Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law requires the commission to continue a program of assistance to residential customers of the states 3 largest electrical corporations consisting of households of 3 or more persons with total household annual gross income levels between 200% and 250% of the federal poverty guideline level, which is referred to as the Family Electric Rate Assistance (FERA) program.

This bill would expand eligibility for the FERA program by eliminating the requirement that a household consist of 3 or more persons. The bill would require the commission, by March 1, 2025, and each year thereafter, to require the states 3 largest electrical corporations to report on their efforts to enroll customers in the FERA program. The bill would require the commission, by June 1, 2025, and each year thereafter, to review each electrical corporations report to ensure it has made reasonable efforts to enroll eligible households in the FERA program commensurate with the proportion of households the commission determines to be eligible within the electrical corporations service territory. If the commission, in its review of a report, determines an electrical corporation has not made reasonable efforts to enroll eligible households in the FERA program, the bill would require the commission to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within 3 years of the adoption of the strategy and plan.

Existing law requires the commission to develop a process that enables electrical and gas customers to concurrently apply, or begin to apply, to multiple low-income customer assistance programs, including the California Alternate Rates for Energy (CARE) program and the FERA program. Existing law requires that the process complement, rather than replace, other application processes.

This bill would expressly authorize electrical corporations to market enrollment for the FERA program separately from the CARE program and provide a separate FERA program-only application form.

Under existing law, a violation of the Public Utilities Act, or any order, decision, rule, direction, demand, or requirement of the commission, is a crime.

Because the provisions of this bill would be codified in the act and would require action by the commission, a violation of which would be 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.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law requires the commission to continue a program of assistance to residential customers of the states 3 largest electrical corporations consisting of households of 3 or more persons with total household annual gross income levels between 200% and 250% of the federal poverty guideline level, which is referred to as the Family Electric Rate Assistance (FERA) program.

This bill would expand eligibility for the FERA program by eliminating the requirement that a household consist of 3 or more persons. The bill would require the commission, by March 1, 2025, and each year thereafter, to require the states 3 largest electrical corporations to report on their efforts to enroll customers in the FERA program. The bill would require the commission, by June 1, 2025, and each year thereafter, to review each electrical corporations report to ensure it has made reasonable efforts to enroll eligible households in the FERA program commensurate with the proportion of households the commission determines to be eligible within the electrical corporations service territory. If the commission, in its review of a report, determines an electrical corporation has not made reasonable efforts to enroll eligible households in the FERA program, the bill would require the commission to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within 3 years of the adoption of the strategy and plan.

Existing law requires the commission to develop a process that enables electrical and gas customers to concurrently apply, or begin to apply, to multiple low-income customer assistance programs, including the California Alternate Rates for Energy (CARE) program and the FERA program. Existing law requires that the process complement, rather than replace, other application processes.

This bill would expressly authorize electrical corporations to market enrollment for the FERA program separately from the CARE program and provide a separate FERA program-only application form.

Under existing law, a violation of the Public Utilities Act, or any order, decision, rule, direction, demand, or requirement of the commission, is a crime.

Because the provisions of this bill would be codified in the act and would require action by the commission, a violation of which would be 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.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law requires the commission to continue a program of assistance to residential customers of the states 3 largest electrical corporations consisting of households of 3 or more persons with total household annual gross income levels between 200% and 250% of the federal poverty guideline level, which is referred to as the Family Electric Rate Assistance or FERA (FERA) program.

This bill would expand eligibility for the FERA program by eliminating the requirement that a household consist of 3 or more persons. The bill would require the commission, by March 1, 2025, and each year thereafter, to require the states 3 largest electrical corporations to report on their efforts to enroll customers in the FERA program. The bill would require the commission, by June 1, 2025, and each year thereafter, to review each electrical corporations report to ensure it has sufficiently enrolled made reasonable efforts to enroll eligible households in the FERA program commensurate with the proportion of households the commission determines to be eligible within the electrical corporations service territory. If the commission, in its review of a report, determines an electrical corporation has not sufficiently enrolled made reasonable efforts to enroll eligible households in the FERA program, the bill would require the commission to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within 3 years of the adoption of the strategy and plan.

Under existing law, a violation of the Public Utilities Act, or any order, decision, rule, direction, demand, or requirement of the commission, is a crime.

Because the provisions of this bill would be codified in the act and would require action by the commission, a violation of which would be 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.

Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations. Existing law requires the commission to continue a program of assistance to residential customers of the states 3 largest electrical corporations consisting of households of 3 or more persons with total household annual gross income levels between 200% and 250% of the federal poverty guideline level, which is referred to as the Family Electric Rate Assistance or FERA program.

This bill would expand eligibility for the FERA program by eliminating the requirement that a household consist of 3 or more persons. The bill would require the commission, by March 1, 2025, and each year thereafter, to require the states 3 largest electrical corporations to report on their efforts to enroll customers in the FERA program. The bill would require the commission, by June 1, 2025, and each year thereafter, to review each electrical corporations report to ensure it has sufficiently enrolled eligible households in the FERA program commensurate with the proportion of households the commission determines to be eligible within the electrical corporations service territory. If the commission, in its review of a report, determines an electrical corporation has not sufficiently enrolled eligible households in the FERA program, the bill would require the commission to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within 3 years of the adoption of the strategy and plan.

Under existing law, a violation of the Public Utilities Act, or any order, decision, rule, direction, demand, or requirement of the commission, is a crime.

Because the provisions of this bill would be codified in the act and would require action by the commission, a violation of which would be 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.

 UNFINISHED BUSINESS  

Bill No: SB 1130

Author: Bradford (D)

Introduced: 8/22/24

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 15-0, 3/19/24

AYES: Bradford, Dahle, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, Limón, Min, Newman, Rubio, Skinner, Stern

NO VOTE RECORDED: Grove, Seyarto, Wilk

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/16/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

SENATE FLOOR: 35-3, 5/20/24

AYES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Laird, Limón, McGuire, Menjivar, Newman, Nguyen, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NOES: Jones, Niello, Seyarto

NO VOTE RECORDED: Min, Ochoa Bogh

ASSEMBLY FLOOR: 71-0, 8/26/24 - See last page for vote

SUBJECT: Electricity: Family Electric Rate Assistance program

SOURCE: Author

DIGEST:

This bill expands eligibility for an existing electric utility bill discount program to households with fewer than three members and requires specified reporting by electrical corporations about enrollment in the program.

Assembly Amendments

make clarifying changes and authorize electrical corporations to market enrollment for the utility bill discount program separately and provide a separate application form.

ANALYSIS:

Existing law:

1. Requires the California Public Utilities Commission (CPUC) to ensure that low-income ratepayers are not jeopardized or overburdened by monthly energy expenditures. (Public Utilities Code §382)
2. 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 §739.1)
3. Requires the CPUC to continue a program of assistance to residential customers of the state’s three largest electrical corporations consisting of households of three or more persons with total household annual gross income levels between 200 percent and 250 percent of the federal poverty guideline level, which is referred to as the Family Electric Rate Assistance (FERA) program. Requires the FERA program discount to be an 18 percent line-item discount applied to an eligible customer’s bill calculated at the applicable rate for the billing period. (Public Utilities Code §739.12)
4. Requires the CPUC to develop a process that enables electrical and gas customers to concurrently apply, or begin to apply, to multiple low-income customer assistance programs, including the CARE program and the FERA program. Requires that the process complement, rather than replace, other application processes. (Public Utilities Code §731)

This bill:

1) Expands eligibility for the FERA program by eliminating the requirement that a household consist of three or more persons, thereby allowing households with one or two persons to also be eligible for the program.

2) Requires the CPUC, by March 1, 2025, and each year thereafter, to require the state’s three largest electrical corporations to report on their efforts to enroll customers in the FERA program.

3) Requires the CPUC, by June 1, 2025, and each year thereafter, to review each electrical corporation’s report to ensure it has made reasonable efforts to enroll eligible households in the FERA program commensurate with the proportion of households the CPUC determines to be eligible within the electrical corporation’s service territory.

1. Requires the CPUC, if in its review of the report determines an electrical corporation has not made reasonable efforts to enroll eligible households in the FERA program, to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within three years of the adoption of the strategy and plan.
2. Authorizes electrical corporations to market enrollment for the FERA program separately from the CARE program and provide a separate FERA program-only application form.

Background

1. Electric Utility Customer Rate Assistance Programs. California customers of investor-owned electric utilities with qualifying incomes can receive utility bill assistance, most notably under two key programs, CARE and FERA.
   1. CARE. Existing law requires the CPUC to establish the CARE program, which provides assistance to low-income customers, defined as those with annual household incomes less than 200 percent of federal poverty guideline levels, of electric (and natural gas) investor-owned utilities (IOUs). The cost of this program is spread across multiple classes of customers. AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers, including directing the CPUC to establish rates for the CARE program customers of the large IOUs. The set rates must effectively give a discount between 30 percent and 35 percent to eligible customers of electrical corporations with 100,000 or more customer accounts. Electrical corporations with fewer than 100,000 customer accounts offer a 20 percent discount. Customers may also be eligible for CARE if they are enrolled in public assistance programs, such as: Medicaid/Medi-Cal, Women, Infant, Children Program (WIC), Healthy Families A&B, National School Lunch’s Free Lunch Program, Food Stamps/SNAP, Low Income Home Energy Assistance Program, Head Start Income Eligible, Supplemental Security Income, Bureau of Indian Affairs General Assistance, and Temporary Assistance for Needy Families (TANF). CARE enrollment participation rates are generally in the 80 percent or more of the eligible population for most of the energy utilities. CARE customers also qualify for energy savings assistance program which provides subsidized weatherization and other energy efficiency upgrades to help reduce a CARE customer’s overall energy load.

