BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ) ) ) ) ) )

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1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking to Consider Single Methodology to Calculate Remittance Under Municipal Surcharge Act. R (Filed March 27, 2014 SOUTHERN CALIFORNIA EDISON COMPANY'S (U 338-E RESPONSIVE COMMENTS REGARDING THE SCOPING RULING OF ASSIGNED COMMISSIONER PETERMAN DATED 9/25/2015 MARK A. ROTHENBERG Attorney for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: Facsimile: ( Dated: October 30, 2015

2 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking to Consider Single Methodology to Calculate Remittance Under Municipal Surcharge Act. R (Filed March 27, 2014 SOUTHERN CALIFORNIA EDISON COMPANY'S (U 338-E RESPONSIVE COMMENTS REGARDING THE SCOPING RULING OF ASSIGNED COMMISSIONER PETERMAN DATED 9/25/2015 Pursuant to the Scoping Ruling of Commissioner Peterman, Southern California Edison ( SCE submits the following brief responsive comments. As set forth in Commissioner Peterman s Scoping Ruling, the parties were invited to propose a method to deal with the potential impacts of adopting a uniform remittance methodology for the payment of municipal land surcharges ( Surcharges. The PD does not require SCE to recalibrate its methodology. Therefore, none of the jurisdictions SCE remits the Surcharge to will see a change in their resmittances. As such, SCE suggested that the Sempra Utilities and impacted jurisdictions identify some form of notice protocol to help mitigate remittance shock. For reasons unknown, the Sempra Utilities elected to re-argue their position regarding the Surcharge Act. SCE believes these arguments exceed the scope of the Scoping Ruling and are procedurally improper pursuant to Rule 14.3(c of the Commission s Rules of Practice and Procedure. Although SCE has already addressed these arguments previously, SCE is compelled to provide the following brief response. I. THE SEMPRA METHODOLOGY IS INCONSISTENT WITH THE SURCHARGE ACT. A. Advantage Energy Does Not Support Sempra s Position. Despite several rounds of briefing, the Sempra Utilities cannot find support for their robust and complex methodology in their citation to a prior Commission decision or in the plain text of the Surcharge Act itself. The Sempra Utilities selectively cite to the CPUC s

3 decision in Advantage Energy, LLC v. San Diego Gas & Electric (D for the proposition that the Surcharge is a substitute for franchise fees and their remittance methodology is consistent with the Surcharge Act. 1 However, that case addressed allegations by Advantage Energy that the franchise fees embedded in rates charged to SDG&E s customers were lower than the surcharge charged to energy transporters. It does not appear that SDG&E s remittance methodology was an issue or subject to meaningful discussion in the case. 2 The Advantage Energy decision also undermines subsequent policy arguments made by the Sempra Utilities that their methodology more closely aligns with legislative intent. For example, the Sempra Utilities state: Calculating the surcharge remittance using the same calculation methodology as the franchise remittances (as done under the Sempra Methodology ensures (to the greatest extent possible that cities and counties are collecting similar amounts of surcharge revenue from transported gas that they would have otherwise collected in franchise revenue prior to the unbundling of the gas industry. * * * Simply handling whatever is collected in a particular city or county to cover that particular city or county does not follow the legislative intent of SB 278 and has the potential to pay cities and counties more than they would have received for franchise fees prior to the 1990s, because it does not take franchise fee terms into account and instead treats the Surcharge as any other tax levied on a customer within a city. However, the Advantage Energy decision states: The Commission has established a process for calculating a franchise fee rate.the municipal surcharge, on the other hand, is set pursuant to a formula embedded in Section It requires that the customer pay a surcharge equal to an estimate of the customer s gas purchases multiplied by the franchise fee factor * * * [The CPUC] particularly note[s] that had the Legislature sought to equalize the outcome [between franchise fees and surcharges], it 1 Sempra Comments, pp With Advantage and SDG&E stipulating to the disparity between the franchise fees embedded in rates and the municipal surcharges levied on customers, there are no major factual disputes in this complaint. The crux of the complaint is whether the disparities in franchise fees and municipal surcharges are permissible under the statute and whether the Commission could or should remedy the disputes. D

