Affordability Rulemaking

Phase 2 – Implementation of affordability metrics

On August 4, 2022 the CPUC took an important stance in addressing affordability of utility rates by adopting Decision 22-08-023. (CPUC Press Release). The Decision adopted the staff proposal on implementation with some modifications. Upon release of the staff proposal on implementation, staff hosted a public webinar to discuss their recommendations. Please see below for details.

Ongoing Assessment of Implementation

The Commission is currently assessing implementation of the affordability framework. By November 30, 2022, parties are invited to formally comment on implementation generally, and answer the following questions. All interested individuals and stakeholders may comment informally on affordability of utility and communications service at any time, by writing public comments here.

Implementation

Has implementation allowed the Commission to better fulfill its statutory duties expressed in various Public Utilities Code sections, including Section 739(d)(2), Section 382, Section 739.8(a), and Section 871.5?
Has implementation allowed the Commission to enhance its role in closing the digital divide as expressed in various Public Utilities Code sections, including Section 709, Sections 280281, Section 275.6, and the Moore Act?
What has been gained from any implementation of the metrics in past proceedings or final decisions?
Is affordability testimony being required for the right types of proceedings?
Is updated affordability testimony being required at the right points in time during a proceeding?
Is the revenue requirement threshold (more than one percent revenue requirement increase over total systemlevel revenue requirement in current rates for water and energy proceedings) appropriate?
Are the demarcations designating Areas of Affordability Concern set at a useful and relevant level? (note: for more information on Areas of Affordability Concern and affordability demarcations, please refer to Implementation Staff Proposal)
Is analysis of Areas of Affordability Concern a useful component in affordability testimony?
Are the annual Affordability Reports a good forum to present the forecast of cumulative revenues for future years?
Have the metrics been applied to small water utilities or Small Local Exchange Carriers?

Affordability Ratio Calculator (AR Calculator) and Calculations

Are there technical changes to the metrics or the methodologies that can be made to make them more effective/useful? For example, is the Affordability Ratio (AR) at the 20th income percentile capturing lowincome customers eligible for the CARE/FERA or ESA programs? Eligible for the Affordable Connectivity Program (ACP)? For Lifeline? Is AR20 capturing customers that are lowincome but do not necessarily qualify for an assistance program such as CARE/FERA, ESA, ACP, or Lifeline?
Should the AR Calculator add production of metrics at other geographic levels such as city, county, or geographic level, such as zip code?
Is the administrative burden involved in the production of the metrics worth the extra work, for the utilities? For the Commission?

Forecasting

Do nationwide Consumer Price Index (CPI) metrics accurately forecast the Affordability Ratio inputs for customers outside the metropolitan statistical areas (MSAs) or is it necessary to develop an alternate approach?
Are there more regionally based metrics of inflation for regions outside of MSAs?
Are there weaknesses to the staff method of forecasting income and housing costs for the metrics?
Has any utility used the Global Insights inflation rates as an alternative to forecast increases in costs/rates/bills?
As contemplated in this decision, have parties been able to get access to the source data for essential bills in the AR Calculator?
Are the Energy and Water Trackers good mechanisms to provide a view of current and prospective cumulative revenues from which forecasted rates are derived and from which projected essential usage bills are derived?