4. Discussion

As discussed above, West Coast Gas has a CARE program with about 14 households enrolled. Mountain Utilities does not offer a CARE program. Since our issuance of D.01-08-065, Alpine Natural Gas has enrolled 7 customers into its CARE program after conducting program outreach. None of the three utilities offers LIEE. The purpose of this decision is to assess the extent to which SBX1 5 funds should be used to either augment existing or initiate new low-income assistance programs in these three SMJU service territories.

We have carefully reviewed Energy Division's recommendations and the comments of ORA and Mountain Utilities, as described in Attachment 1, and the comments of Alpine Natural Gas on the draft decision. We believe that Energy Division's recommendations to augment Alpine Natural Gas' and West Coast Gas' current CARE outreach activities, as modified below, will increase enrollment in this program to the benefit of the impacted vulnerable, low-income households. Energy Division's recommendations, as updated in its May 20, 2002 report and modified herein, ensure that Alpine Natural Gas and West Coast Gas comply with the outreach requirements established under Assembly Bill (AB) X1 3 and the penetration rate goal requirements of SBX2 2.⁴

For similar reasons, we will require that the utilities work with Energy Division to develop a LIEE program appropriate to the needs of their low-income customers. However, we clarify that a referral service can serve as a reasonable alternative to initiating a new energy efficiency program by Alpine Natural Gas and West Coast Gas, and should be explored, given the very limited customer size and resources of these utilities.

Further, Energy Division's recommendations take into account the unique resort nature of Mountain Utilities' service territory, housing stock, and customer base. We concur with Energy Division's observation that Mountain Utilities most likely does not have any customers that would qualify for a CARE or LIEE program either now or in the near future. Therefore, we will not require Mountain Utilities to establish low-income assistance programs at this time.

Finally, Energy Division recognizes that monitoring SMJUs' economic and ethnic demographics will provide useful information to these utilities and the Commission for future improvements to the CARE and LIEE low-income assistance programs. We direct that the Phase 2 Needs Assessment Study examine these issues, as Energy Division recommends. The cost of this additional monitoring should be born by the current study participants, and not allocated to the SMJUs.

In its comments, Alpine Natural Gas suggests several modifications to the proposals contained in Energy Division's report. First, Alpine Natural Gas responds to the recommendation that it install a voice message system to comply with Public Utilities Code § 739.4(b)(1).⁵ As explained in its comments, Alpine Natural Gas does not have a system of "customer service lines" for customer calls, as described in the statute, and with a total of 650 customers it does not receive a lot of calls for new residential service and rarely puts calls on hold. Instead, it has a single line used in conjunction with a 24 hour live answering service that serves all of Alpine's voice telephone needs, such as billing inquiries, service calls, etc. Alpine contends that the $650 amount budgeted by Energy Division for the voice message equipment would not cover the cost of making such fundamental changes to its existing phone service.

As an alternative to revamping its current phone service with a voice message system, Alpine Natural Gas suggests that it verbally inform all new customers of the CARE program and send out a CARE application with an explanatory brochure to all new customers. For existing customers, Alpine Natural Gas proposes to send out a brochure on an annual basis, reminding customers of the CARE program and advising them of the rate benefits available to eligible customers. Alpine Natural Gas will also review the CARE program with customers who may be having difficulties paying their gas bills. We believe that Alpine Natural Gas' proposals are consistent with the intent of the statute and reasonable in light of the specific circumstances described above. The $650 in SBX1 5 funds budgeted for the voice message system should be used instead to fund the activities proposed by Alpine Natural Gas.⁶

Second, Alpine Natural Gas recommends that the monthly reporting requirements contained in Energy Division's report be modified to an annual reporting requirement, giving Energy Division discretion to increase the frequency. As described in Attachment 1, Energy Division recommends that each report account for administrative, outreach and discount subsidy costs on a monthly and year-to-date basis. The data would be broken out by base and SBX1 5 funding, showing the annual budgets projected for each category. Energy Division recommends that the reports also show the number of new customers enrolled per month and the current year-to-date total number of customers enrolled in the program.

