Implementation Staff Proposal

Important Update: Affordability Metrics Implementation Staff Proposal Available for Download Here

November 15, 2021: Public Workshop on Affordability Metrics Implementation

• Slides Available for Download Here
• Video Recording Available
  • Password: Affordability111521
• Please contact JHO@cpuc.ca.gov with any follow-up questions or comments

Phase I of the Affordability Rulemaking (R.) 18-07-006 established the metrics that will be used for measuring affordability, as well as the data sources and methodologies for doing so. This staff proposal builds on the foundation laid by Decision (D.) 20-07-032 (the Decision) by establishing how these metrics can be used to provide forward-looking analyses, the process by which the metrics will be refreshed on an annual basis, and how the metrics can be used in various capacities by the California Public Utilities Commission (CPUC).

This staff proposal introduces a specialized, Excel-based tool, the Affordability Ratio Calculator, for use by essential service providers and other parties in calculating the Affordability Ratio (AR). The goal of providing the Affordability Ratio Calculator is to assist stakeholders[5] with calculating the AR metric and standardize its calculation. It is anticipated that there will be a steep learning curve as stakeholders learn how to calculate and interpret the metrics, particularly the AR metric, which requires a thorough understanding of the forecasting assumptions of the metric inputs and of the geographically-based outputs.

In an effort to provide context to the values of the affordability metrics, staff also introduces two new definitions of vulnerable communities based on the AR and Socioeconomic Vulnerability Index (SEVI) metrics. Areas of Affordability Concern (AAC) refers to geographic areas where the AR metric for representative low-income households is disproportionately higher than it is for the rest of the state, based on the distribution of AR values for a given industry.[6] This identifies communities where representative low-income households’ ability to pay for essential services is severely lacking as compared to the rest of the state.

The second concept is a variation of disadvantaged communities (DAC), and is known as the SEVI-DAC. While the traditional definition of a DAC is a census tract with a CalEnviroScreen score in the top 25 percent, a SEVI-DAC is a census tract that has a SEVI score in the top 25 percent. By using SEVI rather than CalEnviroScreen, this alternative definition of DACs focuses specifically on the socioeconomic factors that make a community vulnerable rather than incorporating additional considerations, such as pollutants.

Both of these concepts complement existing definitions of vulnerable communities and give policymakers the tools to focus exclusively on the socioeconomic conditions that burden them. By excluding non-socioeconomic factors in the identification of SEVI-DACs, this designation ensures that the most economically vulnerable communities are highlighted and are not obscured when other factors, such as environmental and demographic considerations, are included. By providing these additional concepts, the CPUC has the ability to select the most appropriate method for geographically targeting resources based on the goals of a specific program or proceeding.