• 1. FERA. Families whose household income slightly exceeds the CARE allowance (those whose income falls above 200 percent and up to 250 percent of federal poverty guidelines) qualify to receive the FERA discount. FERA applies an 18 percent line-item discount to customers of the state’s three largest electric utilities – Southern California Edison (SCE), San Diego Gas and Electric Company (SDG&E), and Pacific Gas & Electric Company (PG&E). FERA was originally established through a CPUC decision as a 12 percent line-item discount on electric utility bills to help families whose incomes fall just above the income eligibility for CARE, but which likely still experience hardships paying their utility bills.

1. SB 1135 (Bradford, Chapter 413, Statutes of 2018) codified the FERA program in the statutes and increased the discount from 12 percent to 18 percent for households with qualifying incomes. The bill also required the three electric utilities to increase marketing and outreach for the program.

1. FERA participation rates. FERA enrollment participation rates are significantly lower across the board for all three IOUs as compared to CARE. Based on reports submitted to the CPUC in April 2023, citing research conducted by Athens Research estimating the eligible customers for CARE and FERA compared to eligible customers as of December 2022, enrollment in the CARE program was over 100 percent for both PG&E and SDG&E and 91 percent for SCE. In contrast, estimated enrollment participation rates for the FERA program ranged from 11.7 to 28 percent among the three IOUs, specifically: SDG&E at 28.0 percent, PG&E at 22.4 percent, and SCE at 11.7 percent. (Noted in the table below.)

Comments

1. FERA participation rate has shown a slight increase, but remains low. FERA participation penetration rates have shown an increase for all three IOUs since the numbers were reported when SB 1135 was being considered in 2018. At that time the utilities reported FERA penetration rates ranging from 8 to 16 percent. Specifically, PG&E at 16 percent, SDG&E at 18 percent, and SCE at 8 percent. As such, the overall participation penetration rate for the FERA program has increased from 12.5 percent reported in 2018 to 17.4 percent based on the numbers provided in 2023. However, there is a large gap between customers who may be eligible for the FERA discount and customers who are enrolled in the program.
2. Electricity utility bills continue trending higher. Californians have generally enjoyed lower energy bills when compared to the rest of the country, largely due to milder weather and investments in energy efficiency, even as electric rates have been higher than many other states. However, in more recent years, these trends have been changing as California’s higher energy rates are also resulting in higher energy utility bills. Affordable energy utility bills was the topic of an oversight hearing by this committee last month. Members raised concerns from residents about the increasing costs of energy utility bills, particularly those in PG&E service territory. These impacts have been exacerbated by the COVID-19 pandemic, and compounded by recent inflation and supply shortages on most goods and services.
3. Expanding FERA program to households with fewer than three members. Currently, the FERA program only serves customers of the three large electric IOUs in households with three or more persons whose household income falls under 250 percent of the federal poverty guidelines. SB 1130 proposes to expand the eligibility for the FERA program to allow households with fewer than three members to participate in the program. By expanding the FERA program, as proposed by this bill, income-eligible customers who are struggling to pay their utility bills could receive the 18 percent line-item discount, regardless if there household has less than three members. Several supporters of this bill, including AARP California, The Utility Reform Network (TURN), Marin County Energy (MCE), and Western Center on Law & Poverty, note the important benefit that these struggling residents could receive through this change given the existing financial struggles. TURN notes that about one-fifth of customers are behind on their energy utility bill. An expansion of FERA may be able to help these customers better afford their bills.
4. Income-graduated fixed charge. Earlier this year, the CPUC adopted an income-graduated fixed charge on electric IOU bills as authorized by AB 205 (Committee on Budget, Chapter 61, Statutes of 2022). AB 205 requires the CPUC to structure the default income graduated fixed charge for “no fewer than three income thresholds so that low-income customers in each baseline territory would realize a lower average residential monthly bill without making changes in usage.” Importantly, the statute explicitly prohibits the discount on the fixed charge to be included as part of the CARE discount, but makes no similar treatment for the FERA discount. The CPUC decision incorporates three income tiers that would be charged varying amount on the fixed charge. Specifically, CARE customers would be $6 per month, FERA customers and those in deed-restricted housing would be charged $12 per month, and the remaining customers would be charged $24 per month.
5. Impacts to ratepayers. By expanding the eligibility for the FERA program, as proposed by this bill, the costs to non-CARE and non-FERA customers may increase as the discount provided must be recovered from all other customers. Given the low participation rates in FERA, it’s unclear how much of an additional cost to other customers would be anticipated. However, given the FERA enrollment results in a lower fixed-charge, per the CPUC’s recent decision, subscription in the program should grow to better reflect the proportion of eligible customers.

Related/Prior Legislation

AB 205 (Committee on Budget, Chapter 61, Statutes of 2022) among its many provisions, included language that prohibits the CPUC from including discounts on fixed charges in the average effective discount for CARE.

SB 1135 (Bradford, Chapter 413, Statutes of 2018) codified the requirements of an existing low-income electric rate discount program, known as the FERA program, for eligible customers of the state’s three largest electrical corporations and increased the program discount from 12 percent to 18 percent line-item discount on a customer’s electric utility bill.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers, including directing the CPUC to establish a discount between 30 percent and 35 percent to eligible customers of the large IOUs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Assembly Committee on Appropriations, the CPUC would need to review annually each IOU’s FERA enrollment report and, if necessary, establish enrollment targets and ensure IOU implementation of enrollment plans. The CPUC expects to dedicate to these efforts one regulatory analyst, at an ongoing annual cost of $210,000, as well as a cost of $250,000 for each of three years (Public Utilities Commission Utilities Reimbursement Account).

SUPPORT: (Verified 8/22/24)

AARP California

California Solar & Storage Association

Cities Association of Santa Clara County

Clean Power Alliance

Marin Clean Energy

Peninsula Clean Energy

Sonoma Clear Power

The Greenlining Institute

The Utility Reform Network

Western Center on Law & Poverty

OPPOSITION: (Verified 8/22/24)

None received

ARGUMENTS IN SUPPORT: In support of this bill, AARP California expresses particular interest in this bill’s proposal to eliminate the existing requirements on FERA eligibility that a household consists of three or more persons. AARP California writes:

…SB 1130, which will help many Californians, particularly those who live on their own, afford their energy bills, at a time of skyrocketing electric and gas rates…As California’s Master Plan for Aging notes, nearly two million Californians over 60 live alone, and that number is expected to grow exponentially in the coming years… AARP believes that affordable, reliable, and sustainable energy is essential to health, safety, and well-being. SB 1130, which connects more older adults on fixed incomes to energy assistance programs like FERA, is essential to meeting these policy goals and principles.

Writing in support of this bill, The Utility Reform Network (TURN) states:

…Californians are facing a utility bill affordability crisis and one in five households are behind on their bills. SB 1130 would expand the eligibility criteria for the FERA Program and require the state’s three largest investor-owned utilities to report on their efforts to enroll customers in the FERA program. This expands the assistance available to customers who may not be eligible for CARE but still need support to keep the lights on.

ASSEMBLY FLOOR: 71-0, 8/26/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Pacheco, Papan, Jim Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Cervantes, Megan Dahle, Dixon, Essayli, Gallagher, Mathis, Ortega, Joe Patterson

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

8/27/24 12:23:19

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1130

Author:(Bradford)

As Amended Ver:August 22, 2024

Majority vote

SUMMARY

Expands eligibility for the Family Electric Rate Assistance (FERA) discount program by eliminating the requirement that a household consist of three or more persons, and requires electrical corporations to make specified reporting about enrollment in the program.

Major Provisions

1. Specifically, this bill requires the state''s three largest electrical corporations to report on their efforts to enroll customers in the FERA program by March 1, 2025, and each year after.
2. Authorizes electrical corporations to market enrollment for the FERA program separately from the California Alternate Rates for Energy (CARE) program.
3. Clarify that a separate FERA program-only application form can be used for enrollment purposes.
4. Reduces the new burden threshold on electrical corporations to enroll customers by changing "sufficiently enrolled" to "made reasonable efforts to enroll."

