CARE PROGRAM
This section discusses the SMJU's proposed PY 2005 CARE penetration benchmarks, enrollment targets, activities, administrative budgets and the subsidies/discounts provided to participating customers, as presented in the SMJU's applications, various reports and utility data responses.
Income Guidelines and Discount
The CARE discount provided to SMJU customers is 20% off the total gas and/or electric bill, which is the same for the four large energy utilities. Income guidelines for the SMJU are also currently the same as for the large utilities. This was not always the case. The following table presents the current income guidelines.
Table 2
CARE Income Guidelines for June 1, 2004 through May 31, 2005
Household Size
CARE & LIEE
1 - 2
$23,400
3
$27,500
4
$33,100
5
$38,700
6
$44,300
Each Additional
$ 5,600
Income guidelines for the next year, beginning on June 1, 2005 were recently distributed to the utilities. The following income limits are effective from June 1, 2005, to May 31, 2006.
Table 3
CARE Income Guidelines for June 1, 2005 through May 31, 2006
Household Size
CARE & LIEE
1 - 2
$24,200
3
$28,400
4
$34,200
5
$40,000
6
$45,800
Each Additional
$ 5,800
Energy Division presents these guidelines for comparison with household and family information obtained from Census 2000 that is discussed later in this report.
CARE Participation Achievements and Targets
According to information from the 2000 census, approximately 24.29% of households in California have income less than $24,999 per year. Families are even harder hit, with roughly 29.96% of families in California having income of less than $34,999 per year.3
The following tables depict the number of residential customers, relative to their eligible CARE populations, served by each of the SMJU. For those utilities that Energy Division has data on permanent or year-round residents from the utilities, Energy Division presents those figures in the following table.
Table 4
Utility Estimated 2004 CARE Eligible Rates
Utility
Total Residential Customers
Total Primary/ Year-Round Residential Customers
Utility Estimated CARE Eligible at 12/31/03
% of Total Residential Customers
% of Primary Residential Customers Eligible for CARE
Alpine (1)
700
700
23
3.3%
3.3%
Avista
17,041
11,076
1,175
6.9%
10.6%
BVES
22,461
6,241
2,030
9.0%
32.5%
PC
33,857
33,857
15,574
46.0%
46.0%
Sierra
39,000
17,500
2,300
5.9%
13.1%
SWG (2)
130,795
118,952
31,314
22.8%
23.9%
WCG
1,230
1,230
40
3.3%
3.3%
Total
245,084
189,556
52,456
(1) Energy Division was unable to locate information submitted by the utility to the Commission on the total residential customers that could be eligible for CARE. Energy Division uses total residential customers as a proxy.
(2) Energy Division uses the most recent estimate contained in SWG' Annual CARE report, submitted in August of 2004, wherein they estimate 31,314 are eligible. From information in the same report, Energy Division calculated the primary full-time as 118,952 (Southern California of 110, 043 (30,922/.281) plus Northern California of 8,909 (392/.044); note that the Southern California component is slightly more than the primary and secondary residential customers combined for that area as shown in the report).
As shown in the table above, it appears that Bear Valley and PacifiCorp have low-income concentrations higher than the statewide data presented before this table. It appears that Alpine, Sierra and West Coast Gas have low-income populations significantly less than the statewide data.
Energy Division notes that the SMJU's unique features, including that their service areas contain just a small segment of California's population, may cause their CARE eligible rates to vary significantly from the statewide characteristics. Only the low-income population in Southwest Gas' service areas, relative to their total residential customers, appears to be in-line with the statewide characteristics. This may be due to the fact that Southwest Gas serves the largest number of residential customers of all the SMJU.
Even amongst themselves, these utilities vary not only in the number of customers they serve, but also in many other ways. Some of the most notable differences include wide variances in the size of the service areas, non-contiguous service areas, widely varying demographics, and stand-alone small utilities with limited resources versus large multi-jurisdictional utility companies that may have more resources at their disposal.
In addition, some of these utilities only recently began offering CARE programs, and due to limited resources, may not have used sophisticated techniques to estimate their CARE eligibility and don't have historical participation data to draw from. Further, CARE eligibility figures for all the SMJU are subject to update pending the results of the Needs Assessment Study ordered in D.03-01-020 and Assigned Commissioner Wood's Ruling, dated May 5, 2004.
In D.02-07-033, the Commission ordered an overall CARE participation goal of 100%, while acknowledging that it may not be possible to achieve 100% participation right away. In recognition of that, the Commission set benchmark penetration levels for each utility to achieve over the subsequent years. In D.03-03-007, the Commission set the most recent benchmarks for the SMJU. Energy Division recommends that the Commission set higher benchmarks for the SMJU for 2005 and continue to require aggressive outreach and recertification efforts, with the caveat that each utilities' eligible population, benchmarks and budgets may need adjusting depending on the results of the Needs Assessment Study.
The following table shows comparisons between actual enrollment, and that ordered as targets by the Commission, in D.03-03-007, for PY 2003 and PY 2004. In addition, the table presents the utilities' proposed enrollment targets for 2005, and, based on the utilities' proposed enrollment target for 2005, the incremental increases to CARE program enrollment that would occur if the utilities' proposed target is adopted and achieved.
Table 5
CARE Enrollment Compared with CPUC Prescribed Enrollment Targets for PY 2003 - PY2004
Utility
Utility Estimated Eligible Population 1/1/04
Addition to Enrolled in 2003
Enrolled at 12/31/03
2003 Target Per CPUC (1)
Utility Estimated Addition to Enrolled for 2004
Utility Estimated Enrolled at 12/31/04
2004 Target Per CPUC (1)
Utility Proposed Addition to Enrolled for 2005
Utility Estimated Enrolled at 12/31/05
Alpine
23
N/A
23
22
4
26
33
4
30
Avista
1,175
267
942
846
135
1,077
1,027
39
1,116
PC
15,574
1,049
3,336
8,556
1,083
4,419
9,982
1,581
6,000
Sierra
2,300
74
1,108
1,840
175
1,283
2,070
83
1,366
BVES
2,030
(31)
1,569
1,522
(145)
1,455
1,726
105
1,560
SWG (2)
31,314
403
21,634
22,936
1,806
23,440
23,440
1,760
25,200
WCG
40
27
40
20
4
45
25
0
44
Totals
50,426
1,789
28,561
35,742
3,062
31,745
38,303
3,751
35,316
(1) Pursuant to D.03-03-007, see p.43.
(2) The participation rates for Southwest Gas differ than those presented by the utility because of the difference in estimating the eligible population.
As shown in the tables, some of the utilities met or exceeded their Commission ordered targets for 2003, namely Alpine, Avista and West Coast Gas. For 2004, only Avista and West Coast Gas exceeded their targets, while Southwest Gas estimates that it met its target. However, three of the utilities, Bear Valley, Sierra and PacifiCorp failed significantly in meeting their targets. Two of these utilities only permit enrollment through income-verification through DCSD. For 2005, Alpine, PacifiCorp, Sierra, and Bear Valley all request an enrollment target that is lower than those adopted for 2004.
The following table shows comparisons between actual participation rates, and those ordered as benchmarks by the Commission in D.03-03-007 for PY 2003 and PY 2004. In addition, this table also shows the utilities' proposed benchmarks for 2005, and, based on the utilities' proposed benchmark for 2005, the incremental increases to CARE program enrollment that would occur if the utilities' proposed benchmark is adopted and achieved.
Table 6
Historical and Proposed Penetration Rates Compared with Commission Benchmarks (1)
Utility
Utility Estimated Eligible Population at 1/1/04
D.03-03-007
Ordered Target for 2003
Percentage Enrolled at 12/31/03
D.03-03-007 Ordered Target for 2004
Estimated Enrolled at 12/31/04
Utility Proposed Target for 2005
2005 Utility Proposed Addition to Enrolled
Alpine
23
100%
100%
100%
100%
100%
4
Avista
1,175
70%
80%
85%
92%
95%
39
PC
15,574
60%
21%
70%
28%
39%
1,581
Sierra
2,300
80%
48%
90%
56%
59%
83
BVES
2,030
75%
77%
85%
72%
77%
105
SWG
31,314
91%
69%
93%
75%
80%
1,760
WCG
40
100%
100%
100%
100%
100%
(1)
Totals
50,426
3,751
(1) Because Energy Division used the most recent utility estimate of eligible, the penetration rates in the table may be different than those in the utilities' applications.
Based on the information provided by the utilities, assuming their estimates of their eligible are correct, as shown in the tables above, it appears that Alpine, Avista and West Coast Gas are doing an excellent job of locating, enrolling and recertifying their CARE-eligible customers. Bear Valley and Southwest Gas also appear to be doing a reasonable job.4 However, it appears that either the estimate of the eligible are overstated, or PacifiCorp and Sierra need to step-up their outreach and enrollment practices to increase their penetration rates.
Alpine Participation Rates
With the smallest number of residential customers of all the SMJU, Alpine provides natural gas to approximately 700 customers throughout Calaveras County, specifically the subdivisions of La Contenta, Hogan Dam Estates and Rancho Calaveras.
Alpine explains that because it serves a resort area, with a large ski resort in its area, that most of its customers reflect higher incomes than the norm; and therefore, their estimated CARE-eligible population is lower than most utilities. Alpine points out that many of the workers at the ski resort and the summer employees in its service area reside in employee housing and are not customers of Alpine.
