MODESTO IRRIGATION DISTRICT S RESIDENTIAL LOW-INCOME ELECTRIC RATE ASSISTANCE PROGRAM

Transcription

1 MODESTO IRRIGATION DISTRICT S RESIDENTIAL LOW-INCOME ELECTRIC RATE ASSISTANCE PROGRAM CONTENTS PAGE Executive summary 2 Background 3 Local need 3 Assessment process 3 Community agency interviews 4 Focus groups 4 Program proposal 4 Program name 5 Certification process 5 Outreach 6 Possible future components 6 Community advisory group 7 Review process 7 Staffing 7 Timeline 7 Recommendation 7 Attachment I : Community agencies interviewed 8 Attachment 2: Community agency interview questions 9 Attachment 3: Focus group discussion outline 10 Attachment 4: SB Executive Summary Recommendation

2 2 Staff recommends that the MID Board of Directors Recognize that a need exists for a residential low-income electric rate assistance program, Adopt a residential low-income electric rate assistance program, Direct staff to pursue an outreach program to educate low-income customers on program availability and other components (developed and still-to-be-developed), including the existing weatherization program, Direct the General Manager to provide a staff position to oversee the low-income and public benefit programs, and Direct staff to review the program a year from implementation. Goal Provide a low-income residential electric rate assistance program for all qualified customers. Low-income program specifics 15 percent discount on the MID electric bill (excluding taxes). Qualifying criteria: the household income must be certified at 150% or less of the Federal poverty guidelines. Certification process can be contracted with a third party that is performing it for other utilities. Re-certification will take place on a yearly basis. Staff will develop the outreach program. Staff will continue to investigate additional program components such as a balanced payment plan tailored for low-income customers. Timeline Nov. 28: Dec. 5 : Dec. 12: Jan. 1 : Board workshop Public hearing Board consideration for adoption Implementation Pros and Cons Pro: Meets State mandate and provides a program that is based upon community research. Con: Customers who do not qualify for the program may have increased rates as existing Public Benefit programs are restructured to provide funding for the low-income electric rate assistance program. Fiscal impact 2001: $610, : $750,000 Estimates based upon participation rate for similar counties. Background Senate Bill 1939, signed by the Governor on September 30, 2000, mandates the irrigation districts providing electric service to perform a needs assessment and establish low-income services if the need exist.

3 3 Low-income programs include, but are not limited to, rate discounts for low-income customers and non-rate benefits such as subsidized low-income energy efficiency programs. The irrigation districts are encouraged to work with community-based organizations, community action agencies or community-based weatherization providers to implement these programs and adopt them by July 1, By law, consideration is to be given to the: Number and income level of low-income customers who reside in the service area Availability of home weatherization services to low-income customers, and Availability of in-home energy efficiency education in the service area. While the bill was still in the formulation stages, MID began a community needs assessment and work on program development. A staff task force was named: Chris Mayer, Ron Montwid, Lou Hampel and Maree Hawkins. Board approval of the process was given on May 23, Local need Statistics and interviews with community agencies and low-income customers demonstrate a local need. Stanislaus County s average annual unemployment rate for 1999 was 10.6 percent. We are historically almost double the national rate. California s average annual unemployment rate for 1999 was 5.4 percent. Stanislaus County s per capita income was $19,650 in Median family income in Stanislaus County was $34,575 in Almost one-fourth of Stanislaus County residents (22.1 percent) had an income level of less than $14,999 Almost one-fifth of Stanislaus County residents (17.1 percent) residents had an income between $15,000 and $24,999. The federal poverty level is $11,250 for a family of two; $19,950 for a family of five. Assessment process Once the board approved staff s plan of action, staff reviewed other utility programs and attended a national conference and California Public Utilities Commission meetings on the subject. We looked for clues to program development and program success. MID staff was also provided the opportunity to respond to a questionnaire advice customers ask for regarding bill payment, what would help our customers pay their bills and what shape a low-income assistance program might take. Customer information was the next component. JD Franz and Associates of Sacramento was hired through a competitive bid process to survey community agencies whose clients may include those who are low-income. That same firm then conducted focus groups comprised of MID low-income customers, including two focus groups with Spanish- speaking customers and two with English-speaking customers. Community agency interviews Twenty-seven interviews were done with personnel from 24 diverse agencies, ranging from Salvation Army to the Stanislaus Multicultural Health Coalition to The Bridge, which works primarily with Southeast Asian families. We found the interviews valuable for a number of reasons: A local need was demonstrated: Agencies report that people with low incomes do have trouble paying their electric bill, especially if out of work or disabled