COMMENTS

Low-Income Affordability Programs: CARE and FERA. California Alternate Rates for Energy (CARE) Program was established by the California Legislature in 1989 to provide financial assistance to low-income residential gas and electric customers. Eligibility for participation is set at 200% or less of Federal Poverty Guidelines. Existing statute restructured the rate design for residential electric customers, including directing the California Public Utilities Commission (CPUC) to adopt a fixed charge of no more than $5 for CARE customers. The set rates provide a discount between 30-35% to eligible customers of electrical corporations with 100,000 or more customer accounts. Electrical corporations with fewer than 100,000 customer accounts offer a 20% discount. In 2022, the CARE program provided an estimated $2.1 billion in annual subsidies and served about five million low-income customers statewide.

The FERA program was established by a CPUC decision in 2004 as the Lower Middle Income Large Household program for families of three or more persons. FERA is funded by a statutory "public purpose program surcharge" that appears on utility bills. This is an effort to help families who may have incomes that are just above the income eligibility for CARE, but who likely still experience hardships paying their utility bills. The program offers an 18% discount on electric bills if household income slightly exceeds CARE allowances (up to 250% of federal poverty). While these programs provide a helpful bill discount, they do not guarantee an affordable bill. Additional costs of the CARE and FERA subsidies are borne by all other utility customers, hence increasing the costs to non-participating ratepayers both residential and non-residential.

FERA Participation Rates. Unlike CARE, FERA enrollment participation rates are low across all three large IOUs. Based on the reports submitted to the CPUC in April 2023, estimated enrollment participation rates for the FERA program ranged from 11.7 to 28% among the three IOUs. Investor-owned utilities (IOUs) did not meet the 50% enrollment goal by 2023 and are exploring ways to increase program enrollment.

Impacts of the Bill. The CARE and FERA discounts are offered as a percentage of the customer's total bill, therefore as utility bills increase so do the costs associated with the CARE and FERA programs. In fact, the CPUC reports CARE program costs have been the primary driver of increases within the Public Purpose Program portion of the electric bill over the past few years. By expanding the eligibility for the FERA program, as this bill provides, the costs to non-CARE and non-FERA customers may increase as the discount provided must be recovered from all other customers. However, given the low FERA participation rates to date, it is unclear how much of an impact or cost this measure might have.

According to the Author

"California customers with qualifying incomes can receive energy utility bill assistance, under two key programs: CARE, the California Alternate Rates for Energy program, and FERA, the Family Electric Rate Assistance program. FERA is an effort to help families that might have incomes that are just above the income eligibility for CARE. Based on reports sent to the California Public Utilities Commission in 2023, enrollment in the CARE program was over 100% for both Pacific Gas & Electric and San Diego Gas & Electric and 91% for Southern California Edison. In contrast, PG&E estimated FERA enrollment in its service territory at 23%. In the same year, SDG&E and SCE reported their enrollment rates at 24% and 14% respectively. SB 1130 would fill this gap by expanding the eligibility criteria for the FERA Program and requiring the state's three largest investor-owned utilities to report on their efforts to enroll customers in the program."

Arguments in Support

This legislation is supported by local not-for-profit electricity providers, and rate payer advocacy groups among others. Specifically, The Utility Reform Network argues that, "Californians are facing a utility bill affordability crisis and one in five households are behind on their bills. SB 1130 would expand the eligibility criteria for the FERA Program and require the state's three largest investor-owned utilities to report on their efforts to enroll customers in the FERA program. This expands the assistance available to customers who may not be eligible for CARE but still need support to keep the lights on."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, the CPUC would need to review annually each IOU's FERA enrollment report and, if necessary, establish enrollment targets and ensure IOU implementation of enrollment plans. These efforts will need one regulatory analyst, at an ongoing annual cost of $210,000, as well as a cost of $250,000 for each of three years from the CPUC Reimbursement Account.

VOTES

SENATE FLOOR: 35-3-2

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Laird, Limón, McGuire, Menjivar, Newman, Nguyen, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NO: Jones, Niello, Seyarto

ABS, ABST OR NV: Min, Ochoa Bogh

ASM UTILITIES AND ENERGY: 15-0-1

YES: Petrie-Norris, Jim Patterson, Bauer-Kahan, Boerner, Calderon, Chen, Friedman, Hart, Holden, Reyes, Santiago, Ting, Wallis, Wood, Zbur

ABS, ABST OR NV: Joe Patterson

ASM APPROPRIATIONS: 12-0-3

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua

ABS, ABST OR NV: Dixon, Jim Patterson, Ta

UPDATED

VERSION: August 22, 2024

CONSULTANT: Lina Malova / U. & E. / (916) 319-2083 FN: 0004391

SENATE THIRD READING

STR Bill Id:SB 1130

Author:(Bradford)

As Introduced Ver:February 13, 2024

Majority vote

SUMMARY

Expands eligibility for the Family Electric Rate Assistance (FERA) discount program by eliminating the requirement that a household consist of 3 or more persons, and requires electrical corporations to make specified reporting about enrollment in the program.

Major Provisions

COMMENTS

Low-Income Affordability Programs: CARE and FERA. California Alternate Rates for Energy (CARE) Program was established by the California Legislature in 1989 to provide financial assistance to low-income residential gas and electric customers. Eligibility for participation is set at 200% or less of Federal Poverty Guidelines. Existing statute restructured the rate design for residential electric customers, including directing the California Public Utilities Commission (CPUC) to adopt a fixed charge of no more than $5 for CARE customers. The set rates provide a discount between 30-35% to eligible customers of electrical corporations with 100,000 or more customer accounts. Electrical corporations with fewer than 100,000 customer accounts offer a 20% discount. In 2022, the program provided an estimated $2.1 billion in annual subsidies and served about five million low-income customers statewide.

The FERA program was established by a CPUC decision in 2004 as the Lower Middle Income Large Household program for families of three or more persons. FERA is funded by a statutory "public purpose program surcharge" that appears on utility bills. This is an effort to help families who may have incomes that are just above the income eligibility for CARE, but who likely still experience hardships paying their utility bills. The program offers an 18% discount on electric bills if household income slightly exceeds CARE allowances (up to 250% of federal poverty). While these programs provide a helpful bill discount, they do not guarantee an affordable bill. Additional costs of the CARE and FERA subsidies are borne by all other utility customers, hence increasing the costs to non-participating ratepayers both residential and non-residential.

FERA Participation Rates. Unlike CARE, FERA enrollment participation rates are low across all three large IOUs. Based on the reports submitted to the CPUC in April 2023, estimated enrollment participation rates for the FERA program ranged from 11.7 to 28% among the three IOUs. Investor-owned utilities (IOUs) did not meet the 50% enrollment goal by 2023 and are exploring ways to increase program enrollment.

Impacts of the Bill. The CARE and FERA discounts are offered as a percentage of the customer's total bill, therefore as utility bills increase so do the costs associated with the CARE and FERA programs. In fact, the CPUC reports CARE program costs have been the primary driver of increases within the Public Purpose Program portion of the electric bill over the past few years. By expanding the eligibility for the FERA program, as this bill provides, the costs to non-CARE and non-FERA customers may increase as the discount provided must be recovered from all other customers. However, given the low FERA participation rates to date, it is unclear how much of an impact or cost this measure might have.

According to the Author

"California customers with qualifying incomes can receive energy utility bill assistance, under two key programs: CARE, the California Alternate Rates for Energy program, and FERA, the Family Electric Rate Assistance program. FERA is an effort to help families that might have incomes that are just above the income eligibility for CARE. Based on reports sent to the California Public Utilities Commission in 2023, enrollment in the CARE program was over 100% for both Pacific Gas & Electric and San Diego Gas & Electric and 91% for Southern California Edison. In contrast, PG&E estimated FERA enrollment in its service territory at 23%. In the same year, SDG&E and SCE reported their enrollment rates at 24% and 14% respectively. SB 1130 would fill this gap by expanding the eligibility criteria for the FERA Program and requiring the state's three largest investor-owned utilities to report on their efforts to enroll customers in the program."

Arguments in Support

This legislation is supported by local not-for-profit electricity providers, and rate payer advocacy groups among others. Specifically, The Utility Reform Network argues that, "Californians are facing a utility bill affordability crisis and one in five households are behind on their bills. SB 1130 would expand the eligibility criteria for the FERA Program and require the state's three largest investor-owned utilities to report on their efforts to enroll customers in the FERA program. This expands the assistance available to customers who may not be eligible for CARE but still need support to keep the lights on."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, the CPUC would need to review annually each IOU's FERA enrollment report and, if necessary, establish enrollment targets and ensure IOU implementation of enrollment plans. These efforts will need one regulatory analyst, at an ongoing annual cost of $210,000, as well as a cost of $250,000 for each of three years from the Public Utilities Commission Utilities Reimbursement Account.

