BILL NUMBER: AB 1002 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 17, 1999
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
890. (a) On and after January 1, 2000, there shall be imposed a
surcharge on all natural gas consumed in this state. 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) (1) 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.
(2) A public utility gas corporation is relieved from liability to
collect the surcharge insofar as the base upon which the surcharge
is imposed is represented by accounts which have been found to be
worthless and charged off in accordance with generally accepted
accounting principles. If the public utility gas corporation has
previously paid the amount of the surcharge it may, under regulations
prescribed by the board, take as a deduction on its return the
amount found to be worthless and charged off. If any accounts are
thereafter collected in whole or in part, the surcharge so collected
shall be paid with the first return filed after that collection. The
commission may by regulation promulgate such other rules with
respect to uncollected or worthless accounts as it shall deem
necessary to the fair and efficient administration of this part.
(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.
(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.
(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.
(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)
(i) 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,
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)
(j) Notwithstanding subdivision (a), public utility gas
corporations shall continue to collect in rates those costs of
programs 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)
(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 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.
892.1. The surcharges imposed by this part and the amounts
thereof required to be collected by public utility gas corporations
are due quarterly on or before the last day of the month next
succeeding each calendar quarter.
892.2. On or before the last day of the month following each
calendar quarter, a return for the preceding quarterly period shall
be filed with the State Board of Equalization in such form as the
board may prescribe. A return shall be filed by every public utility
gas corporation, and by every person consuming, as defined in this
article, natural gas purchased from a provider other than the public
utility gas corporation. The return shall be signed by the person
required to file the return by his or her duly authorized agent.
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
described in subdivision (a) of Section 890 .
(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. Consumption does not include the
consumption of natural gas which this state is prohibited from taxing
under the United States Constitution or the California Constitution.
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 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 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 to provide service to customers who bypass a utility
system at competitive market-based rates pursuant to the
provisions of Section 902 .
902. (a) (1) The commission shall modify the rates
specified in the existing residual load service tariff adopted by the
commission 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 alternate gas transportation service
provider .
(2) Nothing in this article is intended to limit the flexibility
of the commission to modify the applicability or special conditions
provisions of the residual load service tariff adopted in Decisions
Nos. 95-07-046 and 97-04-082.
(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
gas transportation service provider 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 corporations' most recent 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 longrun marginal costs. If the commission adopts
a costing methodology that is not based on longrun 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. This 50/50 allocation shall
remain in place as long as the public utility gas corporations'
commission approves the utilization of long run marginal cost based
volumetric rates for the utility. However, if the commission moves
to another pricing structure, the commission shall establish a
residual load service tariff rate under the same methodology as the
customer's interstate pipeline or alternate pipeline competitive
alternative, while remaining consistent with the restructuring
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. As part of
this proceeding, the commission shall request an advisory opinion
from the Attorney General about the existence of competitive options
available to the customer bypassing the public utility gas
corporation.
(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 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 alternate gas transportation
service provider chooses to resume full service from a utility
gas corporations under the standard tariff rates, 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) This section shall apply to gas transportation service
provided to any noncore customer who bypasses a public utility gas
corporation's service, in whole or in part. For purposes of this
section, bypass is defined as any situation where a customer of a
public utility gas corporation becomes connected to, and receives
services from, an alternate gas transportation service provider on or
after July 1, 1995.
(g)
(h) 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. 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.