4. Low-Income Discount Proposal
Under the LIRA program, Cal-Am will provide a credit to qualifying customers of $5.00/month in the Sacramento District, and $8.50/month in the Larkfield District. These amounts are approximately 15% of the monthly bills for customers in each district.
To fund the program, Cal-Am presently is not requesting a surcharge to be authorized, but instead requests approval to open a Water Revenue Adjustment Mechanism (WRAM) account to track the program. Any undercollections or lost revenues would be recovered in Cal-Am's next general rate case (GRC). Adjustments to the LIRA discount would also be made in the GRC's, but in no event be greater than 15% of the average customer bills. Cal-Am is requesting a flat discount because of the flat rate service in its Sacramento District, and notes that its proposed 15% discount is about mid-point of that approved for San Gabriel (11-19%).
4.1 Assessment of Need and Eligibility Criteria
Cal-Am serves approximately 57,000 customers in its Sacramento District, and 2,600 in its Larkfield District. Cal-Am could not accurately estimate the participation rate of its proposed LIRA. Cal-Am does note that: 1) the federal poverty rate in Sacramento County is 14%; 2) that CARE program income requirements are above the federal poverty level limits; 3) not all residents will participate in the program; and 4) for comparison, the federal poverty limit in Monterey County is 13.5%, while only 1.44% of Cal-Am's customers participate in its low-income program already established in its Monterey District.3 Cal-Am is directed to provide a more detailed description of the participation rates for its LIRA program in the Sacramento and Larkfield Districts, similar to that now provided for its program in its Monterey District, in its next GRC.
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 of Pacific Gas and Electric Company (PG&E).4 Some Cal-Am customers reside in Sacramento Municipal Utility District (SMUD) service territory (for energy service) and are therefore eligible for SMUD's low-income energy program. PG&E's CARE program and the SMUD low-income program differ somewhat. To avoid confusion, Cal-Am will use the income requirements provided in PG&E's CARE program for all of its customers, regardless of residence location, energy utility service territory, and whether or not the customer is enrolled in either the CARE program or SMUD's low-income program.
Cal-Am shall not offer its LIRA program to master-metered / sub-metered customers. We see no way to ensure that discounts would be properly credited.
4.2 Notice and Eligibility Renewal
For its LIRA program, Cal-Am followed the same Commission notice requirements as for rate increase applications (publish notice in local newspapers within 10 days, and mail individual notices to customers within 45 days of filing the application). Cal-Am will also mail annual reminders to all customers and provide program information on its web-site.
To be eligible for CARE, qualifying customers must re-qualify every two years. Cal-Am will allow eligible customers not enrolled in CARE to self-verify eligibility by providing residency, income and utility bill information directly to Cal-Am.
Within 30 days of the effective date of today's decision, Cal-Am will mail a description of the program and an application form, printed in English and Spanish, to all affected customers. Eligible customers may apply for LIRA discounts once the program description and applications have been mailed.
4.3 Accounting, Reporting Practices and Rates
As mentioned above, Cal-Am proposes to reconcile its LIRA program discounts, costs and expenses through its WRAM account and propose any impacts to customer rates in its next GRC. Although we approve the general accounting approach, we instead approve a simple memorandum account rather than a WRAM. Cal-Am should account for LIRA credits, surcharge revenues, incremental costs, franchise fees, uncollectible accounts, and monthly interest, in a memorandum account as described in its Preliminary Statement for this specific purpose.
3 As authorized by D.96-02-005, which we do not view as precedent in this case because it is outdated, in light of newer policies a programs now in place.
4 CARE eligible customers generally are those with income levels at or below 200% of the federal poverty level (D.05-10-044).