4 4 Interview answers helped formulate questions used for the focus groups Interview answers indicated what program components our customers would be most likely to use. For instance, we asked if we required customer to attend an education class to get assistance, would they? The answer was that the customers would not, but might take advantage of a class that was not required. Agencies indicated their willingness to help get the word out. The agencies were supportive that MID is addressing this topic. Each agency perceives a definite need in the community for such a program. Attachment 1 contains a list of interviewed agencies and Attachment 2 the questionnaire. Focus groups The focus groups were held on two separate nights. The Spanish-speaking focus groups were moderated by Carlos Garcia, president of Garcia Research Associates, Inc., and the Englishspeaking groups by JD Franz, president of JD Franz and Associates of Sacramento. Both are highly experienced focus group moderators. The focus groups were very exciting because they did provide a lot of information, much of which still needs to be digested and used as the program is refined. Some points of interest: When the temperature is high, most people turn on the air conditioner regardless of the cost. Many elderly and disabled people are on a fixed, low income. If the month s prescription bills are high, there might not be money left over for the utility bill. Low-income customers do want energy education. While some are very in-tune with using appliances efficiently, many realize there is a big gap in their knowledge of how to use electricity efficiently. People believe a discount will help them pay the MID bill. Attachment 3 contains the focus group discussion guideline. Program proposal The task force recommends: A 15 percent discount on all electric consumption (excluding taxes) for qualifying residential customers A household will qualify if the total household income level is 150 percent or less of federal poverty guidelines Certification will be performed by a third party. Re-certification will take place on a yearly basis. Household size Monthly Yearly 1 $1,517 $18,200 2 $1,517 $18,200 3 $1,792 $21,500 4 $2,150 $25,800 5 $2,508 $30,100 6 $2,867 $34,400 $ 358 $ 4,300 For households with more than 6 members, increase income by this amount for each additional family member These guidelines are already in use by many California utilities including investor-owned utilities such as PG&E and publicly-owned utilities such as SMUD and LADWP.

5 5 Program name The committee recommends MID CARES (MID Community Alternative Rates for Electric Service). Other programs in California are using a similar acronym, CARE. MID CARES will continue customer familiarity with the name and avoid offending customers. Focus group participants asked us not to use the words "low-income" in the program title. Other suggestions were Rate Assistance Program, Helping Hands, Community Assistance and Community Alternative Rates for Energy. Certification process MID customers will need to apply for the program and be qualified at 150 percent of Federal poverty guidelines. The California Department of Community Services and Development (CSD) currently provides these services for SMUD, LADWP and cities of Santa Clara and Healdsburg. The agency is willing to contract with MID. Staff recommends a yearly re-certification process. Focus group participants said they preferred a yearly re-certification since people should not be on the program unless they qualify for it. The certification process works like this: Applicants call an 800 number with information provided in English, Spanish and Vietnamese. Prescreening is accomplished on the telephone. Application is mailed Estimated costs associated with CSD certification process One-time start up costs $8,000 (est.) Applications received and certified by CSD $5.11 per app. Applications received and deemed ineligible $5.11 per app. Incomplete applications $5.11 per app. Duplication applications $2.58 per app. Applications mailed by CSD but not returned within time frame $1.79 per app. Denial letter $1.43 per letter Staff recognizes that an application may not easy for everyone to fill out. Community agencies could provide assistance for our customers. Program outreach Staff wants to ensure that the program is a success. Success will be measured by participation of MID s low-income customers in the program. It will be a challenge to get the word out on the program. Focus group participants were sometimes unaware of other assistance programs they might qualify for, including those of PG&E and Pacific Bell. Focus group participants said the usual ways of advertising a program are good, including radio, television and Hispanic newspapers, as well as a separate bill insert dedicated to the program with English on one side and Spanish on the other.

