifications to LifeLine customers to encourage them to complete and return the required forms. Correspondingly, Staff recommends minor amendments to GO 153 to permanently include them in the LifeLine qualification process. Attachment 1 incorporates GO 153 changes to require the CertA to:

As described earlier, the current contract amendment calls for the CertA to provide the above notifications and reminders via postcard and autodialer.

Staff recognizes that as long-term strategies are developed and employed in the LifeLine program, the Commission may determine that it is beneficial to change the timing or frequency of reminders and notifications from the CertA. Thus, Staff also recommends that the Commission allow it to make ministerial changes to the GO 153 via Commission-approved resolution on a going-forward basis.

Clarify Allowable Documentation

Staff has become aware of an issue raised because of an undefined term in GO 153. Specifically, the GO sets forth a list of specific types of documentation an applicant can submit to be determined eligible for the LifeLine program. The last item on the list of possible documents is identified simply as "other official documents". Since neither the GO nor D.05-04-026 specify what documents would fall into this category, it is unclear what documents would qualify as an "other official document"74. Recently, for example, Staff was contacted by a LifeLine applicant who had presented to the CertA and subsequently to CAB a document not on the list. Because the document was not listed, Staff was uncertain about how to treat the information.

To alleviate this problem, the Commission should clarify how the term "other official documents" is defined in any decision it adopts lifting the LifeLine suspension. Staff recommends that the Commission adopt a broad definition including categories of documents that will allow Staff some discretion to review documents presented, and to develop some guidelines for what specific documents should be accepted. Staff recommends that the Commission deem documents from a state or federal agency or from a state or federal judicial or administrative court as "other official documents" for purposes of meeting the requirements set forth in GO 153. Staff also recommends that the Commission delegate to Staff the authority to interpret and apply that definition so as to accord applicants some flexibility in the certification and verification process.

Additional Carrier Outreach

As described later in this report, the short-term outreach improvements being developed include carrier correspondence to new LifeLine customers informing them that LifeLine certification forms are being mailed to them and of the need to return the completed forms in a timely manner to CertA. Staff recommends that the CPUC formalize the requirement that all carriers send such correspondence to new LifeLine customers in GO 153 (see report Section IV.c and Attachment 6).

b. Contract Amendment

The aforementioned workshop held on November 13 and 14, 2006, and related working group meetings resulted in the identification of a number of issues contributing to the low LifeLine response rates as well as potential solutions to those issues. Because the recommended solutions are procedural changes that were not envisioned and were not included in the original existing contract, a contract amendment is required both to incorporate these changes in Solix's administrative activities as well as to provide $10.496 million in additional funding for them. Because of the large incremental cost involved (the original contract cost is $19.995 million) the contract amendment is subject to the Department of General Services' (DGS) guidelines on Non-Competitive Bids (NCB). Staff sent a NCB request to the DGS and is actively working for its approval. As of March 21, 2007, the NCB was approved by DGS. This means that the CPUC has attained approval to amend the contract. The next step is for CPUC to send the contract amendment to the Office of Legal Services of DGS for approval.

The procedural changes contained in the contract amendment include improvements in the existing communication process with the customers and other improvements such as:

¬ changing the appearance of the envelopes in which LifeLine applications are sent;

¬ using an outbound dialer to inform the customer that a certification or verification form has been sent to them and reminding the customer to return the completed certification/verification forms;

¬ implementing revisions in the form letters and certification and verification forms;

¬ instituting changes in the verification process to allow a "soft" denial on the 45th day instead of an outright denial on the 31st day (in the existing process) and using the balance of the period prior to the customer's LifeLine anniversary date to get the customer to respond to the request for verification;

¬ periodically updating and maintaining Solix's Interactive Voice Recognition (IVR) system; and

¬ creating a "True Up" file for carriers to improve data reconciliation between carriers and Solix.

Change In Appearance of Envelopes

The reasons identified for the low response rate include non-recognition of the LifeLine name and logo as well as customers mistaking LifeLine envelopes from the certifying agent for junk mail. Although improvements in the appearance of the envelope were implemented prior to the suspension, (i.e., incorporating a message in English and in Spanish in big red font on the envelope that it contains LifeLine documents) both the Implementation Working Group and the Marketing Working Group determined that additional changes in the appearance of the envelope should be explored further. From December 20, 2006 through January 24, 2007, the CertA tested 6 different envelopes with 12,000 customers. The test highlights were:

The envelope that had the highest response rate will be used when DGS approves the pending contract amendment.

Use of Outbound Dialer

Workshop participants identified the failure of customers to return the forms as another issue. Solix will begin using an outbound dialer to call customers and remind them to return their completed certification and verification forms before the due date stated on the forms. Two calls will be made to certification and verification customers. The first call will be made when the form is mailed and the second call, 21 days from the form mail date.

Revised Form Letters, Certification Forms, and Verification Forms

Feedback from LifeLine customers, the carriers, the CBOs and CAB indicates that some customers have difficulty completing the LifeLine application forms. The forms are presently being reviewed in the working groups to institute changes that will make them easier for the customers to complete. Form changes include eliminating overly technical verbiage on the forms and putting additional reminders at the bottom of each page (such as "submit completed original form, do not send copies, etc.).