Energy Division was not able to locate where, if any, Alpine has provided the number of its residential customers that are permanent or year-round and could be eligible for CARE. Energy Division was able to obtain 2000 census data on Calaveras county as a whole, wherein there are 16,449 households.5 Of those households, 4,817, or 29%, have income less than $24,999 per year. Calaveras families, as with the state statistics, are worse off, with 33% or 3,890 having income less than $34,999 per year. However, Alpine estimates only 3.3% of its residential customers are eligible for CARE.
Additional information would need to be obtained from Alpine to refine these countywide results and make them specifically applicable to Alpine. Energy Division requests that the Commission require Alpine to provide Energy Division with its customers by Census block, or if that information is not obtainable, its customers by zip code. Obtaining that information will assist Energy Division in analyzing Alpine's estimated eligible.
As mandated by the Commission, Alpine reiterates its commitment to promptly enroll new and current customers, provide CARE information to all its customers, and continue to update its tariffs in a timely fashion to comply with the Commission's requirements. Alpine states it should be able to achieve their new target of a total of 30 enrolled in CARE by the end of 2005, with reasonable costs and expenditures.
Alpine does not expect to attain the 2004 target of 33 customers as ordered by the Commission in D.03-03-007. Alpine points out that this original target served as an approximation since Alpine's program had been in existence for less than two years and historical data on the income levels of their customers was limited. Alpine estimates that its low-income customer base should continue to increase in 2005, increasing the number of CARE-eligible customers to 30.
Until Energy Division can refine the estimated eligible, or the results of the Needs Assessment Study become available, Energy Division recommends that Alpine's CARE penetration Benchmark and enrollment target be approved, on an interim basis.
Avista Participation Rates
Avista provides gas service to approximately 17,041 residential customers in its South Lake Tahoe service area. In its July 30, 2004 CARE Annual Report, Avista estimated that approximately 35% of their connections are for seasonal or secondary homes which are not eligible for CARE, leaving approximately 11,076 permanent residential customers.
Avista states that it enrolled an additional 267 customers for a total of 942 CARE participants in 2003, exceeding its Commission authorized target by nearly 11%. Avista also reports that it also surpassed its 2004 enrollment target of 1,027 with 1,077 enrolled customers. Avista proposes a PY 2005 minimum penetration target of 95% or 1,116 CARE customers, estimating that it will add 39 more customers to its CARE program in 2005.6
In reviewing its July 30, 2004 CARE Annual Report, Energy Division noted that Avista reported that poverty statistics in the Lake Tahoe area indicated that the eligibility rate is about 55% of the statewide norm. Applying 55% to the 2003 statistics cited earlier in this report would result in 13.35%-16.47% of the year-round residents being eligible or from 1,480-1,825 customers.7
Energy Division recommends that Avista's estimated eligible population be adjusted upwards in the interim until the results of the Needs Assessment Study are available. Energy Division recommends that at least the low end of the range be used to estimate Avista's CARE eligible customers, or 1,480, in the interim, and that based on that level of eligible, an 80% benchmark rate, with 1,180 as the enrollment target, be adopted. This means that Avista would need to increase enrollment by a net of 103.8
PacifiCorp Participation Rates
PacifiCorp provides electric service to approximately 33,857 full-time residential customers, in the counties of Siskiyou, Modoc, Del Norte, Trinity and Shasta, of which PacifiCorp estimates that 15,574 or 46% are CARE-eligible. The utility estimates that it will enroll additional 1,581 new CARE customers in 2005. PacifiCorp indicates that its service area doesn't overlap with other utilities. PacifiCorp began implementing CARE in 1989.
Energy Division obtained 2000 Census data for the counties PacifiCorp serves.9 The following table displays the estimated low-income households and families in the counties that PacifiCorp serves.
Table 7
Estimated Low-Income by County
County
Type (1)
Number
Percent of Total
Del Norte
Households
4,075
44%
Families
3,051
48%
Modoc
Households
1,683
45%
Families
1,231
48%
Shasta
Households
23,289
37%
Families
18,534
42%
Siskiyou
Households
8,228
44%
Families
5,834
47%
Trinity
Households
2,486
45%
Families
1,856
51%
Total Households
96,837
(1) Households with income less than $24,999 and families with income less than $34,999.
Thirty-one percent of PacifCorp's CARE customers reside in Del Norte County.10 While the total number of households from the Census data exceeds those in PacifiCorp's service area, it appears that PacifiCorp's estimate of its eligible is similar to the countywide data, and without any information to the contrary, should be relied on in the interim until the Needs Assessment Study is complete.
PacifiCorp has done a dismal job of reaching its eligible population and increasing enrollment. Due to the rural and diverse nature of PacifiCorp's territory and their high volume of low-income customers, Energy Division feels it is imperative that PacifiCorp exceed their proposed 2005 penetration benchmark of 39% or a target of 6,000 enrolled. To meet this benchmark and target, PacifiCorp would need to enroll a net of 1,581 new CARE-eligible.
Energy Division recommends the Commission require PacifiCorp to increase their efforts to reach the over 15,000 eligible CARE customers. Energy Division recommends that a benchmark of 70% with a target of 10,902 enrolled be set for PacifiCorp for 2005. To meet this benchmark and target means that PacifiCorp would need to enroll a net 6,482 CARE-eligible customers in 2005.
Sierra Participation Rates
Sierra provides electric service to approximately 39,000 residential in California's Nevada, Placer, Sierra, Plumas, Mono, Alpine and El Dorado counties, with 80% of their customers located within the western portions of the Lake Tahoe Basin. Southwest Gas and Avista provide natural gas service within Sierra Pacific's service territory. Sierra points out that the largest population center is in the City of South Lake Tahoe and most of their customers are located at elevations of over 6000.' Sierra indicates that approximately half of the residential homes are non-qualified second homes or vacation rentals. Sierra notes that they have been offering CARE to its customers since 1989.
Sierra believes that their estimated CARE-eligible may be overstated, as an explanation for why their penetration rates aren't increasing. Without the results from the Needs Assessment Study, it is difficult to ascertain whether or not Sierra is correct.
Based on information that Sierra provided, it estimates only 13.1% of its residential customers are CARE-eligible. Energy Division also pulled Census 2000 data at the county level for the counties that Sierra serves. However, as with the data for PacifiCorp serve, these counties contain a much larger number of households than Sierra serves and the poverty status at the county level are much greater than Sierra estimated for its area.
Table 8
Estimated Low-Income by County
County
Type (1)
Number
Percent of Total
Alpine
Households
143
29%
Families
97
32%
El Dorado
Households
12,181
20%
Families
10,368
23%
Mono
Households
1,227
24%
Families
1,027
32%
Nevada
Households
8,984
24%
Families
7,612
29%
Placer
Households
16,284
17%
Families
13,369
20%
Plumas
Households
3,220
36%
Families
2,255
37%
Sierra
Households
507
33%
Families
383
39%
Total Households
205,663
Additional information would need to be obtained from Sierra to refine these countywide results and make them specifically applicable to Sierra. Energy Division requests that the Commission require Sierra to provide Energy Division with its customers by Census block, of if that information is not obtainable, its customers by zip code. That information that will assist Energy Division in analyzing Sierra's estimating eligible.
Sierra states that it does not expect to reach its 2004 authorized target of 2,070 customers. Their estimated CARE customer enrollment for 2004 is 1,283, which is well below their authorized target. For 2005, the utility projects that 1,366 customers will be participating, for a benchmark rate of only 59%.
Until Energy Division can refine the estimated eligible, or the results of the Needs Assessment Study become available, Energy Division recommends that Sierra's CARE penetration benchmark and enrollment target be approved, on an interim basis until the report on the Needs Assessment Study is complete. However, Energy Division finds the utility's recommendation for penetration and enrollment unreasonable. A total enrollment of 1,725 (359 additional CARE customers) is deemed a favorable target for the company, which would boost their participation rate to 75% (1,725/2,300), until refinements can be made to the estimate of their CARE-eligible.
Bear Valley Participation Rates
Bear Valley is owned and operated by Southern California Water Company and provides electric service to approximately 22,461 residential customers in the Big Bear Lake resort area of the San Bernardino mountains. Of its residential customers, Bear Valley reports that approximately two-thirds are vacation and seasonal homes while the remaining one-third, or roughly 6,241 customers are full-time residents. Bear Valley estimates that approximately 2,030, or 32.5% of its full-time customers are CARE-eligible.
In the amendment to their Application, submitted on January 12, 2005, Bear Valley indicates that they reviewed data from Census 2000 for the three zip codes in their service area, and they now estimate that only 27% of their full-time residential customers qualify for CARE. However, they note that they haven't adopted that level, awaiting the results of the Needs Assessment Study. Utilizing this estimate would result in only 1,685 customers that would be income-eligible for CARE. If Bear Valley were correct, that would mean that the estimated penetration rate at December 31, 2004 would be 86%.
In its CARE Annual Report Revision, submitted on March 1, 2005, Bear Valley indicates that 1,506 customers were participating in CARE in July-August of 2003. Bear Valley has not made any significant progress since then in enrolling new CARE customers. In fact, Bear Valley has lost 176 CARE customers since December 31, 2002.