6 6 In addition to the traditional media buys, staff recommends a grassroots effort to penetrate further into the community. A grassroots effort might use "small grants" in the range of $100 to $1000 to local agencies. For instance: Focus group participants told us the flea markets are one of the best ways of reaching Hispanic families. MID could grant a community agency a certain amount of dollars to hand out fliers at a flea market, while another agency receives a grant for making sure each of its clients receives MID program information. This would be similar to our existing Community Service Program where MID donates money in exchange for advertising space in the programs of non-profit groups. This aspect of the program needs to be refined, but would help us accomplish our goal of reaching the people who need the help. A number of other outreach methods will need to be explored as we work through the program. Possible future components The focus groups were very enlightening in a number of ways. Participants told us they wanted a balanced payment plan that can be used by low-income customers. Our current balanced payment program works only if you are a customer with a very good payment record. We may need to look at the program and see what allowances could be made to assist low-income customers whose payment record may be less than stellar. Deposit alternatives was another option. One woman suggested an education class instead of paying a deposit. All participants agreed that they need more energy education. One method will apparently not work for all, so a combination of distributing videotapes, in-home audits and free classes will probably be used. All agreed they learn best by being showed how to do something, rather than reading. Additionally, MID could develop a welcome package when a customer signs up for the program. This could include caulking material, an energy efficient light bulb, and other yet-to-be decided items. Community advisory group SB 1939 encourages consultation with a community advisory board comprised of community members who represent low-income customers in order to implement the low-income programs. No precise guidelines are given. Staff believes a properly managed community advisory board can be an excellent way to: Communicate about the program Produce program feedback Assist with program direction. Our community agency interviews can be considered our first advisory board. We anticipate holding meetings three to four times a year with community agencies, low-income customers and community advocates to comment on the program and assist with program direction. Program review When the program has been in place for a year, staff suggests a comprehensive internal and external program review. Internally, the certification interface and program administration should be reviewed. Externally, it should be determined if our low-income customers know

7 7 about the program and why they have signed up or why not. The external information can be accomplished through a telephone survey of MID s low-income customers. Information can be used to refine the program, including customer outreach efforts. Staffing It is recommended that a coordinator position oversee both the low-income and public benefit programs. An interdepartmental team will be appointed to advise the coordinator on program aspects such as community education. Timeline A public hearing will be held Dec. 5, 2000, with Board consideration of the program on Dec. 12. The next steps would be to contract with the certification agency and plan a program kickoff. The certification agency needs about a month s lead-time to put things in place. We would like the program ready to go January 1, Recommendation Staff recommends that the MID Board of Directors Recognize that a need exists for a residential low-income electric rate assistance program, Adopt a residential low-income electric rate assistance program, Direct staff to pursue an outreach program to educate low-income customers on program availability and other components (developed and still-to-be-developed), including the existing weatherization program, Direct the General Manager to provide a staff position to oversee the low-income and public benefit programs, and Direct staff to review the program a year from implementation. ATTACHMENT 1: Community agencies interviewed Airport Neighborhoods United Area Agency on Aging California Rural Legal Assistance Catholic Charities-Senior Services Central Valley Information and Referral Service (United Way) Central Valley Opportunity Center (three interviews) Community Housing and Shelter Services First Baptist Church Friends are for Life--Support Group Clearing House Habitat for Humanity King-Kennedy Center Latino Community Round Table Mark Twain Healthy Start Modesto Independent Living Center Salvation Army Second Baptist Church Senior Opportunity Service Program Stanislaus Community Assistance Project

8 8 Stanislaus Community Services Agency Stanislaus County Public Health Department Stanislaus Multicultural Community Health Coalition The Bridge (two interviews) Valley Caregiver Resource Center Women s Refuge Center ATTACHMENT 2: Community agency interview questions What is the purpose of your organization? What standards use to qualify people as low-income? What is the certification process? How do you think people would feel about providing documentation to support an application for an MID program? What would be the easiest way for people to sign up for an MID program? What is the biggest hurdle your clients face in paying their MID bill? How do you help your low-income clients or where do you refer them when they have trouble paying their MID bills? What do they do when they fall behind in their bills? Do they feel they can call MID if they fall behind on their bill? Please tell us why or why not? As far as you know, have any of your clients contacted MID s Customer Service Department? How has the experience been? Have you ever contacted? MID s Customer Service Department on behalf of a client. How was the experience? What program or programs would you recommend MID undertake to help its low-income customers? Are you familiar with any exemplary programs for low-income customers that other utilities offer? How do you think your clients would feel about attending energy education classes? How would they feel about energy education videos they could watch in their homes?

