(1)Existing law requires the Public Utilities Commission to establish programs to assist low-income electricity and gas customers. Existing law requires the commission, not less often than every 3rd year, to conduct an assessment of the needs of low-income electricity and gas ratepayers. Existing law requires the assessment to evaluate low-income program implementation and the effectiveness of weatherization services and energy efficiency measures in low-income households. Existing law requires the assessment to consider whether existing programs adequately address low-income electricity and gas customers energy expenditures, hardships, language needs, and economic burdens.

This bill would require the commission to conduct a new assessment not less often than every 5th year, instead of every 3rd year. The bill would require the assessment to additionally evaluate the impacts of low-income programs on low-income households and consider whether available technologies, in combination with existing programs, adequately address those low-income electricity and gas customers concerns. The bill would require the assessment to measure the overall participation rates of low-income electricity and gas customers in existing low-income energy assistance programs for which they are eligible.

This bill would require the commission to consider whether the eligibility requirements for low-income programs should be changed to better serve in-need eligible low-income populations and to maximize the effectiveness of moneys spent through those programs.

(2)Existing law requires an electrical or gas corporation to perform home weatherization services for low-income customers if the commission determines that a significant need for those services exists in the corporations service territory. For these purposes, existing law authorizes weatherization to include, where feasible, specified measures for a dwelling unit and other building conservation measures, energy management technology, energy-efficient appliances, and energy education programs, as specified.

This bill would require that, require, to the extent they are feasible, reduce hardships, and are it reduces hardships, and is feasible and cost effective, that those measures reflect the most current and relevant available knowledge and technologies, where applicable. The bill would also require the commission to ensure that its proceeding schedule does not limit an electrical or gas corporations ability to provide those measures, as applicable.

(3)Because the bill would require the commission to impose new requirements on electrical and gas corporations and a violation of any part of any order, decision, rule, direction, demand, or requirement of the commission is a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law requires the Public Utilities Commission to establish programs to assist low-income electricity and gas customers, including the California Alternate Rates for Energy or CARE program. customers. Existing law requires the commission, not less often than every 3rd year, to conduct an assessment of the needs of low-income electricity and gas ratepayers. Existing law requires the assessment to evaluate low-income program implementation and the effectiveness of weatherization services and energy efficiency measures in low-income households. Existing law requires the assessment to consider whether existing programs adequately address low-income electricity and gas customers energy expenditures, hardships, language needs, and economic burdens.

This bill would require the commission to conduct the a new assessment not less often than every 5th year, instead of every 3rd year. The bill would require the assessment to additionally evaluate the impacts of low-income programs on low-income households and to consider whether available technologies, in combination with existing programs, adequately address those low-income electricity and gas customers concerns. The bill would require the assessment to measure the overall participation rates of low-income electricity and gas customers in existing low-income programs for which they are eligible.

(3)Existing law requires an electrical or gas corporation to perform home weatherization services for low-income customers if the commission determines that a significant need for those services exists in the corporations service territory. For these purposes, existing law authorizes weatherization to include, where feasible, specified measures for a dwelling unit and other building conservation measures, energy management technology, energy-efficient appliances, and energy education programs, as specified.

This bill would require that, to the extent feasible they are feasible, reduce hardships, and are cost effective, those measures reflect the most current and relevant available knowledge and technologies, where applicable. The bill would also require the commission to ensure that its proceeding schedule does not limit an electrical or gas corporations ability to provide those measures, as applicable.

(4)Because the bill would require the commission to impose new requirements on electrical and gas corporations and a violation of any part of any order, decision, rule, direction, demand, or requirement of the commission is a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law requires the Public Utilities Commission to establish programs to assist low-income electricity and gas customers, including the California Alternate Rates for Energy or CARE program. Existing law requires the commission, not less often than every 3rd year, to conduct an assessment of the needs of low-income electricity and gas ratepayers. Existing law requires the assessment to evaluate low-income program implementation and the effectiveness of weatherization services and energy efficiency measures in low-income households. Existing law requires the assessment to consider whether existing programs adequately address low-income electricity and gas customers energy expenditures, hardships, language needs, and economic burdens.

This bill would require the commission to conduct the assessment not less often than every 5th year, instead of every 3rd year. The bill would require the assessment to additionally evaluate the impacts of low-income programs on low-income households and to consider whether available technologies, in combination with existing programs, adequately address those low-income electricity and gas customers concerns. The bill would require the assessment to measure the overall participation rates of low-income electricity and gas customers in existing low-income programs for which they are eligible, and would set a goal of 90% participation by those customers in those programs. eligible.