Implementation of Changes to Extend Application Processing Time

The workshop participants noted that customers were not returning verification forms to Solix by the due date and as a consequence those customers were being removed from the program. Under the existing verification procedure, Solix sends customers verification forms 60 days before their anniversary date in order to verify the customer's continued participation in LifeLine. Failure to submit the forms on the 31st day will disqualify a customer from remaining on the program75. Since this may be insufficient time for the customers to respond, the timeline for the certification and verification processes will be revised in accordance with the recommended GO changes described earlier and included in Attachment 1.

Periodic Update and Maintenance of the Interactive Voice Recognition System

The current implementation problems have led to a need for Staff to assess periodically the efficiency of the Interactive Voice Recognition system (IVR) and update the system based upon customer feedback to carriers and CAB. The IVR automates interaction with telephone callers. It uses pre-recorded voice prompts and menus to present information and options to callers and a touch-tone telephone keypad entry to gather responses. The IVR enables customers to make a selection from a menu to retrieve information on their LifeLine application such as the status of their application, the date Solix sent the form, request for another form, and questions about letters received from Solix, etc.

Institute Database Improvements

Since the start of the program on July 1, 2006, carriers have not had an opportunity to reconcile their database with the Solix database and would like additional information on their customer activity (i.e., when the form is sent to a customer, etc). During the first three months of the program, Solix assisted a few carriers by providing them with a list of "active" customers in order to better process LifeLine forms and enrollment. When more carriers started to request "true-up" information and supporting data for large groups of customers, Solix found that it was spending more time and resources investigating these requests than the contracted resources permitted. Thus, a one-time true-up and the customer activity report in the Daily Return Feed to the carriers will be performed once the contract amendments are approved. In the longer term, Staff will evaluate whether more true-ups will be needed and will identify the best mechanism for achieving them if so.

c. Short-Term Outreach Efforts

A contributing factor to the low response rate may be customers' lack of awareness of the new LifeLine processes. Staff identified that more "touches" or outreach efforts were needed to inform and educate customers of the program changes. A description of short-term outreach measures already implemented or under way follows below. (In addition, long-term outreach measures are described in Section V of this report.)

Educating Consumers and Involving Key Agencies

On February 6, 2007, in recognition of Consumer Protection Week, the Commission issued a press release announcing the launch of a new initiative to educate consumers about the LifeLine Program. The Commission sent the press release to some 400 media news outlets.

In addition, the Commission, under direction from Commissioner Grueneich, designed a brochure specifically addressing the current issues with Lifeline phone service enrollment or verification. The brochure provides resources that consumers could use if they were having problems with their LifeLine service. The Commission sent the brochure to over 500 CBOs and government agencies, along with an invitation to contact the Commission to sign up for LifeLine training sessions to be held later this year. Originally sent out in English, the brochure is now also available in Spanish and Chinese.

Expanding Carrier Communications

Staff has identified the need for additional outreach or "touches" to customers informing them of the new LifeLine verification process. As mentioned earlier, a Marketing Working Group, consisting of carriers, consumer interest groups, Solix, and CPUC Staff, has been meeting on a regular basis to develop messages that would better inform LifeLine customers.

The Marketing Working Group is also developing a communications piece (postcard or letter format) that will be sent by all carriers to all of their existing LifeLine customers informing them of the new LifeLine verification process. This item, using both the carrier's name and the LifeLine name, will highlight the partnership between the carrier and the LifeLine program, inform the customer of the new verification process, and provide a phone number for customers to call to learn their anniversary date for program renewal. The communications piece will be sent out prior to re-launch of the verification process.

The Marketing Working Group is also working with carriers to assure that the carriers send reminder materials to new LifeLine customers informing them of the arrival of application forms and the need to return the completed forms in a timely manner. Since some carriers already send out confirmation letters to customers with similar information, the final details on this measure are still being developed. Staff recommends that the CPUC formalize the requirement that all carriers send such reminders to new LifeLine customers in GO 153. See Attachment 6 for the specific changes that staff proposes.

Improving LifeLine Outreach Materials

The Marketing Working Group has developed language and format changes to the verification and certification instructions and application forms to more clearly instruct customers. Once DGS approves the Solix contract amendment, Solix will change the instructions and forms. Unfortunately, the application form itself is a scanned document and cannot be easily modified without incurring millions of dollars in additional expense to reprogram the scanning equipment. Thus, no major modifications to the forms will be made at this time, but less extensive changes are being developed in the short-term. Nonetheless, Staff recognizes that it is desirable to make some modifications to the scanned portion of the application forms and recommends implementing changes as part of the next contract cycle (July 2008).

Lack of consumer familiarity with the LifeLine Logo along with plain white envelopes containing the forms were identified as possible contributing factors to the low response rate. As noted earlier, Solix and Staff conducted an envelope mailing trial, in which six different envelopes containing forms were sent to LifeLine customers76. The results of the envelope trial are illustrated in the following table.

