PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

ENERGY DIVISION					  RESOLUTION E-3646
								  MARCH 16, 2000

	R E S O L U T I O N

Resolution E-3646.  Pacific Gas & Electric Company (PG&E), Southern California Edison Company (Edison), San Diego Gas and Electric Company (SDG&E), and Southern California Gas Company (SoCal Gas), request approval for the conduction of a needs assessment study.  This resolution is a continuation of Resolution
E-3601.  The Energy Division will conduct a needs assessment workshop and will have supervisory and facilitation responsibilities of the study.  Conditionally approved.

Utility requests by advice letters 2140-G/1854-E, 1370-E, 1156-E/1141-G, and 2792-G, respectively, filed on March 12, 1999.

SUMMARY

     On February 26, 1999, the Low Income Governing Board (LIGB or Board) submitted a compliance filing requesting authority for its 1999 budget and to implement a needs assessment study and a California Alternate Rates For Energy (CARE) outreach pilot program.  The LIGB’s compliance filing was submitted pursuant to Resolution E-3583, dated December 17, 1998.

     On March 12, 1999, Pacific Gas And Electric Company (PG&E), Southern California Edison Company (Edison), San Diego Gas & Electric Company (SDG&E), and Southern California Gas Company (SoCal Gas) filed Advice Letters 2140-G/1854-E, 1370-E,  1156-E/1141-G, and 2792-G (Advice Letters), respectively.  These Advice Letters  request approval for the conduction of a needs assessment study and to implement a CARE outreach pilot. The Advice Letters were filed pursuant to an Assigned Commissioner’s Ruling, dated March 8, 1999, in Rulemaking (R.) 98-07-037.

     On April 1, 1999, ORA filed comments generally in support of the Advice Letters.  ORA agrees with the utility recommendation for the selection of the needs assessment consultants using the state procurement process through the Energy Division.  ORA points out that low-income programs do not have a sunset-date, and therefore the needs assessment study and any outreach pilot should not be rushed at the expense of effectiveness, accuracy, or completeness.

     On April 1, 1999, the Community Enhancement Services and the Community  Resource Project, Inc. (collectively referred to as Community Services) filed a protest to the Advice Letters. On April 6, 1999, the Associated Community Action Program, City  of Oakland Department of Health and Human Services, Contra Costa County Community Services Department, Economic and Social Opportunities, Inc., City of Berkeley Community Action Agency, Spectrum Community Services, Inc., Community Action Agency of San Mateo County, Inc. (collectively referred to as Community Agencies)   filed a protest to the Advice Letters.  The community organizations that filed protests on both April 1st and April 6th shall be collectively referred to as Community    Organizations.  On April 1, 1999, the LIGB also filed a protest to the Advice Letters.   The Community Organizations and the LIGB request the Commission adopt the LIGB’s proposal for the needs assessment study and express concerns with the Joint Utilities’ proposals for the same.

     On June 3, 1999, Resolution E-3601 conditionally approved Advice Letters 2140-G/1854-E, 1156-E/1141-G, 1370-E, and 2792-G with respect to an outreach pilot program and conditionally approved LIGB's budget.  Resolution E-3601denied LIGB's request to conduct a needs assessment study and an outreach pilot.  This resolution conditionally approves the utilities' request for the conduction of a needs assessment  study and directs the Energy Division to conduct a workshop and supervise and facilitate the conduction of both Phases I and II of the study.

BACKGROUND

     Pursuant to Decisions (D.) 95-12-063 as modified by D.96-01-009 and D.96-03-022, the Low-Income Working Group prepared a report on its recommendations or positions on the possible impacts that electric industry restructuring would have on utility- sponsored low-income programs.  Most of the group determined that assessing the need for these programs requires at least three steps:  1) identify the current program objectives; 2) review program progress in meeting these objectives; and 3) assess the   need for future funding, based on how the remaining needs may change over time.  They recommend that the Commission provide for a comprehensive needs assessment for each program element.  The report provides general guidance upon how the group  recommends a needs analysis be done.  However, the group indicated it did not have the time or resources to design and begin the implementation of a rigorous needs analysis.

     On September 24, 1996, Section 382 was added to the Public Utilites (PU) Code, which mandates:

"Programs provided to low-income electricity customers, including, but not limited to, targeted energy-efficiency services and the California Alternative Rates for Energy Program shall  be funded at not less than 1996 authorized levels based on an assessment of customer need.  The commission shall allocate funds necessary to meet the low-income objectives in this section."

     PU Code Section 739.1, 739.2, and 2790 are also relevant to the conduction of any needs assessment study.  PU Code Section 739.1 states: 

                    "(a) The commission shall establish a program of assistance to low-income electric and gas customers, the cost of which  shall not be borne solely by any single class of customer.  The program shall be referred to as the California Alternate Rates for Energy or CARE program.  (b)  The commission's program of assistance to low-income electric and gas customers shall, as soon as practicable, include nonprofit group living facilities specified by the commission, if the commission finds that the residents in these facilities substantially meet the commission's low-income eligibility requirements and there is a feasible process for certifying that the assistance shall be used for the direct benefit, such as improved quality of care or improved  food service, of the low-income residents in the facilities.  The commission shall authorize utilities to offer discounts to eligible facilities licensed or permitted by appropriate state or local agencies, and to facilities, including women's shelters, hospices, and homeless shelters, that may not have a license or permit but provide other proof satisfactory to the utility that they are eligible to other participate in the program."

     PU Code Section 739.2 states:

 "(a)  The commission’s program of assistance to low-income electric and gas customers shall also include the following facilities, provided the commission finds that the occupants of the facilities substantially meet the commission’s low-income eligibility requirements and there is a feasible process for

certifying that the assistance shall be used for the direct   benefit of the occupants of the facilities.

(1) Migrant farmworker housing centers provided pursuant to Section 50710 of the Health and Safety Code.
(2) Employee housing, as defined in Section 17008 of the Health and Safety Code, that is licensed and inspected by state or local agencies pursuant to Part 1 (commencing with Section 17000) of Division 13 of the Health and Safety Code.
(3) Housing for agricultural employees, as defined in subdivision (b) of Section 1140.4 of the Labor Code, that has received an exemption from local property taxes pursuant to subdivision (g) of Section 214 of the Revenue and Taxation Code.
(b)	The assistance provided pursuant to subdivision (a) shall only apply to gas and electricity, or both, used for the housing occupied by the workers and employees specified in subdivision (a)."

