V. Care Discount

Greenlining/LIF presented testimony on specific changes to the California Alternative Rates for Energy (CARE) program for eligible low-income residential customers. Greenlining/LIF proposes to:

(1) Exempt CARE-eligible customers from the current surcharge and any increases that result from implementation of AB1X 1. Greenlining/LIF maintain that because low-income households often consist of multiple families living in sub-standard housing, electricity usage above the 130% baseline is often unavoidable;

(2) Increase the CARE discount from 15 to 25%, applicable to all Edison and PG&E customers, including PG&E's gas customers;

(3) Increase the CARE eligibility criteria from 150% to 175% of federal poverty guidelines. The effect of increasing eligibility would allow a family of three to earn up to $25,000 and still qualify for the discount. Adoption of an increase in eligibility criteria essentially acknowledges the reality of California's high cost of living;

(4) Rule favorably on Greenlining/LIF's motion for Clarification of D.01-01-018 regarding application of the EPS exemption.

TURN supports these proposals, stating that § 382 authorizes the Commission to ensure that the CARE program is funded at a level that will serve customers' needs. TURN provides evidence that customer need for such assistance may well be far higher than what is being provided today. CCSF also supports Commission consideration of financial assistance programs for low-income customers.

ORA and CMTA do not support further changes to the CARE discount during this phase of the proceeding because (1) CARE customers are already exempt from the 9% EPS increase applicable to residential customers; and (2) the Legislature is considering bills that increase the CARE discount. CMTA explains that CARE customers are already receiving an effective discount of 22.5% due to their exemption from the EPS and current CARE rates are 13% lower than they were in 1993. If additional discounts to CARE customers are adopted, CMTA fears that non-CARE customers will be forced to bear the increased cost burden.

PG&E supports increasing the CARE discount level to 25% for the electric portion of CARE customer bills if the Commission adopts PG&E's requested two cent per kWh increase in customer electric rates. Absent the Commission's adoption of a two cent per kWh rate increase, PG&E supports continuation of the current discount and the exemption for CARE customers from the one-cent per kWh increase (EPS) adopted in D. 01-01-018.

PG&E states that it may be appropriate to revisit the income threshold for participation in the CARE program, as well as other issues raised by Greenlining/LIF in its testimony, in the ongoing low-income proceeding. There consistency can be assured between gas and electricity customers, and among the state's investor-owned utilities. Edison asserts that the Commission should either retain the current EPS exemption for CARE customers or increase the CARE discount, but not both.

Edison is opposed to raising the income-eligibility guidelines for the CARE program because under the proposed guidelines Edison states that this would place over one-fourth of its residential customers as eligible for CARE, placing substantial additional burdens on the remaining ratepayers to cover these costs due to the potential increase in spending to fund the program.

Greenlining/LIF explains that low-income ratepayers tend to be renters rather than owners, reside in older housing that is less energy efficient, and who may have larger families or live in multi-family households. As Greenlining/LIF explains, under current CARE guidelines a family of three living in San Francisco and earning $21,505 per year would not qualify for the energy discount. (Greenlining/LIF Brief, p.4.) Low-income households are struggling now to meet the cost of utility energy services, which includes both their electric and gas usage bills. Greenlining/LIF has demonstrated that the poor (as defined by federal poverty level guidelines) bear a disproportionate energy burden. For example, according to a recent Rand Institute Study,²² the percentage of household income devoted to energy services is far greater for low-income households.

The following table demonstrates current guidelines for the CARE program (at 150% of Federal Poverty Level) and the proposed new guidelines (at 175% of Federal Poverty Level):

Family/Household Size	Current Guidelines (150% of Federal Poverty Level)	Proposed Guidelines (175% of Federal Poverty Level)
1 - 2	$18,200	$21,233 (round to $21,250)
3	$21,500	$25,083 (round to $25,000)
4	$25,800	$30,100
Each additional person	$ 4,300	$5,016 (round to $5,000)

It is reasonable to adopt Greenlining/LIF's revised guidelines for eligibility in the CARE program to help relieve the energy burden of low-income households. We will increase the CARE eligibility levels from 150% of federal poverty guidelines to 175% for electric customers of PG&E and Edison. By adopting these new guidelines, we increase the number of households who may be eligible for this important program. As we expand the eligibility for this important program, it is crucial to make eligible people aware of the program. Therefore, consumer education and notice becomes imperative. We are impressed that Greenlining/LIF and Edison were able to negotiate a Memorandum of Understanding regarding customer notification. We direct PG&E and Edison to consult with Greenlining/LIF and our Public Advisor's Office so that notification by bill inserts or other agreed upon methods can occur expeditiously. We will consider other issues related to consumer education in our current low-income proceedings, A.00-11-009, et al.

We do not increase the CARE discount from 15% to 25% at this time. While we propose to adopt a significant rate increase, we will consider the issue of an increased discount for both electric and gas customers in current related proceedings, A.00-11-009, et al.

We adopt Greenlining/LIF's proposal to exempt eligible CARE customers from this rate increase. We will determine whether similar exemptions apply to any additional increases that result from implementation of AB1X. It is clear that AB1X continues the exemption of CARE customers from the EPS, based on the statute's references to rates in effect as of January 5, 2001, and we affirm that finding here.