Bear Valley estimates that their expected enrollment for December 31, 2004, is 1,455, though the authorized target is 1,726. Bear Valley estimates CARE enrollment will reach 1,560 customers in PY 2005, which is only an increase of 104, while they have lost 176 customers to their current enrollment over the last two years.
Bear Valley's proposed addition for 2005 does not meet the Commission's intent of moving penetration to 100%. Whether Bear Valley's CARE-eligible population is 1,685 or 2,030, their proposed increase to enrollment for 2005 is unreasonable. Bear Valley needs to make a concerted effort to increase their amount of eligible and participating CARE customers. Energy Division advocates for the Commission to set at least an 79% penetration rate benchmark for 2005, which would add back the 176 customers and reach a total or target enrollment of 1,600 CARE customers. If Bear Valley's new estimate of eligible is correct, they would achieve a benchmark of 98%.
Southwest Gas Participation Rates
Southwest Gas provides natural gas service to approximately 118,952 permanent/year-round residential customers in the high desert and mountain areas of San Bernadino County and in the Lake Tahoe area in Placer, El Dorado and Nevada counties, with approximately 24% of those eligible for CARE. As noted above, Southwest Gas' estimate of CARE-eligible appears consistent with the statewide norm.
Southwest Gas indicates that most of their CARE-eligible reside in the southern California area. Southwest Gas points out that approximately 83% of their CARE participants are located within the Victorville district of Southwest Gas' southern service area, while another 9% reside in Barstow. Together, Victorville and Barstow account for 91% of all SWG' CARE customers.
Table 9
Comparison of Southwest Gas Service Areas
Region
Total
Full-Time Customers
CARE Eligible
Percent Eligible
Participants at 4/30/04
Participation Rate
Southern Service Area
110,043
30,922
28.1%
23,114
75%
Northern Service Area
8,909
392
1.9%
396
100%
Total (*)
118,952
31,314
23,510
75%
(*) Energy Division calculated the full-time customers from information in Southwest Gas' Care Annual Report submitted on July 31, 2004. Energy Division notes that for the southern region, this method yields a higher amount of primary customers than the SWG estimate of the primary and secondary customers for that area.
As of June 2004, Southwest Gas states CARE enrollment has reached 24,162 customers, which exceeds its Commission authorized PY 2004 penetration target of 23,440. Southwest Gas estimates 1,760 additional CARE enrollments for PY 2005 to reach 25,200 participants with an 80% participation rate.
Southwest Gas alleges that reaching the remaining CARE-eligible customers will be difficult as it continues to strive towards 100% penetration. Southwest Gas points out that its success is due to a large low-income population that is receptive to the CARE program. The four large energy have achieved similar results, with penetration rates ranging from 73-86% at the end of 2004 as shown in the following table.
Table 10
Large Energy Utility Penetration Rates
Utility
CARE Participation at December 31, 2004 (1)
Pacific Gas and Electric Company
76%
San Diego Gas & Electric Company
73%
Southern California Edison Company
86%
Southern California Gas Company
77%
(1) As reported in the utilities' February 22, 2005 Rapid Deployment Reports on Program Year 2004.
Energy Division proposes that the Commission adopt an 85% benchmark for Southwest Gas' 2005 penetration with a target of 26,617 enrolled. With the current program's high success rate, it seems that Southwest Gas would be able to attain a further increase in enrollment.
West Coast Gas Participation Rates
West Coast Gas serves the former Mather Airfield base in Sacramento County and Castle Air Force Base in Merced County. West Coast Gas indicates that most of their residential housing is single family homes, less than two-years old, with most of the housing being owner-occupied.
The total number of CARE program participants, as of January 1, 2002, was 13, and as of December 31, 2004, the number of enrolled customers is estimated at 45, an increase of more than 300%. As of June 30, 2004, the total number of CARE participants was 49. The Commission adopted a CARE penetration rate target for PY 2003 of 12, and for PY 2004 the target was 25. West Coast Gas proposes that its target enrolled for 2005 should be 44, which would actually result in a net decrease in enrolled for the year.
Information would need to be obtained from West Coast Gas to evaluate West Coast Gas' estimate of CARE eligible. Energy Division requests that the Commission require West Coast Gas to provide Energy Division with its customers by Census block, of if that information is not obtainable, than customers by zip code. That information that will assist Energy Division in analyzing West Coast Gas' estimated eligible.
Until Energy Division can refine the estimated eligible, or the results of the Needs Assessment Study become available, Energy Division recommends that West Coast Gas' CARE penetration benchmark and enrollment target be approved, on an interim basis until the report on the Needs Assessment Study is complete.
Energy Division compliments West Coast Gas on their efforts to increase the amount of CARE customers with such a small budget, small staff, and great efforts. Until Energy Division can refine the estimated eligible or the Needs Assessment Study is complete, Energy Division recommends that West Coast Gas' benchmark continue to be set at 100% and that the Commission set a target enrolled of 50 for 2005, a net increase of 5 from their estimated participants at December 31, 2004. In addition, Energy Division recommends that West Coast Gas continue to promptly enroll all low-income households in their service area.
Comparison of CARE Participation Proposals and Recommendations
The following table compares the utilities' proposed penetration targets and targeted enrollment increases with Energy Division's recommendations for PY 2005 CARE penetration rates for each utility and the incremental increase of new participants required in order to meet the recommended targets.
Table 11
CARE Penetration Targets
Utility
Commission Authorized
Utility Proposed
Energy Division Recommendations
D.03-03-007
2004 Target
D.03-03-007 2004 Projected Enrolled
2005 Target
Utility Proposed Enrollment At 12/31/05
2005 Utility Proposed Addition to Enrolled
2005 Penetration Target
Projected Enrolled At 12/31/05
2005 Projected Enrollment Increase
ALPINE
100%
33
100%
30
4
100%
30
4
Avista
85%
1,027
95%
1,116
39
80%
1,180
103
PC
70%
9,982
39%
6,000
1,581
70%
10,902
6,482
Sierra
90%
2,070
59%
1,366
83
75%
1,725
359
BVES
85%
1,726
77%
1,560
1
80%
1,624
167
SWG
93%
23,440
80%
25,200
1,760
85%
26,617
3,177
WCG
100%
25
100%
44
0
100%
50
5
TOTAL
38,303
35,316
3,468
42,128
10,301
CARE Outreach
The following table identifies the SMJU' reported projected spending levels for 2004, and proposed CARE outreach budgets for PY 2005.
Table 12
Actual & Proposed CARE Outreach Expenditures
Utility
2003 Authorized Budget(1)
2003 Actual
2004 Authorized Budget(1)
Estimated Expense At 12/31/04
2005 Utility Proposed Budget
Increase (Decrease) In 2005 Proposed Budget Over 2004 Expected
Increase (Decrease) In 2005 Proposed Budget Over 2004 Authorized
Alpine
$709
$50
$709
$50
$100
$50
($609)
Avista
$28,800
$17,438
$28,800
$3,930
$18,800
$14,870
($10,000)
PC
$43,500
$55,927
$43,500
$21,000
$42,000
$21,000
($1,500)
Sierra
$19,378
$21,888
$19,378
$10,284
$10,593
$309
($8,785)
BVES
$51,550
$11,401
$51,550
$1,000
$1,500
$500
($50,050)
SWG
$132,714
$85,908
$132,714
$97,714
$77,600
($20,114)
($55,114)
WCG
$0
$575
$0
$375
$500
$125
$500
TOTAL
$276,651
$193,187
$276,651
$134,353
$151,093
$16,740
($125,558)
(1) Authorized in D.03-03-007, Ordering Paragraph 4.
As shown in the table above, most of the utilities are requesting a budget that exceeds their estimated expenditures in 2004 and most are less than the budgets established for PY 2004 by the Commission.
The following table shows actual and proposed spending levels for outreach as reported by the utilities, along with the number of new CARE participants based on the utilities' proposed yearly increases, if their benchmarks are authorized and achieved.
Table 13
Outreach Compared With Utility Proposed CARE Additions
Utility Actual & Proposed
Total CARE Outreach Funding
Utility Estimated and Proposed
Additions to CARE Enrollment
Estimated Primary Residential Customers
Utility
2003 Actual
2004 Expected
2005 Proposed
2003
2004
2005
Alpine (1)
$50
$50
$100
x
4
4
700
Avista
$438
$3,930
$18,800
267
135
39
11,076
PC
$55,927
$21,000
$42,000
1,049
1,083
1,581
33,857
Sierra
$21,888
$10,284
$10,593
74
175
83
17,500
BVES
$1,401
$1,000
$1,500
1,569
72
105
6,241
SWG
$85,908
$97,714
$77,600
403
1,806
1,760
118,952
WCG
$575
$375
$500
27
6
0
1,230
TOTAL
$276,651
$134,353
$151,093
5,285
3,468
189,556
(1) Energy Division used Alpine's total residential customers. The number of primary or full-time residential customers was not provided by Alpine.
Southwest Gas partnered with Avista, Bear Valley, Sierra and Southern California Edison to promote the CARE programs on the distribution bags used by the food banks in Placer, Nevada, and San Bernardino counties. Southwest Gas also partnered with Southern California Edison and Bear Valley to distribute napkins to meal programs website with CARE information. Energy Division believes these coordinated efforts are worthwhile and should continue whenever possible.
