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AB-2705 Excess energy costs: San Diego Gas and Electric.(2001-2002)

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Amended  IN  Assembly  April 22, 2002

CALIFORNIA LEGISLATURE— 2001–2002 REGULAR SESSION

Assembly Bill
No. 2705

Introduced  by  Assembly Member Wyland

February 22, 2002

An act to add and repeal Sections 17053.83 and 23673 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. An act to add Section 332.3 to the Public Utilities Code, relating to public utilities.


LEGISLATIVE COUNSEL'S DIGEST


AB 2705, as amended, Wyland. Personal income and bank and corporation taxes: credits: excess Excess energy costs: San Diego Gas and Electric.
(1) The Public Utilities Act required the Public Utilities Commission to establish a ceiling of $.065 per kilowatthour on the energy component of electric bills for residential, small commercial, and street lighting customers of the San Diego Gas and Electric Company, through December 31, 2002, retroactive to June 1, 2000 and permits the commission to extend that ceiling through December 2003. Existing law required the commission to also establish a frozen rate of $0.065 per kilowatthour on the energy component of electric bills for electricity supplied to all customers by the San Diego Gas and Electric Company not subject to the ceiling imposed by the law, through December 31, 2002, retroactive to February 7, 2001.
This bill would, on or before March 1, 2003, require the San Diego Gas and Electric Company to identify each customer who was subjected to excess energy costs, calculate the total amount of these costs, and to communicate that information to those customers.
The bill would require the San Diego Gas and Electric Company to develop a plan to provide full excess energy costs reimbursement to all identified customers, in a manner deemed most feasible by the San Diego Gas and Electric Company.
The bill would require the commission, after reviewing the San Diego Gas and Electric Company reimbursement plan and no later than January 1, 2004, to order that company to reimburse identified, eligible customers the excess energy costs. Since a violation of a decision or order of the commission is a crime, this bill would impose a state-mandated local program by creating new crimes.
(2) The bill would declare that, due to the special circumstances surrounding the San Diego Gas and Electric Company, a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution, and the enactment of a special statute is therefore necessary. (3) 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.

The Personal Income Tax Law and the Bank and Corporation Tax Law authorize various credits against the taxes imposed by those laws.

This bill would authorize a credit against those taxes for each taxable year beginning on or after January 1, 2002, and before January 1, 2004, in an amount equal to 12 of the amount paid or incurred by small-to-medium size customers, as defined, in San Diego for excess energy costs, as defined, incurred between June 1, 2000, and February 7, 2001.

This bill would make legislative findings and declarations as to the necessity of a special statute.

This bill would take effect immediately as a tax levy.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

The Legislature finds and declares that a special

SECTION 1.

 The Legislature finds and declares all of the following:
(a) In 1999, when the Public Utilities Commission determined that San Diego Gas and Electric Company had fully recovered its uneconomic costs, as set forth in the provisions of Assembly Bill 1890 (Chapter 854, Statutes of 1996), the statutory rate freeze imposed by Chapter 854 was lifted. The following year, wholesale electricity prices soared and San Diego Gas and Electric Company passed those increased costs on to its customers.
(b) With the enactment of Assembly Bill 265 (Ch. 328, Stats. 2000), a retail ceiling of six and five-tenth cents ($.065) per kilowatthour retroactive to June 1, 2000, was reestablished for residential, small commercial, and street lighting customers of the San Diego Gas and Electric Company. Subsequent legislation, Senate Bill 43 of the First Extraordinary Session (Ch. 5, Stats. 2001), directed the Public Utilities Commission to extend this rate ceiling to all San Diego Gas and Electric Company customers, effective February 7, 2001.
(c) Throughout the years 2000 and 2001, while California experienced a severe electricity costs crisis, San Diego Gas and Electric Company and its parent company, Sempra Energy, recorded several hundred million dollars in profits, and in 2001, Sempra Energy entered into contracts with the state which will provide Sempra Energy with revenues in excess of seven billion dollars ($7,000,000,000).
(d) For the eight-month period between June 2000 and February 2001, those customers in the San Diego Gas and Electric Company service area not covered by the rate ceilings imposed by Chapter 328, were the only class of California ratepayers subject to severe economic hardship due to unprecedented bill volatility and extraordinarily high rate levels. Many businesses and not-for-profit entities were forced to lay off workers, reduce operating hours, reconsider capital investments, or take out loans to continue operating; and some ceased operations altogether. Given the unique nature of the financial hardship these San Diego Gas and Electric Company customers were forced to bear, these customers deserve financial relief in the form of reimbursement by San Diego Gas and Electric Company and Sempra Energy for the “excess energy costs” levied upon them between June 2000 and February 2001.

SEC. 2.

 Section 332.3 is added to the Public Utilities Code, to read:

332.3.
 (a) For the purposes of this section, “excess energy costs” shall be calculated by taking the total amount charged to San Diego Gas and Electric Company service area customers that were not covered by the rate ceiling established by Section 332.1 during the period of June 1, 2000, to February 7, 2001, inclusive, and subtracting from it the total amount that would have been charged during that period had the rate ceiling of six and five-tenth cents ($.065) per kilowatthour imposed under Section 332.1 been in effect for that customer.
(b) On or before March 1, 2003, the San Diego Gas and Electric Company shall identify each customer who was subject to the excess energy costs, calculate the total amount of excess energy costs incurred by that customer, and communicate that information to each affected customer.
(c) The San Diego Gas and Electric Company shall then develop a plan to provide full excess energy costs reimbursement to all identified customers, in a manner deemed most feasible by the San Diego Gas and Electric Company, provided that a reimbursement plan shall be completed no later than September 1, 2003.
(d) Upon developing the program for reimbursement of excess energy costs, the San Diego Gas and Electric Company shall, no later than September 1, 2003, report its plan to the commission and the chairpersons of the Senate Committee on Energy, Utilities and Communications and the Assembly Committee on Utilities and Commerce.
(e) The commission shall, after reviewing the San Diego Gas and Electric reimbursement plan, and no later than January 1, 2004, order the San Diego Gas and Electric Company to reimburse those identified, eligible customers the excess energy costs.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B 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 XIII B of the California Constitution.

