BACKGROUND
Since 1987, DGS has been operating a natural gas services program that provides full-requirements turn-key natural gas services. DGS now serves approximately 100 participants in SoCalGas' and SDG&E's service territory. Participants include virtually all state government agencies operating in the SoCalGas and SDG&E service territory, plus a number of local government agencies and certain public sector entities such as colleges and hospitals.
SoCalGas Advice Letter (AL) 3515-A, effective January 1, 2006, established a late payment charge for non-residential customers. The tariff language included with that AL addressed the concerns of DGS regarding the application of late payment charges to the various customers DGS serves.
The following language was included to apply to customers served by DGS:
"If an account is served by or serves a State Agency and payment is not received within the time limits specified pursuant to the California Prompt Payment Act, Government Code 927 et seq., then a penalty for late payment shall be imposed upon the State in accordance with the provisions of the California Prompt Payment Act. For purposes of determining the applicability of this section, the phrase "is served by or serves a State Agency", shall include governmental entities where a portion of utility service is provided or arranged for by a State Agency and collection and payment of the particular utility bills is handled by that State Agency. It is the intent of this section not to exceed the requirements and limitations specified by the California Prompt Act."
SoCalGas now finds this approved language problematic because it extends "State Agency" status to "non-State Agency" account holders and desires to revise the above language of Rule No. 12 to avoid the difficulty in applying late payment charges to non-State Agencies.
SoCalGas said that DGS is a State Agency that pays bills for not only State Agencies but also certain other entities that are not listed in the State Agency Index available on the State of California's website. SoCalGas believes that the State Agency Index on the State's website should be used in determining State Agency status. SoCalGas proposes to modify its Rule No. 12, Payment of Bills, to replace the above quoted text with the following:
"Where an account serves a State Agency and payment is not received within 45 calendar days after the date of electronic transfer or the date mailed as indicated on the bill, the late payment charge applicable to that account will be at a rate of one percent above the rate accrued on June 30th of the prior year by the Pooled Money investment Account, but not to exceed 15 percent, all as set forth in Government Code 927.6(b). Such rate shall be applied to and accrue on a State Agency account only after 45 days from the date mailed as indicated on the bill.
The State of California shall notify the Utility as to which accounts serve State Agencies. The provisions of the above paragraph shall apply after such notification, except where the Utility has previously identified the account as one belonging to the State Agency."
SoCalGas points out that the above language for assessing a late payment charge on a State Agency is essentially identical to the authorized language in San Diego Gas & Electric's (SDG&E) Rule 9, Rendering and Payment of Bills.
SoCalGas contacted the Department of General Services manager responsible for the administration of the California Prompt Payment Act (PPA)1 who provided information clarifying the eligibility under the Act of defined State Agencies. SoCalGas asserts that its proposed revision to its Rule No. 12 will not violate the provisions of the Act.
1 The California Prompt Payment Act requires State Agencies to make payments on undisputed invoices within 45 days.