Another joint effort that is worth mentioning, is data sharing. For instance, Southwest Gas and Southern California Edison share CARE enrollment data, which is a type of automatic enrollment. CARE customers of only one utility in overlapping service areas are then sent enrollment information by the other utility. This is another outreach tactic that can greatly benefit all utilities with overlapping service areas.
Analysis of Outreach Budgets
In evaluating and making recommendations on the utilities' outreach budgets, Energy Division considered various approaches, and data from the tables above, to determine if the budgets appear reasonable and sufficient or if adjustments should be made.
One approach evaluated the utilities' penetration achievements. For those who meet or exceed their Commission targeted benchmarks, there is some assurance that utility isn't conducting inadequate or inappropriate outreach. Energy Division also considered the residential population the utility needs to outreach to, considering such factors as the costs per residential customer outreached to compared to that per-household/customer cost to other years for the same utility and even across the other utilities.
When looking at those costs per customer to compare with other years for the same utility, Energy Division considered factors such as enrollment achievements and the total number of customers, whether any new, innovative or experimental outreach methodologies was employed in any of the subject years. In comparing these average costs per residential customer across utilities, additional aspects were factored in, such as efficiencies that may be achieved by outreaching to a larger base, the depth and breadth of types of outreach conducted by each utility, and the effectiveness or achievements.
Finally, Energy Division also considered the average cost of outreach for each newly enrolled CARE customer across recent years for each utility, and across the utilities. In conducting this analysis, Energy Division took into consideration similar aspects as those considered when looking at the average cost per residential customer.
Alpine Outreach
The following table depicts Alpine's actual and proposed CARE outreach expenditures and the number of additional enrollees necessary to reach Energy Division's recommended participation rates.
Table 14
Alpine CARE Outreach Expenditures
Estimated 2004 Residential Customers
Utility Estimated Eligible At 1/1/04
2003 Costs
2003 Addition to Enrolled
2004 Utility Estimated Outreach Costs
2004 Addition to Enrolled
2005 Utility Proposed Outreach Costs
2005 Utility Proposed Addition to Enrolled
Energy Division 2005 Recommended Increase to Enrollment
700
23
$50
N/A
$50
4
$100
4
4
In looking at the reasonableness of estimated outreach costs, among other things, Energy Division choose to look at the average outreach costs per the newly enrolled and per residential customer. This allows a comparison of the cost to enroll a new customer or to outreach to each residential customer. The following table presents the results of calculating the average costs to outreach.
Table 15
Alpine Average Outreach Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
N/A
$12.50
$25.00
Per Total Residential
0.07
$0.07
$0.14
Alpine is the smallest of the SMJU and is significantly smaller than all but one of the other SMJU. Alpine initiated its CARE program in 2001. Alpine's current outreach consists of printing and mailing applications and bill inserts.
Energy Division sees the value of establishing a website for consumers who wish to contact the utility for new or existing service with easy, accessible CARE and LIEE information, forms and referral numbers. We request Alpine purse this issue and review the costs of establishing a website.
Energy Division finds Alpine should be able to achieve their outreach target with reasonable costs and expenditures, due to its small service territory and limited number of customers. Energy Division recommends that Alpine be required to continue to monitor low-income customer growth within its area to ensure new eligible customers are immediately enrolled in the CARE program. Alpine should be able to achieve their targets with reasonable costs and expenditures, and therefore, Energy Division recommends approval of Alpine's proposed CARE outreach budget, with an increase of $50 to explore establishing a website.
Avista Outreach
The following tables depict Avista's actual and proposed CARE outreach expenditures and the number of additional enrollees necessary to reach Energy Division's recommended participation rates, along with the average outreach costs.
Table 16
Avista CARE Outreach Expenditures
Estimated 2004 Residential Customers
Utility Estimated Eligible At 1/1/04
2003 Costs
2003 Addition to Enrolled
2004 Estimated Outreach Costs
2004 Addition to Enrolled
2005 Utility Proposed Outreach Costs
2005 Utility Proposed Addition to Enrolled
Energy Division 2005 Recommended Increase to Enrollment
11,076
1,175
$17,438
267
$3,930
135
$18,800
39
103
Table 17
Avista Average Outreach Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$65.31
$29.11
$482.05
Per Total Residential
$1.57
$0.35
$1.69
While Avista deployed various outreach strategies in the past, Avista chose direct customer contact as their preferred method. Avista currently has two CARE bill inserts, one in June, after the annual update to income guidelines and one in October at the onset of their cold weather season. The company has quarterly CARE information messages printed on the face of its bills. They have an "on-hold" phone message to customers about CARE and they also sends out flyers with past-due notices.
Avista has an enhanced billing system that assists Call Center Reps with CARE promotion to new customers, creates queries and CARE status reports for outreach personnel and facilitates a data exchange with Sierra Pacific for enrolling shared customers into CARE. In addition, Avista contracts with the El Dorado Community Services to conduct certification. This agency also conducts outreach, including the distribution of CARE applications and brochures at their agency and hands out door hangers in targeted low-income areas.
Avista's website is not California resident friendly or low-income customer friendly.11 The low-income consumer would be hard pressed to find California CARE information, much less the referral number to DCSD, which serves to process and certify new CARE enrollees for Avista. The CARE information is listed on the website under `Current Natural Gas Tariffs/Rate Schedules/ Prices.' The CARE forms are available by doing a `search' for CARE in the utility's website search field. The 2004 forms have the correct income guidelines and are available in English and Spanish, though it is possible to mistakenly retrieve older CARE forms and documents.
In other states, Avista has a CARES program, which provides economic assistance in paying bills for Avista's low-income customers in other states. The CARES program is vastly different than California's CARE program. Energy Division recommends that Avista's website clearly state the differences from the two programs to avoid confusion.
Clearly, all Avista's California customers would benefit from an updated web-site. Energy Division advises that Avista be required to update their website to become more consumer friendly for all their California customers.
The company's meter-readers distributed CARE information as well as separate CARE recertification guidelines printed on `door hangers,' which in Energy Division's opinion, was one of the most innovative uses of resources to distribute CARE information.
Pursuant to D.03-03-007, Avista is required to track and report DCSD outreach expenditures in order to evaluate whether an in-house program would be more cost effective. Energy Division recommends that the Commission continue to require Avista to track and report these expenditures separately.
Energy Division recommends that Avista increase CARE enrollment in 2005 by adding at least a net 103 new eligible CARE customers.
Energy Division believes that not all of Avista's CARE-eligible will apply for DCSD's programs. That leaves many deserving and vulnerable low-income households with no help or assistance of any kind in managing their energy costs. Energy Division recommends that in addition to conducting its processing, certifying and verification efforts through DCSD, that Avista begin to mail out a self-certification application with its twice-yearly bill insert and modify its outreach materials to indicate customers can now self-certify, if customers elect to do so.
Energy Division notes that with the reduction in outreach in 2004, net adds to enrollment fell off. Energy Division believes that with a requirement that Avista improves its website and that they step-up outreach efforts to increase participation with a self-certification effort warrant the utilities' proposed budget amount. Energy Division believes that Avista can accomplish Energy Division's recommended increase to their outreach effort within Avista's recommended budget, which is substantially higher than the costs they incurred in 2004.
PacifiCorp Outreach
The following tables depict PacifiCorp's actual and proposed CARE outreach expenditures, and the number of additional enrollees necessary to reach Energy Division's recommended participation rates, along with the average costs for conducting outreach.
Table 18
PacifiCorp CARE Outreach Expenditures
Estimated 2004 Residential Customers
Utility Estimated Eligible At 1/1/04
2003 Costs
2003 Addition to Enrolled
2004 Estimated Outreach Costs
2004 Addition to Enrolled
2005 Utility Proposed Outreach Costs
2005 Utility Proposed Addition to Enrolled
Energy Division 2005 Recommended Increase to Enrollment
33,857
15,574
$55,927
1,049
$21,000
1,083
$42,000
1,581
6,482
Table 19
PacifiCorp Average Outreach Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$53.31
$19.39
$26.56
Per Total Residential
$1.65
$0.62
$1.24
The utility states that it increased outreach activities in 2003 and 2004 and will continue in 2005 with bill inserts, flyers, napkins and grocery bags at local agency offices, a direct mail solicitation, along with radio and newspaper advertisements. PacifiCorp indicates that it intends to increase their outreach significantly in 2005 in an effort to increase penetration. CARE applicants are income-certified by DCSD.
The Commission ordered penetration benchmark of 70%, with a target enrollment of 9,982, established for PacifiCorp in D.03-03-007, was not met for PY 2004. PacifiCorp expects to increase 2005 CARE enrollment by 1,581 with a budget of $42,000, which is slightly less than their 2003 outreach costs, although PacifiCorp was able to achieve a similar increase in enrollment in 2004, compared with 2003, with less money.
PacifiCorp's website gives complete CARE information in English and Spanish though the site can be difficult to navigate. The information is readily available under community services under low-income assistance.
While PacifiCorp reports a steady increase in participation levels, Energy Division is concerned that PacifiCorp's proposed benchmark and target means over half of its CARE eligible customers will still not be enrolled by the end of 2005. Due to the rural and diverse nature of PacifiCorp's territory and their high volume of low-income customers, Energy Division feels it is imperative that PacifiCorp expand their outreach programs.