     In D. 97-02-014, the Commission indicated its desire for the LIGB to design and undertake a needs assessment as part of its program development and evaluation functions.  The Commission stated its intent to consider the schedule and scope of such  an effort during the transition to independent administration of low-income programs.

     On October 15, 1998, the LIGB submitted its budget for 1999.  Included in this filing was a proposal to set aside $2 million for the LIGB to conduct a needs assessment study and $4 million for the LIGB to conduct pilot programs.  Resolution E-3583, dated December 17, 1998, indicated that the LIGB’s request was insufficient, and that if the Board submitted a more thorough and complete needs assessment proposal in a supplementary filing by February 26, 1999, the Commission would reconsider the   Board’s request.  Resolution E-3585, dated December 17, 1999, indicated that any funds necessary for a needs assessment shall be an increase to the CARE costs and shall be split between dual-fuel utilities’ gas and electric departments, proportionally based on the respective gas and electric CARE budgets.

     In its February 26, 1999 compliance filing, the LIGB submitted a needs assessment study proposal.  LIGB indicated its concern that any needs assessment be conducted in an unbiased, impartial, and credible manner.  The LIGB requested authority to issue and manage the contract.  If that was not possible, the LIGB requested the utilities issue the contract, but that the management be under the purview of the Board.  LIGB proposed a 

third option where the Commission would be the contracting entity and the LIGB would manage the study.

     The Board proposed that the needs assessment study be completed in phases.  LIGB proposed that samples be drawn from utility service areas, upon which the study would   be conducted.  In its filing, the LIGB noted, on page 5, the choice of the sample size is of concern both at the utility and at state levels.  For the first phase, the LIGB suggested there should be a collaborative planning and final design of the study, which would lead   to the development of a request for proposal for a general contractor to conduct the study.  Per LIGB’s proposal, Phase II would have been the data gathering and analysis phase.  Phase III would have been the synthesis and assessment phase where results would be discussed and possible program change recommendations would be developed by the LIGB.  The LIGB made many assumptions in designing its proposed study with regards  to sample size, the sampling process, research questions, and research methodology.  For example, per LIGB’s proposal, LIGB indicated most of the samples would not provide  for statistical significance.

     The LIGB proposed that a Needs Assessment Subcommittee (NAS), a subcommittee to the LIGB, be created.  The LIGB requested the NAS be chaired by a LIGB member and comprised of a Commission staff member, two public members (designated by the LIGB), one representative designated by the utilities and, as ex-officio members, the contractor and representatives from each utility.  The purpose of LIGB’s proposed NAS would have been: 

a)	Fulfill tasks assigned by the LIGB; 
b)	Propose management plans; 
c)	Be responsible for preparing the RFP; 
d)	Allocate work among the team of utilities, consultants, university faculty, etc.; 
e)	Provide monthly progress reports to the LIGB and the Commission; 
f)	Publish results and provide them to the public; and 
g)	Review results and submit them with preliminary recommendations to the LIGB.

     The LIGB proposed that Phase I of the study be started immediately and be completed by August 15, 1999, at which time Phase II would begin.  The LIGB estimated that Phase II would be completed and Phase III would begin January 31, 2001.  The LIGB estimated that Phase III would be completed by April 15, 2001.

    
 The LIGB proposed the following needs assessment budget:

Needs Assessment Study:
     Phase I - LIGB Technical Consultant	    $77,000	
     Phase II and III - Independent Consultant	  $888,600		
Total Needs Assessment Study	  $965,600	

     On March 8, 1999, an Assigned Commissioner’s Ruling (ACR) ordered PG&E, Edison, SoCal Gas, and SDG&E to file advice letters, no later than March 12, 1999, seeking approval to implement a needs assessment study and any CARE outreach pilot program.

     On March 12, 1999, PG&E, Edison, SoCal Gas and SDG&E (Joint Utilities)  submitted a joint proposal for the implementation of a needs assessment study and for a CARE outreach pilot program.  The Joint Utilities acknowledge that prior to the LIGB’s February 26, 1999 submittal to the Commission, they actively participated and provided comments to the LIGB on the Board’s draft proposal for the needs assessment study.  The Joint Utilities state that many revisions in the LIGB’s proposal were incorporated based on the utilities’ input.  However, the Joint Utilities believe that additional changes are warranted that will further the Commission’s goals for the low-income programs.  The Joint Utilities believe their own proposals will expand upon and enhance the proposals submitted by the Board.

     The Joint Utilities strongly recommend that the needs assessment study be produced  by the Commission, by staff at its direction, on behalf of the ratepayers, and not be delegated to the LIGB.  The Joint Utilities point out that the part-time nature of the LIGB members might make it extremely difficult to manage a study of the magnitude  envisioned.  The Joint Utilities assert that Commission staff, supported by members of  the Board and interested parties, could quickly and consistently respond to issues and      make decisions as required.

     If the Commission prefers for Joint Utilities to implement the needs assessment study, the Joint Utilities request the Commission adopt its needs assessment study proposal, which differs from the LIGB’s proposed approach as follows:

a)	The Joint Utilities would jointly sponsor the RFP to select the independent contractor that would conduct Phase I of the study and would jointly issue the independent consulting agreements;

b)	A needs assessment oversight committee (Supervisory Committee) would be formed and chaired by an Energy Division representative, no later than May 21, 1999, and would be comprised of 10 additional voting members:

i)	two LIGB members;
ii)	one ORA member;
iii)	one member from each of the Joint Utilities; and
iv)	three members from agencies representing low-income customers.

c)	The study would be undertaken in two phases. Phase I would include developing a report summarizing known information, preparing and  issuing a RFP for Phase II and recommending the consultant to complete Phase II.  Phase II would include the in-depth needs assessment study and analysis.  The Joint Utilities indicate that the Commission may want to consider adding a third (or more) phase(s) to further refine and update Phase II and/or investigate under-served populations identified by the study;

d)	That the principal parties, such as the Commission and the LIGB, would  be involved in the study; and

e)	The Joint Utilities propose a budget of $223,200 for Phase I of the study.  This amount includes the independent contractor’s professional fees and business and travel expenses, and the Supervisory Committee meeting costs.  The Joint Utilities propose that Supervisory Committee meeting expenses be limited to refreshments and working luncheon costs, that meetings be held at the Commission’s offices or an alternative space free  of rental fees, and that the Commission provide administrative support for these meetings.

f)	The Joint Utilities propose that they file another advice letter describing Phase II and requesting Phase II funding (and any subsequent phases).   The Joint Utilities point out that the scope of subsequent phases is dependent on the outcome of the previous phases.

