V. Comments on Draft Decision
The draft decision of Administrative Law Judge Thomas R. Pulsifer in this matter was mailed to the parties in accordance with Section 311(g) and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed on ____________, and reply comments were filed on ___________.
1. Under the provisions of AB1X, the DWR took over responsibility for procuring and selling a portion of the electric power supplied to end use customers in the service territories of the three IOUs beginning in early 2001.
2. Because DWR retains title to the electric power that it has procured under Water Code Section 80110, and sold to end use customers, DWR sales revenue are not "receipts of the grantee" that form the basis for IOU remittances of franchise fees under Public Utilities Code Section 6006.
3. DWR has not included franchise fees as an element of its revenue requirement under AB1X, and has not remitted franchise fees to municipalities related to AB1X sales revenue.
4. Senate Bill 278 (1993) adopted the Municipal Lands Surcharge Act ("the Act" or "SB 278") which imposed a surcharge on gas and electric sales by entities other than the incumbent utility.
5. Public Utilities Code Section 6350 states that the intent of the municipal surcharge is "to replace, but not increase, franchise fees that would have been collected pursuant to this division if not for changes in the regulatory environment such as the `unbundling' of the gas industry."
6. Public Utilities Code Section 6352 (a) states that "[n]otwithstanding any other provision of law, a transportation customer who receives transportation service on [an] electric transmission or distribution system . . . subject to a franchise agreement executed pursuant to this division from an energy transporter shall be subject to a surcharge as defined in Section 6353."
7. In response to D.01-09-059 SDG&E filed tariffs under which customers taking power from DWR are billed the municipal surcharge (pursuant to Sections 6350 to 6354 of the Public Utilities Code) to compensate local government for the use of public lands.
8. Under its tariffs SDG&E is already collecting the municipal surcharge for DWR sales and remitting those amounts to municipalities in accordance with D.01-05-059 and D.01-10-035 (which denied rehearing of D.01-09-059).
1. The municipalities should not be deprived of receipts that would otherwise be realized merely because DWR took over procurement responsibility to meet the residual net short requirements of the IOUs pursuant to AB1X.
2. DWR revenues are not a component of the "receipts of the grantee" which form the basis for franchise fees under Public Utilities Code Section 6006. Title to the underlying electric power (and sales there from) is held by DWR, not the IOU.
3. End-use customers purchasing power from DWR are subject to the municipal surcharge created by SB 278 (1993) as refined by SB 703 (1997).
4. End-use customers that purchase power from DWR under AB1X are "transportation customers" under the provisions of the municipal charge.
5. Since the municipal surcharges to be remitted will be determined as a percentage of DWR revenues, the accounting procedures for the municipal surcharges should mirror the procedures previously established to segregate and true up URG revenues as a result of fluctuations in DWR sales as a percentage of total sales to endues customers.
6. It is not necessary for new legislation to be initiated in order to resolve the dispute over franchise fees.
7. To the extent that remittances of charges to DWR and remittances of municipal surcharges to municipalities relating DWR sales revenues impact revenues available to recover URG costs, the Commission can address any necessary ratemaking adjustments for municipal surcharges in the same manner and under the same time frame as for remittances of DWR revenue requirement charges.
IT IS ORDERED that:
1. Each of the investor-owned utilities (IOUs) shall bear responsibility for making remittances to municipalities for Department of Water Resources (DWR) revenues under the provisions of the municipal surcharge set forth in Public Utilities Code Sections 6350 et. seq.
2. Each IOU shall continue to maintain the memorandum accounts that were authorized in D.02-02-052 established for the purpose of tracking remittances made to municipalities relating to DWR revenues, and to account for any differences between proceeds collected and funds remitted for the municipal surcharges on DWR revenues, pending further notice and disposition by the Commission.
3. Further disposition of any differences between collections and remittances by each IOU for municipal surcharges for DWR revenues shall be addressed in a manner consistent with the Commission's ratemaking treatment of under/overcollections in utility retained generation URG revenues due to the effects of DWR revenue requirement remittances.
This order is effective today.
Dated , at San Francisco, California.