VOTES

SENATE FLOOR: 35-3-2

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Laird, Limón, McGuire, Menjivar, Newman, Nguyen, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood‑Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NO: Jones, Niello, Seyarto

ABS, ABST OR NV: Min, Ochoa Bogh

ASM UTILITIES AND ENERGY: 15-0-1

YES: Petrie-Norris, Jim Patterson, Bauer-Kahan, Boerner, Calderon, Chen, Friedman, Hart, Holden, Reyes, Santiago, Ting, Wallis, Wood, Zbur

ABS, ABST OR NV: Joe Patterson

ASM APPROPRIATIONS: 12-0-3

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua

ABS, ABST OR NV: Dixon, Jim Patterson, Ta

UPDATED

VERSION: February 13, 2024

CONSULTANT: Lina V. Malova / U. & E. / (916) 319-2083 FN: 0004023

Date of Hearing: August 7, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 1130

Author:(Bradford) – As Introduced Ver:February 13, 2024

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

SUMMARY:

This bill requires each of the state’s large investor-owned electrical utilities (IOUs) to develop strategies to enroll in the Family Electric Rates Assistance (FERA) program eligible households in numbers commensurate with the California Public Utilities Commission’s (CPUC’s) estimate of eligible households within each IOU’s service territory.

Specifically, this bill:

1. Removes the requirement in existing law that a household have three or more people to be eligible for the FERA program.
2. Requires the CPUC, by March 1, 2025, and each year thereafter, to require the state’s three largest IOUs to report on their efforts to enroll customers in the FERA program.
3. Requires the CPUC, by June 1, 2025, and each year thereafter, to review each IOU’s report to ensure IOU has sufficiently enrolled eligible households in the FERA program commensurate with the proportion of households the CPUC determines to be eligible within the IOU’s service territory.
4. Requires the CPUC to require an IOU to develop a strategy and plan to sufficiently enroll eligible households in the FERA program within three years of the adoption of the strategy and plan, if the CPUC, in its review of an IOU’s report, determines the IOU has not sufficiently enrolled eligible households in the FERA program.

FISCAL EFFECT:

The CPUC would need to review annually each IOU’s FERA enrollment report and, if necessary, establish enrollment targets and ensure IOU implementation of enrollment plans. The CPUC expects to dedicate to these efforts one regulatory analyst, at an ongoing annual cost of $210,000, as well as a cost of $250,000 for each of three years (Public Utilities Commission Utilities Reimbursement Account).

COMMENTS:

1. Purpose. The author intends this bill to lead to greater enrollment in the FERA program. According to the author:

California customers with qualifying incomes can receive energy utility bill assistance, under two key programs: CARE, the California Alternate Rates for Energy program, and FERA, the Family Electric Rate Assistance program. FERA is an effort to help families that might have incomes that are just above the income eligibility for CARE. Based on reports sent to the California Public Utilities Commission in 2023, enrollment in the CARE program was over 100% for both Pacific Gas & Electric and San Diego Gas & Electric and 91% for Southern California Edison. In contrast, PG&E estimated FERA enrollment in its service territory at 23%. In the same year, SDG&E and SCE reported their enrollment rates at 24% and 14% respectively. SB 1130 would fill this gap by expanding the eligibility criteria for the FERA Program and requiring the state’s three largest investor-owned utilities to report on their efforts to enroll customers in the program.

1. Background. There are a number of programs available to customers of IOUs who have difficulty paying their electric or gas utility bills. Two of the most prominent programs are the California Alternate Rates for Energy (CARE) program and the FERA program, both of which help pay the utility bills of qualifying low-income customers.

The CARE program is available to low-income electric and gas customers with annual household incomes that are no greater than 200% of federal poverty level. Enrollees in the CARE program receive a discount on their monthly electric and gas bills—30% to 35 % for qualifying customers of the larger IOUs, and 20% for qualifying customers of the smaller IOUs—and do not pay fixed charges applicable to other IOU customers.

The FERA program is available to low-income electric and gas customers with annual income of no more than 200% of federal poverty level to no more than 250% of the federal poverty level. Utility bills of customers in the FERA program are discounted 18%.

The costs of both CARE and FERA are paid for by charges on other IOU ratepayers.

Participation in the CARE program is robust: about 80% of eligible customers participate in CARE.

Participation in FERA, by comparison, is meager. The CPUC established FERA enrollment goals of 50% of eligible customers by 2023 and 70% of eligible customers by 2026. Yet, according to the CPUC, based on data submitted by the IOUs, of 439,602 households eligible for FERA, only 74,799, or 17%, were enrolled in the program.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: June 19, 2024

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Cottie Petrie-Norris, Chair

SBPCA Bill Id:SB 1130

Author:(Bradford) – As Introduced Ver:February 13, 2024

SENATE VOTE: 35-3

SUBJECT: Electricity: Family Electric Rate Assistance: reports

SUMMARY: Expands eligibility for the Family Electric Rate Assistance (FERA) discount program by eliminating the requirement that a household consist of 3 or more persons, and requires electrical corporations to make specified reporting about enrollment in the program.

Specifically, this bill:

1. Expands eligibility for the FERA program by eliminating the requirement that a household consist of three or more members.
2. Requires the California Public Utilities Commission (CPUC), by March 1, 2025, and each subsequent year, to require the state’s three largest electrical corporations to report on their efforts to enroll customers in the FERA program.
3. Requires the CPUC, by June 1, 2025, and each subsequent year, to review each electrical corporation’s report to ensure it has sufficiently enrolled eligible households in the FERA program commensurate with the proportion of households the CPUC determines to be eligible within the electrical corporation’s service territory.
4. Requires the CPUC, if in its review of the report determines an electrical corporation has not sufficiently enrolled eligible households in the FERA program, to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within three years of the adoption of the strategy and plan.

EXISTING LAW:

1. Establishes and vests the CPUC with regulatory authority over public utilities, including electrical corporations. Authorizes the CPUC to fix the rates and charges for every public utility. (Article XII of the California Constitution)
2. Requires the CPUC to ensure that low-income ratepayers are not jeopardized or overburdened by monthly energy expenditures. (Public Utilities Code § 382)
3. Requires the CPUC to require each electrical corporation to identify a separate rate component to collect the revenues used to fund certain programs. (Public Utilities Code § 381)
4. Authorizes the CPUC to establish fixed charges for any rate schedule applicable to a residential customer account, and is required, no later than July 1, 2024, to authorize a fixed charge for default residential rates. Requires these fixed charges to be established on an income-graduated basis, with no fewer than three income thresholds, so that low-income ratepayers in each baseline territory would realize a lower average monthly bill without making any changes in usage. (Public Utilities Code § 739.9(e))
5. Mandates each electric and gas investor-owned utility (IOU) to develop and implement a rate assistance program at a fixed percentage to eligible food banks, as specified. (Public Utilities Code § 739.3)
6. Creates a charge on electricity and natural gas consumption to fund cost-effective energy efficiency and conservation activities. (Public Utilities Code §§ 381, 890, and 1615)

1. Requires the CPUC to continue the California Alternative Rates for Energy (CARE) program to provide assistance to low-income electric and gas customers with annual household incomes that are no greater than 200% of the federal poverty guideline levels, and excludes any fixed charge from the discount. (Public Utilities Code § 739.1)
2. Establishes the FERA program, a program of assistance to low-income residential customers of the state’s three largest IOUs whose household income ranges between 200% and 250% of the federal poverty guidelines, slightly exceeding the CARE allowance. Requires the FERA program discount to be an 18% line-item discount applied to an eligible customer’s bill calculated at the applicable rate for the billing period. (Public Utilities Code § 739.12)
3. Requires the CPUC to prepare a written report on the costs of programs and activities conducted by the four major electric and gas companies regulated by the CPUC. (Public Utilities Code § 913.1)

FISCAL EFFECT: According to the Senate Committee Appropriations one-time costs of $750,000 spread over three years and ongoing costs of $210,000 annually in ratepayer funds are anticipated for the CPUC to review reports on program enrollment, establish enrollment targets, work with electrical corporations on meeting those targets, and determine if targets have been met. The Committee also notes potential ongoing costs to the state of an unknown amount, given that the state is also an electric utility ratepayer and will pay increased charges as a result of this legislation.

BACKGROUND:

California’s High Electricity Rates – In recent years, many Californians have experienced record high electric and natural gas bills. A recent report by the University of California, Berkeley’s Energy Institute at Haas and NEXT 10 found that California’s high electric rates are roughly two to three times the costs it takes to produce electricity.^[1] This misalignment between price and costs may confuse many customers, as the costs imbedded in an electric bill grow more removed from the cost of delivering the electricity, and any effort by an individual to reduce consumption might bear little change to their billing. These trends show no indication of slowing down. About 2.4 million customers of California’s three largest utilities are behind on their bills, accounting for approximately $1.8 billion in energy debt.^[2]

Low-Income Affordability Programs: CARE and FERA – California Alternate Rates for Energy (CARE) Program was established by the California Legislature in 1989 to provide financial assistance to low-income residential gas and electric customers to help them afford essential utility services.^[3] Eligibility for participation is set at 200% or less of Federal Poverty Guidelines (FPG). The CARE discount and income eligibility threshold are set by statute. AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers, including directing the CPUC to adopt a fixed charge of no more than $5 for CARE customers.

