AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT Financial Services AGENDA NO. 18
MEETING DATE February 22, 2022
APPROVAL:
COMMISSION
SECRETARY Donna Hood
Public Hearing: Authorize the General Manager to Memorialize the Customer Assistance Program in SFPUC’s Rules and Regulations Governing Water Service to Customers, to Modify the Enrollment and Eligibility Verification Processes and to Modify the Water and Wastewater Discounts
Project Manager: Erin Franks
Summary of
Proposed
Commission
Action:
Authorize the General Manager to Memorialize the Customer Assistance Program (CAP) for residential customers in SFPUC’s Rules and Regulations Governing Water Service to Customers, to modify the enrollment and eligibility verification processes, and to modify the water and wastewater discounts which, if authorized would take effect no later than April 1, 2022.
Background: History of SFPUC’s Low Income Discount Program and Description of the Existing CAP Program
In July 2004, by Resolution No. 04-0094, as part of a rates package, the Commission implemented the Customer Assistance Program (CAP), offering a 15 percent discount on sewer charges for qualifying low-income residential single-family customers. One of the goals in establishing the CAP was to better adhere to the San Francisco City Charter, Article VIIIB, SEC. 8B.125(5), which requires that the Commission consider low-income customers and evaluate providing assistance to those customers when establishing rates, fees, and charges. In July 2005, by Resolution No. 05- 0045, the Commission modified the CAP by increasing the discount on sewer charges to 35 percent and adding a 15 percent discount on water charges for qualifying low-income residential single family customers. In September 2016, qualifying Hetch Hetchy Power customers began receiving a 30 percent discount on Hetch Hetchy Power charges.
Currently, the CAP offers qualifying customers a 15 percent discount on water charges, a 35 percent discount on sewer charges, and a 30 percent discount on Hetch Hetchy Power charges. Despite being a long-standing program, and the primary assistance program for providing long-term support to low-income customers, the CAP has never been memorialized in any of SFPUC’s rules and regulations.
Approve Memorialization of and Process Changes to the Customer Assistance Program Commission Meeting Date: February 22, 2022
As currently structured, the CAP poses significant barriers to access.
Following a 2012 audit report conducted by the City Controller’s Office City Services Auditor (CSA), new requirements were added to the enrollment process to eliminate risk of ineligible customers receiving the discount benefit. The report recommended a more thorough eligibility verification process, which the SFPUC adopted into its internal processes, including among other features: (1) requiring applicants to provide, at time of application, documentation including names of all household members, a federal income tax return, and proof of residence for each income earner, or lack of income for nondependent household members listed as having no income; (2) disallowing enrollment in another utility’s low-income discount program as proof of eligibility; (3) requiring all applicants to complete a Water Wise Evaluation before receiving discounts; and (4) automatically removing customers who did not respond to requests for documentation to confirm eligibility; among others. The full list of recommendations and their implementation can be found in a February 9, 2015 memorandum from the Director of City Audits to the General Manager of the SFPUC.
1 These new requirements were intended to eliminate ineligible customers from participating in the program. It also raised the barrier to entry for households in need, reducing the number of eligible customers that applied or enrolled into the CAP. In 2018, an analysis conducted by DataSF as part of the Water and Sewer Rates Study, as requested by the Commission, to better understand the impact of rates on low-income customers, found that as of FY 2018-2019 fewer than 5 percent (1,200) of eligible accounts (estimated to be approximately 26,000) were enrolled in the CAP, down from approximately 7,500 enrolled households before the 2012 recommendations were implemented. As of January 2022, approximately 2,100 accounts are enrolled, approximately 10 percent of currently eligible customers. The changes resulting from the 2012 audit remain in place, with a few exceptions: Water Wise Evaluations are no longer a mandatory requirement for enrollment in CAP, rules related to maximum amount of water usage were removed, and the required timeline for eligibility renewal was extended from two to three years.
In addition to making discounts more difficult to access for customers in need, this enrollment process requires SFPUC staff to work with customers to track down, and then review, often complex tax documentation, taking time they would otherwise be allocating towards supporting customers. Customer Services Bureau estimates that it takes $110 of staff time to review documentation for one application once all appropriate
1 https://sfcontroller.org/sites/default/files/FileCenter/Documents/6213-SFPUC-CAP%20Follow- up%20memo.pdf
Approve Memorialization of and Process Changes to the Customer Assistance Program Commission Meeting Date: February 22, 2022
documents are submitted.
