BILL NUMBER: AB 1002 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 27, 1999
AMENDED IN ASSEMBLY APRIL 26, 1999
AMENDED IN ASSEMBLY APRIL 14, 1999
AMENDED IN ASSEMBLY APRIL 6, 1999
INTRODUCED BY Assembly Member Wright
FEBRUARY 25, 1999
An act to add Article 10 (commencing with Section 890) to Chapter
4 of Part 1 of Division 1 of the Public Utilities Code, relating to
public utilities, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
AB 1002, as amended, R. Wright. Natural gas: consumption
surcharge.
(1) The Public Utilities Act and other existing law requires
electrical and gas corporations to create certain public purpose
programs, including assistance to low-income customers and low-income
weatherization. The act authorizes the Public Utilities Commission
to allow the inclusion of expenses for research and development in
rates to be charged by, among other utilities, gas corporations.
This bill, except as specified, would require the commission to
impose establish a surcharge on all
natural gas consumed in this state to fund those public
purpose certain low-income assistance programs
, and cost-effective energy efficiency
and conservation activities, and public interest research
and development, as prescribed. The bill would require a
gas public utility gas corporation
, as described, to collect the surcharge from natural gas
consumers, as specified. The money from the surcharge would be
deposited in the Gas Consumption Surcharge Fund, which fund the bill
would create, for continuous appropriation to specified entities, as
prescribed. This bill would require the commission to
repeal modify a specified existing tariff
adopted by the commission and replace it with a tariff
based on a prescribed calculation. The bill would
require that new tariff to apply until the commission determines
that workable competition exists, at which point the bill would
require the commission , if it makes a specified
determination, to allow a public utility gas
corporation , as defined, to provide service at
competitive market-based rates. The bill would provide an
unspecified definition of workable competition. Because a
violation of the act is a crime, this bill would impose a
state-mandated local program by creating a new crime. The bill would
make legislative findings and declarations , and statements of
legislative intent, relating to the surcharge and the tariff.
(2) 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.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares that statutes
and regulations have imposed programs and fees, such as energy
efficiency, public interest research and development,
low-income assistance, and weatherization programs, upon
regulated gas utilities that have public policy goals not directly
related to the provision of gas service. The costs borne by gas
utilities to provide these programs have historically been recovered
through gas rates established by the Public Utilities Commission.
(b) The Legislature also finds and declares that, due to changes
in state and federal regulations, the monopolies for the provisions
of gas service in California that effectively permitted the
commission to allocate the cost of these public policy programs to
all gas users are being replaced with competitive markets. Gas
customers may continue to take advantage of the deregulation of the
gas industries by obtaining service from nonregulated gas providers
who are not required to provide these programs. Thus, these
customers do not pay the costs of public policy programs.
(c) It is the intent of the Legislature to continue public policy
programs in an equitable manner that will ensure that all gas
consumers will provide a fair share of adequate funding for these
programs without increasing the current funding levels for these
programs.
SEC. 2. Article 10 (commencing with Section 890) is added to
Chapter 4 of Part 1 of Division 1 of the Public Utilities Code, to
read:
Article 10. Natural Gas Surcharge
890. (a) No later than January 1, 2000, the commission shall
impose establish a surcharge, as
provided in this article, on all natural gas consumed in this state
to fund low-income assistance programs required by Sections 739.1,
739.2, and 2790 , and cost-effective
energy efficiency and conservation activities , and public
interest research and development authorized by Section 740 that is
not adequately provided by the competitive and regulated markets
. Upon implementation of this article, funding for those
programs shall be removed from the rates of gas utilities.
(b) Except as specified in Section 898, a gas utility
public utility gas corporation , as defined in
subdivision (b) of Section 891, shall collect the
surcharge imposed pursuant to subdivision (a) from any person
consuming natural gas in this state who receives gas service from the
gas utility public utility gas corporation
.
(c) Except as specified in Section 898, all persons consuming
natural gas in this state that has been transported by a gas
utility an interstate pipeline, as defined in
subdivision (c) of Section 891, shall be liable for the
surcharge imposed pursuant to subdivision (a).
(d) The commission shall annually determine the amount of money
required for the following year to administer this chapter and fund
the natural gas related programs described in subdivision (a) for the
service territory of each public utility gas corporation.