The set rates provide a discount between 30-35% to eligible customers of electrical corporations with 100,000 or more customer accounts. Electrical corporations with fewer than 100,000 customer accounts offer a 20% discount. CARE enrollment participation rates are generally in the 80% or more of the eligible population for most of the energy utilities. Program customers may also be eligible for CARE if they are enrolled in public assistance programs such as Medicaid/Medi-Cal, Food Stamps/SNAP, Low Income Home Energy Assistance Program (LIHEAP), Supplemental Security Income (SSI), among others.^[4] In 2022, the program provided an estimated $2.1 billion in annual subsidies and served about five million low-income customers statewide.^[5] The cost of the CARE program is spread across multiple classes of customers.

Qualifications for households as shown in Figure 1 – If the total household income is at or below the income limits below, a household is eligible for the CARE program. The income limits are effective through May 31, 2025.^[6]

These income limits may be adjusted each year depending on inflation.

The FERA program was established by a CPUC decision in 2004 as the Lower Middle Income Large Household program for families of three or more persons.^[7] FERA is funded by a statutory “public purpose program surcharge^[8]” that appears on utility bills. FERA offers an 18% discount on electric bills if household income slightly exceeds CARE allowances (up to 250% of federal poverty). FERA is an effort to help families who may have incomes that are just above the income eligibility for CARE, but who likely still experience hardships paying their utility bills. While these programs provide a helpful bill discount, they do not guarantee an affordable bill.^[9] Moreover, the costs of the CARE and FERA subsidies are borne by all other utility customers, increasing the costs to non-participating ratepayers both residential and non-residential. FERA was codified in statute in 2018 by SB 1135 (Bradford, Chapter 413). When a customer applies for CARE with an income that instead qualifies them for FERA, they are automatically enrolled in the appropriate program.

Qualifications for households as shown in Figure 1 – The 250% of Federal Poverty Guidelines is illustrated below. The Income limits are effective through May 31, 2025^[10]

FERA Participation Rates — Unlike CARE, FERA enrollment participation rates are low across all three large IOUs. According to the CPUC, at the end of 2023, approximately 79,160 households were enrolled in FERA out of an estimated 430,450 eligible households. Investor-owned utilities (IOUs) did not meet the 50% enrollment goal by 2023 and are exploring ways to increase program enrollment.^[11] As demonstrated in Figure 1 – Based on the reports submitted to the CPUC in April 2023, estimated enrollment participation rates for the FERA program ranged from 11.7 to 28% among the three IOUs.

COMMENTS:

1. Author’s Statement. According to the author, “California customers with qualifying incomes can receive energy utility bill assistance, under two key programs: CARE, the California Alternate Rates for Energy program, and FERA, the Family Electric Rate Assistance program. FERA is an effort to help families that might have incomes that are just above the income eligibility for CARE. Based on reports sent to the California Public Utilities Commission in 2023, enrollment in the CARE program was over 100% for both Pacific Gas & Electric and San Diego Gas & Electric and 91% for Southern California Edison. In contrast, PG&E estimated FERA enrollment in its service territory at 23%. In the same year, SDG&E and SCE reported their enrollment rates at 24% and 14% respectively. SB 1130 would fill this gap by expanding the eligibility criteria for the FERA Program and requiring the state’s three largest investor-owned utilities to report on their efforts to enroll customers in the program.”
2. Uncertainty Remains. There is broad consensus that rate increases will continue as California utilities continue to navigate through innumerable challenges arising from projected growth on the demand-side, electricity rates, and the effects of climate change among others. This has been reflected in discussion in multiple oversight hearings held by this Committee recently and the last few years. While numerous efforts have been underway in attempt to address high electric and gas bills, uncertainly remains on how to best ease energy costs and manage longer-term energy bill impacts, particularly for the most vulnerable, as California transitions to a clean energy future.
3. Purpose of the Bill. The FERA program only serves customers of the three large electric IOUs in households with three or more customers whose income falls under 250% of the federal poverty guidelines. This bill proposes to expand the eligibility for the FERA program to allow households with fewer than three members to participate in the program. By expanding the FERA program more customers will be able to participate in rate relief programs. The author motivates the need for the FERA expansion by noting the low participation rates in FERA to date. However, expanding program eligibility to more customers is unlikely to improve the low participation rates of the already eligible population. The IOUs may equally struggle to reach the expanded customer pool, made eligible by this measure, if more intentional program reforms or targeted outreach are not simultaneously conducted.
4. Impacts of the Bill. The CARE and FERA discounts are offered as a percentage of the customer’s total bill, therefore as utility bills increase so do the costs associated with the CARE and FERA programs. In fact, the CPUC reports CARE program costs have been the primary driver of increases within the Public Purpose Program portion of the electric bill over the past few years.^[12] By expanding the eligibility for the FERA program, as this bill provides, the costs to non-CARE and non-FERA customers may increase as the discount provided must be recovered from all other customers. However, given the low FERA participation rates to date, it is unclear how much of an impact or cost this measure might have.
5. Related Legislation.

AB 1999 (Irwin) Revokes, on July 1, 2028, the income-graduated fixed charge for electric IOU residential customers recently adopted by the CPUC, and replaces it with prior statutory language capping the fixed charge at $5 for CARE discounted customers and $10 for everyone else. Status: Failed passage – Assembly Committee on Appropriations

SB 1292 (Bradford) requires a report on learnings and challenges of the first phase of the CPUC’s adoption of income-graduated fixed charges and prohibits adoption of a second phase until after the report is provided. Status: set for hearing in this committee on July 1, 2024.

SB 1326 (Jones) repeals the provisions adopted in AB 205 which authorize an income-graduated fixed charge in electric IOU rates, replaces with the language that existed prior which capped fixed charges. Status: failed passage in the Senate Committee on Energy, Utilities, and Communications on a 4-0-14 vote; granted reconsideration.

1. Prior Legislation

AB 982 (Villapudua, 2023) eliminated from electric IOU rates the costs of various programs, including utility bill discount programs for low-income customers, and instead established a Public Utilities Public Purpose Programs Fund in the State Treasury to fund the programs. Status: Died – the Assembly Committee on Appropriations.

AB 2765 (Santiago, 2022) largely the same as AB 982 (Villapudua, 2023). Status: Died – the Assembly Committee on Appropriations.

SB 756 (Hueso) defined, beginning July 1, 2022, “low-income customers” for the purposes of eligibility for the ESA program to mean low-income persons or families with household income at or below 250 percent of federal poverty level. Status: Chapter 248, Statutes of 2021

AB 205 (Committee on Budget) among its provisions, repealed the $10 fixed charge cap for residential electric IOU customers. Authorized the CPUC to use fixed charges for any rate schedule for residential customers, as specified. The bill required the fixed charge to be established on an income-graduated basis with no fewer than three income thresholds, such that a low-income ratepayer would realize a lower average monthly bill without making any changes in usage, as specified. Status: Chapter 61, Statutes of 2022.

SB 1135 (Bradford) codified the requirements of an existing low-income electric rate discount program, known as the FERA program, for eligible customers of the state’s three largest electrical corporations and increased the program discount from 12 percent to 18 percent line-item discount on a customer’s electric utility bill. Status: Chapter 413, Statutes of 2018

AB 327 (Perea) among its provisions, included language authorizing fixed charges for electric IOU rates, but capped the fixed charge to $10 per month for residential non-CARE customers, and $5 per month for CARE customers. Status: Chapter 611, Statutes of 2013.

REGISTERED SUPPORT / OPPOSITION:

Support

AARP
Ava Community Energy Authority
California Community Choice Association
California Solar & Storage Association
Clean Power Alliance of Southern California
Greenlining Institute; the
Marin Clean Energy (MCE)
Peninsula Clean Energy
San Jose Clean Energy
Sonoma Clean Power
The Utility Reform Network (TURN)
Western Center on Law & Poverty

Opposition

None on file.

Analysis Prepared by: Lina V. Malova / U. & E. / (916) 319-2083

1. Pg 4, Borenstein, S., Fowlie, M., and Sallee, J., “Designing Electricity Rates for an Equitable Energy Transition,” Energy Institute at Haas working paper WP 314, February 2021. ↑

2. November 2023 Disconnection Settlement Monthly Reports of PG&E, Southern California Edison, and SDG&E (R.18-07-005). ↑

3. CPUC Energy Division- Power Point Presentation, “California Alternate Rates for Energy (CARE) & Low Income Affordability Metrics”; January 22, 2019 ↑

4. CPUC, “CARE/FERA”; https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/care-fera-program ↑

5. Some customers are enrolled in more than one program, for example SCE for electricity and SoCalGas for natural gas. Source: 2022 Investor-Owned Utility ESA-CARE Monthly Reports, posted to Docket A.19-11-003. ↑

6. CPUC; “CARE/FERA Program.” https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/care-fera-program ↑

7. CPUC; Pg 54; “AB 67 Report” April 2024 ↑

8. These charges are assessed on the amount of electricity used ↑

9. Households enrolled in CARE receive a 30-35% discount on their electric bill and a 20% discount on their natural gas bill. Households enrolled in FERA receive an 18% discount on electric bills. https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/care-fera-program ↑

10. CPUC; “CARE/FERA Program.” https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/care-fera-program ↑

11. CPUC; Pg 60; “AB 67 Report” April 2024 ↑

12. CPUC AB 67 2022 California Electric and Gas Utility Costs Report, pg. 6; https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmental-affairs-division/reports/2023/2022-ab-67-report.pdf ↑

 THIRD READING  

Bill No: SB 1130

Author: Bradford (D)

Introduced: 2/13/24

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 15-0, 3/19/24

AYES: Bradford, Dahle, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, Limón, Min, Newman, Rubio, Skinner, Stern

NO VOTE RECORDED: Grove, Seyarto, Wilk

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/16/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

SUBJECT: Electricity: Family Electric Rate Assistance: reports

SOURCE: Author

DIGEST:

This bill expands eligibility for an existing electric utility bill discount program to households with fewer than three members and requires specified reporting by electrical corporations about enrollment in the program.