     The Joint Utilities propose that the Supervisory Committee not be a subcommittee to the LIGB.  Instead, the Supervisory Committee would serve as an independent committee of the Commission and have overall responsibility for the management of the study including: 

a)	Serving as an independent committee of the Energy Division, the Assigned
          Commissioner (AC), and/or the Administrative Law Judge (ALJ); 

b)	Fulfilling tasks assigned by the chairperson of the committee; 

c)	Developing project management plans; 

d)	Supervising the development of an RFP; 

e)	Screening and recommending the Phase I contractor; 

f)	Supervising the work of the Joint Utilities, the contractor, and any others
		involved; 

g)	Providing monthly progress reports to the LIGB and the Commission;

h)	Publishing results and making publications readily available to the LIGB, 
		the Commission and the public; and

i)	Reviewing the results and submitting preliminary recommendations to the 
		LIGB, the AC and/or ALJ.

     The Joint Utilities propose that the minimum qualifications for serving on the Supervisory Committee include:

a)	Demonstrated experience in managing or supervising major market research
		projects; or

b)	Demonstrated experience in the delivery of low-income programs; or

c)	Educational background in economics, statistics, marketing, engineering, or
		business administration.

     With a member from each utility being represented on the Supervisory Committee, the Joint Utilities claim their concerns about unintended or unexpected consequences such as contractor negligence, utility liability, and breach of contract would be mitigated.  The Joint Utilities request the Commission to direct that the Supervisory Committee be  formed within 30 days of approval of the Joint Utilities needs assessment proposal.  Sempra, on behalf of SDG&E and SoCal Gas, indicated that its proposals for the needs assessment would have a minimal impact on ratepayers.

     Resolution E-3601, issued on June 3, 1999, conditionally approved Advice Letters 2140-G/1854-E, 1370-E, 1156-E/1141-G, and 2792-G, with respect to the implementation of an outreach pilot program and conditionally approved LIGB’s budget.  That resolution denied LIGB's request to conduct a needs assessment study and an outreach pilot and indicates a future resolution would address the utilities’ request for the conduction of a needs assessment study.

     D.99-03-056 extended the period in which utilities will continue to administer low-income assistance programs to December 31, 2001.  That decision requires the utilities to work in consultation with the LIGB to develop program plans and budgets.

     Governor Davis approved Assembly Bill (AB) 1393 on October 6, 1999.  This bill added Sections 327 and 381.5 to the PU Code and amended PU Code Section 2790.  Assemby Bill 1393 states:

	“(1) The Public Utilities Act requires the Public Utilities Commission to establish a program of assistance to low-income electric and gas customers, which is referred to  as the California Rates for Energy of CARE program.

                 This bill would require the electric corporations and gas corporations that participate in the CARE program to administer low-income energy efficiency and rate assistance programs, as described, subject to commission oversight.  The bill would require the administrators of the program to undertake certain functions and would allow the commission to require these participating corporations to competitively bid, to the extent practical, service delivery components of these programs.  The bill would require the bidding criteria to recognize specified factors, subject to commission modification.”

     PU Code Section 327 states:

“(a)  The electric and gas corporations that participate in the California Alternative Rates for Energy program, as established pursuant to Section 739.1, shall administer low-income energy efficiency and rate assistance programs described in Sections 739.1, 739.2, and 2790, subject to commission oversight.  In administering the programs described in Section 2790, the electric and gas corporations, to the extent practical, shall do all of the following:

(1)	Continue to leverage funds collected to fund the program described in subdivision (a) with funds available from state and federal sources.

(2)	Work with state and local agencies, community-based organizations, and other entities to esnure efficient and effective delivery of programs.
(3)	Encourage local employment and job skill development.
(4)	Maximize the participation of eligible participants.
(5)	Work to reduce consumers electric and gas consumption, and bills.
(b)	If the commission requires low-income energy efficiency programs to be subject to competitive bidding, the electric and gas corporation described in subdivision (a), as part of their bid evaluation criteria, shall consider both cost-of-service criteria and quality-of-service criteria.  The bidding criteria, at a minimum, shall recognize all of the following factors:
(1)	The bidder’s experience in delivering programs and services, including, but not limited to, weatherization, appliance repair and maintenance, energy education, outreach and enrollment services, and bill payment  assistance programs to targeted communities.
(2)	The bidder’s knowledge of the targeted communities.
(3)	The bidder’s ability to reach targeted communities.
(4)	The bidder’s ability to utilize and employ people from  the local area.
(5)	The bidder’s general contractor’s license and evidence of good standing with the Contractors’ State License Board.
(6)	The bidder’s performance quality as verified by the funding source.
(7)	The bidder’s financial stability.
(8)	The bidder’s ability to provide local job training.
(9)	Other attributes that benefit local communities.
(c)	Notwithstanding subdivision (b), the commission may modify the bid criteria based upon public input from a  variety of sources, including representatives from low-income communities and the program administrators identified in subdivision (b), in order to ensure the effective and efficient delivery of high quality low-income energy efficiency programs.”

     PU Code Section 381.5 states:

“It is the intent of the Legislature to protect and strengthen the current network of community service providers by doing the following:

(a) Directing that any evaluation of the effectiveness of the low-income energy efficiency programs shall be based not solely on cost criteria, but also on the degree to which the provision of services allows maximum program   accessibility to quality programs to low-income communities by entities that have demonstrated performance in effectively delivering services to the communities.
(b) Ensuring that high quality, low-income energy  efficiency programs are delivered to the maximum number of eligible participants at a reasonable cost.”