(2)Existing law requires an electrical or gas corporation to perform home weatherization services for low-income customers if the commission determines that a significant need for those services exists in the corporations service territory. For these purposes, existing law authorizes weatherization to include, where feasible, specified measures for a dwelling unit and other building conservation measures, energy management technology, energy-efficient appliances, and energy education programs, as specified.

This bill would require that that, to the extent feasible and cost effective, those measures reflect the most current and relevant available knowledge and technologies, where applicable. The bill would also require the commission to ensure that its proceeding schedule does not limit an electrical or gas corporations ability to provide those measures, as applicable.

(3)Because the bill would require the commission to impose new requirements on electrical and gas corporations and a violation of any part of any order, decision, rule, direction, demand, or requirement of the commission is a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law requires the Public Utilities Commission to establish programs to assist low-income electric electricity and gas customers, including the California Alternate Rates for Energy or CARE program. Existing law requires the commission, not less often than every 3rd year, to conduct an assessment of the needs of low-income electricity and gas ratepayers. Existing law requires the assessment to evaluate low-income program implementation and the effectiveness of weatherization services and energy efficiency measures in low-income households. Existing law requires the assessment, in part, assessment to consider whether existing programs adequately address low-income electricity and gas customers energy expenditures, hardships, language needs, and economic burdens.

This bill would require the commission to conduct the assessment not less often than every 5th year, instead of every 3rd year. The bill would require the assessment to additionally evaluate the impacts of low-income programs on low-income households and to consider whether available technologies, in combination with existing programs, adequately address those low-income electricity and gas customers concerns. The bill would require the assessment to measure the overall participation rates of low-income electricity and gas customers in existing low-income programs for which they are eligible, and would set a goal of 90% participation by those customers in those programs.

(2)Existing law requires the commission to require an electrical or gas corporation to perform home weatherization services for low-income customers if the commission determines that a significant need for those services exists in the corporations service territory. For these purposes, existing law authorizes weatherization to include, where feasible, specified measures for a dwelling unit and other building conservation measures, energy management technology, energy-efficient appliances, and energy education programs, as specified.

This bill would require that those measures reflect the most current and relevant available knowledge and technologies. technologies, where applicable. The bill would also require the commission to ensure that its proceeding schedule does not limit an electrical or gas corporations ability to provide those measures, as applicable.

(3)Because the bill would require the commission to impose new requirements on electrical and gas corporations and a violation of any part of any order, decision, rule, direction, demand, or requirement of the commission is a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(1)Existing law requires the Public Utilities Commission to establish programs to assist low-income electric and gas customers, including the California Alternate Rates for Energy or CARE program. Existing law requires the commission, not less often than every 3rd year, to conduct an assessment of the needs of low-income electricity and gas ratepayers. Existing law requires the assessment, in part, to consider whether existing programs adequately address low-income electricity and gas customers energy expenditures, hardship, hardships, language needs, and economic burdens.

This bill would require the commission to conduct the assessment not less often than every 5th year, instead of every 3rd year. The bill would require the assessment to consider whether available technologies, in combination with existing programs, adequately address those low-income electricity and gas customers concerns.

Existing law requires the Public Utilities Commission to establish programs to assist low-income electric and gas customers, including the California Alternate Rates for Energy or CARE program. Existing law requires the commission, not less often than every 3rd year, to conduct an assessment of the needs of low-income electricity and gas ratepayers. Existing law requires the assessment, in part, to consider whether existing programs adequately address low-income electricity and gas customers energy expenditures, hardship, language needs, and economic burdens.

This bill would require the commission to conduct the assessment not less often than every 5th year, instead of every 3rd year. The bill would require the assessment to consider whether available technologies, in combination with existing programs, adequately address those low-income electricity and gas customers concerns.

SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 6/20/2017

SUBJECT:

DIGEST: This bill makes changes to programs related to energy efficiency assistance for low-income electricity and gas ratepayers, including modifications to a required assessment of the needs of low-income ratepayers, inclusion of consideration of greenhouse gas (GHG) emissions and benefits to air quality for energy efficiency assistance related to fuel-switching, require the California Public Utilities Commission (CPUC) to consider whether the eligibility requirements for low-income programs should be changes, and requires to the extent feasible, measures that reflect most current available technologies for weatherization assistance.