ANALYSIS:

Existing law:

1. Establishes and vests the California Public Utilities Commission (CPUC) with regulatory authority over public utilities, including electrical corporations. Authorizes the CPUC to fix the rates and charges for every public utility. (Article XII of the California Constitution)
2. Requires the CPUC to ensure that low-income ratepayers are not jeopardized or overburdened by monthly energy expenditures. (Public Utilities Code §382)
3. 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 §739.1)
4. Requires the CPUC to continue a program of assistance to residential customers of the state’s three largest electrical corporations consisting of households of three or more persons with total household annual gross income levels between 200 percent and 250 percent of the federal poverty guideline level, which is referred to as the Family Electric Rate Assistance (FERA) program. Requires the FERA program discount to be an 18 percent line-item discount applied to an eligible customer’s bill calculated at the applicable rate for the billing period. (Public Utilities Code §739.12)

This bill:

1) Expands eligibility for the FERA program by eliminating the requirement that a household consist of three or more persons.

2) Requires the CPUC, by March 1, 2025, and each year thereafter, to require the state’s three largest electrical corporations to report on their efforts to enroll customers in the FERA program.

3) Requires the CPUC, by June 1, 2025, and each year thereafter, to review each electrical corporation’s report to ensure it has sufficiently enrolled eligible households in the FERA program commensurate with the proportion of households the CPUC determines to be eligible within the electrical corporation’s service territory.

4) Requires the CPUC, if in its review of the report determines an electrical corporation has not sufficiently enrolled eligible households in the FERA program, to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within three years of the adoption of the strategy and plan.

Background

1. Electric Utility Customer Rate Assistance Programs. California customers of investor-owned electric utilities with qualifying incomes can receive utility bill assistance, most notably under two key programs, CARE and FERA.
   1. CARE. Existing law requires the CPUC to establish the CARE program, which provides assistance to low-income customers, defined as those with annual household incomes less than 200 percent of federal poverty guideline levels, of electric (and natural gas) investor-owned utilities (IOUs). The cost of this program is spread across multiple classes of customers. AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers, including directing the CPUC to establish rates for the CARE program customers of the large IOUs. The set rates must effectively give a discount between 30 percent and 35 percent to eligible customers of electrical corporations with 100,000 or more customer accounts. Electrical corporations with fewer than 100,000 customer accounts offer a 20 percent discount. Customers may also be eligible for CARE if they are enrolled in public assistance programs, such as: Medicaid/Medi-Cal, Women, Infant, Children Program (WIC), Healthy Families A&B, National School Lunch’s Free Lunch Program, Food Stamps/SNAP, Low Income Home Energy Assistance Program, Head Start Income Eligible, Supplemental Security Income, Bureau of Indian Affairs General Assistance, and Temporary Assistance for Needy Families (TANF). CARE enrollment participation rates are generally in the 80 percent or more of the eligible population for most of the energy utilities. CARE customers also qualify for energy savings assistance program which provides subsidized weatherization and other energy efficiency upgrades to help reduce a CARE customer’s overall energy load.

• 1. FERA. Families whose household income slightly exceeds the CARE allowance (those whose income falls above 200 percent and up to 250 percent of federal poverty guidelines) qualify to receive the FERA discount. FERA applies an 18 percent line-item discount to customers of the state’s three largest electric utilities – Southern California Edison (SCE), San Diego Gas and Electric Company (SDG&E), and Pacific Gas & Electric Company (PG&E). FERA was originally established through a CPUC decision as a 12 percent line-item discount on electric utility bills to help families whose incomes fall just above the income eligibility for CARE, but which likely still experience hardships paying their utility bills.

1. SB 1135 (Bradford, Chapter 413, Statutes of 2018) codified the FERA program in the statutes and increased the discount from 12 percent to 18 percent for households with qualifying incomes. The bill also required the three electric utilities to increase marketing and outreach for the program.

1. FERA participation rates. FERA enrollment participation rates are significantly lower across the board for all three IOUs as compared to CARE. Based on reports submitted to the CPUC in April 2023, citing research conducted by Athens Research estimating the eligible customers for CARE and FERA compared to eligible customers as of December 2022, enrollment in the CARE program was over 100 percent for both PG&E and SDG&E and 91 percent for SCE. In contrast, estimated enrollment participation rates for the FERA program ranged from 11.7 to 28 percent among the three IOUs, specifically: SDG&E at 28.0 percent, PG&E at 22.4 percent, and SCE at 11.7 percent. (Noted in the table below.)

Comments

1. FERA participation rate has shown a slight increase, but remains low. FERA participation penetration rates have shown an increase for all three IOUs since the numbers were reported when SB 1135 was being considered in 2018. At that time the utilities reported FERA penetration rates ranging from 8 to 16 percent. Specifically, PG&E at 16 percent, SDG&E at 18 percent, and SCE at 8 percent. As such, the overall participation penetration rate for the FERA program has increased from 12.5 percent reported in 2018 to 17.4 percent based on the numbers provided in 2023. However, there is a large gap between customers who may be eligible for the FERA discount and customers who are enrolled in the program.
2. Electricity utility bills continue trending higher. Californians have generally enjoyed lower energy bills when compared to the rest of the country, largely due to milder weather and investments in energy efficiency, even as electric rates have been higher than many other states. However, in more recent years, these trends have been changing as California’s higher energy rates are also resulting in higher energy utility bills. Affordable energy utility bills was the topic of an oversight hearing by this committee last month. Members raised concerns they were hearing from residents about the increasing costs of energy utility bills, particularly those in PG&E service territory. These impacts have been exacerbated by the COVID-19 pandemic, and compounded by recent inflation and supply shortages on most goods and services.
3. Expanding FERA program to households with fewer than three members. Currently, the FERA program only serves customers of the three large electric IOUs in households with three or more customers whose income falls under 250 percent of the federal poverty guidelines. SB 1130 proposes to expand the eligibility for the FERA program to allow households with fewer than three members to participate in the program. By expanding the FERA program, as proposed by this bill, income-eligible customers who are struggling to pay their utility bills could receive the 18 percent line-item discount, regardless if there household has less than three members. Several supporters of this bill, including AARP California, The Utility Reform Network (TURN), Marin County Energy (MCE), and Western Center on Law & Poverty, note the important benefit that these struggling residents could receive through this change given the existing financial struggles. TURN notes that about one-fifth of customers are behind on their energy utility bill. An expansion of FERA may be able to help these customers afford their bills.
4. Income-graduated fixed charge. This month, the CPUC adopted an income-graduated fixed charge on electric IOU bills as authorized by AB 205 (Committee on Budget, Chapter 61, Statutes of 2022). AB 205 requires the CPUC to structure the default income graduated fixed charge for “no fewer than three income thresholds so that low-income customers in each baseline territory would realize a lower average residential monthly bill without making changes in usage.” Importantly, the statute explicitly prohibits the discount on the fixed charge to be included as part of the CARE discount, but makes no similar treatment for the FERA discount. The CPUC decision incorporates three income tiers that would be charged varying amount on the fixed charge. Specifically, CARE customers would be $6 per month, FERA customers and those in deed-restricted housing would be charged $12 per month, and the remaining customers would be charged $24 per month.
5. Impacts to ratepayers. By expanding the eligibility for the FERA program, as proposed by this bill, the costs to non-CARE and non-FERA customers may increase as the discount provided must be recovered from all other customers. Given the low participation rates in FERA, it’s unclear how much of an additional cost to other customers would be anticipated. However, given the FERA enrollment results in a lower fixed-charge, per the CPUC’s recent decision, subscription in the program should grow to better reflect the proportion of eligible customers.
6. FERA interplay with other programs. Additionally, as this bill moves forward, the author may wish to consider the interplay of FERA eligibility in other CPUC-related programs where FERA customers may receive differing treatment compared to non-FERA customers (whether by statute or CPUC implementation), including: energy savings assistance program (Public Utilities §2790), renewable energy subscription program (Public Utilities Code §769.3), the recovery of fixed charges for wildfire financing orders (Public Utilities Code §850.1), the implementation of net energy metering tariffs and the net-billing tariff (Public Utilities Code §2827 and §2827.1), and CPUC residential solar and storage incentives funded by the General Fund.