4 could have done so by setting the municipal surcharge equal to the franchise fee. Instead, it specified exactly how to calculate the municipal surcharge in Section Thus, the franchise fee and the municipal surcharge are not meant to be identical, and the inequality is clearly permissible. 3 B. Legislative Intent is Gleaned from Statutory Text. The Sempra Utilities also argue that their remittance methodology is consistent with the legislative intent underpinning the Surcharge Act. 4 SCE believes that legislative intent is first and foremost to be gleaned from the operative text of the statutes themselves. There is no dispute that Section 6353 controls how the Surcharge is calculated. However, the Sempra Utilities attempt to create an ambiguity where none exists by focusing on Section 6354(b of the Surcharge Act. That Section states, surcharges collected from the transportation customer shall be remitted to the municipality granting a franchise pursuant to this division in the manner and at the time prescribed for payment of franchise fees in the energy transporter s franchise agreement. SCE maintains that the term manner and time simply addresses the method and timing for the remittance of the surcharges that had been collected in accordance with Section Reading Section 6354 any other way would require that the Commission add a robust and complex method involving two re-calculations of the collected Surcharge prior to remittance. 5 Even assuming that Section 6354 is ambiguous (it is not, the Sempra Utilities yet again fail to address surrounding sections of the statutes. For example, Sections 6354(d-(f of the Surcharge Act empower jurisdictions to police non-paying Transport Customers in their respective jurisdictions. The Sempra methodology partially divorces collected payments from what is ultimately remitted by pooling the funds prior to remittance. Under the Sempra Methodology, a portion of the remitted surcharge is therefore dependent on payments by Transport Customers outside of the subject jurisdiction. Section 6353(e of the Surcharge Act also clarifies that the Surcharge only applies to the end use point. In Section 6354(j of the Surcharge Act, the legislature gave jurisdictions the initial right to collect the Surcharge from Transport Customers within their respective jurisdictions. 6354(j of the Surcharge Act 3 D , pp.5, and 12 4 Sempra Comments, pp Id. at

5 states: [d]uring the interim period between expiration of the targeted sales program and implementation of the energy transporters surcharge collection program, upon request of the municipality, the energy transporter shall provide the municipality with a monthly list of the names and addresses of the transportation customers within the municipality's jurisdiction enable the municipality to collect the surcharge directly from the transportation customers. (Emphasis added. The IOUs were subsequently required to take over for the jurisdictions and collect and remit Surcharges to such jurisdictions. Put simply, SCE s interpretation is supported both by plain text and surrounding sections whereas the Sempra Utilities require that the Commission engage in guess-work. II. DELAYED ENFORCEMENT IS NOT WARRANTED. The Sempra Utilities assert that SCE does not understand its methodology and would benefit from workshops on the subject. 6 SCE understands the Sempra Methodology. SCE simply disagrees with it. Despite a myopic focus on legislative intent, the Sempra methodology finds no statutory support. 7 SCE respectfully disagrees with the Sempra Utilities as to the need for additional workshops. Fundamentally, additional workshops on a matter that has been briefed and re-briefed and noticed publicly (including directed mailed notice would only delay compliance and perpetuate an unsupported remittance methodology. III. PROPOSED NOTICE PROTOCOL. SCE recognizes the Commission s concern about remittance shock. However, SCE is not positioned to evaluate the continued financial impact to those jurisdictions that have been underpaid under the Sempra methodology. SCE notes that Section 3 of the PD requires the Sempra Utilities to notify each jurisdiction in their service territory regarding the changeover. 8 To further prepare such jurisdictions, SCE proposes that the Sempra Utilities accompany the notices with projected changes based on prior years data. Such data has already been submitted by the Sempra Utilities in this proceeding. 6 Sempra Comments, pp SCE would not object to the addition of a finding clarifying that the Sempra Utilities interpretation (although misguided was not made in bad faith. 8 PD, p

6 IV. CONCLUSION. SCE shares the Commission s view as set forth in the PD that the Sempra Utilities should conform their remittance methodology to the dictates of the Surcharge Act. SCE believes a mailed notice accompanied by projected impacts would mitigate remittance shock. The data for such projections has already been prepared by the Sempra Utilities. However, SCE does not believe that additional delays in requiring compliance with the Surcharge Act (above and beyond a reasonable time to recalibrate Sempra s billing systems is warranted or equitable for jurisdictions that have been underpaid. SCE thanks the Commission for its consideration. Respectfully submitted, /s/ Mark A. Rothenberg By: Mark A. Rothenberg Attorney for SOUTHERN CALIFORNIA EDISON COMPANY October 30, Walnut Grove Avenue Post Office Box 800 Rosemead, California Telephone: ( Facsimile: ( Mark.A.Rothenberg@sce.com - 5 -

7 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Order Instituting Rulemaking to Consider Single Methodology to Calculate Remittance Under Municipal Surcharge Act. R (Filed March 27, 2014 CERTIFICATE OF SERVICE I hereby certify that I have this day served a copy of SOUTHERN CALIFORNIA EDISON COMPANY S (U 338-E RESPONSIVE COMMENTS REGARDING THE SCOPING RULING OF ASSIGNED COMMISSIONER PETERMAN DATED 9/25/2015 on all known parties to R to each person named in the official service list by: [X] Transmitting the copies via to all parties who have provided an address [X] Placing the copies in sealed envelopes and causing such envelopes to be delivered by hand or by overnight courier to the offices of the Assigned ALJ(s or other addressee(s. ALJ Farrar CPUC 505 Van Ness Avenue San Francisco, CA Executed this Friday, October 30, 2015 at Rosemead, CA. /s/ Susie Martinez Susie Martinez, Legal Administrative Assistant SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770