LifeLine Envelope Mailing Trial Results

 

Total Forms sent to Customers*

Customer Forms Received

Response Rate

Pink Envelope w/Logo

1,956

785

40.1%

White Envelope w/Logo & Red Message

1,947

781

40.1%

Pink Envelope w/Logo & Red Message

1,958

790

40.3%

Pink Envelope & No Logo

1,951

788

40.4%

White Envelope & No Logo w/Red Message

1,944

838

43.1%

Pink Envelope & No Logo w/Red Message

1,950

850

43.6%

       

* Total forms sent in each category reduced from 2,000 by the number of customers

disconnected/removed by carriers during process

    
       

Based on the results of this trial, Staff has directed that all future mailings be made in a pink envelope with the red message but without the LifeLine logo. The aforementioned Solix contract amendment contains additional funding for this mailing option.

d. Short-Term Solix-Carrier Interface Improvements

In order to resolve issues with regard to the interface between Solix and carriers, Staff have served as mediators between Solix and carriers, especially on database issues. As a result, a collaborative process has evolved for Staff, carriers and Solix to identify interface issues and quickly develop solutions. For illustrative purposes, Staff highlights some of the short-term fixes that have been implemented through this process.

Creating an Efficient and Effective Process

Since July 2006, CPUC Staff has been working with Solix to improve the certification and verification processes. Based on the feedback received from the carriers, CAB Staff and customers, these improvements include:

Details on the changes implemented since the start of the program are summarized in Attachment 2. Once the database reconciliation between Solix and carriers occurs pursuant to the contract amendment (described earlier in the report), Staff anticipates a decrease in database problems.

Correcting Solix Database Errors

Since the start of the implementation of the new LifeLine process, Solix has encountered glitches in its system which have impacted LifeLine customers and the review of eligibility in the program. Staff highlights two of these problems for illustrative purposes and then summarizes others.

Disqualifications

Solix incorrectly disqualified LifeLine certification forms for 7,940 customers. On December 5, 2006, Solix's system did not properly recognize form due dates in the new year and incorrectly sent these customers denial letters and new certification forms. Specifically, forms dated January 2007 were read as January 2006 and thus rejected as outdated. To remedy this problem, Solix took four corrective actions:

These actions led to 52.6% response rate, which is 6.5% higher than the current response rate certification forms.77 In addition to fixing the problem, these results indicate that increased well-targeted customer outreach results in higher response rates.

Due Date Errors

The LifeLine eligibility/certification process is designed such that, within 45 days of receiving an application, Solix would notify carriers whether a customer is eligible for LifeLine. Within this same timeframe, customers would learn from Solix whether they are eligible or not.

In December 2006, some small ILECs discovered that they were not being informed within this 45-day window of customers' eligibility. Sometimes these carriers heard nothing at all regarding customer eligibility status for up to six months. Upon identification of the problem, Solix also realized that some customers had not been mailed the forms that initiate the certification/verification processes.

This breakdown in the system led to corrective actions. Once discovered, Solix sent customers the certification forms and Staff worked with carriers to minimize re-billing burdens on customers who faced large billing regrades when they were ultimately deemed ineligible for LifeLine discounts.

Solix has responded by making database changes to prevent similar situations in the future. Further, the aforementioned Solix contract amendment allows carrier and Solix to reconcile data to catch problems of this nature more quickly. In the meantime, Staff has directed carriers to closely monitor their LifeLine applicants and make sure they hear back from Solix in a timely manner.

Other Problems

Other problems in the LifeLine process have been discovered:

e. Customer-Carrier Interface Solutions

CAB is responsible for the intake of informal complaints to the Commission. Upon initiation of GO 153, the CPUC designated CAB as the arbiter of any appeal that a customer has regarding Solix's determination of Lifeline eligibility in the verification or certification process. The process permits CAB representatives to uphold or overturn any decision by Solix regarding the customer's eligibility - after review of the case materials. The Commission has authorized CAB representatives to update customer status in the Solix database with appeal outcomes, which in turn is updated and forwarded to carriers.

Unfortunately, for reasons described in this report, many verification and certification customers have not been able to complete eligibility processes for LifeLine under GO 153. This resulted in backbilling as the customer is moved from LifeLine service to basic residential service over a period of months. These customers have contacted CAB disputing the backbilled charges and/or Solix's determination of ineligibility. As a result of the rising portion of CAB's workload related to LifeLine implementation issues, CAB has established regular meetings with AT&T and Verizon to address customer related issues. A general prioritization of problems has resulted from these meetings as well as identification of some short-term solutions.

Tackling Customer Billing Issues

Starting in September 2006, and escalating rapidly through October, written appeals and phone calls to CAB created a major workload impact. From July 2006 through the end of January 2007, CAB has received 12,400 LifeLine appeals, with over 4,000 of those appeals still open. Furthermore a number of those appeals have been in languages that CAB has not historically supported (e.g., Japanese, Korean). The Commission is working on a number of program improvements, each of which may result in reductions to written complaints and calls to CAB. Problems with LifeLine have increased call volumes, call durations, and written appeals. These increases have reduced CAB's ability to respond to phone calls and resolve written complaints.

