7. Program Planning For 2002 and Beyond

The parties to this proceeding are unanimous in their support of continuing rapid deployment efforts through PY2002.38 We concur. Rapid deployment has successfully ramped up during 2001, consistent with our objectives. As of February 2002, PG&E, SCE, SoCal and SDG&E have collectively added approximately 420,000 new customers to the CARE program on a net basis since the inception of rapid deployment in May 2001. (See Attachment 2.) Under the LIEE program, these utilities have collectively weatherized 50,440 homes during 2001. The utilities report that, conservatively, an additional 50,000 homes were treated with additional energy efficiency measures in 2001.39

We believe it is reasonable to build on this momentum during 2002 rather than disrupting this progress by making major program modifications. In the meantime, we need to examine the ratemaking implications of continuing with CARE rapid deployment though 2002 in a separate, ratemaking proceeding.

During the February 8, 2002 PHC, ORA raised the issue of whether the utilities will have sufficient LIEE funding to cover rapid deployment costs during PY2002. The utilities have responded in the affirmative. A summary of their estimates of available LIEE program funding is presented below:

These funds were authorized by the Commission in D.01-05-033. Accordingly, we do not need to modify current funding levels or further address ratemaking issues in order to continue LIEE rapid deployment through December 31, 2002.

In contrast, the utilities project that CARE program costs during PY2002 will greatly exceed the amounts currently authorized in rates and remaining from SBX1 5 appropriations, assuming the continuation of rapid deployment. Actual CARE costs are increasing relative to collections for a combination of reasons, including: (1) the increase in number of eligible participants due to the change in eligibility requirements in 2001, (2) increase from 15% to 20% to the CARE rate discount in 2001 and (3) increased outreach efforts implemented under rapid deployment.40 PG&E projects that its CARE outreach expenditures for 2002 will exceed authorized administrative costs by approximately $4.5 million, and that shortfalls in CARE rate subsidy costs will range from $49 to $121 million, depending on the ratemaking treatment of the CARE surcharge exemptions.41 SCE projects a range of $33.6 to $111.4 million in budget shortfalls for CARE rate subsidies, depending on the ratemaking treatment for the CARE surcharge exemptions. SDG&E and SoCal also project significant shortfalls between estimated program costs and collections, albeit of lesser magnitudes than PG&E and SCE.42

Therefore, implementation of our policy to continue CARE rapid deployment efforts through 2002, which incorporates the automatic enrollment program we adopt today, needs to be further examined in a ratemaking proceeding. By ruling dated March 29, 2002, the Assigned Commissioner directed the utilities to submit ratemaking applications with proposals for CARE administrative activities and budgets for 2002, along with estimated rate subsidy costs and their proposed ratemaking treatment of anticipated shortfalls. The applications (A.02-04-031 et al.) were filed on April 18, 2002. We will consider them in a subsequent Commission decision.

Finally, as discussed in the Assigned Commissioner's ruling, dated February 27, 2002, we have initiated a planning process to consider program design improvements for PY2003. Per that ruling, PG&E, SCE, SDG&E and SoCal filed applications for their PY2003 LIEE and CARE programs and proposed funding levels on July 1, 2002. As part of the review of these applications, we will need to assess program budgets and funding levels, particularly for CARE outreach efforts, in light of the automatic enrollment program we adopt today.

38 See PHC statements and RT dated February 8, 2002; Assigned Commissioner's Ruling dated February 27, 2002. 39 See Table 1. The number of total homes treated by weatherization or other energy efficiency measures (appliances, compact fluorescent lights, etc.) is conservatively estimated at 101,563. This figure divides SCE's number of treated homes by three to take account of the potential double counting described in the footnote to Table 1. Total homes weatherized during 2001 is 50,440, leaving a balance of 51,123 that were treated with non-weatherization measures. 40 By D.01-06-010, the Commission increased the CARE discount from 15% to 20% and raised the income eligibility thresholds for CARE and LIEE from 150% to 175% of the federal poverty guidelines. 41 The $121 million reflects PG&E's assumption that the exemption of CARE program participants from the 1-cent and 3-cent 2001 electric rate increases will be recovered through the CARE PGC collections. The $49 million assumes that only the CARE discount from rates that do not include those increases would be so recovered. The Commission will address this ratemaking issue as part of the separate CARE applications. See PG&E's March 14, 2002 response to request for information and their March 26, 2002 supplemental response in this proceeding. 42 See SCE, SDG&E and SoCal's March 14, 2002 response to request for information and SCE's March 26, 2002 supplemental response in this proceeding.

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