     PU Code Section 2790 now states:

"(a) The commission shall require an electrical or gas corporation to perform home weatherization services for low-income customers, as determined by the commission under Section 739, if the commission determines that a significant need for those services exists in the corporation's service territory, taking into consideration both the cost effectiveness of the services and the policy of reducing the hardships facing low-income households.

 (b)  (1) For purposes of this section, "weatherization" includes, where feasible, any of the following measures  for any dwelling unit:

           (A) Attic insulation.
           (B) Caulking.
           (C) Weather-stripping.
           (D) Low flow showerhead.
           (E) Weatherization blanket.
           (F) Door and building envelope repairs which reduce air infiltration.

           (2) The commission shall direct any electrical or gas corporation to provide as many of these measures as are feasible for each eligible low-income dwelling unit.

           (c) "Weatherization" may also include other building conservation measures, energy-efficient appliances, and energy education programs determined by the commission to be feasible, taking into consideration both the cost effectiveness of the measures and the policy of reducing the hardships facing low-income   households."

NOTICE

     Advice Letters 2140-G/1854-E, 1370-E, 1156-E/1141-G, and 2792-G were served on other utilities, government agencies, and to all interested parties who requested such notification, in accordance with the requirements of General Order 96-A.  Public notice of these filings has been made by publication in the Commission’s daily calendar.

PROTESTS AND COMMENTS

     The following summaries reflect the protests and comments on the utility advice   letters with respect to the conduction of a needs assessment study.  Protests and comments with respect to the conduction of an outreach pilot were discussed and addressed in Resolution E-3601.

     On April 1, 1999, ORA filed comments generally in support of the Advice Letters.  ORA believes the Joint Utilities’ proposals are more inclusive of input from various stakeholders than LIGB’s.  ORA alleges that the LIGB and its consultants have often expressed interest in expanding program offerings and budgets beyond current levels.  ORA points out that because of this, the LIGB is not an impartial participant.  ORA believes a more objective participant than LIGB is needed to oversee the needs  assessment study to ensure true impartiality.  ORA recommends the selection of the   needs assessment consultants using the state procurement process through the Energy Division.  ORA points out there is not a sunset date set for the low-income programs,  and, therefore, the study should be well thought out and not rushed.  ORA believes that the foundation work should be thorough and correct to ensure an effective, complete, and accurate needs assessment is developed.

     On April 1, 1999, the LIGB submitted comments on the Advice Letters and a response to utility comments on the LIGB filing and comments by ORA.  The LIGB asserts that there are many areas of general agreement between the LIGB and the Joint Utilities’

regarding the needs assessment study proposals.  LIGB asserts it is as credible and impartial as the Commission.  The LIGB continues to recommend that the study be under the overall direction of the LIGB.  The LIGB alleges the large size of the Joint Utilities’ proposed supervisory committee will only give an illusion of balanced stakeholder representation.  The LIGB points out that the time requirements for any subcommittee during Phase I will be substantial and it is unrealistic to expect that five uncompensated members of the public will be able to attend all of the meetings and meet their own work schedules.  LIGB points out that consistent attendance will be difficult for LIGB and any public members.  The LIGB recommends that financial support be given to any LIGB   and public members who are appointed to the supervisory committee.  The LIGB requests the Commission order the utilities to cooperate with the supervisory committee under any governance structure.  LIGB requests the chair be elected by the supervisory committee.  The LIGB requests the Commission authorize it to designate public member  organizations to the committee.

     LIGB cautions that separate contractors for Phase I and II will require two Requests for Proposals (RFPs), two bid solicitation and evaluation processes, and a hiatus in the work as the study transitions from one contractor to the next. The LIGB is concerned that the Joint Utilities’ proposal for two separate contractors would delay the results of the study and requests the Commission authorize funding for both Phase I and II, amortizing this funding through 2001.  The LIGB asserts that the utilities have not provided a better model for cost estimation.  LIGB suggests that if supplemental funding is needed for Phase II, then additional funding could be requested at that time.  With funding already approved for Phase II, LIGB proposes that the detailed proposal for Phase II could be made available for a 30-day comment period.  Under LIGB’s revision to the Joint  Utilities’ proposal, LIGB asserts that the process to begin Phase II could be reduced from 385 days to 240 days, as follows:

LIGB Recommendation			Joint Utilities’ Recommendation

    +0	Committee Formed 	 +0	Study Authorized
  +15	Committee Formed	+30	Committee Formed
  +30	Work Plan Issued	+45	Work Plan Issued
  +60	RFP Issued for Phase I and II	+60	RFP Issued for Phase I
+120	Proposals Analyzed, Bidder	+120	Proposals Analyzed, Bidder
			Selected
+130	Independent Contractor Begins	+130	Independent Contractor Begins Work		Work

+180	Contractor Submits Phase I	+180	Contractor Submits Phase I Report		Report
+190	Committee Incorporates LIGB
	Comments on Final Report
	and RFP
+200	LIGB Ratifies and Submits Final	+200	Committee issues final report
	Report and Plan for 30 Day		and RFP
	Comment Period
		+205	Utilities File Advice Letters for 
			Phase II
		+225	Advice Letter Protest Period

+240	Assigned Commissioner Authorizes	+245	Draft Resolution Issued for
	Phase I Study Plan with		Comments
	Amendments from Comments,
	Phase II Work Begins
	+275	Resolution Issued Approving
		Phase II
	+315	RFP Released by Joint Utilities
	+355	Phase II Proposals Reviewed
	+385	Phase II Work Begins
	
     LIGB asserts that an assessment of energy burden was recommended by the Low Income Working Group for any needs assessment study.  LIGB asserts this information is necessary to examine the assistance that low-income households need in managing their bills.  LIGB claims helping low-income households manage their energy bills are an objective of the Commission for the CARE and LIEE programs.  The LIGB supports using Phase I to refine and perhaps add to the objectives that have been proposed and suggests that the Joint Utilities’ governance structure would be problematic in achieving   a fair and open discussion.  LIGB agrees that one or two page descriptions of research studies are not sufficient to provide the level of detail needed to develop a comprehensive

study plan.  The LIGB suggests that the Commission specify what shouldn’t be addressed in the needs assessment study rather than trying to identify the areas that should be addressed.  The LIGB asserts that a key point of designing the study is to develop new data, rather than simply taking information from existing sources, on relevant research questions focusing on contacting low-income households directly.