LifeLine Appeal/Informal Complaint Activity

Date

Informal Complaints

(ICs) Open

LifeLine Appeals

LifeLine Appeals as % Of Open ICs

May-06

242

    

June-06

217

    

July-06

286

    

Aug-06

378

15

4.0%

Sep-06

463

34

7.3%

Oct-06

1794

970

54.1%

Nov-06

2444

1350

55.2%

Dec-06

2367

1037

43.8%

Jan-07

1739

616

35.4%

       

Total

10523

4022

38.2%

Expediting Appeals and Complaints in Collaboration with Carriers

Since the issuance of the November 1, 2006 ACR, CAB has endeavored to meet with carrier Staff responsible for customer service on a regular basis to discuss LifeLine issues and work through solutions. By leveraging the expertise of the CAB and carrier executive level staffs, the team effort identified the problems associated with LifeLine appeals and informal complaints and developed and initiated processing improvements where possible. To date most discussions have been focused on establishing expeditious processes for appeals or informal complaints responsive to both the November, 2006 and February, 2007 ACRs.

CAB/Carrier Customer Issues

Issue

Impact

Action

Next Step

ACR Credits and Reinstatements for Verification

Billing cycle lag has increased CAB contacts - carrier must be contacted for status of reinstatement credit.

Carriers processing reinstatements and credits.

Vast majority of reinstatements were processed. Certain reinstatements to be manually processed.

Eligible Certification Customers Applying Late or not Returning Forms Removed from System

Appeals in CAB cannot be processed until customer completes reinstatement.

Established "pending claim" processes with carriers whereby non-LifeLine charges are not collected while system fixes are implemented.

Working with carriers to categorize charges and develop procedures for when pending claims can be lifted.

Appeals as Share of ICs and Impact on Backlog

See above table. CAB LifeLine workload as percentage of ICs is nearing 40%.

All CAB reps were granted access to Solix database to expedite status checks and case closure. Telco Division personnel assigned to aid in the close of appeals - especially in-language.

Discreet team in CAB will handle only LifeLine issues (call intake and written appeals) in concert with changes in CPUC IVR system. Initiating quantification of appeals that are ministerial and those that may merit CAB intervention.

Boosting CPUC Internal Resources

CAB management is in the process of designating one supervisor and a group of four representatives to categorize all existing LifeLine appeals and informal complaints, and to do telephone intake on only LifeLine issues. This LifeLine team has had a great deal of experience working on the issues since July 2006, including having close contact with carrier executives. Solix, CPUC decisionmakers and LifeLine customers since GO 153 became effective. The team will field all LifeLine calls via the CPUC's IVR. Furthermore, management has reconfigured the team to direct LifeLine customers away from "regular" complaint/inquiry channels into a specific LifeLine queue that will have automated responses to frequently asked questions - and the ability to access a team representative.

CAB management projects that customer wait times will increase initially. Eventually, the team will be able to handle LifeLine appeals and informal complaints more efficiently and effectively. As other LifeLine solutions are implemented as a result of this report and as the CPUC's/carrier's/CBO's outreach and education efforts take hold, management anticipates that LifeLine issues as a percentage of CAB's work will decrease. The next section of this report describes certain longer-term fixes being explored for the expeditious handling of LifeLine issues within CAB.

V. Long -Term Strategies for Improving LifeLine

In the longer-term, Staff has identified a number of approaches to improve LifeLine program efficiency and effectiveness. These approaches are discussed below and include strategies to expand, minimize or eliminate issues related to: mailings, outreach, non-response data, eligibility approvals, the data interface between Solix and carriers, synergies with other low income programs, and dealing with complaints and appeals. Additionally, California can learn a great deal from experiences in other states

a. Improvements in Mail Delivery

The existing contract does not specify the mail class (whether first class, priority, etc.) Solix should use to send LifeLine forms (including self-addressed return envelopes) to customers. Based on the timeline established for certification and verification processes, Solix nonetheless asserted a delivery time of 3-5 days once it mails forms and other documents to LifeLine customers.

Since August 2006, CAB and the carriers have received complaints from LifeLine customers about correspondence from Solix. Customers report non-receipt or late receipt of forms, and non-receipt or late receipt of letters from Solix informing them of the status of their application forms.

In sending forms, letters, and reminders to the customers, Solix uses presorted standard mail which does not guarantee delivery time and return of undeliverable mail to the sender78. Presorted standard mail is generally used for advertisements, circulars, newsletters, etc. Further, standard mail cannot be used for sending personal correspondence, handwritten or typewritten letters, bills and statements of accounts. Despite verbal assurances, Solix could not provide Staff with documentation of mail deliveries in 3-5 days.

Testing Mail Time

CPUC Staff and carrier representatives participated in a test to determine whether the use of presorted standard mail is the reason for the low response rates from LifeLine customers. In February 2007, Solix mailed a certification form, a verification form and a postcard reminder to each test participant in different addresses in different locations. Based on the results of the test, Staff has surmised that the LifeLine mail delivery time takes an average of 8 to 14 days. Furthermore, some forms and reminders never reached test participants. Carriers continue to test and monitor LifeLine mail deliveries and report mail delivery timeframes matching the February test results or longer as well as non-receipt of LifeLine forms and correspondences.