Description of Temporary Emergency Customer Assistance Program for COVID-19 Relief
Due to the economic and financial impact of the COVID-19 pandemic and state and local stay-at-home orders, the SFPUC prioritized making assistance easily accessible. On May 26, 2020, as authorized by Resolution No. 20-0099, the SFPUC first authorized the Temporary Emergency Customer Assistance Program for COVID-19 Relief (E-CAP) for residential and commercial customers. E-CAP provided the same levels of discounts as the CAP (i.e., 15 percent discount on water charges, 35 percent discount on sewer charges, and 30 percent discount on Hetch Hetchy Power charges), but was available to any customer who had experienced a loss of income due to COVID-19 or stay-at-home orders and allowed applicants to self-report their incomes, rather than providing documentation at the time of application.
On August 25, 2020, by Resolution No. 20-0185, this Commission extended the E-CAP through December 31, 2020. On December 8, 2020, by Resolution No. 20-0238, this Commission extended the E-CAP through June 30, 2021. On April 27, 2021, by Resolution No. 21-0063, this Commission extended the E-CAP through March 31, 2022.
E-CAP enrollees quickly outnumbered those in CAP, with 5,391 residential and 885 commercial enrolled as of December 2021. The simplified enrollment and eligibility verification processes allowed Customer Services Representatives to support customers in other ways rather than reviewing extensive income documentation. The success of E- CAP illuminated a need for more permanent changes to CAP following the emergency program’s end in March 2022.
Description of Proposal
This resolution will memorialize the existing program, with the modifications described herein, in the proposed and attached Water/Sewer and Hetch Hetchy Power Customer Assistance Program (CAP) Program Rules, which will be incorporated into SFPUC’s Rules and Regulations Governing Water Service to Customers in Section D, Rule 9.
To ensure bill discounts are accessible for customers who struggle to afford their water, wastewater, and Hetch Hetchy Power bills, the proposal would implement the following modifications to previous processes and discounts under the CAP, which balance making it logistically, administratively, and financially efficient for customers to access discounts with maintaining reasonable eligibility verification processes to Approve Memorialization of and Process Changes to the Customer Assistance Program Commission Meeting Date: February 22, 2022
ensure support is being provided to those who need it most:
1. Allow application to the program via an online form;
2. Allow applicants to self-report eligibility information without documentation review at the time of application;
3. Implement an annual post-enrollment verification (PEV) review of a subset of CAP enrollees to confirm eligibility. The enrollees will be selected via a process that includes risk-based statistical analysis and/or random sample, as well as a review to ensure equitable and non-biased selection. Those selected will be required to provide complete eligibility documentation. Those who are selected for PEV but do not provide requested information will be removed from the program and may be required to repay discounts received;
4. Modify the Water and Wastewater discounts from 15 percent and 35 percent, respectively, to a uniform 25 percent each. This change is intended to achieve administrative efficiencies, with minimal impact to overall customer discounts;
5. Maintain Hetch Hetchy Power discounts at 30 percent; and
6. Maintain the timeline for income re-verification to once every three years (36 months)
These modifications to the CAP, if authorized, will go into effect no later than April 1, 2022 and will remain effective for the duration of the CAP.
Public Hearing Notice
Pursuant to Charter Section 4.104, a Notice of Public Hearing was posted on the SFPUC website on February 2, 2022 and in the San Francisco Examiner on February 6, 9, 10, 11, and 13, 2022.
Fiscal Impact: The proposed memorialization of the CAP and the proposed modification to the enrollment and eligibility verification processes and to the water and wastewater discounts may result in revenue reductions for the Water, Wastewater and Hetch Hetchy Power enterprises. The SFPUC has modeled these reductions in the financial plan, and the program as modified will not significantly impact SFPUC finances.
Funding for these programs will be partially provided by:
• American Water Resources lateral insurance payments
• Customer donations
The SFPUC will continue to explore additional funding sources from nonprofits, foundations, and other federal and state utility rate relief.