     On April 1 and 6, 1999, the Community Organizations filed protests to the Advice Letters.  The Community Organizations claim that LIGB’s proposed completion date of January 31, 2001 for the needs assessment study will permit implementation of recommended changes to CARE and LIEE at the end of PY 2000, when utility administration ends.  The Community Organizations allege that the additional approvals required for the Joint Utilities’ proposal will unnecessarily delay the study results.  The Community Organizations assert the Joint Utilities and the Commission’s Energy   Division are not perceived as representing low-income ratepayers.  The Community Organizations allege that the Joint Utilities’ focus is the transmission and distribution of energy, and Energy Division must serve all ratepayers.  The Community Organizations claim the Commission created the LIGB to specifically focus on the needs of low-income customers.  Therefore, the Community Organizations support LIGB’s proposal for an oversight subcommittee to oversee the needs assessment.  The Community Organizations claim the Joint Utilities’ proposed required experience for public members on the subcommittee is unnecessary.  The Community Organizations claim that the contractor hired to complete the project will have the relevant education and experience to manage and supervise major market studies and deliver low-income services.  The Community Organizations point out that the needs of all stakeholders, especially ratepayers, must be taken into account, but point out the work being undertaken is to improve services to the poor.

     On April 9, 1999, Sempra, on behalf of SDG&E and SoCal Gas, responded to the protests of the Community Agencies.  Sempra points out that the Joint Utilities’ proposal for a needs assessment study will ensure the study will be done in a manner that will provide meaningful results.  Sempra points out that LIGB’s proposed schedule to conduct the needs assessment includes a January 2001 completion date, a date that would not permit incorporation of study results in planning for PY 2001 and that LIGB schedule  may compromise the thoroughness and integrity of the study.  Sempra disagrees with the Community Agencies’ assessment that the competency of the Joint Utilities is the transmission and distribution of energy.  Sempra points out that the Joint Utilities would ensure that utility employees appointed to the Supervisory Committee would be employees who have either extensive experience in administering and implementing the Commission’s low-income assistance programs or who have experience in conducting or managing the Commission directed or program-related research studies.  Sempra points
out that because Energy Division staff must represent the interest of all ratepayers, both low-income participants and those customers who provide the subsidy and therefore, it is 

in the best position to balance the needs of all utility ratepayers.  Sempra alleges that the Joint Utilities’ proposed minimum qualifications for members of the Supervisory Committee will ensure that the committee will understand the issues, be able to make informed decision regarding the quality of the proposals submitted and will be able to address the majority of issues that may arise.  Sempra strongly opposes the LIGB’s and the Community Agencies’ recommendation that the contractor be responsible for supervising its own work.

     On April 13, 1999, PG&E submitted a response to the Community Agencies’ protest.  PG&E agrees that the Commission could approve funding for both Phases of the needs assessment at this time, reducing the possibility of additional Commission approvals.  PG&E asserts it will ensure that representatives selected to serve on the Supervisory Committee would have extensive experience in administering and implementing the Commission’s low-income assistance programs.  PG&E believes that minimum qualifications for serving on the Supervisory Committee are necessary to enable the study to be completed in a timely manner.

     On April 13, 1999, Sempra, on behalf of SDG&E and SoCal Gas, responded to the comments of the LIGB, dated April 1, 1999 and Comments of the Community Resource Project, Inc. and the Community Enhancement Services (collectively referred to as Community Services), also dated April 1, 1999.  Sempra agrees that members, other than utilities, selected for the needs assessment Supervisory Committee should be reimbursed for travel, meals, etc., consistent with the Board’s current Board reimbursement rules.  Sempra alleges that a thirty-day comment period at the end of Phase I of the needs assessment may not provide adequate time for all parties to comment and for the Commission to resolve any disagreements.  Sempra believes the Commission has not endorsed “estimating and explaining the determinants of the energy burden of low-   income households” as an objective for a needs assessment study.  Sempra disagrees that one utility can or will adequately represent the interest of the other three, especially with respect to contractual issues.  Sempra points out the contracts represent liability for which the utilities seek to minimize.  Sempra refers the Commission to its response to the Community Agencies, dated April 9, 1999.  Sempra believes that response addresses the issues raised by the Community Services.

DISCUSSION

     The Commission has expressed its intent for the conduction of a needs assessment study.  In E-3601, the Commission denied LIGB’s request to conduct a needs assessment study.  However, the Commission may still draw upon LIGB’s vision of how such a   study should be conducted.  There are positive points and methodologies inherent in both
the Joint Utilites and LIGB’s vision that can be drawn upon in order to produce a complete, thorough, and unbiased study.

     There appears to be general agreement between the Joint Utilities and LIGB regarding a needs assessment study.  For example, both agree that there should be an oversight committee, and that there should be expense reimbursement for public members of the oversight committee.  Both the Joint Utilities and LIGB agree on the funding levels and that funding for Phase I and II should be authorized now, with the caveat that should increased funding for Phase II be needed, the utilities could request additional funding.  Both the LIGB and the Joint Utilities suggest the Commission may want to consider adding a third (or more) phase(s) to further refine and update Phase II and/or investigate under-served populations identified by the study.  However, the Joint Utilities and LIGB do not agree on many of the details past these points.

     The Joint Utilities and ORA strongly recommend that the needs assessment study be produced by the Commission, by staff at its direction, on behalf of the ratepayers, and not be delegated to the LIGB.  The Joint Utilities point out that the part-time nature of the LIGB members might make it extremely difficult for LIGB members to manage a study   of the magnitude envisioned.  Commission staff, on the other hand, could quickly and consistently respond to issues and make decisions as required.  The Commission strongly agrees with the Joint Utilities and ORA that the needs assessment be produced by the Commission.  ORA's comments and the Joint Utilities' proposal regarding the production of the study should be granted.

