COM/LYN/ALJ/BMD/avs DRAFT Agenda ID #3591

Quasi-Legislative

7/8/2004 Item 52

Decision PROPOSED DECISION OF COMMISSIONER LYNCH
(Mailed 5/28/2004)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Establishment of a Public Purpose Program Surcharge Pursuant to Assembly Bill (AB) 1002.

Rulemaking 02-10-001 (Filed October 3, 2002)

(See Appendix A for List of Appearances)

OPINION REGARDING IMPLEMENTATION OF

ASSEMBLY BILL 1002, ESTABLISHING A

NATURAL GAS SURCHARGE

TABLE OF CONTENTS

Title Page

OPINION REGARDING IMPLEMENTATION OF ASSEMBLY BILL 1002, ESTABLISHING A NATURAL GAS SURCHARGE 22

Summary 22

Procedural Background 33

Phase One Issues - Policy and Implementation of AB 1002 55

Is the Gas Surcharge a Tax or a Fee? 88

BOE Remittances to Utilities 1010

PG&E AL 2440-G 1212

Gas Volumes Used to Set Surcharge Rates 1313

Formulas for Calculating Surcharge Rates 1414

Customer Surcharge Exemptions 1616

Franchise Fees and Uncollectibles (F&U) 1818

Re-Allocating PPP Costs from Exempt Customers
to Non-Exempt Customers 1919

Interest Bearing Account for Surcharge Collections 2020

Allocation of Commission and BOE Administrative Costs 2121

Interstate Pipeline Customers Outside of Service Territories 2222

Intrastate Pipeline Customers Served by a Utility Different
from the Utility Operating that Service Territory 2222

Third Party Gas Storage Providers 2323

Research and Development 2424

Definition of Public Interest Research and Development 2424

Additional Project Criteria 2626

Administration 2929

Commission R&D Program Oversight 3232

R&D Funding Level 3333

Allocating R&D Costs and Remittances 3838

Other Issues 3939

Commercialization of R&D Benefits 4141

Implementing Annual Surcharge Rates 4141

Comments on Proposed Decision 4242

Assignment of Proceeding 4444

Findings of Fact 4444

Conclusions of Law 4646

ORDER 4747

Appendix A - Appearance List

OPINION REGARDING IMPLEMENTATION OF
ASSEMBLY BILL 1002, ESTABLISHING A
NATURAL GAS SURCHARGE

Summary

In this decision, we implement Assembly Bill (AB) 1002 (stats. 2000, Ch. 932), establishing a natural gas surcharge to fund gas related public purpose programs (PPP) such as low-income customer assistance, energy efficiency and public interest research and development (R&D).¹ We adopt the Energy Division's AB 1002 Workshop Report (Workshop Report) and address and resolve Workshop Report implementation issues raised by parties. Many of these implementation issues involve the State Board of Equalization (BOE), which is charged under AB 1002 with collecting surcharge revenues for deposit in the gas surcharge fund (Fund). This decision also initiates a public interest R&D program, and appoints an administrator, the California Energy Commission (CEC), to improve gas energy efficiency and environmental quality, develop renewable technologies, and otherwise provide benefits to the public.

Our decision resolves issues concerning the exemption of certain customers as required by AB 1002. We also establish procedures to improve the efficiency of the surcharge collection and remittance process, and increase the dollars available for PPP by requiring that interest is paid on customer revenues in the possession of utilities.

Our adopted R&D program establishes project criteria and provides an opportunity for other parties to suggest beneficial R&D projects to the administrator, subject to approval by the Commission. We adopt a zero-based budget for 2004 capped at $12 million for the first year, and provide flexibility to increase funding thereafter. We also provide that any commercial benefits resulting from public interest R&D accrue to ratepayers.