Results of A delay or denial in approving this agenda item will prevent the proposed Approve Memorialization of and Process Changes to the Customer Assistance Program Commission Meeting Date: February 22, 2022
Inaction: Customer Assistance Program (CAP) Program Rules from being added to the SFPUC’s Rules and Regulations Governing Water Service to Customers and taking effect, preventing memorialization of the program in a clear and transparent manner, and preventing implementation of modifications designed to improve access to discounts for many low- income SFPUC customers.
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
Attachments: 1. Water/Sewer and Hetch Hetchy Power Customer Assistance Program Rules, Section D. Rule 9 of SFPUC’s Rules and Regulations Governing Water Service to Customers
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, Under San Francisco City Charter, Article VIIIB, Section. 8B.125(5), San Francisco Public Utilities Commission (SFPUC) must consider low-income customers and evaluate providing assistance to those customers when establishing rates, fees, and charges; and WHEREAS, In 2004, by Resolution No. 04-0094, the SFPUC initiated a Customer Assistance Program (CAP) offering a 15 percent discount on sewer charges for qualifying low- income residential single-family customers; and
WHEREAS, In 2005, by Resolution No. 05-0045, the Commission modified the CAP by increasing the discount on sewer charges to 35 percent and adding a 15 percent discount on water charges for qualifying low-income residential single-family customers; and WHEREAS, In 2016, qualifying Hetch Hetchy Power customers began receiving a 30 percent bill discount on Hetch Hetchy Power charges; and WHEREAS, Currently, the CAP offers qualifying customers a 15 percent discount on water charges, a 35 percent discount on sewer charges, and a 30 percent discount on Hetch Hetchy Power charges; and
WHEREAS, Despite being a long-standing program, and the primary assistance program for providing long-term support to low-income customers, the CAP has never been memorialized in any of SPUC’s rules and regulations; and
WHEREAS, In 2012 the City Controller’s Office City Services Auditor (CSA) conducted an audit of CAP, finding that the SFPUC did not require documentation to verify the number of household members, sources of income, and total annual household income, resulting in opportunities for applicants to report incorrect data; and WHEREAS, In response to the findings of the 2012 audit, CAP’s enrollment process incorporated new requirements including thorough financial documentation review prior to enrollment, participation in Water Wise Evaluations, improved customer data tracking processes, and policies related to investigating water usage, all of which are still in place with the exceptions of mandated Water Wise Evaluations, rules related to maximum amount of water usage, and adjustments to the required timeline for renewing eligibility, which were updated via a 2018 review of program rules; and
WHEREAS, In 2015, CSA published a follow-up report to evaluate the SFPUC’s response to the 2012 audit’s recommendations and found that 25 of the initial 28 recommendations were implemented (two were deemed no longer applicable and one was considered closed due to the SFPUC’s implementation of a mitigating control); and WHEREAS, In 2018, as a result of newly implemented application requirements, enrollment in CAP dropped from approximately 7,500 customers to approximately 1,200 customers; and
WHEREAS, In 2018, as part of the Water and Sewer Rates Study, DataSF performed an affordability analysis in collaboration with the SFPUC, as requested by the Commission, to better understand the impact of rates on low-income customers; and WHEREAS, In 2019 the DataSF analysis estimated that fewer than five percent of 26,000 eligible accounts were enrolled in CAP, demonstrating a serious gap in the number of customers in need of assistance and those accessing CAP; and WHEREAS, On February 25, 2020, the Mayor issued a Proclamation (the Proclamation) declaring a local emergency to exist in connection with the imminent spread within the City of a novel (new) coronavirus (COVID-19); and
WHEREAS, On March 13, 2020, the Mayor issued a second supplement to the Proclamation, suspending shutoffs of water and power service by the SFPUC for delinquent water, power, and/or sewer bills, and prohibiting the imposition of late penalties and fees for non-payment of utility bills; and
WHEREAS, On May 26, 2020, by Resolution No. 20-0099, this Commission approved the Temporary Emergency Customer Assistance Program for residential customers financially impacted by COVID-19, and whose pre-COVID-19 maximum gross household income before taxes and deductions is below 200 percent of the San Francisco Area Median Income, to allow customers to apply for such a discount by self-certifying their eligibility via an online application form; and