ANALYSIS:

Existing law:

1. Establishes the California Alternate Rates for Energy (CARE) program for assistance to low-income electric and gas customers with annual household incomes that are no greater than 200 percent of the federal poverty guideline levels to ensure low-income ratepayers are not jeopardized or overburdened by monthly energy expenditures. Requires the CARE discount for electrical corporations with 100,000 or more customer accounts in California is not less than 30 percent or more than 35 percent of the revenues that would have been produced for the same billed usage by non-CARE customers and requires the entire discount to be provided in the form of a reduction in the overall bill for the eligible CARE customer. (Public Utilities Code §§382 and 739.1)
2. Requires, beginning in 2002, and not less often than every third year, an assessment to evaluate low-income program implementation and effectiveness of weatherization services and energy efficiency measures in low-income households, with assistance from the Low-Income Oversight Board. (Public Utilities Code §382)
3. States that increasing access to affordable energy can improve the health, safety, and air quality of low-income communities in the San Joaquin Valley who lack access to natural gas lines. Requires the CPUC to initiate a proceeding to identify disadvantaged communities, analyze the economic feasibility of:
   1. Extending natural gas pipelines to those disadvantaged communities.
   2. Increasing subsidies for electricity for residential customers in those disadvantaged communities.
   3. Other alternatives that would increase access to affordable energy in those disadvantaged communities that the CPUC deems appropriate.

(Public Utilities Code §783.5)

1. Requires the CPUC to determine whether any of the options analyzed in the proceeding would increase access to affordable energy in a cost-effective manner. Requires the CPUC to take appropriate action and determine appropriate funding sources. (Public Utilities Code §783.5)
2. Defines “disadvantaged community” as a San Joaquin Valley community that meets all of the following:
   1. At least 25 percent of residential households with electrical service are enrolled in CARE program.
   2. Has a population greater than 100 persons within its geographic boundaries as identified by the most recent United States Census or a community survey.
   3. Has geographic boundaries no farther than seven miles from the nearest natural gas pipeline operated by a gas corporation.

(Public Utilities Code §783.5)

1. Requires CPUC to require an electrical or gas corporation to perform home weatherization services for low-income customers if the CPUC determines that a significant need for those services exists in the corporation’s service territory. (Public Utilities Code §2790)

This bill:

1. Requires the CPUC to conduct the assessment of the needs of low-income electricity and gas ratepayers not less often than every fifth year, instead of every third year, and requires the assessment to evaluate the impacts of low-income programs on low-income households and to consider whether available technologies, in combination with existing programs, adequately address those low-income electricity and gas customers’ concerns.
2. Requires the assessment to measure the overall participation rates of low-income electricity and gas customers in existing low-income programs for which they are eligible.
3. Requires the CPUC to consider whether the eligibility requirements for low-income programs should be changed to better serve in-need populations and to maximize the effectiveness of moneys spent through those programs.
4. Requires the entities administering low-income energy efficiency programs to also consider, to the extent consistent with proper treatment of ratepayers, the reductions to GHG emissions and benefits to air quality that may result from facilitating the customer fuel switching that will not increase the average energy costs to a program’s participants.
5. Requires, to the extent feasible, reduces hardships, and is cost effective, that weatherization measures provided to eligible low-income customers reflect the most current and relevant available knowledge and technologies, where applicable, to the extent feasible. Requires the CPUC ensure its proceeding schedule does not limit an electrical or gas corporation’s ability to provide these measures, as applicable.

Background

CARE. The CARE program provides discounted rates to low-income ratepayers, up to 35 percent reduction in rates. For families whose household income slightly exceeds the CARE program eligibility, the Family Energy Rate Assistance (FERA) program provides discounts on electric rates. In addition to these rate assistance programs, utilities provide ratepayers payment plan options that can spread the costs of their bills over a limited time period, generally three months to twelve months, depending on the utility and circumstances.

Energy Savings Assistance (ESA) Program. The ESA program provides no-cost weatherization services to low-income households who meet the CARE income guidelines. Services provided include attic insulation, energy efficient refrigerators, energy efficient furnaces, weatherstripping, caulking, low-flow showerheads, water heater blankets, replacement water heaters, heat pumps, appliance replacements, and door and building envelope repairs which reduce air infiltration. The program’s objective is to help income-qualified customers reduce their energy consumption and costs while increasing their health, comfort, and safety in the home.