Developing Contractual Solutions

It is critical that Solix send the forms and letters to LifeLine customers using at least first class mail so that quicker and more guaranteed delivery of these forms and correspondences can occur. Any changes in this regard will likely be a long-term measure since Staff did not discover this issue until after the NCB request had been submitted to DGS in December 2006. At this time Solix contends that it cannot change the class of mail from presorted standard mail to first class because such a change would likely involve additional funding. One alternative for securing such funds is submitting another contract amendment. If an additional contract amendment is pursued later prescribing first class mail, the additional cost would be approximately $2.5 million. However, Staff is exploring whether there are alternatives for dealing with the mailing and associated funding issues.

While Staff devises a long-term solution, Solix proposes to send the reminder postcards using first class mail. Staff is considering whether funds can be temporarily diverted to allow first class mailing of LifeLine forms after the Commission lifts the verification suspension. Staff is also evaluating whether funds can be diverted if anticipated certification and verification processing volumes are below expected levels after the suspension is lifted.

Given all the changes in the Solix contract and the proposed amendment, staff recommends that the Commission perform an audit of the Solix contract to ensure that all measures have been implemented and Solix is in full compliance with its contract and any amendments.

b. Long-Term Outreach Efforts

In addition to the outreach measures already underway or planned in the short-term as described earlier in this report, Staff is exploring other outreach measures to target and educate consumers on the new LifeLine process.

Re-Branding the Program

There has been much discussion about the effectiveness of the current logo being used by the program. Staff assessed the feasibility of hiring a marketing/branding expert to assess the current LifeLine logo, analyze the CPUC's marketing/branding program, and make recommendations on how the CPUC can improve its branding efforts. Staff performed a market survey of possible firms currently on the California Multiple Award Schedule (CMAS) list79, to solicit feedback from those firms on their interest in the project and an estimate of costs.

Staff determined that if a contract was 1) less than $10,000 and 2) granted to a firm that is on the CMAS list, then the Commission would not have to follow the DGS request for proposal (RFP) process to grant a contract, but rather could enter into a short-term contract without the requirement of external review and approval. Staff prepared a list of the firms that met the above requirements, along with a summary of their proposals. Staff will decide soon whether such a contract will be granted, and if so, to which firm.

Assisting Community-Based Organizations

The Public Advisor's Office (PAO) has entered into a contract with Richard Heath and Associates (RHA) to assist CBOs on outreach and education to their constituents about telecommunications issues. Lifeline is one of the issues that will be included in the education and outreach program. RHA has just begun its activities under the contract and the education components are still under design.

In addition, the Commission, under direction from Commissioner Grueneich, designed brochures that specifically address the current issues with Lifeline enrollment or verification. The brochure provides resources that consumers can use if they are having problems with their LifeLine service. The Commission sent the brochure to over 500 CBOs, along with an invitation to contact the CPUC to sign up for LifeLine training to be provided later this year.

Enhancing the LifeLine Marketing Contract

In addition to the aforementioned contract on CBO outreach, the CPUC has another contract with RHA to market the LifeLine program and target hard to reach demographic groups. That contract ends in August 2007. CPUC Staff is in the process of developing an RFP for a replacement contract. It is anticipated that the new contract will include additional outreach and education targeted at a wider audience than the existing contract. Staff is exploring how the CPUC can enhance this outreach program and design the new contract to address issues raised during the LifeLine program suspension. Staff is considering whether to include as part of the new contract, a toll-free number for consumers to access additional information on LifeLine program changes and receive help in completing LifeLine forms. It is anticipated the new contract will commence when the old contract ends so as to ensure seamless coverage of marketing efforts.

c. Refinements in Customer Responses

The CPUC may be able to make further improvements to the LifeLine customer enrollment in the longer term by targeting certification and verification non-responses. Currently, Solix disqualifies LifeLine customers whose certification and verification forms are categorized as "non-responses"80. Between July and December 2006, data from Solix indicates that approximately 53% of certification forms and 50% of verification forms mailed to LifeLine consumers were non-responses.

Processing Unscannable Mail

The non-response category includes customers who did not return LifeLine forms as well as correspondence which cannot be scanned and automatically accounted for in Solix's systems. While Staff has already discussed a variety of other proposals (the contract amendment, better outreach, etc.) which generally addresses non-receipt of LifeLine forms, the non-responses that are deemed unscannable have not been addressed.

Solix indicates that it is currently taking no action with regard to the LifeLine correspondence that is unscannable mail. Originally, Solix planned to shred the unscannable mail from LifeLine customers. Due to concern over the treatment of that correspondence, Solix does not currently shred these items. Instead, it collects and stores them, but has no manual process in place to review them. The unscannable mail includes but is not limited to:

Solix data indicates that unscannable mail accounts for less than 1% (or just over 9,200 items) of the LifeLine application forms mailed to Solix since the program began in July 2006. However, Solix data likely underestimates the unscannable mail since it relies upon standard mail delivery to send correspondence to LifeLine customers and that class of mail is not guaranteed to be returned to Solix if it does not reach the addressee. CAB Staff report LifeLine complaints and appeals from customers who can document that they mailed LifeLine forms to Solix. Some of these customer forms may be included in the stored unscannable mail.

Staff is evaluating whether a manual process for reviewing the unscannable mail can be developed and how it would be funded. With such a review, customers who submitted partial LifeLine forms to Solix could be given the opportunity to correct their applications. In addition, correspondences indicating that verification applicants are no longer eligible for the program could be logged. Both of these strategies could improve the certification and verification response rates and overall customer enrollment.

