BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 476| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 476 Author: Chesbro (D) Amended: 6/29/99 Vote: 21 SENATE ENERGY, U.&C. COMMITTEE : 6-0, 4/27/99 AYES: Bowen, Hughes, Peace, Solis, Speier, Vasconcellos NOT VOTING: Alarcon, Baca, Brulte, Kelley, Mountjoy SENATE JUDICIARY COMMITTEE : 7-0, 5/18/99 AYES: Burton, Escutia, O'Connell, Peace, Sher, Wright, Schiff NOT VOTING: Haynes, Morrow SENATE FLOOR : 27-9, 6/1/99 AYES: Baca, Bowen, Burton, Chesbro, Costa, Dunn, Escutia, Figueroa, Hayden, Hughes, Johannessen, Johnston, Leslie, McPherson, Morrow, Murray, O'Connell, Ortiz, Peace, Perata, Polanco, Rainey, Schiff, Sher, Speier, Vasconcellos, Wright NOES: Brulte, Haynes, Johnson, Kelley, Knight, Lewis, Monteith, Mountjoy, Poochigian NOT VOTING: Alarcon, Alpert, Karnette, Solis ASSEMBLY FLOOR : 51-24, 8/16/99 - See last page for vote SUBJECT : Mobilehomes: liquified petroleum gas sales SOURCE : Golden State Mobilehome Owners League DIGEST : This bill would cap the price a moblehome park CONTINUED SB 476 Page 2 manager may charge mobilehome park residents for liquified petroleum gas to 110 percent of the actual price paid, when the residents can only purchase their gas from the park management. Assembly Amendments change the term "liquid propane butane" to "liquified petroleum gas", and make technical changes. ANALYSIS : Current law allows mobilehome parks to bill residents separately for utility services if the rental agreement does not include such services. Existing law allows park management to require a resident wishing to purchase liquified petroleum gas to make the purchase solely from management at an unregulated price. This bill limits the price that mobilehome park owners may charge tenants for liquified petroleum gas if the park owner does not permit the tenant to purchase his/her own gas. The price which park owners may charge is capped at 110% of the actual price paid by the park owner. The bill requires the mobilehome park management to post the actual price paid by management for liquified petroleum gas sold by it. The bill expressly excludes recreational vehicles from its provisions. The bill clarifies that it applies only to mobilehome parks covered under the Mobilehome Residency Law. The bill clarifies that it will not affect the provisions of law that allow the costs of services rendered to be charged to tenants. Comments This bill addresses the issue of liquified petroleum gas pricing by mobilehome parks whose tenants have no alternative but to purchase gas from the park's propane distribution system. A 1993 study by the California Public Utilities Commission (CPUC) estimated that approximately 500 of the state's approximately 1,200 mobilehome parks operated multi-customer systems where the residents can only purchase gas from the park owner, creating an SB 476 Page 3 effective monopoly. Liquified petroleum gas is to mobilehomes as natural gas is to traditional homes, yet while the retail price of natural gas is regulated, the retail price of liquified gas is not. This bill is intended to deal with this inconsistency in state policy. The author doesn't believe that the sale of gas to captive residents should be allowed to be a profit center for mobilehome park owners. This bill limits that profit by capping rates at 110% of the price paid by the park owner. Out of the 10% margin, the park owner would presumably cover the costs of operating and maintaining the system of pipes and storage tanks which deliver the gas to the mobilehomes. The 10% figure is not scientifically based, but the author has apparently attempted to acquire actual cost data from park owners without success. Without such data it is not possible to determine a fair margin. The Legislature has three times in the last ten years passed bills to limit propane prices in mobilehome parks. Bills that capped propane prices at 110% of the wholesale price were passed by the Legislature and vetoed in 1989 and 1991. In 1998, AB 2016 (Brown), which capped the price of propane at the price paid by the park management plus a monthly charge to cover the cost of operating, maintaining, and improving the distribution system, also passed the Legislature and was vetoed. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 8/16/99) American Association of Retired Persons Area Agency on Aging, Eureka Santa Clara County Council on Aging California Senior Legislature El Dorado County Commission on Aging Golden State Mobile Homeowners League Western Center on Law and Poverty, Inc. California Rural Legal Assistance Foundation Numerous individuals SB 476 Page 4 ARGUMENTS IN SUPPORT : The supporters of this bill argue that it is necessary to prevent excessive charges for liquified petroleum gas by mobilehome park owners. They note that many residents of mobilehome parks are senior citizens living on fixed incomes. ASSEMBLY FLOOR : AYES: Alquist, Aroner, Battin, Bock, Cardenas, Cardoza, Cedillo, Corbett, Correa, Davis, Ducheny, Dutra, Firebaugh, Florez, Gallegos, Granlund, Havice, Hertzberg, Honda, House, Jackson, Keeley, Knox, Kuehl, Lempert, Leonard, Longville, Lowenthal, Machado, Mazzoni, Migden, Nakano, Papan, Reyes, Romero, Runner, Scott, Shelley, Soto, Steinberg, Strom-Martin, Thompson, Thomson, Torlakson, Washington, Wayne, Wesson, Wiggins, Wildman, Wright, Villaraigosa NOES: A anestad, Ackerman, Ashburn, Baldwin, Bates, Baugh, Briggs, Campbell, Cox, Cunneen, Dickerson, Frusetta, Kaloogian, Leach, Maddox, Maldonado, Margett, McClintock, Olberg, Oller, Robert Pacheco, Pescetti, Strickland, Zettel NOT VOTING: Brewer, Calderon, Floyd, Rod Pacheco, Vincent NC:sl 8/18/99 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****