Low-Income Needs Assessment. California investor-owned utilities (IOUs) provide no-cost services and reduced rates to income-qualified customers to alleviate their energy burden. These services are delivered through the ESA and CARE. In 2001^[1] the Legislature mandated the CPUC to conduct an assessment of the needs of low-income electricity and gas ratepayers, and update the assessment “periodically.” By 2013 the gap between assessments was five years, by which time the “economic conditions facing California and the energy market” had changed substantially.^[2] That same year, the Legislature passed AB 327 (Perea, Chapter 611, Statutes of 2013) which mandated the assessment be updated, at minimum, every three years. Since that time two assessments^[3] have been conducted on behalf of the CPUC and the IOUs. The findings and recommendations in the assessment are intended to provide information used to plan and implement the next cycle of low-income energy efficiency programs, the ESA and CARE. In the most recent assessment, the CPUC sought to understand energy affordability among low-income customers, specific subpopulations especially burdened or neglected by current program outreach, and whether lack of income documentation limited program participation. The proposed modifications of the assessment in this bill, particularly the requirement to demonstrate subscription participation levels, would help improve the assessment. However, changing the interval of the assessment from three years to five years may pose challenges since the assessment will not be aligned with the IOUs three-year budgets for the low-income energy efficiency programs. The author states that the five year interval would provide more time to allow the CPUC to thoroughly conduct the assessment. However, five years may be too long, especially in light of the state’s goals to double our energy savings, as adopted in SB 350 (De León, Chapter 547, Statutes of 2015) and the author’s desire to have the energy efficiency programs incorporate the latest knowledge and technologies. Instead the author and committee may wish to amend this bill to require the assessment every four years, thereby providing an additional year over today’s three year interval, but not waiting five years.

Funding Fuel-Switching Projects. According to the author, the CPUC has requested this language to address the needs of low-income electric ratepayers in some San Joaquin Valley communities who lack natural gas infrastructure and, therefore, must heat their water and home with propane or wood. AB 2672 (Perea, Chapter 616, Statutes of 2014) requires the CPUC by March 31, 2015, to initiate a new proceeding to identify disadvantaged communities in the San Joaquin Valley meeting specified criteria to analyze economically feasible options to increase access to affordable energy in those communities. The CPUC initiated a proceeding and has adopted Phase I, which primarily focused on identifying the communities and identifying possible programs to address the needs. From the Phase I Decision, roughly 29,000 households in the San Joaquin Valley were identified that completely lack access to natural gas service and use propane or wood, which can be more expensive than natural gas and electricity, and potentially produce more GHG emissions and local air pollution. The CPUC has initiated a Phase II proceeding to thoroughly vet how the affordable energy needs might be addressed, including through the use of existing programs, such as ESA.

ESA and Fuel-Switching. ESA has a budget of close to $400 million per year.  Currently under ESA program, eligible low-income customers are qualified to receive fuel-substitution measures (i.e. natural gas to electricity or electricity to natural gas), so long as the measure meets the three-prong test.^[4]

The three-prong test requires that a measure:

• Does not increase source-BTU consumption
• Must have a Total Resources Cost (TRC) or Program Administrator Test cost effectiveness benefit-cost ratio of 1.0 or greater; and
• Must not adversely impact the environment.

However, the program currently does not allow an eligible low-income customer that receives electric service from an IOU, and who uses propane or wood for other end-uses, to qualify for efficient electric end-use devices, such as an electric water heater or heat pump since these would result in increasing the energy load, instead of reducing it. The CPUC energy efficiency manual states that fuel substitution program/measures/projects with a predominantly load building or load retention character are not eligible for funding. As a result, the language related to provisions that would allow for fuel-switching are unclear and could open a Pandora’s Box by allowing GHG emissions and air quality benefits to be driving consideration for funding projects, resulting in an expansion of the ESA program in a manner that is inconsistent with the goals of the program. On the other hand, there may be other sources of funding that would be better-suited for this effort, possibly including revenues from the state’s GHG emissions reduction fund which already funds weatherization efforts for the purpose of reducing GHG emissions in disadvantaged communities. Furthermore, the Phase II of the CPUC’s proceeding has only just begun and should be allowed to continue in order to fully explore all available options for affordable energy to these residents. Therefore, the language in this bill may be premature, the author and committee may wish to amend this bill to delete the language related to funding fuel switching projects.