     The LIGB proposes to oversee the needs assessment study with a LIGB subcommittee comprised of five members, including one LIGB member, one Commission member, two public members (appointed by the LIGB) and one utility representative member.  LIGB's proposed subcommittee would also have four ex-officio members, including the  contractor and the other three utility representatives.  The Community  Organizations support LIGB's proposed oversight Committee.  The Joint Utilities propose an eleven-member independent oversight committee with one Energy Division representative chairing the Committee, two LIGB members, one ORA member, one member from each of the four utilities, and three representatives of entities representing low-income customers.  The LIGB itself indicates an oversight committee would be likely to have substantial staffing demands placed on it, especially during Phase I.  Facilitating and providing resources for an oversight committee, in addition to managing the consultant, would place heavy staffing burdens on the Energy Division.  It would be unwise to establish either committee in light of the Energy Division's already strained staffing resources.

     Instead of an oversight committee, a workshop, conducted before Phase I, would allow interested participants to provide input into the design of the study.  The Energy Division should hold a workshop to develop the workplan for the needs assessment study, that will be used by the Phase I consultant.  Thirty days after the conclusion of the workshop, 

Energy Division should distribute the workplan for public comment.  Energy Division should revise the workplan as necessary.  Additional workshops during the 
study may prove useful.  The Energy Division should use its discretion and hold  additional workshops if warranted.  The Joint Utilities' request to establish an oversight committee should be denied.  LIGB's comments and the Community Organizations’ protest to the advice letters with respect to an oversight committee are moot.

    The Commission is interested in encouraging broad public input especially during the Phase I planning process.  The Commission is aware that some of the potential participants in this process may have limited resources.  Travel and meal expense reimbursement may allow participation in the workshop process by members of the   public that might not be otherwise be able to attend.  Commission and utility travel and meal expense reimbursement for such participation will already be funded by program funds.  Participation in the workshops by other organizations and agencies should provide broad public input to the process and improve the design of the study.  Travel and meal expense reimbursement for participation by other organizations and agencies should have a minimal impact on program funds but may increase public participation.  Therefore, travel and meal expense reimbursement should be approved for members of the public, including any LIGB members, for attendance at any Energy Division workshops for the benefit of the needs assessment study.  Travel and meal expense reimbursement claims should be forwarded to the Energy Division, which shall have authority to determine the reasonableness of the claims.  Travel and meal expense reimbursements for these workshops should follow the guidelines for the LIGB, and reimbursements should be made to individuals’ organizations and not to the individual participants themselves.    Only LIGB members may qualify for per diem.

     The Commission acknowledges that, together, the utilities, contractor implementers, and members of the LIGB and its advisory committee possess a vast reservoir of  expertise in the design and implementation of the low-income programs.  Many of the same also possess considerable expertise in designing such studies as we are pursuing.  In addition to the workshops, Energy Division should seek out and encourage participation by these individuals to the fullest extent possible.  Such expertise should be drawn upon during the design and implementation of this study to ensure a complete, thorough, comprehensive, accurate and unbiased study.

     Some of the utilities have expressed concern with the LIGB's study objectives.   Sempra believes the Commission has not endorsed "estimating and explaining the determinants of the energy burden of low-income households" as an objective for a needs assessment study.  The Joint Utilities propose that the objectives be developed during Phase I.  The LIGB suggests that the Commission specify what shouldn't be addressed in 
the needs assessment study rather than trying to identify the areas that should be addressed.  The Energy Division believes it is reasonable not to determine the study

objectives at this time, and instead the objectives should be developed in Phase I and the Energy Division workshop(s).  Thereby, the Joint Utilities' proposal should be granted on this matter and the LIGB's should be denied.  The Commission would like to remind participants that the design of the needs assessment study needs to take into account PU Code Sections 327, 381.5, 382, 739.1, 739.2, and 2790.

     The Joint Utilities request that the contractor selected for Phase I be ineligible to conduct Phase II.  LIGB cautions that separate contractors for Phase I and II will require two RFPs, two bid solicitation and evaluation processes, and a hiatus in the work as the study transitions from one contractor to the next.  The LIGB is concerned that the Joint Utilities' proposal for two separate contractors would delay the process.  Since the first contractor will be designing such a study and conducting it, there appears to be a conflict of interest between designing such a study and conducting it.  While, as LIGB points out, the Joint Utilities' proposal may incur additional time to complete, it appears to be a reasonable trade-off.  The contractor selected to complete Phase I should not be allowed to conduct Phase II.  Therefore, the Joint Utilities' request should be granted and LIGB's suggestions proposed in their comments is denied.

     LIGB's proposed schedule to conduct the needs assessment includes an early 2001 completion date, a date that would not permit incorporation of study results in planning for PY 2001 and the LIGB schedule may compromise the thoroughness and integrity of the study.  However, as indicated below, it is reasonable to approve funding for the Phase II by this resolution.  This removes the need for an additional advice letter process.  It is reasonable to draw upon both LIGB's and the Joint Utilities' proposed schedules.  Energy Division should convene a workshop within 45 days from the effective date of this resolution.  The remainder of the schedule should be as follows: 

          Days from			
   Conclusion of Workshop			Task

+30	Draft Work Plan for Distribution and Comment; Energy Division to Revise
  +60				Final Work Plan Issued
  +90				RFP Issued for Phase I
+150				Proposals Analyzed, Bidder Selected
+160				Independent Contractor Begins Work
+210	Contractor Submits Draft Phase I Report on Study Design & RFP for Phase II
+230	Public Comments on Draft Phase I Report and RFP for Phase II
+260	Energy Division Issues Final Report on Study Design and RFP for Public Comment Period

+320	Assigned Commissioner authorizes Phase II Study Plan and RFP with amendments from comments
+325				RFP Issued
+365				Phase II Proposals reviewed by Energy Division 
and contractor for Phase II selected
+395				Independent Contractor Begins Phase II Work

     The LIGB indicated its support for the Joint Utilities' proposed budget of $223,200 for Phase I and the expanded work its entails.  The LIGB's best estimate for Phase II is $888,600.  With the continuance of 1999 programs through PY 2001, it is appropriate to set the funding levels for both phases of the needs assessment at this time.  The Energy Division believes Phase I should be funded at the level proposed by the utilities and  should come from PY 2000 funds.  Funding for Phase II should be initially set at the level proposed by LIGB and funding should come from PY 2000 and PY 2001 program funds, if Phase II is begun in PY 2000.  If Phase II is not begun until PY 2001, funding should come from PY 2001 and 2002.  As per established procedures, costs for the needs assessment study should be split between the Joint Utilities in the following manner:

	PG&E		30%			SDG&E	15%
	Edison		30%			SoCal Gas	25%

It is reasonable that the needs assessment study costs be an increase to the CARE  program expenses.  For dual-fuel utilities, these costs should be allocated to their gas and electric departments, proportionately based on their gas and electric CARE expenditures.