Remedying Other Issues

Staff will also take a more granular look at the non-response data as a whole to inform other strategies described in this report. Breaking down the non-response data may provide the CPUC with other clues on how to improve the LifeLine process. For example, if the non-response data demonstrates a problem with forms being returned from customers of a particular carrier or class of carriers, or by a certain customer language group, strategies could be appropriately tailored to resolve specific issues. While preliminary data from Solix generally demonstrates an expected higher percentage of non-responses from large ILECs that have a large share of LifeLine customers and applicants, some small CLECs and resellers may have a disproportionate share of the non-responses. Additionally, the larger ILECs appear to have non-response rates commensurate with the non-response rates for the overall LifeLine program, while smaller carriers may have higher non-response rates. Moreover, preliminary data suggests that some of the Asian language customer groups have a lower non-response rate than the English and Spanish language groups.

d. Customer Pre-Qualification

It has been a long-standing practice that LifeLine customers are given the discounted phone rate when new customers originally enroll in the program. In the past, this practice did not present any hardship to LifeLine customers as they self certified their eligibility. Since the certification process has changed and customers are now required to prove income eligibility, customers who are rejected from the LifeLine program are now required to repay the discounted rates, a higher connection fee, and other federal and state taxes and surcharges. If such back billing is for several months, as is often the case, the additional back billing costs can total more than $100.00. Given that many applicants who are ultimately deemed ineligible for LifeLine discounts marginally exceed LifeLine income thresholds, CAB has received many complaints from customers indicating that the additional repayment amount is a hardship.

Some states do not grant the discounted rates when new customers originally enroll in LifeLine. Rather, the customer is charged the full residential rate and once their eligibility in the program is certified, they are then placed on the LifeLine program and given a credit for the difference between the full residential rate and the LifeLine rate. While this solves the back billing issue, Staff believes the higher initial costs of a pre-qualification process may act as a barrier to enrollment for low-income Californians, especially those in traditionally hard to reach demographic groups.

Some carriers have suggested that the CPUC implement pre-qualification to address the back billing issue. Some suggest the associated initial cost issue could be addressed by requiring carriers to apply a three month payment plan to assist customers with regular connection charges. Staff believes this issue requires further policy development in a subsequent Phase II of the current docket; the Commission must balance the needs of low income customers ultimately eligible for LifeLine with those who are found to be ineligible and suffer financial hardship from the back billing.

e. Long-Term Solix-Carrier Interface Improvements

Some improvements to the data exchange interface between carriers and Solix may require longer term resolution. Several short-tem improvements to the Solix-Carrier data interface were described earlier in this report, including those in the contract amendment and others facilitated by CPUC Staff. Once the short-term improvements are implemented, it would be prudent to evaluate whether additional changes are needed to increase the response rate from LifeLine customers and enhance the processing of their eligibility for the program. For example, Staff is currently working with Solix and carriers to resolve database errors resulting in rejection of LifeLine forms due to carriers inclusion of old records in the data they provided to Solix. Solix and carriers are currently developing a mechanism to allow better information exchange between carriers when these errors occur. This mechanism alleviates the problem until improved database reconciliation can occur pursuant to the contract amendment. While Staff anticipates these measures will ultimately reduce these database errors and resultant LifeLine form rejections, this issue should be monitored once those measures are in place. On a more global scale, additional fields added to the database may accommodate more input from carriers and easier processing of LifeLine forms. Staff will also evaluate whether more true-ups will be needed beyond the one-time true-up included in the pending contract amendment.

For six months after the verification process suspension ends, Staff intends to conduct meetings with Solix and the carriers on at least a monthly basis to facilitate resolution of interface issues that Solix and carriers have not otherwise been able to resolve. While this does not obviate the need for Solix and carriers to resolve issues on a day-to-day basis, it will facilitate the resolution of larger issues that require more complex solutions.

f. Synergies with Other CPUC Low Income Programs

The Commission may be able to improve LifeLine response rates and customer enrollment through synergies with other Commission low-income programs. Currently, the Commission oversees such programs assisting low-income water and energy consumers. One strategy to consider is automatically enrolling customers from these programs into the LifeLine program. However, implementation of such a strategy would require resolving privacy concerns with sharing customer information and resolving differences in income thresholds for each program. Staff recommends an analysis of these synergies be addresses in a subsequent Phase II of this docket. A brief description of the potential programs follows:

Water Low Income Program

The CPUC has authorized low-income water programs for parts of Golden State Water Company's (previously Southern California Water Company) service area and California American Water Company's Monterey District.  Customers qualify for the low-income water programs if their total annual household income is at or below set limits. The income limits are evaluated every year and may change depending on the cost of living. The Commission is considering more low-income programs for consumers of the other regulated water utilities.

Energy Low-income/Assistance Programs

The Commission provides several energy related assistance programs:

California Alternative Rates for Energy (CARE)

Low-income customers that are enrolled in the CARE program receive a 20 percent discount on their electric and natural gas bills and are not billed in higher rate tiers that were created for Southern California Edison (Edison), Pacific Gas and Electric Company (PG&E) and San Diego Gas and Electric Company (SDG&E).  CARE is funded through a rate surcharge paid by all other utility customers. 