Latest Technology. The author contends that the energy efficiency programs are lagging in providing updated information and technology, noting as an example the delay in implementing LED light bulbs. IOUs file applications with the CPUC on three-year cycles for approval of programs and funding of low-income energy efficiency. The last applications were filed in 2014 for the 2015-17 program cycle. However, those applications were not approved by the CPUC until November of 2016. By that time, the CPUC adopted a new three-year cycle and provided authority for 2017-2020. This decision cycle may explain the delay in updating recent technologies in the low-income arena. Additionally, IOUs can file advice letters with the CPUC between program cycle authorizations. This administrative tool avoids lengthy proceedings and allows the utilities to make modest changes in programs with public notice, while gaining CPUC approval in a matter of weeks or a few months. However, the language currently proposed in this bill is largely consistent with those efforts.

Effect on Ratepayers. The changes to ESA proposed in this bill, including: allowing for the use of the latest technologies and allowing for consideration of GHG emissions and benefits to air quality, can affect the costs of the program’s budget. ESA has a budget of close to $400 million, however, in 2015 there was $112 million remaining unused, while in 2013 the budget went over by roughly $635 thousand. Therefore, in order to minimize the impact on ratepayers, the changes regarding the latest technologies may yield less impact, as they are consistent with the current approach of the program. While the fuel switching provisions could have a greater impact on expanding the program budget.

Technical Amendments. The author and committee may wish to amend this bill to provide consistency with the program with technical amendments, such as replacing words such as “in-need” with “low-income.”

Prior/Related Legislation

AB 2672 (Perea, Chapter 616, Statutes of 2014) required the CPUC by March 31, 2015, to initiate a new proceeding to identify disadvantaged communities in the San Joaquin Valley meeting specified requirements and to analyze economically feasible options to increase access to affordable energy in those disadvantaged communities.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

The Utility Reform Network

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to the author:

AB 803 requires the CPUC to issue its assessment of the California Alternate Rates for Energy (CARE) and the Energy Savings Assistance (ESA) programs every five years. This will help ensure the CPUC collects, analyzes and puts forth the most thorough and comprehensive assessment of the CARE and ESA programs.

Furthermore, AB 803 requires the CPUC to ensure that its proceeding schedule does not limit an electrical or gas corporation’s ability to accomplish the ESA’s statuary goals. Gas and electrical corporations will be allowed to install measures that reflect the most current and relevant technologies available.

-- END --

1. SB X2-2 (Alarcon, 2001) ↑

2. CPUC D.12-08-044 ↑

3. 2013—http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M100/K255/100255063.PDF & 2016—http://www.cpuc.ca.gov/iqap/ ↑

4. CPUC Energy Efficiency Policy Manual,V.5., July 2013. pps. 24-25. http://www.cpuc.ca.gov/uploadedFiles/CPUC_Public_Website/Content/Utilities_and_Industries/Energy_-_Electricity_and_Natural_Gas/EEPolicyManualV5forPDF.pdf ↑

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 803 (Quirk) - Energy: low-income energy efficiency programs

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 803 requires the California Public Utilities Commission (CPUC) to prepare the statutorily-required Low-Income Needs Assessment every five years, instead of every three years, and expands the assessment to also consider whether available technologies adequately address the needs of low-income electricity and gas customers and the overall participation rates of low-income customers in existing low-income programs for which they are eligible.

Fiscal Impact:

• Minor costs to the CPUC to conduct the review as required in the bill.
• Potentially significant cost pressures to redirect funds based on the findings of the needs assessment.

Background:

Existing law. Under existing law, the CPUC is required to conduct a triennial assessment of low income ratepayers’ needs of low-income ratepayers’ needs every three years. The assessment must evaluate low-income program implementation, the effectiveness of weatherization services and energy efficiency measures installed, and whether existing programs adequately address low-income customer burdens.

The CPUC must ensure also ensure that, by December 31, 2020, all eligible low-income customers are given the opportunity to participate in energy efficiency programs. All measure installed and services provided must consider cost-effectiveness and hardship reduction of the projects. The Low-Income Oversight Board advises the CPUC on low-income customer issues and serves as a liaison for the CPUC to low-income ratepayers.

Energy Efficiency Strategic Plan. On Sept. 18, 2008, the CPUC adopted California’s first “Long Term Energy Efficiency Strategic Plan,” a roadmap to achieve maximum energy savings in California. Specific attention was given to the needs of low-income customers, including the declaration that all eligible low-income customers will have the opportunity to participate in the LIEE program by 2020.”

