Important Updates: 

  • February 28-March 1, 2022: Affordability Phase 3 En Banc

The California Public Utilities Commission held a virtual En Banc on Electric and Natural Gas Costs and Rates to further evaluate affordability proposals to control costs and mitigate both electric and natural gas rates. The En Banc allowed key decision-makers to hear from experts on utility rates and affordability concerns to ensure California can modernize its energy system while maintaining affordable bills for ratepayers.

Background 

Water, energy, and telecommunications services should be affordable. On July 12, 2018, the California Public Utilities Commission (CPUC) issued an Order Instituting Rulemaking (R.18-07-006) to assess the impacts on affordability of individual CPUC proceedings and utility rate requests. Specifically, the goals of this proceeding are to:

  • Develop a framework and principles to identify and define affordability criteria for all utility services under CPUC jurisdiction; and
  • Develop the methodologies, data sources, and processes necessary to comprehensively assess the impacts on affordability of individual CPUC proceedings and utility rate requests.

Within the scope: Issues determined to be within the scope of the proceeding include:

  • Identification and definition of affordability criteria for CPUC - jurisdictional utility services.
  • Methods and processes for assessing affordability impacts across Commission proceedings and utility services.
  • Other issues relating to the CPUC's consideration of the affordability of utility services.

Outside of the scope: Issues determined to be outside the scope include:

  • Affordability issues related to customer classes other than residential customers.
  • Evaluation of the effectiveness of existing affordability programs or creation of new customer programs to assess affordability.
  • New approaches to disconnections and reconnections.
  • Pacific Gas and Electric Company's Essential Use Study D.18-08-013 issued in PG&E's General Rate Case (GRC).

Visit the Docket Card (R.18-07-006) to view proceeding documents and make a comment on the proceeding.

2019 Annual Affordability Report

D.20-07-032, issued in July of 2020, directed Commission staff to develop an Annual Affordability Report that would include an assessment of affordability of electricity, natural gas, water, and communications services using the most recent data available. The CPUC issued the first of these annual reports on April 29, 2021. Read our press release.

For all of the utility services evaluated, affordability outcomes among low-income households show a great deal of disparity: the majority of households are located in areas where utility costs make up a modest proportion of household budgets, but a substantial number of households are located in areas where utility costs comprise an alarmingly high percentage of low-income household budgets. This suggests that statewide efforts to address equity issues stemming from utility affordability should be geographically targeted.

Across all four services, low incomes are the primary driver of low affordability. Affordability tends to be the lowest in areas where income is low for both low- and median-income households, where even a small charge for essential service takes up a disproportionate amount of the household budget. In some cases, disproportionately high essential service charges also play a role. As with incomes, expensive utility service tends to be geographically distinct: areas with the highest essential service charges also tend to have low incomes, resulting in a double burden of expensive service and a low ability to pay for it.

The results can be viewed in interactive map format.

Decision

In July 2020, the CPUC issued D.20-07-032 adopting metrics and methodologies for assessing the relative affordability of public utility service under the Commission’s jurisdiction. (CPUC Press Release)

The Decision defined affordability as the degree to which a representative household is able to pay for an essential utility service charge, given its socioeconomic status.  A “representative household,” rather than households in general, recognizes that households will have a wide variety of experiences that cannot be perfectly captured by depicting a single household.  “Essential utility service charge” refers to the costs borne by a representative household for the quantity of utility service required to enable a ratepayer’s health, safety, and full participation in society.  “Socioeconomic status” refers to the social and economic standing of a given household.

The Decision also states that three independent, but related, metrics allow for the creation of a more complete picture of affordability than any one metric could provide on its own.  The three metrics are:  1) the affordability ratio, 2) the hours at minimum wage, and 3) the socioeconomic vulnerability index

Affordability Ratio (AR): A higher AR is less affordable, a lower AR is more affordable

The Affordability Ratio (AR) metric quantifies the percentage of a representative household’s income that would be used to pay for an essential utility service, after non-discretionary expenses such as housing and other essential utility service charges are deducted from the household’s income.  The higher an AR, the less affordable the utility service.  The AR may be calculated for a single essential utility service, a combination of services, or all essential utility services combined. See how this metric plays out at a specific geography using our AR interactive map.

Graphic showing the hours at Minimum Wage

The Hours at Minimum Wage (HM) metric quantifies the hours of earned employment at the city minimum wage necessary for a household to pay for essential utility service charges. The minimum wage-based metric also implicitly considers the impact of essential utility service charges on lower-income customers regardless of the socioeconomic conditions of the community as a whole. See how this metric plays out at specific minimum wage jurisdictions using our HM interactive map.

Graphic showing the  Socioeconomic Vulnerability Index

The Socioeconomic Vulnerability Index (SEVI) metric represents the relative socioeconomic standing of census tracts, referred to as communities, in terms of poverty, unemployment, educational attainment, linguistic isolation, and percentage of income spent on housing.  This metric therefore considers h

ow a rate change may affect one community’s ability to pay more than another’s. See how this metric plays out at the census tract level using our SEVI interactive map.

 

Hearings, Workshops, and Proposals

2022 Affordability En Banc on Energy Costs and Rates

This two-day En Banc examines in more depth affordability proposals addressing ratemaking reforms, equity, environmental concerns, and non-ratepayer funding strategies. This En Banc follows-up on the rates en banc held in February 2021, which discussed proposals in an Energy Division whitepaper evaluating utility costs and rate forecasts.

  • WHEN: Two days, as follows:
  • WHERE: Remote access via webcast or phone, as follows:
    • Live video broadcast with English or Spanish captions via webcast: www.adminmonitor.com/ca/cpuc
      • Participants who choose to participate via webcast only will have audio and video, but will not be able to make verbal comment. If you would like to make comments during the meeting, refer to the phone-in information below.
      • For English or Spanish captions, after clicking on the name of the workshop, click the green button below the video for captions. Then select captions by clicking on the white icon next to the word “live” at the bottom of the video.
      • The workshop will also be recorded and archived for future viewing.
    • Phone (English): 800-857-1917, passcode: 1673482#
      • Participants will have audio (in English) and will be able to make comments or ask questions.
    • Phone (Spanish): 800-857-1917, passcode: 9431214#
      • During the public comment portion, participants will have audio (in Spanish) and will be able to make comments or ask questions.
      Members of the public may submit informal written comments to CostsEnBanc@cpuc.ca.gov
  • Meeting Materials

Revised Staff Proposal (issued on January 27, 2020)

February 27, 2020 
Webinar on the Revised Staff Proposal  

August 26, 2019
Workshop #2 

January 22, 2019
Workshop #1 

Other Related Links

Please direct inquiries related to the Affordability Rulemaking (R18-07-006) to Jefferson Hancock JHO@cpuc.ca.gov.

Affordability Resources

Affordability Ratio Calculator (ARC)

Water Cost and Rate Tracker (CRT)
Please note that the Water Cost and Rate Tracker is still in draft form and has not been officially adopted by the Commission at this time. Please contact JHO@cpuc.ca.gov with any questions.

Related Divisions