CARE High-Usage Strategy 2012-2014 Proposal

1. CARE High-Usage Strategy2012-2014 Proposal October 28, 2011 Workshop #7

2. Strategic Vision • Ensure qualified households continue to be aware of the CARE program, can easily enroll and can remain on the program as long as they continue to be qualified and require its benefits

3. Context for Proposed Changes • Population of customers on CARE increased 32% between 2008 and 2010. Very high usage CARE households increase by over 70%. • Analysis reveals: • A small group of CARE households (~1%) are: • Consuming 4-6 times the average annual amount of electricity and receiving 10 times as much subsidy as the typical CARE household • Have extremely high levels of energy use inconsistent with typical CARE household usage patterns. • Studies cited in testimony demonstrate usage/income connection: • Clear correlation between usage and income levels noted in all studies reviewed • On average, low income customers spend less on their energy costs (~$950/yr vs. $1,250 for non-low-income) . This top ~1% is averaging over $3,000/yr (discounted) • Low income households tend to be smaller sq. ft. and have fewer appliances and electronics than do non-low income households. • PG&E Proposes New Process to Address Top Energy Users on CARE • Households with usage between 400-600% of baseline annually • Households with usage greater than 600% of baseline annually

4. Proposed Strategy to Address High CARE Users Top ~1% of CARE households receiving ~12% of Subsidy Figures reflect 9/30/11 program statistics, including subsidy estimates based on actual11/01/11 rates and 09/01/10 to 08/31/11 sales

5. CARE Side-by-Side profile To legitimately achieve these usage levels • >600% of Baseline Group: • High percentage residing in Humboldt, Mendocino, Sonoma, and Santa Cruz Counties - 54% compared to 7% of all CARE • Households in these 4 counties are 15 times more likely to be in the >600% group

6. High Usage Statistics Of the ~5,400 households in the >600% of baseline group 55% are actually using >800% of baseline NOTE: Table updated as of 9/30/11 program statistics, including discount and bill estimates based on actual 11/01/11 rates. Usage (kWh) based on 09/01/10 to 08/31/11 sales.

7. Examples: 400%-600% of Baseline Large houses with many household members in the Central Valley are still well below the 600% of Baseline threshold.

8. >600% of Baseline View Pharmacy San Mateo County ~10,800 Sq Ft Annual Usage: 27,500 kWh, Annual Res Baseline: 665% Pharmacy Alameda County Sq Ft Unkn Annual Usage: 26,900 kWh, Annual Res Baseline: 890%

9. Residential Comparisons Comparison #1 Basic single family CARE household 1,015 Sq Ft Solano County Annual Usage: 24,900 kWh Annual Baseline: 601% Annual CARE Discount: $4,400 Comparison #2 Basic single family CARE household 735 Sq Ft Sonoma County Annual Usage: 24,900 kWh Annual Baseline: 601% Annual CARE Discount: $4,400 Comparison #3 All electric single family CARE household 1,705 Sq Ft Placer County Annual Usage: 56,850 kWh Annual Baseline: 601% Annual CARE Discount: $9,900

10. Times-StandardServing Eureka and California’s North Coast Public Concern Over Abuse Keeping the lights on: Indoor pot growers skirt high electric bills through discount program for low income ThadeusGreenson/The Times-Standard Posted: 10/09/2011 02:39:44 AM PDT ““These lights aren't the lights this program is intended to keep on,” said Arcata Police Chief Tom Chapman. “This program was designed to let a family in a two bedroom apartment keep the lights on, but the system is being abused.” And, according to Chapman and others in law enforcement, the rate of abuse is only increasing. Of the 20 grow house search warrants his department has served over the last two years, 70 percent have been enrolled in the CARE program, Chapman said, adding that those are only the ones officers were able to confirm. In many of these cases, officials said, there's also no real argument that the growers should qualify as low income.”

11. Public Concern Over Abuse Times-StandardServing Eureka and California’s North Coast Follow-up article Program, Looks to Rein in Abuse of Low-Income Rates by Pot Growers ThadeusGreenson/The Times-Standard Posted: 10/23/2011 02:18:22 AM PDT1

12. Appendix

13. Indications of ineligible household on CARE Are there indications that show that ineligible households may be enrolled in the CARE Program? Yes…through PEV activities, reports from law enforcement, employees (field and office), CBO’s and other ratepayers have identified actual and potential ineligible households enrolled in the CARE program. Reported cases are selected for PEV, but PG&E is unable to remove customers from CARE rate unless reported income is found to be above guidelines, documents are falsified or strong evidence that no one is living in the household.

14. Examples of ineligible household on CARE • Example 1 • Arrested by police for growing marijuana • Selected for post-enrollment verification and provided qualifying documents on 3/14/11 • 5,000 sq. ft. house, high-end vehicles, and over $80,000 in cash found onsite • Annual usage nearly 200,000 kWh – 6,400% of Baseline • Annual CARE discount of over $41,000 • Even on CARE, monthly bill averaged over $2,000 • Example 2 • Narcotics Task Force warrant on 7/5/11 evidence shows nobody living in home • Selected for post-enrollment verification and provided qualifying documents on 3/31/11 • Detective found forged income documents while executing warrant • Annual usage over 200,000 kWh – 3,700% of Baseline • Annual CARE discount of over $42,000 • Even on CARE, monthly bill averaged over $2,000