Low-Income Needs Assessment. California IOUs provide no-cost services and reduced rates to income-qualified customers to alleviate their energy cost burden. In IOU territory, services are delivered through the Energy Savings Assistance (ESA) and the California Alternate Rates for Energy (CARE) Programs. In 2001 the Legislature mandated the CPUC to conduct, and periodically update, an assessment low-income ratepayers needs. The mandate was later changed to require the CPUC to conduct the assessment every three years due significant economic changes that occurred in the five years between one set of assessments.

California’s Low income energy efficiency programs. Federal and state statute authorize numerous programs intended to reduce low-income households’ energy use and costs, and improve their health, comfort, and the safety of their home. These are generally administered by local energy service providers and overseen by the California Department of Community Services and Development, the CPUC, or the California Energy Commission. The table below outlines the state’s Low-income Energy Efficiency programs and solar programs.

Low Income Energy Efficiency Programs

* In the County of Los Angeles for a family of 4.

Proposed Law:

This bill requires the California Public Utilities Commission (PUC) to prepare the Low-Income Needs Assessment every five years instead of every three years, and expands the assessment to include information regarding whether available technologies adequately address the needs of low-income electricity and gas customers and the overall participation rates of low-income customers in existing low-income programs for which they are eligible.

Staff Comments:

Purpose of the bill. According to the author, AB 803 requires the PUC to issue its needs assessment every five years. This will help ensure the PUC collects, analyzes and puts forth the most thorough and comprehensive assessment of its low-income programs. Furthermore, AB 803 requires the CPUC to ensure that its proceeding schedule does not limit an electrical or gas corporation’s ability to accomplish the Energy Savings Assistance (ESA’s) Program's statutory goals. Gas and electrical corporations will be allowed to install measures that reflect the most current and relevant technologies available.”

-- END --

Date of Hearing: May 24, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 803

Author:(Quirk) – As Amended Ver:April 25, 2017

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires the California Public Utilities Commission (PUC) to prepare the Low-Income Needs Assessment every five years instead of every three years, and expands the assessment to include information regarding whether available technologies adequately address the needs of low-income electricity and gas customers and the overall participation rates of low-income customers in existing low-income programs for which they are eligible.

FISCAL EFFECT:

No additional state costs.

COMMENTS:

1. Purpose. According to the author, AB 803 requires the PUC to issue its needs assessment every five years. This will help ensure the PUC collects, analyzes and puts forth the most thorough and comprehensive assessment of its low-income programs. Furthermore, AB 803 requires the CPUC to ensure that its proceeding schedule does not limit an electrical or gas corporation’s ability to accomplish the Energy Savings Assistance (ESA’s) Program's statutory goals. Gas and electrical corporations will be allowed to install measures that reflect the most current and relevant technologies available.”
2. Background. California investor-owned utilities (IOUs) provide no-cost services and reduced rates to income-qualified customers to alleviate their energy burden. These services are delivered through the ESA and California Alternate Rates for Energy (CARE) Programs. In 2001, the Legislature required the PUC to conduct an assessment of the needs of low-income electricity and gas ratepayers, and update the assessment “periodically.”

By 2013, the gap between assessments was five years, by which time the “economic conditions facing California and the energy market” had changed substantially. That same year, the Legislature passed AB 327 (Perea), Chapter 611, Statutes of 2013, which required the assessment to be updated, at minimum, every three years. Since that time two assessments have been conducted on behalf of the PUC and the IOUs.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 19, 2017

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Chris Holden, Chair

ABPCA Bill Id:AB 803 (

Author:Quirk) – As Amended Ver:April 4, 2017

SUBJECT: Energy: low-income energy-efficiency programs: weatherization

SUMMARY: Expands the timeline and requirements of the Low-Income Needs Assessment (assessment) prepared by the California Public Utilities Commission (CPUC), and requires investor-owned utilities (IOUs) to use available technologies in low-income energy efficiency programs. Specifically, this bill:

1. Increases the timeline of the assessment from three years to five years and expands the scope of the assessment to include whether available technologies adequately address the needs of low-income customers, and to measure the overall participation rates of low-income customers. Requires the assessment to set a goal of 90 percent participation by low-income customers.
2. Repeals the requirement that the CPUC ensure that all eligible low-income customers are given the opportunity to participate in low-income energy efficiency programs by December 31, 2020.
3. Requires that low-income energy efficiency programs provide the most current and relevant available knowledge and technologies and that the IOUs are not limited by the CPUC’s proceeding schedule in providing the most current and relevant technologies in low-income energy efficiency programs.