WHEREAS, On March 31, 2022 the Temporary Emergency Customer Assistance Program is set to expire and the regular Customer Assistance Program (CAP) will remain as the primary discount program for low-income customers; and
WHEREAS, The SFPUC strives to make bill assistance accessible for all eligible customers to promote affordable bills for customers, increase enrollment in the CAP discount program, and make efficient use of SFPUC resources and staff time by minimizing CAP’s administrative burden and standardizing the discounts offered while mitigating risk of ineligible customer enrollment in the program through post-enrollment verification (PEV); and
WHEREAS, The income threshold for CAP eligibility will remain unchanged from current levels, and the value of discounts received by customers are expected to be minimally affected by the standardization of water and wastewater discounts from 15 percent and 35 percent, respectively, to 25 percent each; and
WHEREAS, Pursuant to Charter Section 4.104, a notice of public hearing was posted on the SFPUC website, as required, on February 2, 2022, and published in the San Francisco Examiner; now, therefore, be it
RESOLVED, That this Commission hereby authorizes the General Manager to memorialize the Water/Sewer and Hetch Hetchy Power Customer Assistance Program (CAP) as Section D, Rule 9 in the SFPUC’s Rules and Regulations Governing Water Service to Customers, as set forth in the attached Water/Sewer and Hetch Hetchy Power Customer Assistance Program (CAP) Program Rules; and be it
FURTHER RESOLVED, That this Commission hereby authorizes the General Manager to modify the enrollment and eligibility verification processes as set forth in the attached CAP Program Rules, including allowing application to the program via an online form; allowing applicants to self-report eligibility information without documentation review at the time of application; and implementing an annual-post-enrollment verification review of a subset of CAP enrollees to confirm eligibility; all of which are designed to reduce the administrative burden on low-income customers to access discounts, increase enrollment by eligible customers, and achieve efficiencies for program administration; and set the timeline for re-verification to once every three years (36 months); and be it
FURTHER RESOLVED, That this Commission hereby authorizes the General Manager to modify the Water and Wastewater discounts from 15 percent and 35 percent, respectively, to a uniform 25 percent each; and be it
FURTHER RESOLVED, That the attached CAP Program Rules will take effect on April 1, 2022.
I hereby certify that the foregoing was adopted by the Public Utilities Commission at its meeting of February 22, 2022.
_______________________________________
Secretary, Public Utilities Commission
Section D. Rule 9.
Water/Sewer and Hetch Hetchy Power Customer Assistance Program (CAP) Program Rules
a) Program Purpose
The purpose of the Customer Assistance Program (CAP) is to provide discounts to customers struggling to pay their SFPUC bills. The structure of CAP balances trade-offs between making it logistically, administratively, and financially efficient to enroll low-income customers to access discounts while maintaining reasonable eligibility verification processes to ensure support is being provided to those who need it most.
b) Benefits
The program provides a 25% discount on eligible single-family residential customers’ water and sewer bills. Eligible residential Hetch Hetchy Power customers will receive a 30% discount on their power bill. c) Eligibility
To qualify for this program, an applicant must satisfy each of the following eligibility requirements:
• Have only one water and/or Hetch Hetchy Power service account with SFPUC. • Have an account for which the bill is in the applicant’s name. • Reside full-time at the address where the discounts will be received. • Not be claimed as a dependent on another person’s tax return. • Certify on their application form that their reported income and household size are accurate. • Have a maximum gross household income, before taxes and deductions, below 200% of the Federal Poverty Level.
o The income thresholds will be updated annually with the latest-available information published by the federal government.
o For 2022, the income thresholds are:
Household Size Annual Household Income Monthly Household Income 1 Person $27,180 $2,265
2 Person $36,620 $3,052
3 Person $46,060 $3,838
4 Person $55,500 $4,625
For Each Additional Person, Add $9,440 $786
d) Application Process
Separate applications are required to receive water/sewer discounts and Hetch Hetchy Power discounts.
