BILL ANALYSIS
AB 746
Page 1
ASSEMBLY THIRD READING
AB 746 (Blakeslee)
As Amended April 19, 2005
Majority vote
UTILITIES AND COMMERCE 10-0
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|Ayes:|Levine, Bogh, Baca, | | |
| |Blakeslee, | | |
| |De La Torre, Jones, | | |
| |Keene, Montanez, | | |
| |Ridley-Thomas, Plescia | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, 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).
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), the sponsor, would not offer credit and
debit card payment options to its customers: SCE had previously
offered these payment options to its customers and SCE recovered
AB 746
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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.
Electrical corporations are not like typical retail and 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 IOUs must get approval
from 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.
This bill is intended to compensate IOUs for their costs
associated with the credit and debit card payments only:
According to the author, this bill is intended to be a
convenience for customers, not a revenue source for 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, PUC may need
to open a proceeding to determine what fee would be considered
"reasonable."
How to ensure the fee is "reasonable" and that any cost savings
are realized by the ratepayers: It is unknown whether 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 IOUs in a number of ways,
including: 1) reduced need for manual accounts receivable
processes; 2) reduced time to collect and process payments; 3)
reduced number of uncollectible accounts; and, 4) other
potential benefits.
Analysis Prepared by : Gina Mandy / U. & C. / (916) 319-2083
FN: 0009791