CARE energy subsidy costs

By CMTA Staff

Capitol Update, May 15, 2009 Share this on FacebookTweet thisEmail this to a friend

California Alternate Rates for Energy (CARE) is a program to provide discounted electric and gas service to low-income customers.  The costs of the CARE subsidy are allocated among customer classes according to methodology adopted by the California Public Utilities Commission (CPUC).  "Equal cents per therm or kWh" methodology would be put into state law if AB 413 (Felipe Fuentes, D-Los Angeles) or SB 695 (Rod Wright, D- Los Angeles) are passed and signed by the Governor. CMTA opposes this approach.   

Putting cost allocation methodology into statute takes away authority from the CPUC and makes the legislature responsible for monitoring rates to ensure they remain just and reasonable, and making legislative changes if necessary. This is not an insignificant issue.

It has been extremely difficult to negotiate an end to the legislatively imposed rate freeze on the first tiers of residential customer usage passed during the energy crisis. Known as the "AB1X" problem, it has caused high-use customers (large families) to pay enormously high prices in recent years, yet the CPUC had no authority to make adjustments.  The legislature is not set up to balance utility customer interests in these cases-- and there is a reluctance to take any action that could be perceived as a rate increase. There is also not a process to develop a complete record of costs and impacts for purposes of a final decision, as would be available at the CPUC.   

The CPUC is where these decisions should be made, and since the CPUC recently reaffirmed that the methodology is appropriate for CARE costs allocation-- the legislature need not act.   

Other elements these bills would improve energy policy in the state, such as increasing rates in the first tiers of residential use and reopening direct access for some customers.  However, we are disappointed that the cost allocation issue is part of the negotiated solution.  

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