BILL ANALYSIS
AB 746
Page 1
Date of Hearing: April 11, 2005
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Lloyd E. Levine, Chair
AB 746 (Blakeslee) - As Amended: April 6, 2005
SUBJECT : Public utilities: billings.
SUMMARY : Permits an electrical corporation to charge a
reasonable transaction fee when customers pay their utility
bills by credit card and debit card.
EXISTING LAW permits electrical corporations to accept payment
by credit or debit card; however, the Civil Code prohibits any
retailer or service provider from imposing a surcharge on a
cardholder who elects to use a credit card in lieu of payment by
cash, check, or similar means. In addition, current law imposes
punitive damages on a retailer or service provider if the
retailer or service provider willfully violates the law.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author's office, the purpose of
this bill is to enable customers to pay their bills in a more
convenient method, and permit the investor-owned utilities
(IOUs) to recover fees imposed by banks and credit card
companies when customers use a credit card or debit card to pay
their bills. Current law permits electrical corporations to
receive payment by credit or debit card, however, they are
prohibited from passing the fee charged by the bank onto the
customer through their rates. Electrical corporations' rates are
regulated by the California Public Utilities Commission (PUC).
1)Without the ability to pass on the bank costs to customers who
choose to use credit and debit card payment options, Southern
California Edison (SCE) would not offer credit and debit card
payment options to its customers : SCE is the sponsor of this
bill. SCE had previously offered these payment options to its
customers and SCE recovered the fee from the customer. In
1996, SCE discovered that charging the fee to the end-use
customer for making a credit card payment was in violation of
Civil Code Section 1748.1 and ceased offering the credit card
payment option.
2)Electrical corporations are not like typical retail and
AB 746
Page 2
service providers : Almost all other retail and service
establishments permit customers to pay by credit card because
it is convenient for the customer and may result in cost
savings to the company. Most of those retail and service
providers are not regulated and can recover the credit and
debit card costs from various methods including in the prices
of goods or services sold or by using another company revenue
source. Because the IOUs must get approval from the PUC before
they can recover costs in rates, they are prohibited from
using the various cost-recovery methods available to
unregulated retailers and service providers.
3)The bill is intended to compensate the IOUs for their costs
associated with the credit and debit card payments only :
According to the author's office, AB 746 is intended to be a
convenience for customers, not a revenue source for the IOUs.
According to SCE, they have been speaking with credit card
companies and they anticipate the transaction fee to be a flat
rate of less than $1 per transaction. At any rate, the PUC may
need to open a proceeding to determine what fee would be
considered "reasonable." The author and committee may wish to
add language that would identify the author's intent, which is
to permit the IOUs to recover only their direct fee associated
with providing the customers the option of paying their bills
by using credit and debit cards .
4)How to ensure the fee is "reasonable" and that any cost
savings are realized by the ratepayers : It is unknown whether
the PUC would be required to hold a proceeding that would
ensure the fee is reasonable. In addition, the ability to
receive payments electronically may reduce costs for the IOUs
in a number of ways, including: reduced need for manual
accounts receivable processes, reduced time to collect and
process payments, reduced number of uncollectible accounts,
and other potential benefits. To ensure that ratepayers
benefit by any cost savings, the author and committee may wish
to add language that would require the PUC to establish a
proceeding to :
a) Determine the reasonableness of the fee; and,
b) Determine whether the associated costs and any potential
cost savings attributable to the IOUs' ability to receive
electronic payments may be passed on to customers utilizing
those payment options or reflected in general rates.
AB 746
Page 3
5)The author and committee may wish to make the following minor
amendments :
a) Add language that would more clearly identify this bill
as a stand-alone statute, notwithstanding the relevant
Civil Code section.
b) Fix a drafting error that would clarify who is permitted
to pass on reasonable transaction-related fees.
REGISTERED SUPPORT / OPPOSITION :
Support
Sempra Energy
Southern California Edison (Sponsor)
Pacific Gas and Electric Company
Opposition
The Utility Reform Network
Analysis Prepared by : Gina Mandy / U. & C. / (916) 319-2083