(e) The commission shall annually establish a surcharge rate for
each class of customer for the service territory of each public
utility gas corporation. A customer of an interstate gas pipeline,
as defined in Section 891, shall pay the same surcharge rate as the
customer would pay if the customer received service from the public
utility gas corporation in whose service territory the customer
resides. The commission shall , in determining
determine the total volume of retail natural
gas transported within the service territory of a utility gas
provider , that is not subject to exemption pursuant to Section
896, for the purpose of establishing the surcharge rate
, shall rely on information reported in the California Gas
Report to determine the volumes of retail gas transported within the
service territory of the public utility gas corporation.
. The commission shall allocate the surcharge for gas
used by noncore all customers,
including those customers who were not subject to the surcharge prior
to January 1, 2000, on an equal cent per therm basis
based on a formula allocating all costs associated
with funding the public purpose programs by core and noncore customer
classes using the cost allocation principles and the program budget
in place on December 31, 1998 on an equal cent per therm basis. The
rates for core customers shall not be affected by the inclusion of
those noncore customers who were not required to fund the programs
described in subdivision (a) prior to January 1, 2000 . The
rates for core customers shall not be affected by the inclusion of
those noncore customers who were not required to fund the programs
described in subdivision (a) prior to January 1, 2000.
(f) The commission shall notify the State Board of Equalization of
the surcharge rate for each class of customer served by an
interstate pipeline in the service territory of a public utility gas
corporation.
(g) The State Board of Equalization shall notify each person
who consumes natural gas delivered by an interstate pipeline of
the surcharge rate for each class of customer within the service
territory of a public utility gas corporation.
(h) The surcharge imposed pursuant to subdivision (a) shall be in
addition to any other charges for natural gas sold or transported for
consumption in this state. The Effective on
July 1, 2000, the surcharge imposed pursuant to this article
shall be identified as a separate line item on all gas bills
received by each class of customer. the bill of a
customer of a public utility gas corporation.
(i) Notwithstanding subdivision (a), public utility gas
corporations shall continue to collect in rates those costs of
programs associated with Sections 739.1, 739.2, and 2790 that are
uncollected prior to the operative date of this article.
891. (a) "Gas utility" means any public utility gas corporation
or interstate pipeline as defined in this section.
(b) "Public utility gas corporation" means a public utility gas
corporation as defined in Section 216.
(c) "Interstate pipeline" means any entity that owns or operates a
natural gas pipeline delivering natural gas to consumers in the
state and is subject to rate regulation by the Federal Energy
Regulatory Commission.
(d) Each gas utility shall notify the State Board of Equalization
of its status under this section. Each person who consumes
natural gas delivered by an interstate pipeline shall annually
register with the State Board of Equalization. The State Board
of Equalization may require any documentation that it determines to
be necessary to implement this article.
892. The revenue from the surcharge imposed pursuant to this
article and collected by gas utilities a
public utility gas corporation shall be paid to the State Board
of Equalization in the form of remittances. Persons consuming
natural gas delivered by an interstate pipeline shall pay the
surcharge to the State Board of Equalization in the form of
remittances. The board shall transmit the payments to the
Treasurer who shall deposit the payments in the Gas Consumption
Surcharge Fund, which is hereby created in the State Treasury.
893. The State Board of Equalization shall administer the
surcharge imposed pursuant to this article in accordance with the Fee
Collection Procedures Law (Part 30 (commencing with Section 55001)
of Division 2 of the Revenue and Taxation Code.
894. The State Board of Equalization may collect any unpaid
surcharge imposed pursuant to this article.
895. Notwithstanding Section 13340 of the Government Code, funds
in the Gas Consumption Surcharge Fund are continuously appropriated,
without regard to fiscal years, as follows:
(a) To the commission or an entity designated by the commission to
fund programs pursuant to Sections 739.1, 739.2, and 2790.
(b) To the California Board for Energy Efficiency, or an entity
designated by the commission, to fund public interest research and
development not adequately provided by the competitive and regulated
markets.
(c)
(b) To pay the commission for its costs in carrying out its
duties and responsibilities under this article.
(d)
(c) To pay the State Board of Equalization for its costs in
administering this article.
896. "Consumption" means the use or employment of natural gas.
Consumption does not include the use or employment of natural gas to
generate power for sale, the sale or purchase of natural gas for
resale to end users, the sale or use of gas for enhanced oil
recovery, or natural gas utilized in cogeneration technology projects
to produce electricity.
