BILL ANALYSIS
AB 1002
Page 1
ASSEMBLY THIRD READING
AB 1002 (Wright)
As Amended April 26, 1999
2/3 vote
UTILITIES AND COMMERCE 11-0
APPROPRIATIONS 19-1
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|Ayes:|Wright, Pescetti, |Ayes:|Migden, Ashburn, Corbett, |
| |Campbell, Cardenas, | |Davis, Granlund, |
| |Frusetta, Maddox, | |Hertzberg, Kuehl, |
| |Mazzoni, Papan, Reyes, | |Ackerman, Papan, Aroner, |
| |Vincent, Wesson | |Runner, Shelley, |
| | | |Steinberg, Thomson, |
| | | |Wesson, Wiggins, Wright, |
| | | |Zettel, Longville |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Brewer |
| | | | |
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SUMMARY : Imposes a surcharge on all natural gas consumed in
California to fund specified low-income, energy efficiency,
conservation and public interest research programs.
Specifically, this bill :
1)Requires the California Public Utilities Commission (CPUC) to
impose a surcharge on all natural gas consumed in the state.
2)Exempts specified natural gas usage from the consumption
surcharge, including natural gas utilized to generate power
for sale, for resale to end users, for enhanced oil recovery,
in cogeneration technology projects to produce electricity,
pursuant to contracts previously approved by CPUC which do not
currently impose the surcharge, and gas sold within the
service territory of a municipality that provides similar
programs.
3)Requires CPUC to establish the surcharge rate for each class
of customer and notify the State Board of Equalization (BOE)
of the surcharge and requires each end user on an interstate
pipeline to notify BOE of their consumption.
4)Requires that revenues collected from the surcharge be paid to
BOE and deposited into the Gas Consumption Surcharge Fund to
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be created in the State Treasury to fund the public purpose
programs.
5)Appropriates funds to pay CPUC and BOE for their costs
associated with the administration of these programs.
6)Establishes an advisory board to administer programs and
conduct financial and compliance audits.
7)Institutes a tariff rate to apply to customers who bypass
public utility gas corporation and subsequently seek to
utilize the public utility gas corporation for transportation
services.
EXISTING LAW :
1)Establishes certain public purpose programs, including energy
efficiency, public interest research and development,
low-income assistance and weatherization.
2)Authorizes the collection of funds through a surcharge on
ratepayers of public utility gas corporations.
FISCAL EFFECT : BOE estimates annual costs of $70,000 to
administer the surcharge and CPUC would incur minor absorbable
costs.
COMMENTS : The sponsor of this bill, Sempra Energy, had this
bill introduced to establish a surcharge on all natural gas
customers to ensure the financial stability of California's
public purpose programs. Program costs are spread over core
(i.e., residential and small commercial) and non-core (i.e.,
large, industrial users) customers. The four public purpose
programs provide rate assistance and weatherization services to
low-income customers, promote cost-effective energy conservation
and efficiency measures, and to support technology research that
would reduce energy production and end-use costs.
In recent years, federal deregulation of the gas industry has
enabled interstate pipelines regulated by the Federal Energy
Regulatory Commission (FERC) to compete with CPUC-regulated
intrastate pipelines. This competition has caused a significant
exodus of large, non-core customers from intrastate pipelines,
and resulted in the reduction of the funding base for
California's public purpose programs. When non-core customers
abandon the public utility gas corporation's pipeline, their
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contributions to the public purpose programs are shifted and
reallocated amongst core customers remaining on the system.
This bill is intended to level the playing field and require all
customers to share in funding California's public purpose
programs which benefit core utility customers.
Based on the 1998 budgeted costs for the public purpose
programs, core customers are currently paid approximately 85% of
the overall program costs and non-core funded the remaining 15%.
This bill proposes that there be no cost shifting between core
and non-core customers.
This bill also proposes a change in the manner in which the
public purpose programs are administered. At present, the
utility companies administer the program and receive varying
benefits under the programs. The differences impact program
costs, participation levels and overall program funding. This
bill proposes that program administration be transferred to an
advisory board and that the advisory board be required to
establish a uniform statewide program and also be authorized to
conduct financial and program audits of the public purpose
programs.
The surcharge collection mechanism is proposed to be with BOE.
Customers of the interstate pipelines must register with BOE so
that they may receive remittances on a quarterly basis for
payment.
A corollary problem has been revealed to the author while
addressing the public purpose surcharge, the residual load
service (RLS) tariff. The RLS tariff, which was approved by
CPUC in 1995, imposes a higher rate on any customer which
partially bypasses the public utility gas corporation and
continues to use the gas corporation for its high cost peak load
volumes. This bill modifies the RLS tariff and replaces it with
one that shares the customer's and the system's peak
utilization. The replacement tariff will apply until such time
that a workably competitive market exists. CPUC will be
required to make a finding as to whether a workably competitive
market exists.
Analysis Prepared by : Carolyn Veal-Hunter / U. & C. / (916)
319-2083
FN:
AB 1002
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