Eligible customers are those whose total household income is at or below certain income limits. California has a Low-Income Oversight Board (LIOB), which was established by the Legislature to advise the PUC on the energy low-income assistance programs of utilities under the Commission's jurisdiction.

The Family Electric Rate Assistance Program (FERA)

Families whose household income slightly exceeds the low-income energy program allowances qualify to receive FERA discounts, which bills some of their electricity usage at a lower rate.

 

Low-Income Energy Efficiency Program (LIEE) 

 

The LIEE program provides no-cost weatherization services to low-income households who meet the CARE income guidelines. Services provided include attic insulation, energy efficient refrigerators, energy efficient furnaces, weather stripping, caulking, low-flow showerheads, water heater blankets, and door and building envelope repairs that reduce air infiltration. On January 25, 2007, the CPUC opened a proceeding to improve the LIEE program and increase participation levels.

Discounts, Payment Plans, and Assistance Paying Energy Bill

Some utilities have shareholder-funded emergency payment assistance programs for their customers, which provide cash assistance to help offset the costs of heating and cooling their homes.

Medical Baseline

All residential customers are billed a certain amount of their natural gas and electricity use at their utility company's lowest residential rate. This is called the "Baseline Allowance" and it is set depending on what climate zone the customer's home is in and whether it is the utility's "winter" or "summer" season.

 

Extra allowances of natural gas and electricity are billed at the lowest rate for customers who rely on life support equipment, or those who have life threatening illnesses or compromised immune systems. The extra allowances are called Medical Baseline. Also, in consideration of their increased heating and cooling needs, the Medical Baseline allowance is available to: paraplegics and quadriplegics, multiple sclerosis patients, scleroderma patients, and people being treated for a life threatening illness or who have a compromised immune system.

Federal Low-Income Programs Administered by the Department of Community Services and Development (CSD)

CSD administers Federal low-income home energy assistance, energy crisis intervention, and low-income weatherization programs (LIHEAP). These programs are funded by federal grants to provide weatherization services and cash to help low-income customers pay their energy bills.

Joint LIOB and LifeLine Outreach Efforts

Joint LIOB and ULTSAC Report: dated January 24, 2003

In D.02-07-033, the Commission ordered, among other things, that the LIOB hold public meetings for targeted outreach to specific telephone utility service areas for the purpose of soliciting public input on coordinating customer outreach between the CARE and ULTS (now known as California LifeLine) programs. 82

The following is a summary of the joint LIOB and ULTSAC recommendations:

g. Lessons from Other States

Through a query of Lifeline programs in other states, Staff gathered information on strategies it is considering to affect long-term improvement in the LifeLine process. A brief description of those strategies follows and how the CPUC may consider incorporating them. Also, detailed information on state programs is located in Attachment 5 at the end of this report.

h. Long-Term Appeal and Complaint Solutions

As expressed in the previous section on short term strategies, CAB has instituted certain solutions in concert with carriers and Solix that address issues during the pendency of the November, 2006 and February 2007 ACRs. When the ACR process suspensions are lifted, CAB has explored how to more effectively process LifeLine appeals and complaints. The focus of consideration of longer term solutions must be the efficient processing of LifeLine customers. This entails a balancing of resources so that CAB can also process non LifeLine customer inquiries and informal complaints.

Commission Staff is working with state control agencies regarding the Commission's need to hire more Staff or to identify an alternative approach to managing the additional LifeLine appeals work. Also under consideration is a process where another California State agency, that has access to income information, could aid the CPUC in the tasks associated with the income verification that is part and parcel of the LifeLine eligibility process under GO 153.

VI. Response Rate Comparison

Given the problems with the California LifeLine process since the federal changes, the open question is what, if any, benchmark should be used as an acceptable rate of response. Some attrition from the LifeLine program appears reasonable as customers must substantiate their eligibility in either an income or program basis. However, the large number of LifeLine customer complaints suggests that current response rates are too low with eligible customers and applicants being removed from the program. An analysis of customer response rates before and after changes instituted by the FCC's Lifeline Order is presented below. There is also an assessment of response rates in other states and jurisdictions.

a. Carriers Obtained Rates of Over 70%

Staff sent a data request to Verizon and AT&T in order to evaluate the LifeLine response rates prior to the recent federal changes. While the information from these carriers suggests that response rates were over 70% when carriers administered the California LifeLine program, those rates are not wholly comparable to present rates given differences in program requirements prior to the federal changes and the limitations in the way carriers tracked response rate data at that time. In particular all customers self-certified their eligibility for the program, with no supporting documentation requirement or random auditing. Such program differences clearly contributed to LifeLine response rates over 70%.

31 In Rulemaking (R.) 01-08-002, the Order Instituting Rulemaking on Implementation of Senate Bill 669, As It Affects California High-Cost Fund A; California High-Cost Fund B; Universal Life Line Telephone Service Trust; Payphone Service Providers Enforcement; Telecommunications Devices for the Deaf Interim Placement Committee; Public Policy Payphone Program; and California Teleconnect Fund.

32 Lifeline and Link-Up Report and Order and Further Notice of Proposed Rulemaking, WC Docket No. 03-109, FCC 04-87, (rel. April 29, 2004) at para. 29.