As with Avista, Energy Division believes that not all of PacifiCorp's CARE-eligible will apply for DCSD's programs. That leaves many deserving and vulnerable low-income households with no help or assistance of any kind in managing their energy costs. Energy Division recommends that in addition to conducting its processing, certifying and verification efforts through DCSD, that PacifiCorp begin to mail out a self-certification application with its twice-yearly bill insert and modify its outreach materials to indicate customers can now self-certify, if customers elect to do so.
PacifiCorp needs to substantially increase the amount of eligible, participating CARE customers and therefore, Energy Division endorses the higher amount of outreach monies proposed by the utility to perform this task with an average outreach cost of $1.24 spread across the potentially CARE-eligible residential base. Energy Division recommends that PacifiCorp's proposed outreach budget be approved, even though it is double that of 2004's estimated expenditures, to accomplish these additional outreach efforts and activities.
Sierra Pacific Outreach
The following tables depict Sierra's actual and proposed CARE outreach expenditures, and the number of additional enrollees necessary to reach Energy Division's recommended participation rates, along with their average costs of conducting outreach.
Table 20
Sierra CARE Outreach Expenditures
Estimated 2004 Residential Customers
Utility Estimated Eligible At 1/1/04
2003 Costs(1)
2003 Addition to Enrolled
2004 Estimated Outreach Costs
2004 Addition to Enrolled
2005 Utility Proposed Outreach Costs
2005 Utility Proposed Addition to Enrolled
Energy Division 2005 Recommended Increase to Enrollment
17,500
2,300
$21,888
74
$10,284
175
$10,593
83
359
(1) Includes $17,322 funded by SBX1 5 Funds
Table 21
Sierra Average Outreach Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$296.00
$58.77
$127.62
Per Total Residential
$1.25
$0.58
$0.61
Sierra uses twice-yearly billing inserts, in English and Spanish, recently developed direct postcard mailings to permanent residential customers, quarterly CARE messages printed on front-facing residential bills, and poster/flyers in high-traffic low-income community facilities to increase CARE participation. Sierra has developed a customer friendly website that is exceedingly easy to use and research customer information.
The 2004 average Outreach cost was $58.72 per newly-enrolled customer. Energy Division finds the utility's recommendation unreasonable at $127.62 per newly enrolled customer without a substantial increase in CARE customers.
As with Avista and PacifiCorp, Energy Division recommends that Sierra, in addition to its arrangement with DCSD, begin to mail out a self-certification application with its twice-yearly bill insert and modify its outreach materials to indicate customers can now self-certify, if they elect to do so. Energy Division recommends that $3,000 be added to Sierra's outreach budget, for a total budget of $14,000 to accomplish these activities in 2005.
Bear Valley Outreach
The following tables depict Bear Valley's actual and proposed CARE outreach expenditures, and the number of additional enrollees necessary to reach Energy Division's recommended participation rates, along with their average costs of conducting outreach.
Table 22
Bear Valley CARE Outreach Expenditures
Estimated 2004 Residential Customers
Utility Estimated Eligible At 1/1/04
2003 Costs
2003 Addition to Enrolled
2004 Estimated Outreach Costs
2004 Addition to Enrolled
2005 Utility Proposed Outreach Costs
2005 Utility Proposed Addition to Enrolled
Energy Division 2005 Recommended Increase to Enrollment
6,241
2,030
$11,401
(31)
$1,000
(145)
$1,500
105
145
Table 23
Bear Valley Average Outreach Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
N/A
N/A
$10.34
Per Total Residential
$1.83
$0.16
$0.24
Bear Valley asserts that the most cost-effective outreach method in their service area is through bill inserts and direct mailers. Bear Valley's website is customer friendly and provides easy access to the CARE forms and information though it is not available in the "New Service" section of the website. The "News" section has several CARE articles.
Energy Division recommends that Bear Valley step-up its outreach program and requests their website be updated to include detailed new customer service information procedures along with a link to the CARE guidelines and forms.
Due to their large service area, many methods of outreach may prove too costly, though Energy Division finds that Bear Valley meter readers could leave CARE information door hangers. In addition, Energy Division recommends that Bear Valley update their web-site for new service customers and to include CARE information and that Bear Valley try other methods of outreach that may prove effective. Energy Division recommends an increase of $1,500 in their proposed budget for a total of $3,000 for outreach in 2005, in order that Bear Valley may step up their outreach.
Southwest Gas Outreach
The following tables depict Southwest Gas' actual and proposed CARE outreach expenditures, and the number of additional enrollees necessary to reach Energy Division's recommended participation rates, along with their average costs of conducting outreach.
Table 24
Southwest Gas CARE Outreach Expenditures
Estimated 2004 Residential Customers
Utility Estimated Eligible At 1/1/04
2003 Costs
2003 Addition to Enrolled
2004 Estimated Outreach Costs
2004 Addition to Enrolled
2005 Utility Proposed Outreach Costs
2005 Utility Proposed Addition to Enrolled
Energy Division 2005 Recommended Increase to Enrollment
118,952
31,314
$85,908
403
$97,714
1,806
$77,600
1,760
3,177
Table 25
Southwest Gas Average Outreach Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$213.17
$54.11
$44.09
Per Total Residential
$0.72
$0.82
$0.65
Southwest Gas' outreach activities include enrollment incentives with several CBO agencies (capitation), targeted mailing, media, bill inserts, and joint utility data sharing.
As mentioned earlier, Southwest Gas has joined with other California utilities to cooperatively administer and market the CARE and LIEE programs statewide. Southwest Gas distributes brochures, door hangers, application inserts, and posters in both English and in Spanish. Southwest Gas is unique in that it airs radio spots advertising the low-income programs as well as Movie Theater on-screen ads.
Southwest Gas and Southern California Edison electronically share each utility's list of CARE customers. Through this process, Southwest Gas identified approximately 10,000 customers that may qualify for CARE, who were sent CARE applications in both English and Spanish. Southwest's website has complete CARE information and it is extremely easy to access; though CARE information is not available in Spanish. Southwest Gas added a tracking code to its application forms to track where completed application forms come from.
Energy Division commends Southwest Gas for their excellent use of resources to increase enrollment. Southwest Gas' website has complete CARE information and it is extremely easy to access. Energy Division does have one recommendation for improving Southwest Gas' outreach, that their CARE information on their website also be provided in Spanish.
Southwest Gas' proposed budget of $77,600 appears reasonable given the large and diverse base of residential customers in two distinct and separate service areas, for an average cost per permanent residential customer of only $.65 per household.
West Coast Outreach
The following tables depict West Coast Gas' actual and proposed CARE outreach expenditures, and the number of additional enrollees necessary to reach Energy Division's recommended participation rates, along with their average cost data.
Table 26
West Coast Gas CARE Outreach Expenditures
Estimated 2004 Residential Customers
Utility Estimated Eligible At 1/1/04
2003 Costs
2003 Addition to Enrolled
2004 Estimated Outreach Costs
2004 Addition to Enrolled
2005 Utility Proposed Outreach Costs
2005 Utility Proposed Addition to Enrolled
Energy Division 2005 Recommended Increase to Enrollment
1230
40
$575
27
$375
4
$500
(1)
5
The following table presents the results of calculating the average cost to outreach a residential customer.
Table 27
West Coast Gas Average Outreach Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$21.29
$93.75
$500.00
Per Total Residential
.47
$0.31
$0.41
West Coast Gas states it believes it has provided every CARE-eligible customer adequate opportunity to enroll in CARE through its outreach activities. West Coast Gas indicates that all customers are approached with CARE information at the inception of moving to the limited housing. West Coast Gas' CARE outreach program primarily consists of direct customer contact at the time of new service application. Also, the utility prints CARE information quarterly on their bills and has CARE information included on its "on-hold" message for customers.
Currently West Coast Gas proposes a 41-cent per potentially CARE-eligible customer for outreach. Energy Division recommends West Coast Gas continue with their outreach programs by handing out CARE/LIEE information to their new incoming customers as well as sending out quarterly notices to all their customers. . West Coast Gas' telephone outreach center addresses each of their 1,500 customer's concerns when they call for account information.
A re-certification follow-up program for those customers who drop-off the CARE program should be enacted, if WCG has not already done so. Such a program could include special mailings to those customers as well as direct phone calls to the customer. Energy Division recommends that West Coast Gas' outreach budget be adopted for 2005.
Average Outreach Costs
In reviewing the average cost of enrolling each new customer into CARE, it appears that the costs can vary tremendously, and for some of the utilities, it can be fairly expensive. Utilities should use these average costs as a tool to measure whether or not their current outreach methodologies are adequate of if other methods should be evaluated to acquire new enrollees at a lower cost. The following table reflects the average CARE outreach costs for each SMJU on newly enrolled basis, based on the SMJU's proposed budgets and proposed number of additions to CARE enrollment::
Table 28
Utility Average CARE Outreach Costs Per Newly Enrolled
UTILITY
Average 2003 Outreach Costs
Average 2004 Outreach Costs
PY 2005 Estimated Outreach Costs
Alpine
N/A
$12.50
$25.00
Avista (*)
$65.31
$29.11
$482.50
PacifiCorp (*)
$53.31
$19.39
$26.56
Sierra (*)
$296.00
$58.77
$127.62
BVES
$11.90
$12.34
$10.34
SWG
$213.17
$54.11
$44.10
WCG
$21.30
$93.75
$500.00
(*) Use DCSD to outreach and certify new enrollment.
