YOUR RIGHTS BYTES #19

 

NEW CALIFORNIA PUBLIC UTILITIES COMMISSION (CPUC) DECISION PROTECTS HOMEOWNERS IN PARKS UNDERGOING UTILITY CONVERSIONS

By BRUCE STANTON

GSMOL GENERAL COUNSEL

 

History:

For nearly a decade the California Public Utilities Commission (CPUC) has been holding hearings to consider transferring control of gas and electric systems in mobilehome parks back to the local serving utilities, such as Edison or PG &E.  Over the decades many park owners took over operation of the gas and electric systems in their parks, and created a sub-meter system where the park owner directly bills the residents for their energy use.  This only applies to gas and electric, and not water.  In a sub-metered park the park owner is also responsible to repair or replace the system, and receives energy from the local utility at a discounted rate so as to receive compensation for system repairs and upgrades.  Unfortunately park owners have never been required to account for these “discount” funds, and have simply spent the money however they wish.  And when repairs arose park owners formerly tried to pass those costs on to homeowners.

 

In 1996 GSMOL obtained a landmark decision at the CPUC which is referred to as the “Double-Dip” decision.  It provides that a park owner cannot pass through any costs to repair gas or electric systems in a park to the homeowners, since they are already receiving the utility discounts for that purpose.  Subsequent decisions confirmed that limited pass through of costs related to park common areas, or to that portion of the system between the utility meter and the home which was already owned by the park owner (i.e. “behind the meter”), are permissible.

 

Over the years gas and electric systems have been aging in parks, sometimes creating hazardous conditions and unreliable energy service to homeowners.   Many parks did not wish to spend money for repairs or upgrades, and if the system was too old they tried to give it back to the utility.  But the utility would typically require repair of the system first before taking it back.  Since the park didn’t wish to pay for that, a stalemate ensued, where the utility would not take back the system and the park owner wouldn’t repair it.  As a result, the homeowners suffered.

 

In 2012 a proceeding was opened at the CPUC to consider how a program could be developed to break this statemate and encourage transfer of mobilehome park gas and electric systems back to the serving utilities.  Phase I of that proceeding established a “pilot program” whereby 10% of the State’s mobilehome spaces would be so converted.  The existing systems would be abandoned in the ground and new “line extension” systems installed with new meters.  The cost of the project would be predominantly borne by all of the ratepayers in the State of California, and funded via allowable increases in gas and electric rates state-wide.  In 2018 the CPUC voted in rulemaking proceeding R.18-04-018 to adopt a permanent 10-year program to run from 2021-2030 to facilitate these utility conversions throughout California.

 

In 2020 the CPUC opened Phase II of this proceeding, involving consideration of two issues.  One is referred to as “electrification”, which would require all mobilehome appliances be operated by electric energy only-no gas appliances.  This portion is still to be determined.

 

The remaining issue in Phase 2 focused on “consumer protection”, specifically “examining ways to protect residents of mobilehome parks from unreasonable rent increases or evictions following a park’s participation in the Mobilehome Utility Conversion Program.”  The concern is that a park owner would allege that because its system was now modernized, the value added to the park, and to the residents, would justify rent increases, and cause evictions if residents could not pay the higher rents.

The Decision:

On August 20, 2021, the CPUC adopted Decision 21-08-025, which contained the following Order requiring new language to be inserted in the written agreement to be signed by park owners when utility conversion projects are initiated:

 

             1.      The consumer protection language recommended in the CPUC Staff Proposal issued on February 12, 2021, is adopted with modifications.

             2.      Pacific Gas and Electric Company, San Diego Gas & Electric Company, Southern California Edison Company, Southern California Gas Company, Bear Valley Electric Service Inc, Liberty Utilities (CalPeco Electric) LLC, PacifiCorp, and Southwest Gas shall add the following language to the Mobilehome Park (MHP) Utility Upgrade Program Agreement (MHP Program Agreement) that is signed by MHPs participating in the MHP Utility Conversion Program:

The MHP residents are intended third party beneficiaries with respect to the protections contained in this clause, and shall have the sole right to enforce this clause:

The property owner(s) and/or the resident shall not raise the rent of a unit or space because of the increased value of the unit due solely to infrastructure improvements provided by the Mobilehome Park (MHP) Utility Conversion Program (MHP Conversion Program or Program).  Allowable factors for rent increase include, but are not limited to, an increase in property taxes, operation and maintenance costs, and/or amortizing costs of property improvements other than those made by the MHP Conversion Program.  The owner(s) of the MHP shall provide notice of this protection from rent increases due to participation in the MHP Conversion Program in writing to each MHP resident within 3 days of transfer of the MHP infrastructure to the utility following program completion.  That notice will include the current contact information for mobilehome resources, including but not necessarily limited to the Mobilehome Assistance Center and the Mobilehome Residency Law Protection Program:

Mobilehome Assistance Center (Complaints)

Phone: 1-(800) 952-8356

E-mail:  MHAssistance@hcd.ca.gov

Mailing Address:  P.O. Box 278690, Sacramento, CA 95827-8690

Mobilehome Residency Law Protection Program (Complaints)

Phone: 1-(800) 952-8356

E-mail: MRLComplaint@hcd.ca.gov

Mailing Address:  P.O. Box 278690, Sacramento, CA 95827-8690

Participating utilities shall update the contact information for these resources in the MHP Program Agreement and notices as needed.

             3.      The utilities shall require Mobilehome Parks (MHP) participating in the MHP Utility Conversion Program to inform their residents in writing of the consumer protections adopted in this decision, including up-to-date information on the MHP resources identified in the consumer protection language set forth in Ordering Paragraph 2.  Specifically, the utilities will include the language adopted in this decision in the updated MHP Program Agreement and will provide a written reminder of this notice requirement to the MHP owner upon transfer of the system to the utility.  

             4.      Within 45 days of the issuance of this decision, Pacific Gas and Electric Company, San Diego Gas & Electric Company, Southern California Edison Company, Southern California Gas Company, Bear Valley Electric Service Inc, Liberty Utilities (CalPeco Electric) LLC, PacifiCorp, and Southwest Gas shall submit a Tier 1 Advice Letter to the Commission’s Energy Division in compliance with this decision.  That Advice Letter shall include an updated Mobilehome Park Utility Upgrade Program Agreement that contains the consumer protections adopted in this decision, including a description of the specific information that participating MHP owners will provide to residents, as well as a discussion of methods the MHP owners may use to communicate these protections to their residents.”

 

A number of objections to the Decision by WMA, the park owner’s trade organization, were not accepted.

 

This important Decision offers critical protections to any homeowner in a park which is undergoing a utility system conversion.  Homeowners in those parks are encouraged to be looking for these required communications, and to report to GSMOL any park owner violations of the above Order. 

 

The full text of this Decision can be viewed by clicking on the “Proceedings” tab on the CPUC website for R.18-04-018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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