ALJ/MEG/k47 Mailed 7/22/2002

Decision 02-07-033 July 17, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's Proposed Policies and Programs Governing Low-Income Assistance Programs.

Rulemaking 01-08-027 (Filed August 23, 2001)

INTERIM DECISION: STATUS OF RAPID DEPLOYMENT, CARE PENETRATION GOALS, AUTOMATIC ENROLLMENT

AND RELATED PROGRAM PLANNING ISSUES

TABLE OF CONTENTS

Title Page

INTERIM DECISION: STATUS OF RAPID DEPLOYMENT, CARE
PENETRATION GOALS, AUTOMATIC ENROLLMENT
AND RELATED PROGRAM PLANNING ISSUES 1

1. Summary 2

2. Background and Issues 10

3. Status of Rapid Deployment 13

3.1 PG&E 15

3.2 SDG&E 16

3.3 SCE 17

3.4 SoCal 18

4. CARE and ULTS Penetration Rates - Methodological Issues 19

5. Interim CARE Penetration Benchmarks 26

6. Automatic Enrollment 30

6.1 Partner Agencies 30

6.2 Eligibility Requirements 32

6.3 Other State and Utility Data Matching Programs 33

6.4 Impact of Automatic Enrollment on CARE Penetration 35

6.5 Commission Administration and Customer Confidentiality 36

6.6 Recertification of Automatic Enrollment Customers 38

6.7 Monitoring Program Effectiveness 39

6.8 Bill Insert 41

6.9 Program Costs and Funding 41

6.10 Coordination with ULTS 43

7. Program Planning For 2002 and Beyond 45

8. Need for Expedited Consideration 48

Findings of Fact 53

Conclusions of Law 58

ORDER 60

Table 1 Rapid Deployment Program Statistics

Attachment 1 List of Abbreviations/Acronyms

Attachment 2 CARE Enrollment and Drop Off History

Attachment 3 Rapid Deployment Status For PG&E

Attachment 4 Rapid Deployment Status For SCE

Attachment 5 Rapid Deployment Status For SoCal

Attachment 6 Rapid Deployment Status For SDG&E

Attachment 7 Penetration Rate Methodologies

INTERIM DECISION: STATUS OF RAPID DEPLOYMENT, CARE PENETRATION GOALS, AUTOMATIC ENROLLMENT

AND RELATED PROGRAM PLANNING ISSUES

1. Summary¹

By Decision (D.) 01-05-033, issued on May 3, 2001, we adopted a rapid deployment strategy for the low-income assistance programs administered by Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison Company (SCE) and Southern California Gas Company (SoCal). Low-income assistance programs consist of direct weatherization and energy efficiency services under the Low-Income Energy Efficiency (LIEE) programs and rate assistance under California Alternative Rates For Energy (CARE). In addition to providing increased funding for CARE and LIEE program activities, D.01-05-033 authorized the following: expanded use of LIEE funds to leverage the programs provided through the Department of Community Services and Development's (DCSD) network of community-based organizations, "capitation fees" to low-income assistance organizations of up to $12 per CARE enrollee, increased non-English radio and print advertising for CARE and new LIEE measures on a pilot basis (e g., high efficiency air conditioners and water heaters).

We find that the rapid deployment strategy adopted in D.01-05-033 has been successful in substantially increasing the deployment of low-income assistance services to those that have needed it the most during the energy crisis. As of February 2002, PG&E, SCE, SoCal and SDG&E have added approximately 420,000 new customers to the CARE program on a net basis since the inception of the rapid deployment in May 2001.² Under the LIEE program, these utilities have collectively weatherized 50,440 homes and have treated a minimum of 50,000 additional homes with other energy efficiency measures during 2001. Given the success of our rapid deployment strategy, we authorize the continuation of the rapid deployment programs adopted in D.01-05-033 until further Commission order. We plan to reexamine rapid deployment programs and budgets for program year (PY) 2003, and make modifications as appropriate, later this year. The utilities filed their applications for PY2003 LIEE and CARE program plans and budgets on July 1, 2002.

By today's decision, we examine more closely the manner in which we measure program achievements in the CARE program. CARE penetration rates represent the number of low-income customers that actually participate in the CARE program, divided by an estimate of the number of customers eligible for the program.

