BILL NUMBER: AB 1002 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 8, 1999
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
establish a surcharge on all natural gas consumed in this state to
fund 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 public utility gas corporation, as
described, to collect the surcharge from natural gas consumers, as
specified. The bill would affect consumers of natural gas that
has been transported by an alternate pipeline, as prescribed.
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 modify a specified existing
tariff adopted by the commission based on a prescribed calculation.
The bill would require the commission, if it makes a specified
determination, to allow a gas corporation to provide service at
competitive market-based rates. 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, 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
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 and 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 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 public utility gas corporation.
(c) Except as specified in Section 898, all persons consuming
natural gas in this state that has been transported by an interstate
pipeline, as defined in subdivision (c) of Section 891, or
alternate pipeline as defined in subdivision (d) 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
or alternate 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
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. The commission shall allocate the
surcharge for gas used by all customers, including those customers
who were not subject to the surcharge prior to January 1, 2000,
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 allocate the surcharge for gas used by
all customers, including those customers who were not subject to the
surcharge prior to January 1, 2000, based on the following formula:
(1) The commission shall allocate 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 December 31, 1998. 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.
(2) The commission shall allocate any increase in the cost to fund
the California Alternative Rates for Energy (CARE) program,
described in Section 739.1, above the December 31, 1998, level, by
allocating 85 percent of the increase in program cost to the core
customer class and 15 percent of the increase in program cost to the
noncore customer class.
(3) The commission shall allocate any reduction in the cost to
fund the California Alternative Rates for Energy (CARE) program,
described in Section 739.1, down to the December 31, 1998, program
funding level by allocating 85 percent of the reduction to the core
customer class and 15 percent of the reduction to the noncore
customer class. Any reductions in the cost to fund the California
Alternative Rates for Energy (CARE) program, described in Section
739.1, below the December 31, 1998, program funding level shall be
allocated based on the cost allocation principles in place for each
customer class on December 31, 1998.
(f)
(g) 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)
(h) The State Board of Equalization shall notify each person
who consumes natural gas delivered by an interstate or
alternate 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. Effective on July 1, 2000
2001 , the surcharge imposed pursuant to this
article shall be identified as a separate line item 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
described in subdivision (a) of Section 890 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) For purposes of this article, "alternate pipeline" means
any entity that owns or operates a natural gas pipeline delivering
natural gas to consumers in the state and is not regulated by the
Federal Energy Regulatory Commission or the commission.
(e) 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 a public utility gas corporation or
alternate pipeline 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 pay the commission for its costs in carrying out its duties
and responsibilities under this article.
(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 offers in
published tariffs home weatherization services, rate assistance
for low-income customers, or programs similar to those described in
subdivision (a) of Section 890, 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 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
determine 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.
In determining the most cost-effective way to provide service that
benefits persons eligible for low-income programs, the commission
shall consider factors, including, but not limited to, outreach
efforts to reach the targeted population and the types of discounts
and services that should be provided by each utility. On or before
July 1, 2001, the commission shall develop and 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, the
commission shall authorize a 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 modify the rates specified in
the existing residual load service tariff adopted by the
commission , known as the RLS tariff in
Decisions Nos. 95-07-046 and 97-04-082 . The modifications to
the tariff shall be based on the calculation described in
subdivision (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 public 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
public utility gas corporation.
(5) "Concurrent" means taking service from a utility gas
corporation and an interstate or alternate 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
subclass, if the class rates are segmented by size or pressure level
in noncore longrun 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. The
50/50 allocation shall remain in place as long as the public utility
gas corporations' commission approved rates are based on long-run
marginal costs. If the commission adopts a costing methodology that
is not based on long-run marginal costs, the commission shall
establish a residual load service tariff that is consistent with the
cost and rate design principles applied to full requirements
customers. This tariff shall remain in existence until the
commission determines that there is workable competition pursuant to
a formal proceeding.
(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 for
class or subclass . The volumetric charge shall be collected
on metered throughput to the public utility 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 public utility
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
in 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. the
customer cannot take gas from the bypass line. This customer can be
prevented from taking gas by requiring the locking of the block valve
in the fully closed position or the removal of the flange section at
the point of connection with the bypass pipeline.
(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.
This section shall be fully implemented 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 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.
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.