SFPUC will offer multiple methods of application. All applications and program information will be available in multiple languages. No application method requires income documentation at the time an Water/Sewer and Hetch Hetchy Power Customer Assistance Program (CAP) Program Rules Last Updated February 22, 2022 2
application is submitted, but a customer must confirm under penalty of perjury that they meet the eligibility requirements specified in this Rule 9, subsection (c) above, and agree to notify the SFPUC immediately if their eligibility status changes.
SFPUC will notify customers of their approval or denial for the benefit and will provide the reason for denial as applicable. This notification will remind customers of their obligation to notify SFPUC if they no longer qualify for the program and provide methods for them to do so.
SFPUC has determined that certain residential customers who reside within a City and County of San Francisco income-restricted affordable housing facility, who have passed income verification procedures to be eligible for such residency, meet the eligibility criteria for SFPUC’s Customer Assistance Program.
These customers will be auto enrolled in the Hetch Hetchy discount program without needing to submit an application.
e) Timeframe
Customers enrolled in the program will receive discounts beginning on the first full billing cycle after their application is approved. Discounts will be applied on each bill issued to that customer for a total of three years (36 months) after their application is approved, at which time the customer will be required to recertify their eligibility for the program. If a customer does not recertify their eligibility before 36 months, the discounts will cease after the 36
th month of discounted bills. Discounts will also end if the customer leaves the program before 36 months, either through reporting a change in household income which makes the account ineligible for the program, or if the customer is found to be ineligible via post- enrollment income verification.
f) Income Verification
Customers may be subject to post-enrollment income verification (PEV) to confirm eligibility in the CAP.
Upon written request, customers must provide income and other relevant documentation. PEV will be conducted annually and will include a minimum of 5% of enrollees. Enrollees will be selected for PEV via risk-based statistical identification of characteristics likely to indicate ineligibility, and/or random sample.
PEV will require selected customers to provide proof of eligibility using either documentation such as, but not limited to, tax or income statements, or by confirming enrollment in other means-tested government assistance programs. If a customer’s verified income and household size confirms that they meet the eligibility requirements of the program, the customer will not be subject to another PEV for the next three (3) years of their participation in the CAP. If a customer is found to be ineligible for the program by PEV or fails to respond to the PEV request, the customer will be removed from the program and may be required to repay any discount received while ineligible.
Michael Perlstein, Special Projects Manager
Customer Assistance Program (CAP)
Program Rules
CAP History and Background
CAP Timeline
2004
CAP
Launched
• Part of rates
package
2012 - 2015
Controller’s
Office CAP
Audit
• Stricter
enrollment
requirements
• 77% drop in
enrollment
2020 - 2022
Emergency
CAP
• Self-
certification
• Loss of
income due to
COVID
2022
Update &
Formalize
Rules
• Add to Rules
& Regs
• Improve
enrollment
process
2 The July 2020 “SFPUC Racial Justice Resolution” (20-0149) mandates that SFPUC take “(visible) concrete actions… in the prioritization of resources and programs to… recognize access to clean and safe drinking water as a human right.” Program Administration
Water + Sewer, Hetchy Power
Goal 1: Improve program enrollment and
administrative processes based on emergency
program learnings
• Online-f irst application
• Continue to provide paper applications on-dem and and via download
• All applications in multiple languages
• Eligibility self-c ertification (3 year recertification) • Annual post-enr ollment verification (PEV)
• Hetchy Power: Ability to automatically enroll eligible af
fordable housing customers
3 Program Rules
Water + Sewer, Hetchy Power
Goal 2: Clarify and memorialize program rules
Changes to program rules:
• Discount for both Water and Sewer: 25%
• Previously 15% Water, 35% Sewer
Continued program rules:
• Hetch Hetchy Power discount: 30%
• Eligibility: 200% Federal Poverty Level (FPL)
• Individually metered households
4 Current Context
Rates Increased >2x since 2010
5 Estimated future rate increases
• 23% of Water Cost Burdened and Energy Cost Burdened
(WC
B/ECB*) customers are linguistically isolated
• 30% of residents in WCB households are over 65
• Among all customers who pay water bills to the SFPUC, Black residents are 2x as likely to live in an WCB household
*Refers to households spending more than 2.5% of annual household income on water/wastewater or electricity bills