Related/Prior Legislation

AB 205 (Committee on Budget, Chapter 61, Statutes of 2022) among its many provisions, included language that prohibits the CPUC from including discounts on fixed charges in the average effective discount for CARE.

SB 1135 (Bradford, Chapter 413, Statutes of 2018) codified the requirements of an existing low-income electric rate discount program, known as the FERA program, for eligible customers of the state’s three largest electrical corporations and increased the program discount from 12 percent to 18 percent line-item discount on a customer’s electric utility bill.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers, including directing the CPUC to establish a discount between 30 percent and 35 percent to eligible customers of the large IOUs.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Committee on Appropriations:

• The California Public Utilities Commission (CPUC) estimates one-time costs of $750,000 spread over three years and ongoing costs of $210,000 annually (ratepayer funds) to review reports on program enrollment, establish enrollment targets, work with electrical corporations on meeting those targets, and determine if targets have been met.
• Potential ongoing costs of an unknown amount (various funds) to the state as an electric utility ratepayer. The State of California is an electricity customer, purchasing roughly one percent of all electricity sold in-state. As such, the state incurs costs when electricity rates increase. To the extent that the eligibility expansion proposed by this bill leads to providing additional discounts that each come with costs, it could increase the total amount of Family Electric Rate Assistance (FERA) discounts that must be recovered from other electric customers. Higher overall costs for FERA as a result of this bill could increase costs to the state as a ratepayer.

SUPPORT: (Verified 5/15/24)

AARP California

California Solar & Storage Association

Clean Power Alliance

Marin Clean Energy

Peninsula Clean Energy

Sonoma Clear Power

The Greenlining Institute

The Utility Reform Network

Western Center on Law & Poverty

OPPOSITION: (Verified 5/15/24)

None received

ARGUMENTS IN SUPPORT: In support of this bill, AARP California expresses particular interest in this bill’s proposal to eliminate the existing requirements on FERA eligibility that a household consists of three or more persons. AARP California writes:

…SB 1130, which will help many Californians, particularly those who live on their own, afford their energy bills, at a time of skyrocketing electric and gas rates…As California’s Master Plan for Aging notes, nearly two million Californians over 60 live alone, and that number is expected to grow exponentially in the coming years… AARP believes that affordable, reliable, and sustainable energy is essential to health, safety, and well-being. SB 1130, which connects more older adults on fixed incomes to energy assistance programs like FERA, is essential to meeting these policy goals and principles.

Writing in support of this bill, The Utility Reform Network (TURN) states:

…Californians are facing a utility bill affordability crisis and one in five households are behind on their bills. SB 1130 would expand the eligibility criteria for the FERA Program and require the state’s three largest investor-owned utilities to report on their efforts to enroll customers in the FERA program. This expands the assistance available to customers who may not be eligible for CARE but still need support to keep the lights on.

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

5/17/24 19:18:04

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SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1130 (Bradford) - Electricity: Family Electric Rate Assistance: reports

Bill Summary:

This bill would expand eligibility for an existing electric utility bill discount program and require electrical corporations to report on program enrollment.

Fiscal Impact:

• The California Public Utilities Commission (CPUC) estimates one-time costs of $750,000 spread over three years and ongoing costs of $210,000 annually (ratepayer funds) to review reports on program enrollment, establish enrollment targets, work with electrical corporations on meeting those targets, and determine if targets have been met.
• Potential ongoing costs of an unknown amount (various funds) to the state as an electric utility ratepayer. The State of California is an electricity customer, purchasing roughly one percent of all electricity sold in-state. As such, the state incurs costs when electricity rates increase. To the extent that the eligibility expansion proposed by this bill leads to providing additional discounts that each come with costs, it could increase the total amount of Family Electric Rate Assistance (FERA) discounts that must be recovered from other electric customers. Higher overall costs for FERA as a result of this bill could increase costs to the state as an ratepayer.

Background:

Electric Utility Customer Rate Assistance Programs. California customers of investor-owned electric utilities with qualifying incomes can receive utility bill assistance, most notably under two key programs, California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance (FERA).

Family Electric Rate Assistance (FERA). Families whose household income slightly exceeds the CARE allowance (those whose income falls above 200 percent and up to 250 percent of federal poverty guidelines) qualify to receive the FERA discount. FERA applies an 18 percent line-item discount to customers of the state’s three largest electric utilities – Southern California Edison (SCE), San Diego Gas and Electric Company (SDG&E), and Pacific Gas & Electric Company (PG&E). FERA was originally established through a CPUC decision as a 12 percent line-item discount on electric utility bills to help families whose incomes fall just above the income eligibility for CARE, but which likely still experience hardships paying their utility bills.

FERA participation rates. FERA enrollment participation rates are significantly lower across the board for all three IOUs as compared to CARE. Based on reports submitted to the CPUC in April 2023, citing research conducted by Athens Research estimating the eligible customers for CARE and FERA compared to eligible customers as of December 2022, enrollment in the CARE program was over 100 percent for both PG&E and SDG&E and 91 percent for SCE. In contrast, estimated enrollment participation rates for the FERA program ranged from 11.7 to 28 percent among the three IOUs, specifically: SDG&E at 28.0 percent, PG&E at 22.4 percent, and SCE at 11.7 percent.

Proposed Law:

This bill would expand eligibility for an existing electric utility bill discount program to smaller households and require electrical corporations to report on program enrollment. Specifically, this bill would:

1. Expand eligibility for the FERA program by eliminating the requirement that a household consist of three or more persons.
2. Require the CPUC, by March 1, 2025, and each year thereafter, to require the state’s three largest electrical corporations to report on their efforts to enroll customers in the FERA program.
3. Require the CPUC, by June 1, 2025, and each year thereafter, to review each electrical corporation’s report to ensure it has sufficiently enrolled eligible households in the FERA program commensurate with the proportion of households the CPUC determines to be eligible within the electrical corporation’s service territory.
4. Require the CPUC, if in its review of the report determines an electrical corporation has not sufficiently enrolled eligible households in the FERA program, to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within three years of the adoption of the strategy and plan.

Related Legislation:

AB 205 (Committee on Budget, Chapter 61, Statutes of 2022) among its many provisions, included language that prohibits the CPUC from including discounts on fixed charges in the average effective discount for CARE.

SB 1135 (Bradford, Chapter 413, Statutes of 2018) codified the requirements of an existing low-income electric rate discount program, known as the FERA program, for eligible customers of the state’s three largest electrical corporations and increased the program discount from 12 percent to 18 percent line-item discount on a customer’s electric utility bill.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers, including directing the CPUC to establish a discount between 30 percent and 35 percent to eligible customers of the large IOUs.

Staff Comments:

As noted in the analysis for Senate Energy, Utilities, and Communications Committee, the CPUC currently has an active proceeding to implement an income-graduated fixed charge on electric IOU bills as authorized by AB 205 (Committee on Budget, Chapter 61, Statutes of 2022). AB 205 requires the CPUC to structure the default income graduated fixed charge for “no fewer than three income thresholds so that low-income customers in each baseline territory would realize a lower average residential monthly bill without making changes in usage.” Although the CPUC has not adopted (nor proposed) a decision in that proceeding, based on guidance provided by the Administrative Law Judge and proposals from stakeholders, it seems possible that one of the income tiers will include FERA customers who may have a fixed charge lower than non-CARE customers. Importantly, the statute explicitly prohibits the discount on the fixed charge to be included as part of the CARE discount, but makes no similar treatment for the FERA discount.

The policy analysis also notes the interplay of FERA eligibility in other CPUC-related programs where FERA customers may receive differing treatment compared to non-FERA customers (whether by statute or CPUC implementation), including: energy savings assistance program (Public Utilities §2790), renewable energy subscription program (Public Utilities Code §769.3), the recovery of fixed charges for wildfire financing orders (Public Utilities Code §850.1), the implementation of net energy metering tariffs and the net-billing tariff (Public Utilities Code §2827 and §2827.1), and CPUC residential solar and storage incentives funded by the General Fund.

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SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Steven Bradford, Chair

2023 - 2024 Regular

Bill No: Hearing Date: 3/19/2024

SUBJECT:

DIGEST: This bill expands eligibility for an existing electric utility bill discount program to households with fewer than three members and requires specified reporting by electrical corporations about enrollment in the program.

ANALYSIS:

Existing law:

1. Establishes and vests the California Public Utilities Commission (CPUC) with regulatory authority over public utilities, including electrical corporations. Authorizes the CPUC to fix the rates and charges for every public utility. (Article XII of the California Constitution)
2. Requires the CPUC to ensure that low-income ratepayers are not jeopardized or overburdened by monthly energy expenditures. (Public Utilities Code §382)
3. 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 §739.1)
4. Requires the CPUC to continue a program of assistance to residential customers of the state’s three largest electrical corporations consisting of households of three or more persons with total household annual gross income levels between 200 percent and 250 percent of the federal poverty guideline level, which is referred to as the Family Electric Rate Assistance (FERA) program. Requires the FERA program discount to be an 18 percent line-item discount applied to an eligible customer’s bill calculated at the applicable rate for the billing period. (Public Utilities Code §739.12)

This bill:

1) Expands eligibility for the FERA program by eliminating the requirement that a household consist of three or more persons.