33 Id at para. 28.

34 Id at para. 29

35 Id at para. 32.

36 Id at para. 31

37 Id at para. 33.

38 Id. at para. 21 and para. 22.

39 Id. at para. 39.

40 Id. at para. 40.

41 In April and May 2005, CD conducted a workshop attended by representatives from carriers, community based organizations (CBOs), the CPUC's Consumer Affairs and Information Services Division (CSID) and Division of Ratepayers Advocates (DRA), consumer advocates, and prospective certifying agent bidders. Based on the workshop results, the Commission issued a Request for Proposal (RFP) on June 10, 2005 and Addendum #1 to the RFP on June 15, 2005. To better clarify some of the items in the RFP, the RFP and addendum were replaced with a revised RFP posted on July 1, 2005.

42 A workshop to discuss proposed revisions to GO 153 was conducted in June 2005, again including carriers, CBOs, CSID and DRA staff, and prospective certifying agent bidders.

43 The GO 153 prescribes the procedures for the implementation of the Moore Universal Telephone Service Act [California PU Code § 871 et seq.]. This GO is applicable to all telecommunications carriers operating in California and to residential customers eligible for ULTS pursuant to the Moore Universal Telephone Service Act.

44 See Attachment 3 for details on changes to the program.

45 D.05-04-026 at pp.27-28.

46 Id. at pp. 31-32.

47 Id. at pp. 36-37.

48 This call center is distinct from the one operated pursuant to D.96-10-066 which is operated by outside consultants and not by CertA.

49 The ACR temporarily suspended the following sections of GO 153: 4.5, including Appendix C; 5.5; those portions of 6.3 and 6.4 as they relate to the annual verification process; Appendix C; and the portion of Appendix E titled "Existing ULTS Customers (Verification)."

50 LifeLine Program actual results July 2006 through February 2007 (see section VI of this report).

51 FCC Lifeline Order at para. 29.

52 Id at para. 7.

53 Id. at para. 5.

54 Id. at para. 27.

55 Id. at para. 5.

56 D. 05-04-026 at p.21.

57 FCC Lifeline Order at para. 25.

58 Id at footnote 97.

59 D. 05-04-026 at p. 41.

60 Id. at pp.31-32.

61 Id. at pp.31-32.

62 Id at p. 32.

63 D. 05-12-013 at pp. 51-52.

64 FCC Lifeline Order at para. 28.

65 Id. at para. 29

66 Id. at para. 33.

67 Id. at para. 34.

68 Id. at pp. 31-32.

69 These recommended changes require Commission approval.

70 Under this proposal, customers would still be given a deadline of 44 days to return certification and verification forms. However, the CertA would accept late-filed forms received within the 8-day grace period.

71 The contract amendment discussed earlier in this report incorporates the expanded timeframe for return and processing of verification forms In addition, Solix has agreed to allow an expanded timeframe for the return for certification forms without a further contract change. Moreover, CAB staff began using the expanded timeframe as a criterion in considering LifeLine appeals regarding certifications beginning in March 2007.

72 Solix indicates that it will soon begin to mail customer reminders to return certification forms via first class mail.

73 The four day grace period allowed for form receipt delays due to no work activity on weekends and holidays.

74 While D.05-04-026 did not specifically define other official documents, it did generally support the FCC conclusion that if a consumer chooses to proffer any document other than a previous year's tribal, federal, or state income tax return as evidence of income, such as current pay stubs, the consumer must present three consecutive months worth of the same type of statements within the calendar year. Additionally, the decision noted that if someone provides a divorce decree or child support document, that person must certify that he or she receives no other source of income. Moreover, D.05-04-026 noted that since the CPUC was adopting program-based eligibility (in addition to income-base eligibility), it may not be necessary to have an exhaustive list of documents that participants can use to certify their income.

75 During the LifeLine suspension, customers were afforded a 3-day grace period with form disqualification on the 34th day due to slowed work activity on holidays and weekends.

76 Envelopes were mailed to customers in late December 2006 through early January 2007.

77 The LifeLine certification form response rate was 46.44% as of February 2007. See section VI of the report for a fuller discussion on response rate data.

78 As noted earlier, Solix will soon upgrade to first class mail the customer postcards reminding them to return certification forms. Solix plans to reduce the size of the reminder postcards to accommodate the cost of mailing them first class instead of via standard mail.

79 Vendors on the CMAS list have been pre-approved by DGS for contracts below $10,000.

80 Solix also disqualifies LifeLine customers who return certification and verification forms but do not meet income or program-based criteria.

81 Prior to July 1, 2006, LifeLine customers were required to sign the certification forms and return only that portion of the form. After July 1, 2006, some customers accustomed to that practice have continued to tear the application forms and return only the signature portion of the form despite being instructed to return the form in its entirety.

82 D.02-07-033 was issued in response to Senate Bill X2 2 establishing assistance to low-income electric and gas customers. Among other things, that bill required the CPUC to explore synergies between CARE and ULTS programs. Although automatic enrollment of ULTS customers into CARE was not feasible at that time, a report was issued recommending possible outreach and enrollment synergies.

83 See section III of this report for a discussion of the Commissions directives on web-based applications.

84 See Attachment 3 for a list of assistance programs.

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