With the size of programs involved (7 for Alpine Natural Gas and 14 for West Coast Gas) and overall size of the service territories for these two utilities, we agree with Alpine Natural Gas that establishing a monthly reporting frequency at the outset appears excessive. At the same time, however, Alpine Natural Gas and West Coast Gas will be required to substantiate their billings for SBX1 5 fund reimbursements, which we assume will be made more than once a year. Accordingly, we believe that a quarterly reporting schedule (due by the 15^th of the month following the quarter) reaches an appropriate balance for the initial requirements. The first report will be due on November 15, 2002 for the August-October, 2002 quarter. This quarterly schedule dovetails with Energy Division's reporting requirements to the Legislature. We will give Energy Division discretion to increase or decrease the frequency as appropriate. We expect Energy Division to work with these two utilities to establish a report format that is accessible to a small operation.

Third, Alpine Natural Gas recommends that, instead of being required to develop an LIEE program of its own, it be permitted to provide brochures to all new and existing customers informing them of the benefits of energy efficiency, and direct them to a third-party source for such benefits. We do not believe that Energy Division's recommendations rule out the possibility that a referral service, coupled with an Energy Education brochure, may be the most appropriate approach to complying with statutory requirements, given the size and resources of Alpine Natural Gas and West Coast Gas. As Energy Division states:

"Initially, these utilities should work with Energy Division to consider providing a LIEE program in their service area. They should be directed to contract any community-based organizations who provide programs similar to LIEE in or near their service areas and provide Energy Division with a contact in those organizations. Energy Division could then evaluate the extent of the need for LIEE services in these areas and what if any LIEE measures would best serve those needs. At a minimum, Energy Education could be provided."⁷

Since there are clearly qualifying low-income customers within their service territory, the law requires that Alpine Natural Gas and West Coast Gas establish an appropriate program to "ensure" that these customers are "afforded no-cost and low-cost energy efficiency measures that reduce energy consumption."⁸ We need to review and approve the program designed to meet this requirement, be it a referral service or a program where the utility provides energy efficiency measures itself, energy education brochures or programs, or some combination of these approaches. We also need to approve a budget for the program. If rate increases are required to fund the authorized activities, then the ratepayers also need to be properly notified.

Alpine Natural Gas recommends that it be permitted to submit an Advice Letter, rather than an application, for its post-2002 low-income programs. Advice Letters are not utilized for the purposes described above, i.e., to consider new programs, new expenditures and associated rate changes, etc. Therefore, we concur with Energy Division's recommendation that post-2002 program plans be submitted by application. However, we will modify the due date from July 1 to November 1, 2002 for the post-2002 program plans to be filed by Alpine Natural Gas and West Coast Gas so that these utilities have sufficient time to work with Energy Division on program plans and prepare their applications.

Alpine Natural Gas also suggests that it may not be appropriate, given the size of its CARE program and limited resources, to develop CARE penetration goals or a proposal for a CARE balancing account. However, SBX2 2 specifically requires that each utility establish CARE penetration goals. Moreover, it directs us to authorize recovery of actual CARE administrative costs via a "balancing account mechanism."⁹ Therefore, both Alpine Natural Gas and West Coast Gas should address these issues in its post-2002 applications, as Energy Division proposes.

In addition, Alpine Natural Gas explains that its billing is provided on a postcard, and therefore requests permission to place its quarterly notices about the CARE program on the front of the postcard, rather than "on a forward facing page" of the bill, as Energy Division recommends. We find this request to be reasonable.

We adopt Energy Division's recommendations, as set forth in Attachment 1, with the modifications described above. We also need to clarify how the CARE budgets authorized today for Alpine Natural Gas and West Coast Gas will be funded from SBX1 5 appropriations. As indicated above, the authorized budgets total $8,135. In D.01-08-065, we specifically set aside $5,000 in SBX1 5 CARE appropriations for this purpose.¹⁰ In addition, pursuant to Section 5(c)(2) of SBX1 5, the Commission set aside 2.5% of SBX1 5 program funding to cover the Commission's administrative costs. We will use this second set aside to fund the remaining $3,135.