ALJ/MEG/eap Mailed 8/28/2001

Decision 01-08-065 August 23, 2001

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Compliance Application of Pacific Gas and Electric Company for Approval of Year 2001 Low Income Programs, in Compliance with Ordering Paragraph 4 of Decision 00-09-036 (U 39 M).	Application 00-11-009 (Filed November 6, 2000)
Application of Southern California Gas Company (U 904-G) For Authority to Continue Low Income Assistance Programs and Funding Through 2001.	Application 00-11-011 (Filed November 6, 2000)
Application of San Diego Gas & Electric Company (U 902-E) For Authority to Continue Low Income Assistance Programs and Funding Through 2001.	Application 00-11-012 (Filed November 6, 2000)
Southern California Edison Company Compliance Application for Approval of Year 2001 Low Income Program Plans.	Application 00-11-020 (Filed November 6, 2000)

TABLE OF CONTENTS

Title Page

INTERIM OPINION: 2

ALLOCATION OF SBX1 5 LOW-INCOME ASSISTANCE PROGRAM
FUNDING TO SMALL AND MULTI-JURISDICTIONAL UTILITIES
AND RELATED ISSUES 2

1. Introduction and Summary 2

2. Procedural Background 6

3. Allocation of $5 Million LIEE Set Aside to the SMJU 8

4. Allocation of SBX1 5 CARE Funds to the SMJU 13

4.1 Expanded CARE Outreach 16

4.2 SBX1 5 Funding For CARE Subsidies 17

5. Other SBX1 5 CARE Allocation Issues 22

6. Use of SBX1 5 CARE Funding For Bill Arrearages 24

7. Reporting Requirements for the SMJU 26

8. Comments on Draft Decision 28

Findings of Fact 28

Conclusions of Law 32

ORDER 34

Attachment 1 - List of Acronyms and Abbreviations

Attachment 2 - Rapid Deployment Plans of the SMJU

INTERIM OPINION:

ALLOCATION OF SBX1 5 LOW-INCOME ASSISTANCE
PROGRAM FUNDING TO SMALL AND MULTI-JURISDICTIONAL
UTILITIES AND RELATED ISSUES

1. Introduction and Summary¹

By Decision (D.) 01-05-033, we adopted a rapid deployment strategy for utility low-income energy efficiency and rate discount programs, referred to as the Low-Income Energy Efficiency (LIEE) and California Alternate Rates For Energy (CARE) programs, respectively. In that decision, we augmented the utility budgets for LIEE and CARE utilizing the funding appropriated by the Legislature via Senate Bill (SB)X1 5.² Among other things, SBX1 5 provides a one-time appropriation of $100 million to supplement the funding collected in rates for CARE discounts and outreach efforts. In addition, SBX1 5 provides a one-time increase to the LIEE program of $20 million and another $50 million for appliance replacement and other energy efficiency measures. By D.01-05-033, we allocated $25 million of the SBX1 5 appliance replacement funds to further supplement LIEE budgets during the energy crisis.

In D.01-05-033, we set aside $5 million of the additional LIEE funding provided via SBX1 5 to be allocated all or in part to the small and multi-jurisdictional electric and gas utilities under the Commission's jurisdiction for rapid deployment activities. These are: Alpine Natural Gas Company (Alpine), Avista Utilities (Avista), Bear Valley Electric Company (Bear Valley),³ Mountain Utilities, Sierra Pacific Power Company (Sierra Pacific), PacifiCorp, Southwest Gas Company (Southwest Gas) and West Coast Gas Company (West Coast Gas). We refer to these small and multi-jurisdictional utilities collectively throughout this decision as "the SMJU."

By D.01-05-033, we allocated $15 million of the $100 million in SBX1 5 supplemental CARE funds to Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison Company (SCE) and Southern California Gas Company (SoCal) for CARE outreach activities. However, we left open how much of the remaining $85 million should be allocated to the SMJU. We directed Energy Division to develop recommendations concerning this issue as well as the allocation of the $5 million LIEE set aside. We also requested that Energy Division develop reporting requirements for the SMJU.⁴

By today's decision, we adopt the following allocation of SBX1 5 funding to the SMJU:

	Sec. 5(a)(3) LIEE Program (PY 2001 and PY 2002)	Sec. (a)(2) CARE Outreach	Sec. (a)(2) CARE Subsidies	Totals
Avista	$ 260,925	$ 20,000	$ 35,247	$ 316,172
PacifiCorp	$ 173,950	$ 85,000	$ 175,933	$ 434,883
Sierra Pacific	$1,276,620	$ 40,000	$ 97,499	$ 1,414,119
Bear Valley	$ 814,086	$ 80,000	$ 48,707	$ 942,793
Southwest Gas	$2,374,419	$175,000	$ 818,905	$ 3,368,324
West Coast Gas	$ -	$ -	$ 2,077	$ 2,077
Totals	$4,900,000	$ 400,000	$1,178,368	$ 6,478,368

As discussed in this decision, Mountain Utilities does not offer either LIEE or CARE to its 150 year-round customers. Alpine has a CARE program, but none of its approximately 460 residential customers have applied for and qualified for the program. Alpine does not offer LIEE. West Coast Gas serves approximately 560 residential customers, 14 of which are on the CARE rate. The company's service territory is the former Mather Air Force Base, and all of the housing is new construction. Therefore, with the exception of funding to cover additional CARE subsidy costs in West Coast Gas' service territory, we do not allocate any of the SBX1 5 funding to these utilities at this time.

However, we direct Energy Division to continue to work with Alpine, Mountain Utilities, and West Coast Gas utilities to develop rapid deployment low-income assistance programs for their service territories, as appropriate. Energy Division's recommendations should be submitted in this proceeding within 30 days. We will continue to set aside $100,000 of SBX1 5 LIEE funds and $5,000 of SBX1 5 CARE funds for this purpose.

The remaining $83,416,632 in SBX1 5 CARE funding will be allocated among PG&E, SDG&E, SCE and SoCal via the Advice Letter process we established in D.01-05-033, without delay. We reject workshop proposals to withhold a portion of these funds and disburse them under an incentive plan based on the relative level of undercollections, new enrollments or other factors. Such plans are inconsistent with the direction in D.01-05-033 and our longstanding policy to authorize recovery of CARE rate subsidies on an "as needed" basis. Moreover, as discussed in this decision, the incentive formulas proposed during workshops would inappropriately penalize (or reward) nonparticipating ratepayers among the various utility service territories. In addition, the verification requirements of such an approach would be complicated and costly. The development of new mechanisms to provide incentives to utilities to implement CARE or LIEE programs is more appropriately considered in our shareholder incentive proceedings, rather than in the context of how to equitably distribute SBX1 5 funding to offset increased program costs to nonparticipants.

We also address in today's decision a proposal discussed at workshops regarding the use of SBX1 5 CARE funds to bring bill arrearages to zero or to a reduced level. While acknowledging that this type of assistance could help prevent the shut-off of service to some low-income customers, we reject the adoption of this new program for several reasons. First, we believe that using the funds to expand participation in CARE provides longer term benefits to customers. Second, we note that there simply is not enough funding provided by SBX1 5 to offer bill arrearage assistance and to also address the growing shortfall between rate collections and CARE discount subsidies. For PG&E, SDG&E, SCE and SoCal, this shortfall will be approximately $116 million at current penetration levels. Finally, there are other programs available to assist low-income customers with their bill arrearages and potential shut-off of service, including a bill payment program administered by the Department of Community Services and Development (DCSD) and new requirements under Assembly Bill (AB) X1 3 for utility assistance. The utilities work in coordination with DCSD to ensure that customers who are participating in the DCSD payment program do not have their gas or electric service shut-off while payment arrangements are being made.

Per SBX1 5, the utilities are required to fully utilize CARE program funding authorized through current rates (including any carryover funding) each month, before drawing on SBX1 5 funds. As discussed in this decision, the funds we allocate today to offset increased CARE rate subsidy costs ($1,178,368 for the SMJU and $83,416,632 to PG&E, SDG&E, SCE and SoCal) shall not be used to supplement rate collections for CARE outreach and associated administrative costs. We have already allocated a fixed amount from SBX1 5 for that purpose: i.e., $15 million for PG&E, SDG&E, SCE and SoCal per D.01-05-033, and $400,000 for the SMJU by today's decision.

Finally, we adopt Energy Division's recommendations regarding the reporting requirements for the SMJU's LIEE and CARE programs, which are presented in Section 7 of this decision.