Senate Bill 1403
SB 1403 will ensure more of California's low-income families benefit from energy savings assistance in the form of energy efficiency upgrades to their home, including weatherization and appliance replacement. These energy efficiency upgrades will help to reduce energy utility bills, increase a family's quality of life and comfort, support economic development, and advance the state's efforts to achieve its climate goals.
The Energy Savings Assistance (ESA) program provides no-cost home weatherization services, energy efficiency measures, and minor home repairs to help low-income families and households:
(1) Conserve energy;
(2) Reduce energy burden;
(3) Improve health, comfort and safety;
(4) Create jobs in Disadvantaged Communities
The program also provides information and education to promote much-needed energy-efficiency practices and behaviors in low-income communities. Simple tips, such as explaining time of use rates or the energy drain of plugged-in appliances when not in use, teaches low-income families how to help themselves and makes significant differences in energy bills when adopted.
Income eligibility for ESA participation has not been adjusted in almost 15 years and is currently set at 200% or below of Federal Poverty Guidelines, regardless of the geographic location of the home.1 This standard inadvertently excludes countless struggling and disadvantaged families who are living in California’s more expensive urban and suburban areas, from participating in a low-income weatherization program meant to help precisely such families.
Adjusting the ESA income guidelines to more accurately reflect local economic conditions would allow for participation from 200% of the Federal Poverty Guidelines to the “low-income” category as published in the Annual State Income Limits by California’s own Department of Housing and Community Development,2 would allow these services to reach more low-income households who need help reducing their energy usage and monthly energy burden.
Adopting the new income guidelines will not affect the ESA Program budget nor reduce the number of customers served.
Frequently asked Questions (FAQ)
1. Why change the income qualifications?
Currently, the PUC uses a one-size-fits-all approach and sets the income guidelines for participation in the ESA Program at 200% of the Federal Poverty Guidelines, regardless of geography or local costs of living. Although it may have been fitting when adopted, this cap no longer reflects an adequate threshold for most higher-cost areas, especially where inflated housing costs consume the majority of earnings of California’s low-income families. The Federal Poverty Level standard is a national device that does not reflect CA situation or CA values. The current ESA eligibility guidelines are antiquated and have the effect of disqualifying families as over-income who otherwise are the target audience. The result is that many struggling families go unserved while ESA program budgets remain unspent year-after-year.
2. Will this change increase the budget for ESA or reduce the number of homes served?
No. The CPUC establishes the annual ESA budget caps and homes treated goals. Once fully subscribed for the year, new customers requesting service will participate the following year. Increasing the number of qualifying customers will not change the amount of money available to serve customers during that program year. Instead, it will ensure that program funds can be expended as intended. It was certainly not intended that unused funds languish while some low-income families are inappropriately disqualified.
3. Will this change result in a surcharge or increase in funds collected from non-participating customers?
No. This change allows families in need an opportunity to reduce their energy burden and increase their health, comfort, and safety while creating jobs in California. It does not increase the budget and, as such, does not require an increase in rates or collections.
4. Will the California Alternate Rates for Energy (CARE) budget be increased by this legislation?
No. The CARE program eligibility requirements are distinct from the ESA Program. This legislation is only seeking to modify the ESA Program eligibility guidelines. There are no additional rate increases required to implement this legislation.
5. Is this initiative a prescription for Area Median Income (AMI) eligibility?
No. Area Median Income is significantly higher than the low-income standard proposed. The State of California spends resources to develop and publish annually the income levels qualifying as “low income.” The “low income” category falls between “very low income” and “Median Income”.
6. Why not FERA?
Although it would offer a higher cap, FERA would create similar challenges to the existing ESA income qualifications in that, like ESA, FERA does not take into account living and housing costs in different geographical regions throughout California. It is this lack of geographic difference that forms the basis for the underlying issue.
7. Are there other programs that fit this need, such as the Moderate-Income Direct Install (MIDI) Program?
There are currently no other CPUC programs delivering the robust, no-cost package of measures designed to reduce a low-income family’ energy burden while addressing health, comfort, and safety. Even the MIDI program does not align as it offers only a small subset of measures as compared to ESA and, more importantly, is singularly focused on its Return on Investment. It does not consider a family’s energy burden, its housing costs, or its health, comfort, and safety.
8. Does this change upset the alignment between California Alternative Rates for Energy (CARE) and ESA qualifications?
ESA income qualifications can change without impacting the CARE income qualification. While there is a benefit in marketing ESA to CARE customers (and vice versa), many programs have different income guidelines. The greater benefit with ESA, as opposed to CARE (rate assistance only), is reduced consumption, reduced energy burden, reduced greenhouse gas emissions (GHG), and increased health, comfort, and safety for our low-income communities. These goals are in keeping with California’s dual effort of assisting low-income families in need while addressing the state’s goal of reducing GHG emissions. Revamped ESA eligibility program guidelines would generate exponential benefits on both of these mandates.
9. Are there currently any households participating in ESA whose household income exceeds 200%?
Yes. The Commission has already approved participation in ESA for many households who earn well above 200% of the FPL: (a) In the multifamily sector, the ESA Common Area Measures (CAM) program allows all apartments to receive ESA and building improvements if at least 65% of the apartments qualify, thus allowing up to about a third of all apartments therein to exceed the income guidelines; (b) in its geographic categoricals, the Commission allows all households, regardless of their individual incomes to receive ESA benefits if the average income is below a certain standard. The State of California, through its Public Utilities Commission has long since allowed many families to receive ESA benefits despite their far exceeding the 200% guideline.
10. Does this change indicate that some families will be held to differing standards?
No. Differing standards for different low-income families has for many, many years been the standard. The most familiar difference is in the family size differences. We allow a family of 5 people to earn much more than a family of two. We provide different measures to the low-income family in multi-family facilities than in single family homes. We provide different improvements in climate zone that is forbidden to low income families in another. Differing standards are reasonable when one group needs the extra consideration more or can more effectively utilize. This proposal for a differing standard reflective of local economic and cost of living standards are certainly justified, just as changing the standard reflective of family size reflects differences in relative needs.
11. Does this change mean ESA would serve fewer homes?
No. ESA budgets are proposed by the Investor Owner Utilities, scrutinized by the public, and approved by the California Public Utilities Commission. They are based on an independent, 3rd party needs assessment as mandated by law. Allowing the ESA program to reach its intended audience simply means those families can receive the benefit. It does not increase program costs nor does it mean fewer homes will be served and it certainly does not change the program’s cost per home.
12. Is this an expansion of the ESA Program?
No. Amending the ESA income guidelines will not expand the ESA program or increase budgets. The program will continue to offer the same measures, and provide the same service, to qualifying customers and within the established CPUC annual budget. If anything, opening the program up to previously unreached low-income families will actually reduce the costs of marketing and administering the programs, allowing even more families to be treated with the same funds.