EXISTING LAW:

1. Mandates the CPUC to conduct an assessment of the needs of low-income electricity and gas ratepayers every three years. The assessment shall evaluate low-income program implementation and the effectiveness of weatherization services and energy efficiency measures in low-income households, and whether existing programs adequately address low-income customer burdens. (Public Utilities Code §382)
2. Requires the CPUC to ensure that, by December 31, 2020, all eligible low-income customers are given the opportunity to participate in energy efficiency programs. (Public Utilities Code §382)
3. Mandates the CPUC to require the IOUs to perform home weatherization services for low-income customers, with consideration given to cost-effectiveness and hardship reduction of the projects. (Public Utilities Code §2790)
4. Creates a Low-Income Oversight Board (LIOB) to advise the CPUC on low-income electric and gas customer issues and to serve as a liaison for the CPUC to low-income ratepayers. (Public Utilities Code §382.1)

FISCAL EFFECT: This bill is keyed fiscal and will be referred to the Appropriations Committee for its review of the fiscal effect of this bill.

BACKGROUND:

Energy Efficiency Strategic Plan. On Sept. 18, 2008, the CPUC adopted California’s first “Long Term Energy Efficiency Strategic Plan,” presenting a single roadmap to achieve maximum energy savings across all major groups and sectors in California. The Strategic Plan was subsequently updated in January 2011 to include a lighting chapter. This comprehensive plan for 2009 to 2020 is the state’s integrated framework of goals and strategies for saving energy, covering government, utility, and private sector actions, and holds energy efficiency to its role as the highest priority resource in meeting California’s energy needs.

Specific attention was given to the needs of low-income customers. A critical element of the plan was that “All eligible low-income customers will have an opportunity to participate in the LIEE program and will be provided all cost-effective energy efficiency measures in their residences by 2020.” The IOUs were directed to approach the goal through two broad efforts: marketing, education, and outreach, and workforce, education, and training. Additionally, the IOUs were directed to “target outreach efforts based on four customer profile segments: geography, demographic description (e.g., language preference), social networks; and level of energy use.”

Low-Income Needs Assessment. California IOUs provide no-cost services and reduced rates to income-qualified customers to alleviate their energy burden. These services are delivered through the Energy Savings Assistance (ESA) and California Alternate Rates for Energy (CARE) Programs. In 2001^[1] the Legislature mandated the CPUC to conduct an assessment of the needs of low-income electricity and gas ratepayers, and update the assessment “periodically.” By 2013 the gap between assessments was five years, by which time the “economic conditions facing California and the energy market” had changed substantially.^[2] That same year, the Legislature passed AB 327 (Perea) which mandated the assessment be updated, at minimum, every three years. Since that time two assessments^[3] have been conducted on behalf of the CPUC and the IOUs. The findings and recommendations in the assessment are intended to provide information used to plan and implement the next cycle of low-income energy efficiency programs, the ESA and CARE. In the most recent assessment, the CPUC sought to understand energy affordability among low-income customers, specific subpopulations especially burdened or neglected by current program outreach, and whether lack of income documentation limited program participation.

Energy Savings Assistance (ESA) Program. ESA is offered by all IOUs and provides no-cost weatherization, energy efficient appliances, and energy education services to low-income households that meet the income and program guidelines. Services provided may include attic insulation, energy efficient refrigerators, evaporative coolers, air conditioners, weather stripping, caulking, low-flow showerheads, water heater blankets, and door and building envelope repairs. The program also provides referrals to other income-qualified programs. The program’s objective is to help income-qualified customers reduce their energy consumption and costs while increasing their health, comfort, and safety in the home. The ESA Program provides services to both qualified renters and homeowners, in all housing types. Most recently, the CPUC approved approximately $195 million for six months of the 2016 ESA program year via bridge funding .^[4]

COMMENTS:

1. Author’s Statement. According to the author’s office, “California recognizes that electricity is a basic necessity, and that all residents should be able to afford essential electricity and gas supplies. As a result, the CPUC is statutorily obligated to conduct a needs assessment for low-income customers every three years. The assessment considers whether existing programs are adequately addressing low-income customers’ energy needs and burdens. Initially, the scope of the needs assessment was narrow, but over the years the purpose has expanded to include best measures, installment of measures, and budgeting of the program. Due to the expanded scope and massive amount of data that needs to be collected and analyzed, it is difficult for the CPUC to make a thorough and comprehensive assessment and issue a decision under the current three year framework. Further, electrical and gas corporations are only allowed to weatherize homes using the tools and technology explicitly expressed in the CPUC decision. If a new, more efficient, technology emerges during, or after the assessment has concluded, it cannot be included among the energy efficient weatherization measures that electrical and gas corporations can install into customers’ homes.