897. Nothing in this article impairs the rights and obligations
of parties to contracts approved by the commission, as the rights and
obligations were interpreted as of January 1, 1998.
898. Notwithstanding Section 890, a municipality, district, or
public agency that provides home weatherization services, rate
assistance for low-income customers, or programs similar to
those described in subdivision (a) of Section 890, including
home weatherization services or rate assistance for low-income
customers shall not be required to collect a surcharge
pursuant to this article from customers within its service territory.
A municipality, district, or public agency shall be required to
collect a surcharge pursuant to this article from customers served by
the municipality, district, or public agency outside of its service
territory unless the commission determines that the entity offers
those customers services similar to those offered by gas utilities as
described in subdivision (a) of Section 890.
899. Sections 890 and 892 do not apply to any gas customer of a
municipality, district, or public agency exempted by Section 896 from
collecting a surcharge.
900. The commission shall create
establish an advisory board to make recommendations regarding
the most efficient and cost-effective way to provide programs
pursuant to Sections 739.1, 739.2, and 2790 in a consistent manner
statewide by utility provider service territory. The advisory board
shall be comprised of representatives from utility gas providers,
nonutility gas providers, the Office of Ratepayer Advocates, the
Energy Division within the commission, consumer groups,
community-based organizations providing programs, and other
interested parties. On or before July 1, 2000, the advisory group
shall prepare and submit to the commission a report. The commission
may accept, reject, or modify the recommendations. On or before July
1, 2001, the commission shall implement efficient and cost-effective
programs pursuant to Sections 739.1, 739.2, and 2790. The
commission may conduct compliance audits to ensure compliance with
any commission order or resolution relating to the implementation of
programs pursuant to Sections 739.1, 739.2, and 2790, and may conduct
financial audits.
901. (a) The Legislature finds and declares all of the following:
(a) The Federal Energy Regulatory Commission certifies the
construction of interstate natural gas pipelines that provide an
alternative for noncore natural gas customers in this state.
(b) The introduction of federally regulated pipelines for the
transport of natural gas provides reasonable alternatives for the
transport of natural gas, and is an indication that a competitive
marketplace is emerging for the transport of natural gas.
(c) It is the intent of the Legislature that, to eliminate the
uneconomic environment and establish a competitive market, public
utility gas corporations should be allowed to provide service to
customers who bypass a utility system at competitive market-based
rates.
902. (a) The commission shall repeal
modify the existing residual load service tariff adopted by the
commission, known as the RLS tariff , and replace it with a
tariff . The modifications to the tariff shall be
based on the calculation described in subdivision (b)
(c) and shall apply to a customer who concurrently
uses the public utility gas corporation's intrastate pipeline system
for peaking service and also takes service from an interstate
pipeline not subject to the jurisdiction of the commission.
(b) For purposes of this section, the following definitions apply:
(1) "Firm service for stated volumes" means service that is
designed for relatively constant but reduced usage on the utility gas
corporation's pipeline system. On any day, the customer may
schedule up to a stated maximum daily quantity.
(2) "Contingency service" means service that applies to
unanticipated and unscheduled usage of the utility gas corporation's
pipeline, for example, due to unanticipated short-term reductions in
the capacity of the interstate pipeline as a result, for example, of
mechanical breakdowns.
(3) "Peak period service" means service that applies to
anticipated and scheduled usage of the utility gas corporation's
pipeline, for example, at times of scheduled maintenance on the
alternate pipeline or of anticipated peaks in the partial
requirements customer's usage.
(4) "Peaking service" means intrastate transportation for the
services described in paragraphs (1), (2), and (3) above, and shall
be differentiated from customers taking all their requirements from a
gas corporation.
(5) "Concurrent" means taking service from a utility gas
corporation and an interstate pipeline not subject to the
jurisdiction of the commission at any time during the most recent
12-month period, not necessarily limited to overlapping scheduling of
deliveries. This definition of concurrent shall be used solely for
the purpose of determining which customer of a gas corporation is
served as a full requirements customer and which customer is served
under the peaking service.
(c) For all service volumes, the customer shall pay a volumetric
rate and a monthly demand charge.
