III. Positions of the Parties

The positions of the parties, as stated in their Comments and Reply Comments, vary widely on the three issues that are before us.

Joint Parties argue in their Comments that eligibility for CARE discounts should be the same for gas and electric customers, that LIEE eligibility should be consistent with CARE eligibility, and that the level of the CARE discount should be increased.

According to Joint Parties, consistency between gas and electric CARE eligibility criteria is preferable from both a customer perspective and an administrative perspective. From the customer perspective, consistency would result in a clearer message being sent, and would reflect the realities that, "[L]ow-income customers with a high energy burden are indifferent if that burden is caused by escalating natural gas prices or increased electricity prices[,]" and that "[L]ast winter, it was the cost of gas, rather than electricity, that caused many low income families to fall behind on payment of their energy bills." (Joint Parties, p. 2.) From the administrative perspective, consistent eligibility requirements would allow for improved coordination and compatibility between gas and electric utilities, and would simplify the criteria to be applied by combined utilities, such as PG&E.

For similar reasons, Joint Parties support uniformity between LIEE and CARE programs. Joint Parties additionally suggest changing the eligibility level for both CARE and LIEE to 60% of state median income, as opposed to 175% of the federal poverty level. According to Joint Parties, this would make the eligibility level consistent with that of the federal Low Income Home Energy Assistance Program (LIHEAP), and roughly equivalent to 200% of the federal poverty level.

PG&E, while not objecting specifically to the 60% of state median income standard, pointed out that there are significant differences in how this standard would impact ratepayers as compared to our current standard based on the federal poverty level. According to PG&E, single-person and very large households are more likely to qualify under a 175% of federal poverty standard, while others would be more likely to qualify under a 60% of state median income, and some ratepayers, such as seniors, who currently qualify for LIEE at 200% of the federal poverty guidelines could lose their eligibility at 60% of state median income.

Joint Parties recommend increasing the CARE discount from 15% to 25% for both gas and electricity. In addition, Joint Parties call for audits of utility low-income programs, and significant new monthly reporting requirements. The additional reporting requirements requested by Joint Parties are opposed by all of the utilities.

AARP generally agrees with the position of Joint Parties. AARP states, "There is no logical reason to adopt different CARE program rules that vary between electric and natural gas utility service territories." (AARP, p.9.) Accordingly, AARP supports applying the same eligibility requirements to all jurisdictional gas and electric utilities. AARP provides additional observations on eligibility, and suggests that customers should be qualified for CARE based upon their receipt of other benefits, such as Food Stamps or Universal Service Lifeline Telephone Service. This proposal is supported by Joint Parties, and opposed by Joint Utilities. AARP does not directly address the issue of consistency between LIEE eligibility and CARE eligibility.

On the issue of the appropriate level of the CARE discount, AARP recommends an increase, and suggests that: "The Commission should explore the SMUD approach of providing a 30% discount on the baseline usage and a 15% discount on usage above that amount." (AARP, p.8.) AARP does not otherwise make a specific recommendation as to the appropriate level of discount, but does discuss the effect of increasing the discount from 15% to 25-30%, (Id.) and mentions that Massachusetts provides a 20-40% discount, while Texas provides a 10-20% discount. At the same time, however, AARP seems to call for more study of the impacts of an increased CARE discount. (Id., p.9.)

SESCO argues that the same eligibility standard should apply to both gas and electric utility customers of all CPUC jurisdictional utilities. SESCO notes that gas customers may need the protection of a CARE discount even more than do electric customers, who have received exemptions from certain rate increases. SESCO also states that: "[It] is NOT appropriate that low income families receive lesser benefits or services merely because they are caught on the wrong side of a utility service area boundary." (SESCO, pp.2-3, emphasis in original.) SESCO also supports consistency between the definitions of low income used for the CARE and LIEE programs.

SESCO does not support increasing the CARE discount, arguing instead that increasing CARE penetration among eligible customers is a higher priority than increasing the benefits for those enrolled. SESCO expresses concern over the cost of increasing the discount, and argues that a tiered rate design is preferable to an increase in the CARE discount.

ORA is the only party to argue for no change to the existing eligibility requirements and discounts. Focusing upon the costs to other ratepayers, ORA argues against any changes that would result in more customers becoming eligible for CARE or LIEE, or that increase the CARE discount for any customers.

SCE had no comment on the issue of applying the same eligibility requirements to gas customers as are currently applied to its electric customers. (SCE, p.1.) On the second issue, SCE recommends, "[T]hat the Commission increase the LIEE eligibility guidelines to 175% of federal poverty guidelines so that they can be consistent with CARE eligibility guidelines." (SCE, p.2.)

SCE does not support increasing the level of the CARE discount, as it "[W]ould exert increasing pressure on the rates being paid by all other SCE ratepayers." (SCE, p.2.)

With some variations, the position of PG&E is generally similar to that of the Joint Parties. Citing both administrative and customer reasons, PG&E supports consistency in the eligibility criteria for gas and electric customers. "PG&E's current infrastructure is not set up to track customer income qualifications separately by commodity." (PG&E, p.2.) PG&E notes the difficulty involved in dealing with situations where a customer would qualify for an electric CARE discount, but not a gas discount, and claims, "The amount of time and work required to implement the CARE programs could conceivably double." (Id.) From the customer perspective, PG&E states that "Customers trying to qualify for the CARE discount would find the different guidelines confusing and hard to understand, especially in the current energy crisis...Maintaining the same income eligibility guidelines for gas and electric commodities is simpler to explain and understand." (Id.)

PG&E supports standardizing the qualifying guidelines for the CARE and LIEE programs. PG&E does also suggest that, at the end of the rate freeze, it would support changing eligibility for both programs to 200% of the poverty level, which is the current LIEE standard for senior and permanently disabled customers.

PG&E supports an increase in both the gas and electric CARE discount to 25%, to be implemented when the electric rate freeze ends. PG&E provides estimates of the costs to other customers of increasing the discount to 25% and the income eligibility threshold to 200% of federal poverty guidelines.

Joint Utilities express reservations about lowering the threshold for CARE eligibility, citing the costs to non-participant customers. At the same time, however, Joint Utilities support making the LIEE and CARE eligibility levels consistent at 175% of the federal poverty level, while keeping the 200% threshold for LIEE when the head of the household is disabled or a senior.

Joint Utilities do not support an increase in the CARE discount at this time, calling it "premature," and recommending that a more thorough evaluation or a range of factors be performed before changes in the CARE discount be considered. (Id., pp.5-6.)