An additional tool is to look at the average costs of performing outreach to the base residential customers, the potentially CARE-eligible pool. With the exception of Southwest Gas who performs outreach in two separate service areas, it appears that the most expensive outreach on a per residential customer basis is performed for those utilities who contract with DCSD for their outreach, processing and certification services.
The following table shows the average outreach costs per permanent resident, based on the SMJU's proposed budgets and estimated permanent residential customers:
Table 29
Utility Average CARE Outreach Costs Per Permanent Resident
UTILITY
Average 2003 Outreach Costs
Average 2004 Outreach Costs
PY 2005 Estimated Outreach Costs
Alpine
$0.07
$0.07
$0.14
Avista (*)
$1.57
$0.35
$1.69
PacifiCorp (*)
$1.65
$0.62
$1.24
Sierra (*)
$1.25
$0.58
$0.61
BVES
$1.83
$0.16
$0.24
SWG
$0.72
$0.82
$0.65
WCG
$0.47
$0.31
$0.41
(*) Use DCSD to outreach and certify new enrollment.
Requiring self-certification for at least some of their customers may non-substantially increase outreach costs but it should make it easier for the low-income households to enroll households that don't utilize the services offered by DCSD and it should significantly boost enrollment as word gets out
Summary of Outreach Budget Recommendations
The following table summarizes Energy Division's recommended funding levels for outreach in PY 2005 versus those of the utilities.
Table 30
PY 2005 CARE Outreach Budget
Utility Proposals
Energy Division Recommendations
Utility
2004 Authorized Budget
Outreach Budget
2005 Enrollment Target
2005 CARE Additions
Outreach Budget
12/31/05 Enrollment Target
2005 CARE Additions
Alpine
$709
$100
30
4
$150
30
4
Avista
$28,800
$18,800
1,116
39
$18,800
1,180
103
PC
$43,500
$42,000
6,000
1,581
$42,000
10,902
6,482
Sierra
$19,378
$10,593
1,366
83
$14,000
1,725
359
BVES
$51,550
$1,500
1,560
104
$3,000
1600
145
SWG
$132,714
$77,600
25,200
1,760
$77,600
26,617
3,177
WCG
$0
$500
44
(1)
$500
50
5
Total
$276,651
$151,093
35,316
3,467
156,050
42,128
10,301
Processing, Certification, Verification Processing, Certification, Verification
Energy Division looked at the processing, certification/verification costs and budgets in much the same manner as the outreach costs. The following table shows processing, certification and verification costs as proposed by the utilities.
Table 31
CARE Processing, Certification and Verification Expenditures
Utility
D.03-03-007 2003 Authorized Budget
2003 Actual
2004 Authorized Budget
2004 Utility Expected
2005 Utility Proposed Budget
Increase (Decrease) In 2005 Proposed Budget Over 2004 Authorized
Increase (Decrease) In 2005 Proposed Budget Over 2004 Expected
Alpine
$1,579
$50
$1,579
$50
$100
($1,479)
$50
Avista (1)
$11,800
$6,865
$11,800
$11,800
$11,800
$0
$0
PC (1)
$32,500
$9,642
$32,500
$12,000
$12,000
($20,500)
($20,500)
Sierra (1)
$7,446
$7,509
$7,446
$9,694
$9,985
$2,539
$291
BVES (2)
$850
$0
$850
$0
$0
($850)
$0
SWG
$20,402
$20,688
$20,402
$20,402
$29,600
$9,198
$9,198
WCG
$1,500
$650
$1,500
$457
$1,000
($500)
$543
TOTAL
$45,404
76,077
54,403
64,485
($11,592)
($10,418)
(1) DCSD performs CARE processing, certification and verification processes for these utilities.
(2) Bear Valley estimates that it incurs approximately $5,000 on these activities but funds them out of base rates.
One of the two largest challenges faced by utilities with CARE is finding and signing up eligible CARE customers. The second is to retain every CARE-eligible household during the re-certification process that takes place every two years for each CARE customer.12
Alpine's Processing, Certification and Verification Processes
Alpine previously contracted with DCSD to perform its CARE processing, certification and verification processes. Alpine now performs its processing, certifying, and recertification in-house and their costs are exceedingly low. Due to its extremely small size, Alpine is exempt from conducting random post-enrollment verifications.13
Table 32
Average Processing, Certification and Verification Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
N/A
$12.50
$25.00
Per Total Enrolled
$2.13
$1.92
$3.33
Energy Division approves the utility's budget recommendation. With a small amount of CARE customers, the utility has proven it can handle the processing, certification and re-certification efficiently and within a reasonable budget.
Avista's Processing, Certification and Verification Processes
To implement its CARE program, Avista currently refers customers to the DCSD and uses DCSD to determine customer eligibility, process applications and to re-certify customers within Avista's California service territory. Avista contracted with the Tahoe Branch of the County of El Dorado Community Service for certification and enrollment. The utility hired a part-time staff member to serve as the liaison between the utility, the CBO and the CARE customers.
Avista implemented a computer data query in 2003 and searched for customers who had dropped off CARE. The utility called all the CARE "drops," who were identified by the system audit. The utility trained its call centers to answer questions on re-certification. Avista indicated that the customers that were identified were contacted and many reapplied. Avista found that some had moved out of the area. It isn't clear if Avista plans to do this query in 2005.
The table below shows Avista's costs for conducting its processing, certification and verification.
Table 33
Avista's Average Processing, Certification and Verification Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$25.71
$87.41
$302.56
Per Total Residential
$7.29
$10.96
$10.57
As noted in the outreach section, Energy Division recommends that the Commission require Avista to add self-certification and self recertification to its processes, in an attempt to bring costs down, and more importantly, to reach those customers who do not process through DCSD. Avista itself notes that its current approach works well for its CARE customers, but that Avista is concerned that their approach may not attract all of the CARE-eligible who might want to participate.14 Energy Division recommends that $500 be added to Avista's Processing, Certification and Verification Processes to accommodate self-certification.
PacifiCorp's Processing, Certification and Verification Processes
CARE applications are certified through DSCD and sent to PacifiCorp on a weekly basis. The CBOs, under contract with DCSD, help customers fill out the CARE application when they are filling out a Low Income Home Energy Assistance Program (LIHEAP) application.15 It isn't clear from PacifiCorp's submittals if PacifiCorp has implemented a re-certification effort and requires their CARE customers to recertify after participating in its CARE program for two years, as required by the Commission.16
Table 34
PacifiCorp's Average Processing, Certification and Verification Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$9.19
$11.08
$7.59
Per Total Enrollment
$2.89
$2.72
$2.00
As noted in the outreach section, and as with Avista, Energy Division recommends that the Commission require PacifiCorp to add self-certification and self recertification to its processes, in an attempt to bring costs down, and most importantly, to reach those customers who do not process through DCSD. Energy Division also recommends that PacifiCorp add a recertification program, if it hasn't already done so. Energy Division recommends that $1,000 be added to PacifiCorp's Processing, Certification and Verification Processes to accommodate self-certification. Energy Division recommends a larger amount for PacifiCorp due to the larger size of its eligible population.
Sierra's Processing, Certification and Verification Processes
In its CARE Annual Report to the Commission, on the period May 1, 2002 through April 30, 2003, Sierra reports it entered into a full service contract with DCSD. DCSD's responsibilities include assessing eligibility of CARE applicants and conducting recertification efforts annually. DCSD verifies CARE potential enrollee qualifications and answers customers' concerns and questions on CARE from incoming telephone calls. DCSD's number is provided on the mailings.
Sierra reports an initial decrease occurred during DCSD's first recertification review. According to Sierra, the most common reasons a CARE customer was removed from the program during the recertification process were non-responses, incomplete applications or the customer exceeded income requirements.
The following table shows Sierra's average costs of performing the processing, certification and verification efforts.
Table 35
Sierra's Average Processing, Certification and Verification Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$101.47
$55.39
$120.30
Per Total Residential
$6.78
$7.56
$7.31
Energy Division recommends that customers who are deemed a `no-response' should be addressed with a follow-up call (s) as well as a secondary direct-mail notice from the utility. As noted in the outreach section, and with Avista and PacifiCorp, Energy Division recommends that the Commission require Sierra to add self-certification and self recertification to its processes, in an attempt to bring costs down, and most importantly, to reach those customers who do not process through DCSD. Energy Division recommends that $500 be added to the budget for Sierra's Processing, Certification and Verification Processes to accommodate self-certification.
Bear Valley's Processing, Certification and Verification Processes
Processing, certification and verification is handled in-house by Bear Valley staff. There were approximately 532 applications received during Bear Valley's last report period and 389 were approved.17 Energy Division recommends a follow-up program to re-verify qualification for the applications that were rejected.
Bear Valley estimates that approximately $5,000 is incurred for processing, certification, and verification costs, but is recovered in base rates. Bear Valley doesn't request any surcharge funds be allocated for these functions.