9 9 How likely would your clients be to attend an energy education class if it were part of a program that included a discount off their monthly bill? What effect would making such a class mandatory have on program participation? How would you suggest that MID inform low-income residents of any program it develops? What mediums are the most credible: television, radio, newspaper, mail, face-to-face, other? Would your organization be willing to provide information on any MID program to its clients? Is there any other individual or organization in the community that you believe would be viewed as being a credible source of information? In what languages do you feel MID should make program materials available? What barriers do you feel MID will have to overcome in order to have a successful program? What suggestions could you give MID for getting landlords who provide housing to lowincome people to cooperate with a program? Would your agency be interested in partnering with MID on any aspect of a low-income program and how? ATTACHMENT 3: Focus group discussion outline TOPIC INTRODUCTION Let s start by talking about how you use electricity What in your house uses electricity? What do you view as being your household s needs for electricity? In what way? What of the things that use electricity do you use the most? Why? What uses the most electricity? How much do you use that? Do you use electricity during the day as well as the evening or night? What used for during the day? (PROBE: Are people home?) What used for at night? (PROBE: Are people home?) Do you use more electricity at certain times of year? How do you know? (PROBE: Higher bill) Would you be interested in learning how you could use less electricity and still be comfortable? Would you attend a class to learn this? How about watching a video in your home? Why or why not? Do you have an air conditioner? What kind? (central versus window) Do you use it? How often? Does it have a thermostat? (Can you set actual temperature, i.e. programmable?) Set at what temperature? Do you have ceiling or floor fans? Do you use them? How often? Does it replace (because of expense) air conditioning? What appliances do you have? How often do you use them? How old are they?

10 Do you have a portable electric heater? Do you use it? How often? ENERGY EFFICIENCY Do you know what the phrase energy efficiency means? What does it mean to you? Do you feel that the things you have that use electricity are efficient? Why or why not? PROBE: Which ones are? Which ones aren t? Would you be interested in learning how to make the things you have that use electricity more efficient? Would you attend a class to learn this? How about watch a video in your home? How about someone coming to your home to teach you? Why or why not? MID BILLS AND PAYMENT About how much is your MID electric bill in the winter? How about in the summer? Does the amount of your bill ever surprise you? How often? Why do you think that is? What priority does this bill have relative to others? PROBE: What bills are more important? What bills are less important? Why? Do you ever find it difficult to pay your electric bill? How often? Why? Is there a particular time of year this happens? What do you do when your bill is a problem? Do you ever find yourself paying your electric bill late? How often? Why? Is there a particular time of year this happens? What do you do if you are going to be late? PROBE: Have you ever contacted MID when you had a problem paying your bill? What happened? Did you contact anyone else? What happened? By how much would your bill need to be reduced so you could always pay it on time? Why? ASSISTANCE PROGRAMS What kind of assistance or program would help you pay your MID bill? PROBE FOR: Paying the deposit in installments 10

11 Changing payment due date Sliding payment scale Balanced payment plan Would it stop you from signing up for such a program if you had to? Why or why not? Fill out a form Go to the MID office Go to some other agency s office Be interviewed Pprovide proof of income Attend classes about energy efficiency and reducing energy use Some suggested titles for such a program have included. payment assistance low-income limited income PROBE FOR EACH: How do you feel about that? What other ideas do you have? How should MID inform you that a program is available? PROBE FOR: Television Radio Newspaper Mail Community organizations you trust such as HEAP, Salvation Army What else? What would be the easiest way for your to sign up for such a program? PROBE FOR: Telephone Mail In person at MID In person at community organization(s) Do you or other members of your household need information in a language other than English? What language? Have you ever participated in such a program with another utility (electricity, gas, telephone)? How did you hear about it? What did it do? Did it help? Why or why not? How could it have been improved? If MID offered a free check-cashing service for government checks, would you use it? Why or why not? What if it were tied to paying at least part of your bill? 11