AB 803 requires the CPUC to issue its needs assessment every five years. This will help ensure the CPUC collects, analyzes and puts forth the most thorough and comprehensive assessment of its low-income programs. Furthermore, AB 803 requires the CPUC to ensure that its proceeding schedule does not limit an electrical or gas corporation’s ability to accomplish the ESA’s statutory goals. Gas and electrical corporations will be allowed to install measures that reflect the most current and relevant technologies available.”

1. Assessment Changes. This bill proposes the assessment timeline be extended from every three years to every five. The author opines the current assessment timeline results in reports that restate old findings and omit analysis of current technologies. He suggests this extra time will free up more research funds at the CPUC to allow for more comprehensive program evaluations.
   
   Two assessments have been completed since the three-year timeline was mandated by the Legislature in 2013 and each examined different data and asked slightly different questions to assess program impacts. For example, the 2013 report examined specific energy efficiency measures – refrigeration, light bulbs, sealant—in addressing customer energy needs; the 2016 report did not. However, both assessments focused on barriers to program participation, such as household energy burdens and program accessibility for specific sub-populations. The author’s opinion that a change in assessment timelines will result in more comprehensive assessments may not be supported by the last two assessments. When assessments were changed to three-year cycles in 2013, the Legislature did so in order to keep evaluations up-to-date with the “economic conditions facing California and the energy market.” It is important to note that the current three-year evaluation timeline complements the three-year period funding cycle of the low-income programs.
2. New Participation Goal. This bill eliminates the requirement in current law that all eligible low-income electricity and gas customers are given the “opportunity to participate” in low-income energy efficiency programs by 2020. The author appears to intend that the CPUC instead establish a goal of 90% participation of low-income customers in weatherization and energy efficiency programs by an unspecified date.
   
   This “opportunity by 2020” goal was established by the CPUC in 2008 and updated in 2011 as part of its strategic plans for energy efficiency. Although an actual 90% participation rate would be tremendous, it has not been shown to be feasible. As counter-intuitive as it may sound, some customers refuse no-cost weatherization and energy efficiency services making a participation mandate impossible for the IOUs at this time. The reasons are varied but include, (1) privacy and an unwillingness to let service representatives into their homes and, (2) in the rental arena many landlords cannot be found or refuse to allow services to be performed on their property.

Based on the CPUC’s strategic plans for energy efficiency and challenges and feasibility of achieving 90% participation, the committee may wish to strike the participation goal from the bill and reinstate the goal of providing all customers with an opportunity to participate by 2020.

1. Slow Technology Adoption? This bill adds a provision requiring IOUs to use the most “current and relevant available knowledge and technologies, where applicable” in low-income weatherization projects, while mandating the CPUC to “ensure its proceeding schedule does not limit” the IOU’s ability to provide these measures. The author’s staff point to the slow implementation of LED light bulbs as an example of slow CPUC timelines disabling implementation of the most current technologies.
   
   The IOUs file applications with the CPUC on three-year cycles for approval of programs and funding of low-income energy efficiency. The last applications were filed in 2014 for the 2015-17 program cycle. However, those applications were not approved by the CPUC until November of 2016. By that time, the CPUC adopted a new three-year cycle and provided authority for 2017-2020. This decision cycle may explain the delay in updating recent technologies in the low-income arena. Additionally, IOUs can file advice letters with the CPUC between program cycle authorizations. This administrative tool avoids lengthy proceedings and allows the utilities to make modest changes in programs with public notice, while gaining CPUC approval in a matter of weeks or a few months. The Utility Reform Network (TURN) writes in support of this bill noting that the CPUC specifically called for the IOUs to submit measures for program review and approval half-way through the current 2017-2020 funding cycle. However, every endeavor should be made to keep technologies offered in the program not only current but also feasible and cost-effective which is not referenced in this provision. The committee may wish to consider an amendment to the bill clarifying the current technologies are also feasible and cost effective.

REGISTERED SUPPORT / OPPOSITION:

Support

The Utility Reform Network

Opposition

None on file.

Analysis Prepared by: Laura McWilliams / U. & E. /

1. SB X2-2 (Alarcon, 2001) ↑

2. CPUC D.12-08-044 ↑

3. 2013—http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M100/K255/100255063.PDF & 2016—http://www.cpuc.ca.gov/iqap/ ↑

4. D.16-06-018 ↑