Southwest Gas' Processing, Certification and Verification Processes
Southwest Gas processes CARE applications and performs certification and verification in-house. For certification, Southwest reviews applications for completeness, conformance with income parameters, and compares the information with their customer service systems' customers of record. For verification, Southwest Gas reviews the application for income eligibility, requests for proof of eligibility, performs repeated contacts for additional information and conducts random sampling for income documentation. Southwest Gas recertifies each CARE customer biennially.
The following table shows the average costs for Southwest Gas to perform these functions.
Table 36
Southwest Gas' Average Processing, Certification and Verification Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$51.39
$11.30
$16.82
Per Total Enrollment
$0.96
$0.87
$1.17
As shown in the table, and compared with other utilities' average costs, Southwest Gas' budget is reasonable, especially considering they serve two distinct and separate service areas. Energy Division recommends approval of Southwest Gas' budget. In addition, Energy Division recommends that Southwest Gas be required to implement repeated mailings and an automated calling system for those who fail to send in their recertification forms.
West Coast Gas' Processing, Certification and Verification Processes
West Coast Gas also performs all processing, certification and verification in-house. West Coast Gas states it has a single, direct customer contact to certify and recertify its CARE customers. West Coast Gas is exempt from performing random post-enrollment verification.18
Table 37
West Coast Gas' Average Processing, Certification and Verification Costs
2003
2004
2005 Utility Proposed Costs
Per Additions to Enrollment
$24.07
$114.25
$1000.00
Per Total Enrollment
$16.25
$10.16
$22.73
On average, West Coast Gas has the highest average costs of all the utilities, including those who contract with DCSD. In the last two years, West Coast Gas did not near incur the amount it is requesting in its budget for 2005. The utility closest in size to West Coast Gas is Alpine, although Alpine has half the number of residential and CARE customers as West Coast Gas. Similarly, Alpine is also exempt from performing the random post-enrollment process.
Energy Division recommends that a CARE Processing, Certification and Verification budget for West Coast Gas for 2005 be adopted of $500. Energy Division recommends that West Coast Gas be required to implement a recertification follow-up program for those customers who drop-off CARE, if it hasn't already done so. Such a program could include special direct mailings as well as direct phone calls to the customer.
Self Certification
Pursuant to D.99-07-016, utilities are not permitted to verify the income of every CARE customer. Rather, Commission policy demands that customers be allowed to self-certify that they qualify for CARE. This not only simplifies enrollment procedures for the low-income customers, but reduces otherwise expensive processing costs associated with verifying the income status of each CARE customer.
Several of the SMJU, namely Avista, PacifiCorp and Sierra, contract with various organizations for their CARE enrollment and these agencies certify that the household is income-qualified for CARE. Energy Division was to look at these costs in their audit of the SMJU, as required by D.03-12-016. As stated earlier in the report, Energy Division has been unable to perform this extensive audit. However, in the interim until the audit can be completed, Energy Division recommends that these utilities be required to print up self-certifying CARE applications, make them available to their residential customers, and process in-house those customers who choose to enroll through a direct application with the utility. This could be handled in lieu of or in tandem with the certification/verification services provided through contractual/leveraging arrangements through DCSD.
Under this scenario, the utility may also need to develop a re-certification effort and conduct it at the end of each CARE customers' second year of enrollment or provide that the contractual agency contact these customers and help those customers to perform a self-certification recertification.
Another scenario to achieve leveraging is through the use of capitation contracts, as is being used by Southwest Gas and the large energy utilities.19 However, without the income verification segment that is achieved through DCSD, those utilities who elect to use capitation rather than a full-service contract with DCSD, those utilities would need to implement a random post-enrollment verification process.
If a CARE customer is income-certified through the utilities' contractual arrangement with an outside organization, that should count as that customer's being certified for the next two-years. For the Automatic Enrollment program for the four large energy utilities, the Commission determined that
[W]hether enrolled through traditional or automatic means, CARE customers will receive the CARE discount for two years, and may recertify through either new or continued participation in our partner agency programs or through the utility's automatic two-year recertification process. 20
In addition to its other recommendations for processing, certification and verification, Energy Division recommends that all SMJU be required to recertify/re-verify a CARE customer only after that customer has been on CARE for two years. This will reduce the expense of conducting such certifications annually and possibly reduce unnecessary turnover.
Average Processing, Certification and Verification Costs
In reviewing the average cost of processing, certifying and verifying each CARE customer, similar to what was found for outreach, it appears that these costs can vary tremendously, and for some of the utilities, it can be fairly expensive. Utilities should use these average costs as a tool to measure whether or not their current processing, certification and verification methodologies are adequate of if other methods should be evaluated to reduce these costs.
The following table reflects the average CARE processing, certification and processing costs for each SMJU, based on the SMJU's proposed budgets and proposed number of additions to CARE enrollment:
Table 38
Utility Average Processing, Certification and Processing Per Newly Enrolled
UTILITY
Average 2003 Outreach Costs
Average 2004 Outreach Costs
PY 2005 Estimated Outreach Costs
Alpine
$12.50
$25.00
Avista (*)
$25.71
$87.41
$302.56
PacifiCorp (*)
$9.19
$11.08
$7.59
Sierra (*)
$101.47
$55.39
$120.30
BVES
Southwest Gas
$51.33
$11.30
$16.82
WCG
$24.07
$114.25
$1000.00
(*) Use DCSD to outreach and certify new enrollment.
An additional tool is to look at the average costs of performing processing, certification and verification costs per each enrolled CARE customer. The following table shows the average proposed cost of processing, certification and verification of each enrolled CARE customer, based on the SMJU's proposed budgets and proposed number of additions to CARE enrollment:
Table 39
Utility Average Processing, Certification and Verification Costs Per Total Enrolled
UTILITY
Average 2003 Outreach Costs
Average 2004 Outreach Costs
PY 2005 Estimated Outreach Costs
Alpine
$2.17
$1.92
$3.33
Avista (*)
$7.29
$10.96
$10.57
PacifiCorp (*)
$2.89
$2.72
$2.00
Sierra (*)
$6.78
$7.56
$7.31
SWG
$0.96
$0.87
$1.17
WCG
$16.25
$10.16
$22.73
(*) Use DCSD to outreach and certify new enrollment.
In looking at both sets of average costs, as proposed by the utilities, with the notable exception of the average costs for West Coast Gas, the highest average costs, for the most part, are for those utilities who choose to contract out their processing, certification and verification functions.
The following table reflects Energy Division's recommendation for the SMJU's processing, certification and verification budgets for PY 2005.
Table 40
PY 2005 CARE Processing/ Certification/ Verification Budget
Utility Proposed
Energy Division Recommendations
Utility
Processing/ Certification/ Verification Budget
12/31/05 Enrollment Target
2005 CARE Additions
Processing/ Certification/ Verification Budget
12/31/05 Enrollment Target
2005 CARE Additions
ALPINE
$100
30
4
$100
30
4
Avista (1)
$11,800
1,116
39
$12,300
1,180
103
PacifiCorp (1)
$12,000
6,000
1,581
$13,000
10,902
6,482
Sierra (1)
$9,985
1,366
83
$10,485
1,725
359
BVES
$0
1,560
1
$0
1,624
167
SWG
$29,600
25,200
1,760
$29,600
26,617
3,177
WCG
$1,000
44
0
$500
50
5
Total
$64,485
35,316
3,468
65,985
42,128
10,301
CARE General Expenditures
The following table outlines actual and proposed general expenditures as reported by the utilities.
Table 41
CARE General Expenditures
Utility
2003 Authorized Budget Per D.03-03-007
2003 Actual
2004 Authorized Budget Per D.03-03-007)
2004 Utility Expected
2005 Utility Proposed Budget
Increase (Decrease) In 2005 Proposed Budget Over 2004 Expected
Increase (Decrease) In 2005 Proposed Budget Over 2004 Authorized
Alpine (1)
$1,339
$0
$1,339
$0
$0
$0
($1,339)
Avista
$5,500
$7,678
$5,500
$5,500
$15,500
$10,000
$10,000
PC
$2,500
$6,622
$2,500
$8,000
$8,000
$0
$5,500
Sierra
$0
$0
$0
$0
$0
$0
$0
BVES
$0
$0
$0
$0
$0
$0
$0
SWG
$5,100
$5,196
$5,100
$5,100
$74,000
$68,900
$68,900
WCG
$1,100
$706
$1,100
$875
$1,000
($100)
$125
TOTAL
$17,532
$22,20520,202
$15,539
$19,475
$98,500
$78,800
83,186
(1) Alpine estimates that it incurs approximately $1,200 in indirect costs recovered in base rates.
As shown in the table above, Alpine, Sierra and Bear Valley do not request surcharge recovery for any General Expenses related to CARE. Therefore, Energy Division does not address General Expenses for these utilities, other than to note and Sierra and Bear Valley did not estimate the amount of General Expense that is incurred for the benefit of CARE but is recovered in base rates, as required.21
Energy Division does not expect any SMJU workshops this year. However, Energy Division recognizes there are increased reporting requirements this year for the SMJU that could cause a rise in the General Expense category and notes that all the utilities that are requesting surcharge recovery for this expense category propose an increase. The change in reporting requirements for CARE is not extensive. Essentially the filing date of when the information contained in the former CARE Annual Report was due is changed, along with the reporting period moving to a calendar year. A few summary tables were added, including expenditure information, summary outreach and enrollment data were added. Finally, a mid-year report is now required, due August 1 of each year. The increase in reporting requirements for LIEE is more substantial than those for CARE.