12 12 ATTACHMENT 4: SENATE BILL 1939 BILL NUMBER: SB 1939 BILL TEXT CHAPTERED CHAPTER 1041 FILED WITH SECRETARY OF STATE SEPTEMBER 30, 2000 APPROVED BY GOVERNOR SEPTEMBER 30, 2000 PASSED THE SENATE AUGUST 31, 2000 PASSED THE ASSEMBLY AUGUST 29, 2000 AMENDED IN ASSEMBLY AUGUST 28, 2000 AMENDED IN ASSEMBLY AUGUST 18, 2000 AMENDED IN ASSEMBLY AUGUST 9, 2000 AMENDED IN ASSEMBLY AUGUST 7, 2000 AMENDED IN SENATE MAY 18, 2000 AMENDED IN SENATE MAY 15, 2000 AMENDED IN SENATE MAY 3, 2000 AMENDED IN SENATE APRIL 13, 2000 AMENDED IN SENATE APRIL 5, 2000 AMENDED IN SENATE MARCH 28, 2000 INTRODUCED BY Senators Alarcon, Hughes, Murray, Polanco, and Solis (Coauthor: Assembly Member Calderon) FEBRUARY 24, 2000 An act to amend Section 385 of, and to add Section 9607 to, the Public Utilities Code, and to amend Section of the Water Code, relating to public utilities. LEGISLATIVE COUNSEL S DIGEST SB 1939, Alarcon. Public utilities: electric power: irrigation districts. (1) Existing law requires each local publicly owned utility to establish a nonbypassable usage based charge to fund investments in specified public purpose programs, including providing services for low-income electricity customers. The charge is required to be not less than the lowest expenditure of the 3 largest electrical corporations in California based on a percentage of revenue. This bill would require a local publicly owned electric utility that has not implemented programs servicing low-income electricity

13 13 customers to perform a needs assessment, and establish low-income services, as prescribed, thereby imposing a state-mandated local program. Because a violation of this provision would be a crime, this bill would impose a state-mandated local program by creating a new crime. The bill would set forth certain related legislative findings. (2) The Irrigation District Law generally requires a member of the board of directors of an irrigation district to be a voter and a freeholder of the district and a resident of the division that the director represents at the time of nomination or appointment and during the director s entire term. That law authorizes an irrigation district that is governed under that law to sell, dispose of, and distribute electric power for use outside its boundaries. This bill would remove that requirement that a director be a freeholder of the district, and would instead require each director to be a voter and a landowner in the district and a resident of the division he or she represents at the time of his or her nomination or appointment and throughout his or her term, except as provided. The bill would prohibit a district from constructing, leasing, acquiring, or operating facilities for the purpose of serving retail electric customers located in the service territory of an electrical corporation or a local publicly owned electric utility unless the district provides to the customers of the electric corporation or local publicly owned utility certain programs and services that are comparable to those of the current distribution service providers, and would require the district to certify by ordinance certain matters. Because this bill would increase the duties of local entities, it would impose a state-mandated local program. The bill would provide that these restrictions would not become operative if AB 2638 is enacted and becomes operative. (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement, including the creation of a State Mandates Claims Fund to pay the costs of mandates that do not exceed $1,000,000 statewide and other procedures for claims whose statewide costs exceed $1,000,000. This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason. With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. (a) It is the intent of the Legislature to encourage irrigation districts that provide retail electric service, to consult with community advisory boards comprised of community members representing low-income customers in order to implement the low-income programs pursuant to paragraph (4) of subdivision (a) of Section 385 of the Public Utilities Code. These low-income programs include, but are not limited to, rate discounts for low-income customers and nonrate discount low-income energy efficiency programs.