(1) The monthly demand charge shall be billed only during the
months of use. The demand charge rate shall be calculated using the
customer, transmission, distribution, and load balancing storage
costs allocated to the particular customer's customer class, or
sub-class, if the class rates are segmented by size or pressure level
in noncore long run marginal cost rates. The demand charge volume
shall be based on the weighted average of the following: (A) 50
percent on the greater of (i) the customer's peak day usage in that
billing month, or (ii) the customer's maximum daily quantity, for
customers that contract for a maximum daily quantity; and (B) 50
percent on the customer's usage on the utility gas corporations most
recent system peak day. This 50/50 allocation shall remain in place
until the commission reviews the appropriate allocation of these cost
categories between the customer's usage on the customer's peak day
on the gas corporation's system peak day.
(2) The volumetric charge shall be calculated as the difference
between the otherwise applicable tariffed volumetric rate and the
demand charge component expressed on a volumetric basis. The
volumetric charge shall be collected on metered throughput to the gas
corporation's meter at the customer's facility.
(3) Peaking service usage up to the maximum daily quantity shall
be treated as firm noncore service. All peaking service volumes in
excess of the maximum daily quantity shall be treated as
interruptible service. Peaking service shall be treated as any other
comparable firm or interruptible service by the gas corporation.
(d) It is not the intent of the Legislature, in enacting this
statute, for the shareholders of the gas corporation or other
customers to subsidize any investment needed to upgrade the gas
corporation's facilities to serve customers taking peaking service.
(e) If a customer who is no longer taking service from an
interstate pipeline chooses to resume full service from a utility gas
corporations under the standard tariff rates, the customer shall
physically disconnect from the bypass line.
(f) If the commission restructures the gas corporation's rates to
differentiate pricing between firm and interruptible service, the
commission is instructed to also consider the proper pricing for
different levels of service for peaking service. Nothing in this
bill is intended to limit the commission's flexibility in
restructuring jurisdictional intrastate gas transportation, including
the unbundling of transportation service, pricing, or rate design.
(g) The peaking service described above shall be implementing on
each gas corporation's system by June 1, 2000.
903. The Legislature finds and declares that recent changes in
the natural gas industry have provided natural gas customers with the
opportunity to take some or all of their natural gas services from
natural gas providers regulated by the Federal Energy Regulatory
Commission. At the same time, natural gas corporations regulated by
the commission continue to have an obligation to serve customers who
partially or fully bypass their distribution system.
904. (a) It is the intent of the Legislature to authorize gas
corporations to fulfill their obligation to serve customers who
partially or fully bypass the gas corporation's transmission and
distribution system by offering service at commission-authorized
competitive market-based rates, once the commission makes a finding
that there is a workably competitive market.
(b) The tariff described in Section 902 shall apply until the
commission determines that workable competition exists. If the
commission determines that workable competition exists, the
commission shall allow a public utility gas corporation to provide
service at competitive market-based rates. The commission shall make
its determination by considering the full range of natural gas
transportation and energy source alternatives available to the
bypassing customer. Specifically, the consideration of these
alternatives may include, but is not limited to, all of the
following:
(1) Alternate natural gas pipeline transportation systems, both
interstate and local.
(2) The availability of a functioning secondary market for
transportation rights on the gas corporation's system.
(3) Alternate energy sources that act as viable substitutes for
the gas corporation's natural gas transportation service.
(4) Whether the public utility gas corporation has a significant
market share based on its filing in which case it shall do all of the
following:
(A) Explain the basis for a market power assessment.
(B) Identify relevant markets in which it lacks significant market
power.
(C) Present other relevant market power measures.
(D) Discuss other factors that bear on the issue.
(c) Once such a determination has been made, the commission shall
authorize a gas corporation to offer to provide natural gas service
to customers who partially or fully bypass the gas corporation's
distribution system at competitive market-based rates submitted to
the commission. The commission shall protect the confidentiality of
such terms and conditions as necessary to preserve customers and
competitive confidentiality interests.
(d) Notwithstanding subdivision (c), the commission shall not
approve any rate application that relieves the gas corporation of the
obligation to serve wholesale customers where the bypass gas supply
is natural gas produced and consumed within the service territory of
the wholesale customer .
(b) For customers who bypass a utility system, the tariff rate
shall include a monthly demand charge, applied during the month of
utility system usage, using a calculation based 50 percent on the
customer's monthly peak usage and 50 percent on the customer's usage
on the public utility gas corporation's annual system peak day.
(c) The tariff described in subdivision (a) shall apply until the
commission determines that workable competition exists. If the
commission determines that workable competition exists, the
commission shall allow a public utility gas corporation to provide
service at competitive market-based rates. As used in this section,
"workable competition" means ____.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because 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 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.