     LIGB recommends that any subsequent decisions regarding the needs assessment  study after this resolution be delegated to the assigned Commissioner, the LIGB, and/or any oversight committee.  The LIGB recommends the Assigned Commissioner monitor the progress of the study, review research products, and make decisions to support timely and cost-effective completion of the study using informal processes with appropriate public input.  The LIGB recommends that the Commission delegate oversight responsibilities to the Assigned Commissioner and the LIGB, and supervisory responsibilities to the oversight committee.

     For this study, it is appropriate that the Energy Division be delegated supervisory responsibilities.  Subsequent decisions regarding the needs assessment study such as final approval of the Phase I RFP, any changes in scheduling, and any increases in funding that may be needed are essentially ministerial in nature and should be delegated to the  Assigned Commissioner.  After the completion of Phase II, the Commission will assess  the need for any further phases and will address the studies' results.  The LIGB's request 
is partially granted to the extent that the Assigned Commissioner is delegated the ministerial responsibilities.  The remainder of LIGB's request is denied.

  The Community Organizations claim that the Commission created the LIGB to specifically focus on the needs of low-income customers.  As we pointed out in  Resolution E-3601, the Commission established the LIGB to focus specifically on low-income customers.  As an advisory board to the Commission on low-income programs, the LIGB is charged with receiving broad public input on low-income issues, and should 
weigh all aspects of such into its recommendations.  LIGB’s mandate is to be a  consensus-building forum to provide unbiased advice and LIGB is to consider the  interests of all stakeholders, including ratepayers, while ensuring proposed low-income programs are consistent with Commission policy.

COMMENTS

     The draft resolution of the Energy Division in this matter was mailed to the parties in accordance with Public Utilities Code Section 311(g).  The Community Action Agency   of San Mateo County, Inc. filed comments on-February 17, 2000.  Comments were filed on February 18, 2000 by Richard Heath and Associates (RHA), Edison, LIGB, and ORA.  Joint comments were filed on February 18, 2000 by PG&E, the Latino Issues Forum, the Greenlining Institute, and the Bay Area Poverty Resource Council.  Sempra filed comments on February 22, 2000.

     Edison correctly noted several factual errors in the Draft Resolution, which Energy Division corrected.  Specifically, on page 2, the last paragraph of the summary is revised to include Edison’s Advice Letter 1370-E in the list of advice letters that received conditional approval under Resolution E-3601.  Finding of Fact 22 is corrected to reflect the adopted schedule and the ordering paragraphs are corrected to reflect Edison as the fiscal agent for this product and to clarify that the total initial funding for Phase II is $888,600.  Finally, the resolution was clarified with respect to Energy Division’s utilization of expertise outside the Commission.

     The remainder of the comments merely reargues points raised in earlier filings and do not require separate discussion or propose new methodologies that we do not address here.

FINDINGS

1.	On March 12, 1999, PG&E, Edison, SDG&E, and SoCal Gas filed Advice Letters 2140-G/1854-E, 1370-E, 1156-E/1141-G, and 2792-G, respectively, requesting approval for a needs assessment study.

2.	The needs assessment study should provide the Commission with information to determine appropriate specific goals for the future regarding low-income programs.

3.	Resolution E-3601 denied LIGB's request to conduct a needs assessment study.

4.	On April 1, 1999, LIGB submitted comments on the Advice Letters and a response to utility comments on the LIGB filing and comments by ORA.

5.	On April 1 and 6, 1999, the Community Organizations filed protests to the Advice Letters.

6.	On April 1, 1999, ORA filed comments in support of the utility advice letters.

7.	The Commission has before it the Joint Utilities’ proposal and LIGB's vision on how to accomplish such a study.

8.	Commission staff could quickly and consistently respond to issues and make decisions as required to manage the needs assessment study.

9.	A workshop conducted before the study would allow participants to provide  input into the design of the study.

10.	An oversight committee would have substantial demands placed on it, and such a committee would strain Energy Division's staffing resources.

11.	The conduction of a needs assessment study should be produced by the Energy Division.

12.	The Energy Division should be delegated supervisory and facilitation responsibilities.

13.	The proposed study objectives can be developed in a workshop.

14.	The Energy Division should convene a workshop within 45 days from the date of this resolution to develop the proposed study objectives.  The study objectives should take into account P.U. Code Sections 327, 381.5, 382, 739.1, 739.2, and 2790.

15.	In addition to the workshops, Energy Division should seek out and encourage participation by the utilities, contractor implementors, and members of the LIGB and its advisory committee to the fullest extent possible.  Such expertise

              should be drawn upon during the design and implementation of this study to
              ensure a complete, thorough, comprehensive, accurate, and unbiased study.

16.	Funding for Phase I of the needs assessment study should be authorized at $223,200 and funded as an increase to the program year 2000 CARE program.

17.	Initial funding for Phase II of the needs assessment study should be authorized at $888,600 and should be funded as an increase to the program year 2000 and  2001 CARE program, if study is begun in PY 2000.

18.	Initial funding for Phase II of the needs assessment study should be authorized at $888,600 and should be funded as an increase to the program years 2001 and 2002 CARE program, if the study is begun in PY 2001.

19.	Travel and meal expense reimbursement for LIGB members and other public participants at the workshop should allow increased participation and input at the workshop.  Such travel and meal expense reimbursement should be per Board Guidelines as adopted by D.98-02-040.  Only LIGB members should receive per diem.