14 (b) It is the intent of the Legislature to encourage irrigation districts to work with community-based organizations, community action agencies, or community-based weatherization providers to implement these programs. It is the intent of the Legislature that irrigation districts adopt low-income programs by July 1, SEC. 2. Section 385 of the Public Utilities Code is amended to read: 385. (a) Each local publicly owned electric utility shall establish a nonbypassable, usage based charge on local distribution service of not less than the lowest expenditure level of the three largest electrical corporations in California on a percent of revenue basis, calculated from each utility s total revenue requirement for the year ended December 31, 1994, and each utility s total annual expenditure under paragraphs (1), (2), and (3) of subdivision (c) of Section 381 and Section 382, to fund investments by the utility and other parties in any or all of the following: (1) Cost-effective demand-side management services to promote energy efficiency and energy conservation. (2) New investment in renewable energy resources and technologies consistent with existing statutes and regulations which promote those resources and technologies. (3) Research, development and demonstration programs for the public interest to advance science or technology which is not adequately provided by competitive and regulated markets. (4) Services provided for low-income electricity customers, including, but not limited to, energy efficiency services, education, weatherization, and rate discounts. (b) Each local publicly owned electric utility that has not implemented programs for low-income electricity customers including targeted energy efficiency services and rate discounts based upon the income level of the customer, or completed an assessment of need for those programs, on or before December 31, 2000, shall perform a needs assessment for the programs described in paragraph (4) of subdivision (a) and shall hold one or more public meetings, after notice, to review the findings of the needs assessment. Following the public meetings, the governing body of the local publicly owned electric utility shall determine the amount of the total funds collected pursuant to this section to be allocated to low-income programs, including, but not limited to, targeted energy efficiency services, education, weatherization, and rate discounts. In making its decision on the need for the programs, the governing body shall consider all of the following: (1) The number and income level of low-income customers that reside in the service area of the utility. (2) The availability of home weatherization services to low-income customers pursuant to Section (3) The availability of in-home energy efficiency education in the utility s service area. (4) Other factors that may indicate a need for low-income services. (c) Following a determination pursuant to subdivision (b) that low-income services are needed, the local publicly owned utility shall promptly implement or expand those programs. The local publicly owned electric utility shall work with existing weatherization providers to implement energy efficiency, education, and weatherization programs. SEC. 3. Section 9607 is added to the Public Utilities Code, to 14

15 read: (a) Notwithstanding Section 9604, for purposes of this section, "district" means an irrigation district furnishing electric services formed pursuant to the Irrigation District Law as set forth in Division 11 (commencing with Section 20500) of the Water Code. (b) Notwithstanding any other provision of law, a district may not construct, lease, acquire, or operate facilities for the purpose of serving retail electric customers located in the service territory of an electrical corporation or a local publicly owned electric utility unless the district provides to the customers of the electric corporation or local publicly owned utility public purpose programs, universal service, customer protection, and environmental policies regarding distribution facilities that are comparable to those of the current distribution service providers. (c) Prior to the construction, lease, acquisition, or operation of facilities for the purpose of serving retail electric customers located in the service territory of an electrical corporation or a local publicly owned electric utility, a district shall certify by ordinance, consistent with the needs determination provided for in Section 385, all of the following: (1) The district has established and funded public purpose and low-income programs in accordance with Section 385. (2) The district will provide universal service to all retail customers who request service within reasonable physical proximity to the district s distribution or transmission wires and poles allowing for line extensions and service, at published tariff rates and on a just, reasonable, and nondiscriminatory basis, comparable to that provided by the current distribution service provider. (3) The district will provide consumer protection and direct transaction provisions comparable to those established for the current distribution service provider and the district has established environmental policies to minimize or eliminate the duplication of electric transmission or distribution facilities. (d) In certifying its low-income programs pursuant to subdivision (c), a district shall follow public notice and hearing procedures and make detailed findings on the record supporting its decision. SEC. 4. Section of the Water Code is amended to read: (a) Each director, except as otherwise provided in this division, shall be a voter and a landowner in the district and a resident of the division that he or she represents at the time of his or her nomination or appointment and through his or her entire term, except in the case of the director elected at a formation election. A director elected at a formation election shall be a resident and landowner in the proposed district at the time of his or her nomination and a resident of the division that he or she represents during his or her entire term. (b) In any district having no more than 15 landowners who are voters in the district, a person need not be a voter but shall be qualified to be a director of the district if he or she is a landowner of the district at the time of his or her nomination or appointment and during his or her entire term. (c) In a district providing retail electricity for residents of the district, each director, except as otherwise provided in this division, shall be a voter of the district and a resident of the division that he or she represents at the time of his or her nomination or appointment and during his or her entire term, except in the case of a director elected at a formation election. A 15

16 director elected at a formation election shall be a resident in the proposed district at the time of his or her nomination and a resident of the division that he or she represents during his or her entire term. SEC. 5. Section 2 of this act, adding Section 9607 to the Public Utilities Code, shall not become operative if Assembly Bill 2638 of the Regular Session is enacted and becomes operative. SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution for certain costs that may be incurred by a local agency or school district because in that regard this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. However, notwithstanding Section of the Government Code, if the Commission on State Mandates determines that this act contains other costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund. 16

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