With the exception of the budget for Southwest Gas, the increases proposed are slight and therefore appear reasonable. Energy Division recommends the utilities' proposed budget for General Expenses be adopted for Avista, PacifiCorp and West Coast Gas.
In its application, and subsequent filings, Southwest Gas did not demonstrate that such a substantial increase, of almost 15 times the amount expended in each 2003 and 2004, in the General Expense category is warranted. In its data response to the Office or Ratepayer Advocates, Southwest Gas indicated that only $25,000-$34,000 of increased reporting costs would be incurred for both LIEE and CARE due to the change in reporting requirements.22 Therefore, Energy Division recommends that only $17,600 be approved as a budget for CARE General Expenses for 2005 for Southwest Gas. This assumes that half of what Southwest Gas estimated the increase in reporting requirements would cost would be attributable to CARE and that amount is added to the general expense Southwest Gas incurred in2004.
A brief description of the General Expenses for each utility follows.
Avista General Expenses
Avista charges such expenditures as travel for attending Commission mandated workshops to the General Expense category. 23 In addition, Avista also charges the preparation of annual reports, tariff modifications, CARE meetings and misc. to its General Expense category.24
PacifiCorp General Expenses
PacifiCorp reports that its general CARE administrative expenditures are broken down into categories such as travel, meals, training, promotion, consulting services and labor directly charged to CARE. 25
Southwest Gas General Expenses
In its General Expense category, Southwest Gas includes: the filing, logging and reporting of: applications received; applications returned for insufficient information; research and review of CARE computer reports; checks for duplicate applications; and updates to master-meter accounts for the number of qualifying tenants. Southwest Gas also includes costs related to annual program reporting and regulatory compliance.26
West Coast Gas General Expenses
Energy Division is unable to find where West Coast Gas has submitted what expenditures it charges to the General Expense category.
Comparison of CARE General Expense Proposals and Recommendations
The following table reflects proposed general expenditures as reported by the utilities, and compares them to Energy Division's recommendations for the SMJU' general budgets for PY 2005.
Table 42
PY 2005 CARE General Budget
Utility Proposed
Energy Division Recommendations
Utility
CARE General Budget
12/31/05 Enrollment Target
2005 CARE Additions
CARE General Budget
12/31/05 Enrollment Target
2005 CARE Additions
Avista
$15,500
1,116
39
$15,500
1,180
103
PacifiCorp
$8,000
6,000
1,581
$8,000
10,902
6,482
SWG
$74,000
25,200
1,760
$17,600
26,617
3,177
WCG
$1,000
44
0
$1,000
50
5
Total
$98,500
32,360
3,380
$42,100
38,749
9,767
(1) Alpine, Sierra, and Bear Valley do not request surcharge recovery for general expenses related to the deployment of CARE.
Care Subsidy
CARE is needs based and the utilities are allowed to recover 100% of the discount or subsidy provided to the CARE participants. While it is difficult to estimate the subsidy because the actual cost will depend on how many customers participate in CARE and their energy usage, the subsidy is estimated each year for comparison with administrative budgets and for developing the surcharge. The following table shows the subsidy incurred in 2003 and estimated by the utilities for 2004 and 2005. Energy Division does not dispute the utilities' estimates.
Table 43
Discount Provided to CARE Customers
Utility
2003 Subsidy
2004 Estimated Subsidy
2005 Estimated Subsidy
Alpine
$2,320
$3,442
$4,290
Avista
$112,580
(1)
$185,101
PacifiCorp
$466,927
(1)
$715,046
Sierra
$129,274
$205,496
$225,935
BVES
$103,093
$148,965
$154,000
SWG
$1,555,000
$3,332,600
$3,756,690
WCG
$1,683
$4,298
$6,000
Total
$2,370,877
$3,694,801
$5,047,062
(1) Energy Division could not locate estimates for this year for Avista or PacifiCorp.
Summary of CARE Program Budget Proposals and Recommendations
The following table shows the utility proposed budgets for all cost components of the CARE program.
Table 44
Summary of Utility Budget Proposals
Utility
Outreach
Processing
General
Subsidy
Total
Alpine
$100
$100
$0
$4,290
$4,490
Avista
$18,800
$11,800
$15,500
$185,101
$231,201
PacifiCorp
$42,000
$12,000
$8,000
$715,046
$777,046
Sierra
$10,593
$9,985
$0
$225,935
$246,513
BVES
$1,000
$0
$0
$154,000
$155,000
SWG
$77,600
$29,600
$74,000
$3,756,690
$3,937,890
WCG
$500
$1,000
$1,000
$6,000
$8,500
Total
$151,093
$64,485
$98,500
$5,047,062
$5,361,140
The next table shows Energy Division's recommendations for each of the expense categories.
Table 45
Summary of Energy Division Budget Recommendations
Utility
Outreach
Processing
General
Subsidy
Total
Alpine
$150
$100
$0
$4,290
$4,540
Avista
$18,800
$12,300
$15,500
$185,101
$231,701
PacifiCorp
$42,000
$13,000
$8,000
$715,046
$778,046
Sierra
$14,000
$10,485
$0
$225,935
$250,420
BVES
$3,000
$0
$0
$154,000
$157,000
SWG
$77,600
$29,600
$17,600
$3,756,690
$3,881,490
WCG
$500
$500
$1,000
$6,000
$8,000
Total
$156,050
$65,985
$42,100
$5,047,062
$5,311,197
3 See US Census Bureau website at http://factfinder.census.gov/servlet/QTTable?_bm=y&-geo_id=050000USO6003&-qr_name=DEC_2000_SF3_U_DP3&-ds_name=DEC_2000_SF3_U&-_lang=en&-redoLog=false&-_sse=on&-CONTEXT=qt.
4 The penetration rates for the Pacific Gas and Electric Company, San Diego Gas & Electric Company, Southern California Edison Company, and Southern California Gas Company range from 73-86%. See the Rapid Deployment Reports on PY 2004 submitted by these utilities, dated February 22, 2005.
5 See US Census Bureau website.
6 See Avista's January 12, 2005 Amended Application, p.10, wherein Avista notes that its CARE enrollment at 12-31-04 was 1,077, its estimated addition in 2005 to CARE enrollment of 39 to reach its proposed target penetration rate of 95%. This would result in an estimated eligible population of 1,175 (1,077+39=1,116 and 1,116/.95=1,175).
7 For households with incomes of less than $24,999, 1,480 would be eligible (11,076 * .2429 * .55). For families with income of less than $34,999, 1,825 would be eligible (11,076 * .2996% * .55).
8 Net additions to enrollment are the gross additions less those customers who leave the CARE rate.
9 See US Census Bureau website.
10 See PacifiCorp's CARE Annual Report, dated July 30, 2004.
11 Avista's website also has a "Conservation Programs & Rebates" section which does NOT link to any of the California Energy Efficiency Programs. Energy Division recommends that Avista also list a link to California's rebate programs.
12 Some of the utilities choose to perform recertification on their customers annually instead of biennially.
13 See D.03-03-007, Ordering Paragraph 1.(b).
14 See Avista's CARE Annual Report, dated July 30, 2003, p. 6.
15 LIHEAP is a federally funded home energy assistance program that is similar to LIEE. LIHEAP is administered by DCSD.
16 See D.03-03-007, Ordering Paragraph 1.(a).
17 For the period July 1, 2003 through June 30, 2004, as reported in their CARE Annual Report submitted on October 20, 2004 and revised on March 1, 2005.
18 See D.03-03-007, OP 1.(b).
19 Capitation is where a utility enters into a contract with an organization to help customers fill out self-certification CARE applications. That organization can be paid up to $12 for each new enrollment that is achieved through this method.
20 See D.02-07-033, p. 39.
21 See "Second Energy Division Workshop Report on the Review of Accounting and Reporting Requirements for the California Alternate Rates for Energy (CARE) and Low-Income Energy Efficiency (LIEE) Programs of the Small and Multi-jurisdictional Utilities," dated April 5, 2005, p.4, and the Scoping Memo of Assigned Commissioner and Administrative Law Judge, dated June 24, 2004, in R.04-01-006, p.6.
22 See the Reply to the Response by Southwest Gas Corporation to the Response of the Office of Ratepayer Advocate to the Application of Southwest Gas Corporation for the Approval of Program Year 2005 Low-Income Assistance Budgets, dated August 20, 2004.
23 See "Second Energy Division Workshop Report on the Review of Accounting and Reporting Requirements for the California Alternate Rates for Energy (CARE) and Low-Income Energy Efficiency (LIEE) Programs of the Small and Multi-jurisdictional Utilities," dated April 5, 2005, p.11.
24 See CARE Annual Report, dated July 30, 2003, p. 4.
25 See "Second Energy Division Workshop Report on the Review of Accounting and Reporting Requirements for the California Alternate Rates for Energy (CARE) and Low-Income Energy Efficiency (LIEE) Programs of the Small and Multi-jurisdictional Utilities," dated April 5, 2005, p.16.
26 See 2004 Annual CARE Progress Report, p.12, submitted by Southwest Gas on July 30, 2004.
