Background

On September 27, 2006, Governor Schwarzenegger signed Assembly Bill (AB) 32, the California Global Warming Solutions Act (Nuñez, Chapter 488, Statutes of 2006), which authorized the Air Resources Board (ARB) to adopt measures necessary to reduce California's statewide greenhouse gas (GHG) emissions to the 1990 level by 2020. AB 32 provides that ARB may adopt a schedule of fees on GHG emissions to recover its administrative costs associated with the implementation of AB 32. ARB adopted the AB 32 Cost of Implementation Fee (AB 32 Fee) on September 25, 2009, with instructions to ARB's Executive Officer to make certain changes before approving the final version. The final version of the AB 32 Fee regulation was approved by the Office of Administrative Law on June 17, 2010. The AB 32 Fee regulation instructs ARB staff to issue invoices for the first annual AB 32 Fee obligation within 30 days of the passage of the state budget, which was signed by Governor Schwarzenegger on October 8, 2010. Payment of the fee is due within 60 days of receipt of the invoice.

Southwest's application is similar to (and has been consolidated with) an earlier application jointly filed by Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Edison Company (SCE), and Southern California Gas Company (SoCalGas). The latter utilities requested authority for rate increases to collect the costs of AB 32 fees from their respective end-use gas transportation and bundled electric generation customers. Decision (D.)10-12-026 authorized a memorandum account for PG&E, SDG&E, SCE, and SoCalGas to record any fees pending final disposition of the request. Subsequently, Southwest also applied for a memorandum account to record AB 32 fees. Southwest plans to seek recovery of these fees in a general rate case likely to be filed in late 2012 for a 2014 test year. These two applications were consolidated by ruling.