SEC. 4.

 The Legislature finds and declares that, due to the special circumstances surrounding the San Diego Gas and Electric Company, a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution, and the enactment of a special statute is therefore necessary.

law is necessary, and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution, for the following reason:

(a)In 1999, when the California Public Utilities Commission (CPUC) determined that San Diego Gas and Electric Company (SDG&E) had paid all of its stranded costs, the statutory rate freeze set forth in Assembly Bill 1890 (Chapter 854, Statutes of 1996) was lifted. The following summer wholesale electricity prices soared and SDG&E passed those increased costs on to its customers.

(b)With the enactment of Assembly Bill 265 (Chapter 328, Statutes of 2000), retail caps were reestablished for certain customers (residential, small commercial, street lighting, hospitals, schools, and other customers under 100 kilowatt capacity). Subsequent legislation, Senate Bill 43 of the First Extraordinary Session (Chapter 5, Statutes 2001) required the CPUC to extend the rate ceiling to all SDG&E customers, effective February 7, 2001.

(c)For the eight-month period between June 2000, and February 2001, a great number of small-to-medium size businesses in the SDG&E service area were inadvertently caught in the utility user category of “large industrial customers.” Many of these entities were forced to lay off workers, reduce operating hours, reconsider capital investments, or take out loans to continue operating, and some ceased operations altogether.

(d)These San Diego area small-to-medium size businesses are the only class of California ratepayers who remain liable for the exorbitant wholesale energy costs imposed prior to February 7, 2001, and should be granted financial relief.

SEC. 2.Section 17053.83 is added to the Revenue and Taxation Code, to read:
17053.83.

(a)For each taxable year beginning on or after January 1, 2002, and before January 1, 2004, there shall be allowed as a credit against the “net tax,” as defined in Section 17039, an amount equal to one-half of the amount, paid or incurred during the period from June 1, 2000, to February 7, 2001, inclusive, by a small-to-medium size commercial customer, that represents excess energy costs.

(b)For purposes of this section, the following definitions apply:

(1)“Small-to-medium size commercial customer” includes, but is not limited to, all San Diego Gas and Electric Company accounts on Rate Schedule AL-TOU between 100 and 500 kilowatts capacity.

(2)“Excess energy costs” shall be calculated by taking the total amount charged to each small-to-medium size commercial customer during the period June 1, 2000, through February 7, 2001, and subtracting from it the total amount that would have been charged during that period had the rate freeze of six and one-half cents ($0.065) per kilowatthour imposed under Chapter 238 of the Statutes of 2000 been in effect for that customer.

(c)Within six months after the effective date of this section, San Diego Gas and Electric Company shall identify the small-to-medium size commercial customers, as defined, who are eligible for the excess energy cost credit, calculate the total amount of excess costs for each of these customers, and communicate it to them.

(d)In the case where the credit allowed exceeds the “net tax,” the excess may be carried over to reduce the “net tax” in the following taxable year, and succeeding years if necessary, until the credit is exhausted.

(e)No deduction may be allowed for that portion of costs paid or incurred for which a credit allowed under this section.

(f)This section shall remain in effect only until December 1, 2004, and as of the date is repealed.
SEC. 3.Section 23673 is added to the Revenue and Taxation Code, to read:
23673.

(a)For each taxable year beginning on or after January 1, 2002, and before January 1, 2004, there shall be allowed as a credit against the “tax,” as defined in Section 23036, an amount equal to one-half of the amount, paid or incurred during the period from June 1, 2000, to February 7, 2001, inclusive, by a small-to-medium size commercial customer, that represents excess energy costs.

(b)For purposes of this section, the following definitions apply:

(1)“Small-to-medium size commercial customer” includes, but is not limited to, all San Diego Gas and Electric Company accounts on Rate Schedule AL-TOU between 100 and 500 kilowatts capacity.

(2)“Excess energy costs” shall be calculated by taking the total amount charged to each small-to-medium size commercial customer during the period June 1, 2000, through February 7, 2001, and subtracting from it the total amount that would have been charged during that period had the rate freeze of six and one-half cents ($0.065) per kilowatthour imposed under Chapter 238 of the Statutes of 2000 been in effect for that customer.

(c)Within six months after the effective date of this section, San Diego Gas and Electric Company shall identify the small-to-medium size commercial customers, as defined, who are eligible for the excess energy cost credit, calculate the total amount of excess costs for each of these customers, and communicate it to them.

(d)In the case where the credit allowed exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following taxable year, and succeeding years if necessary, until the credit is exhausted.

(e)No deduction may be allowed for that portion of costs paid or incurred for which a credit is allowed under this section.

(f)This section shall remain in effect only until December 1, 2004, and as of the date is repealed.
SEC. 4.

This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.