8 CPUC - Service Lists - R Page 1 of 2 10/30/2015 CPUC Home CALIFORNIA PUBLIC UTILITIES COMMISSION Service Lists PROCEEDING: R CPUC - OIR TO CONSID FILER: CPUC LIST NAME: LIST LAST CHANGED: OCTOBER 7, 2015 Download the Comma-delimited File About Comma-delimited Files Back to Service Lists Index Parties ALBERT J. GARCIA MARK ROTHENBERG SR. ENVIRONMENTAL COUNSEL SR. ATTORNEY SOUTHERN CALIFORNIA GAS COMPANY SOUTHERN CALIFORNIA EDISON COMPANY 555 WEST 5TH STREET, GT-14E WALNUT GROVE AVENUE / PO BOX 800 LOS ANGELES, CA ROSEMEAD, CA FOR: SOUTHERN CALIFORNIA GAS COMPANY / FOR: SOUTHERN CALIFORNIA EDISON COMPANY SAN DIEGO GAS & ELECTRIC COMPANY PAUL KERKORIAN THERESA CHO REP. DEPUTY CITY ATTY-OFFICE OF THE CITY ATTY UTILITY COST MANAGEMENT LLC CITY AND COUNTY OF SAN FRANCISCO 1100 W. SHAW AVE., STE CARLTON GOODLETT PLACE, ROOM 234 FRESNO, CA SAN FRANCISCO, CA FOR: CITIES OF CONCORD, MADERA, TAFT, FOR: CITY AND COUNTY OF SAN FRANCISCO KERMAN AND CLOVIS GRANT GUERRA ANITA L. GRANT ATTORNEY OFFICE OF THE COUNTY COUNSEL PACIFIC GAS AND ELECTRIC COMPANY COUNTY OF LAKE 77 BEALE STREET, B30A 255 NORTH FORBES STREET SAN FRANCISCO, CA LAKE COUNTY, CA FOR: PACIFIC GAS AND ELETRIC COMPANY FOR: COUNTY OF LAKE SCOTT BLAISING ATTORNEY BRAUN BLAISING MCLAUGHLIN & SMITH, P.C. 915 L STREET, STE SACRAMENTO, CA FOR: CITY OF ESCONDIDO Information Only AARON KLEMM ENERGY PROJECT MANAGER BRUCE SMITH PACIFIC GAS & ELECTRIC COMPANY

9 CPUC - Service Lists - R Page 2 of 2 10/30/2015 CITY OF HUNTINGTON BEACH ONLY ONLY ONLY, CA ONLY, CA CASE COORDINATION ELIZABETH BAIRES PACIFIC GAS AND ELECTRIC COMPANY REGULATORY MGR ONLY SOUTHERN CALIFORNIA GAS COMPANY ONLY, CA W. FIFTH ST., GT14D6 LOS ANGELES, CA GREG HEALY RONALD VAN DER LEEDEN SOUTHERN CALIFORNIA GAS COMPANY DIR.-GENERAL RATE CASE & REVENUE REQ. 555 W. FIFTH ST., GT14D6 SOUTHERN CALIFORNIA GAS COMPANY LOS ANGELES, CA W. FIFTH STREET, GT14D6 LOS ANGELES, CA CASE ADMINISTRATION JEANNETTE OLKO SOUTHERN CALIFORNIA EDISON COMPANY CITY OF MORENO VALLEY LAW DEPT FREDERICK STREET 2244 WALNUT GROVE AVE, RM 321 MORENO VALLEY, CA ROSEMEAD, CA RANDY S. DRYDEN ROBERTA GAFFORD 5831 GRNADVIEW AVE. CITY CLERK YORBA LINDA, CA CITY OF BAKERSFIELD 1600 TRUXTON AVENUE, 1ST FLOOR BAKERSFIELD, CA CALIFORNIA ENERGY MARKETS SCOTT NOYER 425 DIVISADERO ST. SUITE 303 CASE COORDINATOR SAN FRANCISCO, CA PACIFIC GAS AND ELECTRIC COMPANY 77 BEALE STREET 09, RM 978C MC B9A SAN FRANCISCO, CA JASON R. ALCALA GERALD LAHR CITY ATTORNEY ENERGY PROGRAMS MGR. CITY OF LIVERMORE ASSOCIATION OF BAY AREA GOVERNMENTS 1052 S. LIVERMORE AVENUE 101 8TH ST. LIVERMORE, CA OAKLAND, CA LLOYD GUINTIVANO LAKE COUNTY COUNTY COUNSEL'S OFFICE 255 NORTH FORBES STREET LAKEPORT, CA State Service LEUWAM TESFAI DARWIN FARRAR CALIFORNIA PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION ENERGY DIVISION OF ADMINISTRATIVE LAW JUDGES ONLY ROOM ONLY, CA VAN NESS AVENUE SAN FRANCISCO, CA TOP OF PAGE BACK TO INDEX OF SERVICE LISTS