We find the methods currently used by Southwest Gas Company (Southwest) to measure program penetration to be reasonable, without modification. As described in this decision, Southwest independently surveys the household size and income of their universe of customers, and then cross-checks the results with available Census data. Recognizing that this direct survey approach is not practicable in the larger utility service areas, we nonetheless expect PG&E, SoCal, SDG&E and SCE to improve their use of Census survey data, as discussed in this decision.

In particular, these utilities need to order the special tabulations of 2000 Census data as soon as they are available this fall to update demographic information on the joint relationship between household size and income. We direct the utilities to present the results of this update (i.e., revised numbers of eligible CARE customers) in their January 2003 monthly status report. This will enable us to evaluate the effects of both Census data updates and the automatic enrollment program we adopt today on utility penetration rates in a timely manner. We also direct Energy Division to ensure that Phase 2 of the Needs Assessment Study is designed to obtain income and household size data specific to Avista Utilities' (Avista) service territory for the purpose of estimating the number of CARE eligible homes.

Per Pub. Util. Code § 739.1, as modified by Senate Bill No. 2 from the Second Extraordinary Session (referred to as SBX2 2), we also establish our goal for CARE program penetration. Simply put, our goal is to reach 100% of low-income customers who are eligible for, and desire to participate in, the CARE program. The utilities report that over one million low-income customers meet the CARE eligibility criteria but are not currently participating in the program. Our goal is to enroll each and every one of these customers who wants to participate.

We recognize that the utilities will not reach this goal at the same pace, given differences in demographic characteristics and the magnitude of the eligible low-income population within each service territory, as well as differences in where each utility stands today with respect to program penetration. We also recognize that the law of diminishing returns applies to CARE outreach efforts over time, i.e., it becomes increasingly difficult to enroll additional customers, the closer the utility moves towards achieving 100% participation.

In consideration of these factors, we establish minimum benchmarks for PG&E, SDG&E, SoCal, Southwest and Avista for PY2002 as follows:
PG&E-63%, SDG&E-75%, SCE-93%, SoCal-70%, Southwest-89%,
Avista-50%. These benchmarks represent substantial improvements over the 2001 penetration rates achieved by these utilities and move each of them at a meaningful pace towards our goal of 100% penetration. At the same time, the benchmark levels we establish today recognize that the pace towards achieving our goal will differ among the utilities for the reasons discussed above. An additional consideration in establishing Avista's penetration rate benchmark for 2002 is the recognition that Avista's current method for estimating penetration rates is likely to underestimate actual program penetration, as discussed in this decision. We will be able to address this issue for future years when we obtain income and household size data specific to Avista's service territory during Phase 2 of the Needs Assessment Study.

SCE proposed that we adopt a penetration rate goal of 88% for 2002 and beyond, which represents maintaining the rate SCE achieved in 2001. As discussed in this decision, we believe that SCE should improve upon the status quo. In fact, SCE has recently reported that, as of the end of May, its penetration rate is now at 91%. This appears to be at least in part due to the steps that SCE has taken this year to improve its recertification notification process. In this context, a benchmark of 93% for the entire year is a reasonable standard, particularly in light of the impact we expect automatic enrollment (see below) to have on program participation.

The minimum PY2002 benchmarks we adopt today reflect our continued commitment to improving CARE enrollment and participation, consistent with SBX2 2 and the program objectives we have articulated in prior Commission decisions. We will continue to closely monitor penetration rate performance. We also intend to establish minimum penetration rate benchmarks for future program years. However, the utilities' proposed penetration goals for 2003 and beyond do not reflect the impact of updating their eligible customer base with 2000 Census data when it becomes available this fall. Nor do they reflect the impact that automatic enrollment will have on new CARE enrollments as we implement the program.

We cannot predict at this time the net effect of incorporating these factors into the ratio that produces the utility's penetration rates. This information is likely to affect our thinking on what the appropriate performance benchmarks should be in future years. Therefore, we do not believe it is prudent to establish minimum benchmarks beyond 2002 at this time. As we obtain the information we need over the next few months, we will use it to establish meaningful benchmarks for future years.

