4. CWS Low-Income Discount Proposal

Under the program, CWS will discount the monthly service charge by 50% for all eligible customers. The discount applies to: 1) all eligible residential customers with 5/8"x 3/4" metered service, or those with flat rate service, each limited to $10/month; and 2) qualified non-profit group living facilities, agricultural employee housing facilities, and migrant farm worker housing centers, each limited to $20/month.

This subsidy will be funded by a surcharge on non-eligible customers. The discounts and surcharges will be included in CWS's "Schedule No. LIRA" tariff. CWS will establish a memorandum account to monitor the implementation and administrative costs of its LIRA program.

4.1. Assessment of Need and Eligibility Criteria

CWS serves approximately 443,000 customers in 24 ratemaking districts throughout the state. About 85% of its customers are residential (313,000 metered and 70,000 flat-rate). Water bills average about $42/month.

To be eligible for program assistance, customers must meet the same income levels and other requirements as for the California Alternative Rates for Energy (CARE) program for electric and gas service in the same service areas.4 CWS customers who meet CARE guidelines but do not participate in a CARE program also will be eligible for the LIRA program.

The Commission's Water Action Plan5 estimates that approximately 30% of CWS customers would be eligible for the LIRA program. However, CWS states that since its service districts are varied, and reflect a broad spectrum of income and service levels, it therefore expects a program participation rate of about 5%, with $1-2 million in assistance provided annually.

CWS supports extending discounts to residential sub-metered customers who receive water from a master-metered customer. However, due in part to legislative requirements, CWS has no means of ensuring that LIRA credits would reach those customers. Though CWS states it will address this issue in future program revisions, the LIRA program adopted here does not apply to sub-metered customers.

4.2. Notice and Eligibility Renewal

CWS will send two notices to its customers in the first year of the program, then annually thereafter. Community Based Organizations will also be provided an annual notice, and LIRA information will be included on the CWS website. CWS will print notices in English and Spanish, and in other languages if found to be prominent. CWS plans to identify LIRA assistance on its monthly bills as "Low Income Credit," and LIRA surcharges as "Public Purpose Programs." Similar to the CARE program, qualifying customers will be required to re-qualify every two years.

4.3. Funding

To fund the LIRA program, CWS recommends a volumetric surcharge of $0.01 per hundred cubic feet (Ccf) for metered customers (based on a 5/8" x 3/4" meter), and a flat surcharge of $0.24 to $0.41 per month for flat rate customers, as listed below.

Customers receiving a LIRA credit, service for fire protection service in all districts, and non-potable irrigation service in the Oroville District would be exempt from the surcharge. The volumetric surcharge for metered customers differs from the fixed rate design adopted to fund the low-income programs for San Gabriel and Park.

4.4. CWS Tariff

Per its request, CWS is authorized to file, by Advice Letter, its "Schedule No. LIRA" tariff reflecting the discounts and surcharges of the LIRA program described above.

4.5. Accounting and Reporting Practices

CWS requests approval to implement a memorandum account to track the program. The memorandum account will include LIRA credits, surcharge revenues, incremental costs, franchise fees, uncollectible accounts, and monthly interest.

CWS will provide an annual summary report of its LIRA program to the Commission's Water Division and DRA, and continue program review in its future General Rate Cases (GRC). Necessary rate adjustments also will be made in the GRCs, or in an Advice Letter if any significant over/under-collection is evident. These accounting practices are consistent with those approved in association with low-income programs.

4.6. Existing CWS Discount Programs

In D.06-08-011, we authorized general rate increases for CWS in eight of its districts. That decision established a Rate Support Fund (RSF), a ratepayer assistance program, for certain customers in the Kern River Valley, Redwood Valley and Antelope Valley Districts. The RSF assistance is $10/month (equivalent to the maximum LIRA discount). The customers in these three districts may continue to receive the RSF or the LIRA discount, whichever is greater, but not both. CWS proposes that the LIRA surcharges established in this order will fund both the LIRA and RSF programs.

4 CARE eligible customers are generally those with income levels at or below 200% of the federal poverty level (D.05-10-044).

5 The Water Action Plan, issued in December 2005, outlines Commission water policy directives.

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