2) Requires the CPUC, by March 1, 2025, and each year thereafter, to require the state’s three largest electrical corporations to report on their efforts to enroll customers in the FERA program.

3) Requires the CPUC, by June 1, 2025, and each year thereafter, to review each electrical corporation’s report to ensure it has sufficiently enrolled eligible households in the FERA program commensurate with the proportion of households the CPUC determines to be eligible within the electrical corporation’s service territory.

4) Requires the CPUC, if in its review of the report determines an electrical corporation has not sufficiently enrolled eligible households in the FERA program, to require the electrical corporation to develop a strategy and plan to sufficiently enroll eligible households within three years of the adoption of the strategy and plan.

Background

Electric Utility Customer Rate Assistance Programs. California customers of investor-owned electric utilities with qualifying incomes can receive utility bill assistance, most notably under two key programs, CARE and FERA.

CARE. Existing law requires the CPUC to establish the CARE program, which provides assistance to low-income customers, defined as those with annual household incomes less than 200 percent of federal poverty guideline levels, of electric (and natural gas) investor-owned utilities (IOUs). The cost of this program is spread across multiple classes of customers.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers, including directing the CPUC to establish rates for the CARE program customers of the large IOUs. The set rates must effectively give a discount between 30 percent and 35 percent to eligible customers of electrical corporations with 100,000 or more customer accounts. Electrical corporations with fewer than 100,000 customer accounts offer a 20 percent discount. Customers may also be eligible for CARE if they are enrolled in public assistance programs, such as: Medicaid/Medi-Cal, Women, Infant, Children Program (WIC), Healthy Families A&B, National School Lunch’s Free Lunch Program, Food Stamps/SNAP, Low Income Home Energy Assistance Program, Head Start Income Eligible, Supplemental Security Income, Bureau of Indian Affairs General Assistance, and Temporary Assistance for Needy Families (TANF). CARE enrollment participation rates are generally in the 80 percent or more of the eligible population for most of the energy utilities. CARE customers also qualify for energy savings assistance program which provides subsidized weatherization and other energy efficiency upgrades to help reduce a CARE customer’s overall energy load.

FERA. Families whose household income slightly exceeds the CARE allowance (those whose income falls above 200 percent and up to 250 percent of federal poverty guidelines) qualify to receive the FERA discount. FERA applies an 18 percent line-item discount to customers of the state’s three largest electric utilities – Southern California Edison (SCE), San Diego Gas and Electric Company (SDG&E), and Pacific Gas & Electric Company (PG&E). FERA was originally established through a CPUC decision as a 12 percent line-item discount on electric utility bills to help families whose incomes fall just above the income eligibility for CARE, but which likely still experience hardships paying their utility bills.

SB 1135 (Bradford, Chapter 413, Statutes of 2018) codified the FERA program in the statutes and increased the discount from 12 percent to 18 percent for households with qualifying incomes. The bill also required the three electric utilities to increase marketing and outreach for the program.

FERA participation rates. FERA enrollment participation rates are significantly lower across the board for all three IOUs as compared to CARE. Based on reports submitted to the CPUC in April 2023, citing research conducted by Athens Research estimating the eligible customers for CARE and FERA compared to eligible customers as of December 2022, enrollment in the CARE program was over 100 percent for both PG&E and SDG&E and 91 percent for SCE. In contrast, estimated enrollment participation rates for the FERA program ranged from 11.7 to 28 percent among the three IOUs, specifically: SDG&E at 28.0 percent, PG&E at 22.4 percent, and SCE at 11.7 percent. (Noted in the table below.)

Comments

FERA participation rate has shown a slight increase, but remains low. FERA participation penetration rates have shown an increase for all three IOUs since the numbers were reported when SB 1135 was being considered in 2018. At that time the utilities reported FERA penetration rates ranging from 8 to 16 percent. Specifically, PG&E at 16 percent, SDG&E at 18 percent, and SCE at 8 percent. As such, the overall participation penetration rate for the FERA program has increased from 12.5 percent reported in 2018 to 17.4 percent based on the numbers provided in 2023. However, there is a large gap between customers who may be eligible for the FERA discount and customers who are enrolled in the program.

Electricity utility bills continue trending higher. Californians have generally enjoyed lower energy bills when compared to the rest of the country, largely due to milder weather and investments in energy efficiency, even as electric rates have been higher than many other states. However, in more recent years, these trends have been changing as California’s higher energy rates are also resulting in higher energy utility bills. Affordable energy utility bills was the topic of an oversight hearing by this committee last month. Members raised concerns they were hearing from residents about the increasing costs of energy utility bills, particularly those in PG&E service territory. These impacts have been exacerbated by the COVID-19 pandemic, and compounded by recent inflation and supply shortages on most goods and services.

Expanding FERA program to households with fewer than three members. Today, the FERA program only serves customers of the three large electric IOUs in households with three or more customers whose income falls under 250 percent of the federal poverty guidelines. SB 1130 proposes to expand the eligibility for the FERA program to allow households with fewer than three members to participate in the program. By expanding the FERA program, as proposed by this bill, income-eligible customers who are struggling to pay their utility bills could receive the 18 percent line-item discount, regardless if there household has less than three members. Several supporters of this bill, including AARP California, The Utility Reform Network (TURN), Marin County Energy (MCE), and Western Center on Law & Poverty, note the important benefit that these struggling residents could receive through this change given the existing financial struggles. TURN notes that about one-fifth of customers are behind on their energy utility bill. An expansion of FERA may be able to help these customers afford their bills.

Impacts to ratepayers. By expanding the eligibility for the FERA program, as proposed by this bill, the costs to non-CARE and non-FERA customers may increase as the discount provided must be recovered from all other customers. However, given the low participation rates of FERA, it’s unclear how much of an additional cost to other customers would be anticipated.

Currently, the CPUC has an active proceeding to implement an income-graduated fixed charge on electric IOU bills as authorized by AB 205 (Committee on Budget, Chapter 61, Statutes of 2022). AB 205 requires the CPUC to structure the default income graduated fixed charge for “no fewer than three income thresholds so that low-income customers in each baseline territory would realize a lower average residential monthly bill without making changes in usage.” Although the CPUC has not adopted (nor proposed) a decision in that proceeding, based on guidance provided by the Administrative Law Judge and proposals from stakeholders, it seems possible that one of the income tiers will include FERA customers who may have a fixed charge lower than non-CARE customers. Importantly, the statute explicitly prohibits the discount on the fixed charge to be included as part of the CARE discount, but makes no similar treatment for the FERA discount.

Additionally, as this bill moves forward, the author may wish to consider the interplay of FERA eligibility in other CPUC-related programs where FERA customers may receive differing treatment compared to non-FERA customers (whether by statute or CPUC implementation), including: energy savings assistance program (Public Utilities §2790), renewable energy subscription program (Public Utilities Code §769.3), the recovery of fixed charges for wildfire financing orders (Public Utilities Code §850.1), the implementation of net energy metering tariffs and the net-billing tariff (Public Utilities Code §2827 and §2827.1), and CPUC residential solar and storage incentives funded by the General Fund.

Prior/Related Legislation

AB 205 (Committee on Budget, Chapter 61, Statutes of 2022) among its many provisions, included language that prohibits the CPUC from including discounts on fixed charges in the average effective discount for CARE.

SB 1135 (Bradford, Chapter 413, Statutes of 2018) codified the requirements of an existing low-income electric rate discount program, known as the FERA program, for eligible customers of the state’s three largest electrical corporations and increased the program discount from 12 percent to 18 percent line-item discount on a customer’s electric utility bill.

AB 327 (Perea, Chapter 611, Statutes of 2013) restructured the rate design for residential electric customers, including directing the CPUC to establish a discount between 30 percent and 35 percent to eligible customers of the large IOUs.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

AARP California

California Solar & Storage Association

Marin County Energy

The Utility Reform Network

Western Center on Law & Poverty

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: In support of this bill, AARP California expresses particular interest in this bill’s proposal to eliminate the existing requirements on FERA eligibility that a household consists of three or more persons. AARP California writes:

…SB 1130, which will help many Californians, particularly those who live on their own, afford their energy bills, at a time of skyrocketing electric and gas rates…As California’s Master Plan for Aging notes, nearly two million Californians over 60 live alone, and that number is expected to grow exponentially in the coming years… AARP believes that affordable, reliable, and sustainable energy is essential to health, safety, and well-being. SB 1130, which connects more older adults on fixed incomes to energy assistance programs like FERA, is essential to meeting these policy goals and principles.

Writing in support of this bill, The Utility Reform Network (TURN) states:

…Californians are facing a utility bill affordability crisis and one in five households are behind on their bills. SB 1130 would expand the eligibility criteria for the FERA Program and require the state’s three largest investor-owned utilities to report on their efforts to enroll customers in the FERA program. This expands the assistance available to customers who may not be eligible for CARE but still need support to keep the lights on.

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