Programs to Mitigate Winter Price Impacts on Low Income

CustomersCalifornia Public Utilities Commission

Full Panel Hearing“Winter 2005-06: Keeping Natural Gas Bills Reasonable”

Los AngelesOctober 6, 2005

Tom BottorffSenior Vice President

Customer Service and Revenue

2

PG&E’s 2005-2006 Winter Care and Relief Program

What we are doing to help low income customers reduce or manage high winter bills:

• Buying gas at lowest possible prices

• Offering conservation and energy efficiency opportunities

• Offering financial assistance programs

• Increasing customer communications and outreach

• Expanding payment options

3

PG&E’s Natural Gas Purchasing Strategy

1. Fill storage in spring and summer when natural gas prices are lower

2. Use gas from storage in winter when natural gas prices are higher

3. Purchase gas from multiple delivery points

4. Hedge against price spikes

4

2003 Residential Average Annual Gas Monthly Bill By Region

$37.14 $40.33$43.92 $44.92

$56.42$62.92 $66.08 $67.42

$78.67$84.08

$98.25

$0

$20

$40

$60

$80

$100

PG&E Pacific Mountain WestSouth

Central

EastSouth

Central

USA SouthAtlantic

WestNorth

Central

EastNorth

Central

MidAtlantic

NewEngland

Source: American Gas Association, Gas Facts; 2003 is latest data available.

5

2003 Residential Average Annual Gas Rate By Region

$0.76$0.84 $0.88 $0.89 $0.91 $0.91 $0.93 $0.97

$1.04$1.11

$1.21

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

Mountain EastNorth

Central

WestNorth

Central

Pacific PG&E WestSouth

Central

USA EastSouth

Central

MidAtlantic

SouthAtlantic

NewEngland

($/t

her

m)

Source: American Gas Association, Gas Facts; 2003 is latest data available.

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PG&E’s Average Residential Gas Rates Over Time

$0.00

$0.30

$0.60

$0.90

$1.20

$1.50

$1.80

93 94 95 96 97 98 99 00 01 02 03 04 05 06

$/T

her

m

Procurement Related

Delivery

Public Purpose Program Charges

*Forecast January 2006 rates are based on management’s best estimates as of September 22, 2005, and are subject to change.

*Forecast

*

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PG&E’s Average Industrial Gas Delivery Rates Over Time

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14

00 01 02 03 04 05 06

$/T

herm

Public Purpose Program Charges

Delivery

*Forecast 10/05-12/06

* Forecast January 2006 rates are based on management’s best estimates as of September 22, 2005, and are subject to change.

*

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PG&E’s Conservation and Energy Efficiency Programs

• Low Income Energy Partners ProgramFree weatherization and energy efficient appliances for qualifying low income households

― weather stripping ― home repair― attic insulation ― new refrigerators― caulking ― shower heads― duct testing (new) ― fluorescent

lighting― furnace repair, replacement

• Energy Efficiency ProgramsRebates for qualifying products:

― clothes washers ($35-$75)

― insulation (attic & wall) ($0.15/sq. ft.)― furnaces (central natural gas) ($200)― water heaters ($30)― dishwashers ($30-$50)

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PG&E’s Payment Assistance Programs

CARE• Provides 20% bill discount to qualifying low-

income households

FERA• Provides electric bill discounts to qualifying large

households of three or more persons (Tier 2 electric rates charged for usage in Tier 3)

REACH• Provides once-annual bill credits of up to $200 to

qualifying low-income households• Funded by contributions from PG&E’s customers

and employees (’05-’06 goal = $3 million, double last year)

• PG&E will match new customer contributions• Administered by Salvation Army with

administrative costs paid by PG&E

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Possible CARE Program Changes

• Expanded Eligibility– Considering including elderly or disabled with

income of 200% of federal poverty guidelines (up from 175%)

– Would add about 115,000 customers– Would create revenue requirement gap of about

$40 million• Winter moratorium on recertification• Post-verification callbacks to non-responsive

customers• Follow-up phone calls to customer’s request for

application• Extension to non-profit and agricultural housing

facilities providing temporary housing to evacuees

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PG&E’s CARE Enrollment

2000 - 2005 CARE Enrollment

934,172

903,217

812,204

350,194

545,175

731,108

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

2000 2001 2002 2003 2004 2005

CARE Enrolled

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PG&E’s Stepped Up Communications & Outreach

Medium Timing Message

Television November through March Replace inefficient appliances, rebates available

Newspaper Ads in up to 21 major daily papers

High gas prices, take action, information about PG&E programs

Radio Ads Began in late Sept, will run through winter

High gas prices, sign up for Balanced Payment Plan

Direct Mail Targeted for November 1st

High gas prices, take action, information about PG&E programs

Bill Insert November and December Energy efficiency and conservation, BPP and other PG&E programs, REACH program

Bill Message October and November High gas prices, take action, information about PG&E programs

Outbound Phone Calls November through March High gas prices, take action, information about PG&E programs

Brochures November through March Energy efficiency and conservation

Targeted Outreach October through March High gas prices, take action, information about PG&E programs

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Examples of PG&E’s Targeted Outreach

• Outbound calls to customers who have had difficulty paying bills

• Participation in community events to reach minority and special needs customers

• Hand delivery of energy savings tips by service representatives visiting customers’ homes

• Briefings with community-based organizations and low-income service providers

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PG&E’s Expanded Payment Options

• Balanced Payment Plans– Levels bills over 12 months– No interest– No late fees– More customers now eligible

• “Winter Stretch” Program– Allows winter bills to be paid over several

months– No interest– No late fees

15

PG&E’s Balanced Payment Plan Promotion

BPP CALCULATES YOUR TWELVE MONTH AVERAGE AND BILLS YOU THE SAME AVERAGE AMOUNT FOR AT LEAST FOUR

MONTHS – WITH A MAXIMUM OF THREE ADJUSTMENTS PER YEAR

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How PG&E’s Balanced Payment Plan Benefits Customers

• Bill comparison is based on historical average residential usage at tariff rates from October 2004, through September 2005, and forecasted average residential usage and rates from October 2005, through December 2006. Forecasted rates are subject to change.

Deferred Bill Benefit under BPP 10/05 – 12/06:

$53

$0

$50

$100

$150

$200

$250

Oct.05

Nov.05

Dec.05

Jan.06

Feb.06

Mar.06

Apr.06

May06

June06

July06

Aug.06

Sept.06

Oct.06

Nov.06

Dec.06

Combined Bill Total BPP Bill

Residential Average Combined Gas & Electric Bill vs. Balanced Payment Plan (BPP) Bill

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Conclusion

PG&E is committed to taking an active approach to mitigating the impact of high natural gas costs on winter bills for low and fixed income customers and special needs customers.

We appreciate the opportunity to present and discuss our proposals before the California Public Utilities Commission.