20.	The contractor selected for Phase I should be ineligible to conduct Phase II due  to the fact that there appears to be a conflict of interest in both designing and then conducting the study.

21.	Subsequent decisions regarding the needs assessment study such as final   approval of the Phase II RFP, changes in scheduling, and any increases in   funding that may be needed should be delegated to the assigned Commissioner.

22.	The study results and any need for additional phases of the study should be addressed as needed by the Commission in the future. 

23.	It is reasonable to adopt the schedule as follows:

Days from			
   Conclusion of Workshop			Task

+30	Draft Work Plan for Distribution and Comment; Energy Division to Revise
  +60				Final Work Plan Issued
  +90				RFP Issued for Phase I
+150				Proposals Analyzed, Bidder Selected
+160				Independent Contractor Begins Work

+210	Contractor Submits Draft Phase I Report on Study Design & RFP for Phase II
+230	Public Comments on Draft Phase I Report and RFP for Phase II
+260	Energy Division Issues Final Report on Study Design and RFP for Public Comment Period
+320	Assigned Commissioner authorizes Phase II Study Plan and RFP with amendments from comments
+325				RFP Issued
+365				Phase II Proposals reviewed by Energy Division 
and contractor for Phase II selected
+395				Independent Contractor Begins Phase II Work

24.	It is reasonable that costs for the needs assessment study should be split between the Joint Utilities in the following manner:

		PG&E		30%		SDG&E	15%
		Edison		30%		SoCal Gas	25%

For dual-fuel utilities, these costs should be allocated to their gas and electric departments, proportionately based on their gas and electric departments' CARE expenditures.

25.	It is reasonable to conditionally approve the utility Advice Letters with the above modifications for the conduction of a needs assessment study.

26.	The Community Organizations’ protest, with respect to the formation of the LIGB proposed oversight committee, is moot.  The remainder of their protests should be denied.

27.	ORA's recommendations in their comments should be granted.

28.	LIGB's comments should be granted to the extent acted on herein.  LIGB's request for the formation of an oversight committee is moot.  The remainder of LIGB's recommendations in their comments should be denied.

THEREFORE, IT IS ORDERED that:

1.	Pacific Gas & Electric Company (PG&E), Southern California Edison Company (Edison), San Diego Gas & Electric Company (SDG&E), and Southern California Gas Company (SoCal Gas) (Utilities) Advice Letters 2140-G/1854-E, 1370-E, 

1156-E/1141-G, and 2792-G (Advice Letters), respectively, are conditionally approved, with respect to the conduction of a needs assessment study, with the following modifications:

a)	The Commission's Energy Division shall conduct the needs assessment study and shall facilitate and manage the study;

b)	Funding for Phase I of the needs assessment study is authorized at $223,200 and funded as an increase to the program year (PY) 2000 California Alternate Rates Energy (CARE) program;

c)	Initial funding for Phase II of the needs assessment study is authorized at a total of $888,600 and shall be funded as an increase to the PY 2000 and 2001 CARE program, if the study is begun in PY 2000;

d)	Initial funding for Phase II of the needs assessment study shall be authorized at a total of $888,600 and shall be funded as an increase to the PY 2001 and 2002 CARE program, if the study is begun in PY 2001;

e)	Within 45 days from the effective date of this resolution, Energy Division shall convene a workshop for the purpose of designing the study objectives.  The Energy Division may convene additional workshops if needed;

f)	The schedule for the conduction of the Needs Assessment Study is as follows:

Days from			
   Conclusion of Workshop			Task

+30	Draft Work Plan for Distribution and Comment; Energy Division to Revise
  +60				Final Work Plan Issued
  +90				RFP Issued for Phase I
+150				Proposals Analyzed, Bidder Selected
+160				Independent Contractor Begins Work
+210	Contractor Submits Draft Phase I Report on Study Design & RFP for Phase II
+230	Public Comments on Draft Phase I Report and RFP for Phase II
+260	Energy Division Issues Final Report on Study Design and RFP for Public Comment Period

+320	Assigned Commissioner authorizes Phase II Study Plan and RFP with amendments from comments
+325				RFP Issued
+365				Phase II Proposals reviewed by Energy Division 
and contractor for Phase II selected
+395				Independent Contractor Begins Phase II Work

	g)	Costs for the needs assessment study shall be split between the utilities in
 		the following manner:

			PG&E		30%		SDG&E	15%
			Edison		30%		SoCal Gas	25%;

h)	For PG&E and SDG&E, costs for the needs assessment study shall be allocated to their gas and electric departments, proportionately based on their gas and electric departments' CARE expenditures;

i)	An oversight committee will not be established; and

j)	The design of the needs assessment study shall take into account Public Utilities Code Sections 327, 381.5, 382, 739.1, 739.2, and 2790.

2.	Travel and meal expense reimbursement for LIGB members and public participation at the workshop(s) shall be per LIGB Guidelines as adopted.  Only LIGB members are eligible for per diem.  To be eligible for reimbursement,   claims for reimbursement shall be directed to the Energy Division.  The Energy Division shall forward approved claims to Edison for payment and the travel reimbursement shall issue to the claimant’s organization.

3.	The Energy Division shall forward all approved invoices for the needs assessment contracted services to Edison for payment.  SDG&E, SoCal Gas, and PG&E shall reimburse Edison for their respective share of the needs assessment study.

4.	The contractor selected for Phase I shall be ineligible to conduct Phase II.

5.	Subsequent decisions regarding the needs assessment study such as final approval
Of the Phase II RFP, changes in scheduling, and any increases in funding that    may be needed are delegated to the Assigned Commissioner.

This Resolution is effective today.

I certify that the foregoing Resolution was duly introduced, passed, and adopted at a conference of the Public Utilities Commission of the state of California held on March   16, 2000, the following Commissioners voting favorably thereon:

                                                                                          _____________________                                                         
						                       WESLEY M. FRANKLIN
						                                   Executive Director

         RICHARD A. BILAS
								      President
         HENRY M. DUQUE
         JOSIAH L. NEEPER
         CARL W. WOOD
         LORETTA M. LYNCH
							    Commissioners