To assist us in reaching 100% of the low-income customers that are eligible for CARE, we adopt an automatic enrollment program that will enroll customers of PG&E, SCE, SoCal and SDG&E into CARE when they participate in the following partner agency programs: Medi-Cal and Women, Infants and Children administered through the California Department of Health Services (DHS), Healthy Families administered by the Managed Risk Medical Insurance Board (MRMIB), or the Energy Assistance Programs administered by DCSD.

As described in this decision, the Commission will administer the agency data exchange for automatic enrollment, in order to ensure confidentiality of all client information provided through our agency partnerships with DHS, MRMIB, and DCSD. The Commission will serve as a clearinghouse to identify electronic matches between agency and utility customer records, by comparing non-CARE data provided by the utilities with client information from the DHS, MRMIB, and DCSD programs. Once a match is made, the Commission will forward the customer's name and address to the utility for provisional enrollment.³ CARE customers, whether enrolled by traditional means or through participation in a partner agency program will receive the CARE discount for two years, and may recertify either through new or continued participation in our partner agency programs or through the utility's automatic two-year recertification process.

The utilities and the Commission will incur one-time and ongoing costs for program start-up and implementation, which may be offset by reductions in traditional outreach administrative costs. Subsidy costs will also be incurred as we enroll the majority of eligible customers into CARE during the first few months of the program. Subsidy costs will vary depending on the number of enrollments. We authorize the utilities to track costs related to automatic enrollment in a memorandum account or in an existing CARE balancing account, as appropriate, pending our determinations in Application (A.) 02-04-031 et al.

We are moving forward with automatic enrollment on an expedited schedule. The Commission's Executive Director will begin immediate efforts to obtain partnership agreements with DHS, MRMIB, and DCSD. As soon as practicable after these agreements are finalized, the Assigned Commissioner will issue a ruling outlining additional implementation tasks and a schedule for completing them. Within 30 days from the effective date of this decision, the Assigned Commissioner will issue a ruling setting forth the text for a bill insert to provide customers with advance information about the automatic enrollment program. Energy Division, in consultation with the Public Advisor's Office, will prepare the bill insert language for the Assigned Commissioner's consideration.

We direct the utilities to submit names and addresses of customers who are not enrolled in CARE to the Commission on a monthly basis, beginning 90 days from today.⁴ The utilities are also expected to track those customers who are automatically enrolled in CARE, and report on the number of customers successfully matched, enrolled and re-certified. This information and actual program expenditure amounts should be included in the utilities' monthly rapid deployment reports until further notice. We further direct each utility to file annual status reports on the automatic enrollment program. This information will allow us to track the number of new enrollees and evaluate the contribution of automatic enrollment to our penetration goals.

Due to the disparities between Universal Lifeline Telephone Service (ULTS) and CARE described in this decision, we do not include ULTS in the automatic enrollment program we adopt today. In particular, the record in this proceeding raises concerns over the extent to which ineligible customers may currently be enrolled in ULTS. However, we direct the Low Income Oversight Board (LIOB) to solicit public input and develop recommendations for coordinated customer outreach between the ULTS and CARE programs. The LIOB report is due within 120 days from the date of this decision, with comments due 30 days thereafter. We also refer Energy Division's recommendations for improvement to ULTS penetration rate calculations and eligibility verification to the Assigned Commissioner in the ULTS proceeding, Rulemaking (R.) 98-09-005.

Today's decision also describes the program planning process we envision for the remainder of 2002 and beyond. The utilities report that there is sufficient SBX1 5 and program carryover funding to continue LIEE rapid deployment activities through the end of the year without any modifications to authorized funding levels or ratemaking. In contrast, CARE program costs will greatly exceed the amounts currently authorized in rates and remaining from SBX1 5 appropriations as we continue rapid deployment through 2002. Accordingly, we have directed the utilities to file separate applications to address the funding of CARE rapid deployment activities, and associated ratemaking treatment, through December 31, 2002.⁵ We will consider these applications by subsequent Commission decision.

Finally, as outlined in the Assigned Commissioner ruling dated February 27, 2002, we have initiated a planning process to consider program design improvements for PY2003. As part of this review, we may need to reassess program budgets and funding levels, particularly for CARE outreach efforts, in light of the automatic enrollment program we adopt today. The utilities shall augment their PY2003 CARE program plans within 30 days from the effective date of this decision with a proposed scope of study for evaluating the results of automatic enrollment, and associated budget.