BILL ANALYSIS Ó
AB 1180
Page 1
ASSEMBLY THIRD READING
AB
1180 (Cristina Garcia)
As Amended January 13, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Utilities |14-0 |Gatto, Patterson, | |
| | |Achadjian, Burke, | |
| | |Dahle, Eggman, | |
| | | | |
| | | | |
| | |Cristina Garcia, | |
| | |Hadley, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Obernolte, Quirk, | |
| | |Santiago, Ting, | |
| | |Williams | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, Eduardo | |
AB 1180
Page 2
| | |Garcia, Holden, | |
| | |Jones, Quirk, Wagner, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Authorizes a water corporation to seek California
Public Utilities Commission (CPUC) approval through its general
rate case application to operate a pilot program to evaluate
customer interest in, and utilization of, additional bill
payment options. Specifically, this bill:
1)Authorizes a water corporation with more than 10,000 service
connections to seek, through its general rate case, CPUC
approval to operate a pilot program designed to evaluate
customer interest in, and utilization of, bill payment
options, including credit card and debit card bill payment
options for their water bills, as specified.
2)Authorizes a water corporation to recover the reasonable
expenses incurred by the water corporation in providing to its
customers bill payment options and prohibits the CPUC from
requiring the water corporation to impose a transaction fee on
its customers, as specified.
3)Prohibits the costs of a pilot program from being collected
from low-income customers, as specified.
4)Requires a water corporation operating a pilot program to
provide its customers with certain notifications, as
specified.
AB 1180
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5)Requires the CPUC to ensure that accepting bill payment
options neither increases nor decreases the rate of return of
the water corporation.
6)Sunsets the pilot program on January 1, 2022.
7)Requires the CPUC, in consultation with the Low-Income
Oversight Board, by July 1, 2020, to submit to the Assembly
Utilities and Commerce Committee and the Senate Energy,
Utilities and Communications Committee, a report on the
results of the water corporations operating a pilot program,
as specified.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill would have increased costs for the CPUC of
approximately $130,000 to monitor the rate case and collect and
analyze data for the report.
COMMENTS:
1)Author's Statement: "Current law is impeding the payment of
utility bills by credit and debit cards at a time when more
consumers are utilizing the convenience of credit cards as
their primary method of paying recurring bills. Due to the
almost universal use of online commerce sites, from giants
like Amazon to small local retailers, customers take it for
granted that they can pay online by credit or debit card.
They are confused, disgruntled, and often discouraged when
they are required to pay an additional fee if they want to pay
their utility bill with their credit or debit card. For
example, how many customers end up waiting in line at a
customer payment center to pay their bill in cash in order to
avoid paying a transaction fee? AB 1180's pilot program would
allow the CPUC to collect critical information on customer
AB 1180
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behavior."
2)Background: As more customers turn to credit or debit cards,
including reward program cards, as their primary payment
method, companies must determine how to pay for the
transaction cost of each payment. For the most part,
unregulated retail and service providers recover the
transaction costs through various methods such as increasing
the price of the good or service sold or using company
revenue. But investor-owned utilities (IOUs), unlike
retailers, cannot simply raise utility rates to offset the
transaction costs. IOUs must submit a general rate case
typically every three years detailing their revenues,
expenses, and investments, including how much they wish to
charge ratepayers. Current law restricts passing the
transaction costs on to other utility customers; some
utilities assess a separate fee on top of the monthly bill,
when a credit card is used to pay the bill.
3)Impact on Ratepayers: The fundamental question is whether
utilities should spread the transaction costs across all its
customers or should the costs continue to be borne by the
individual card user. Typically, transaction costs vary
depending on the payment method being used and are negotiated
between the retailer and the banking provider. According to
the sponsor, this transaction fee discourages customers from
using credit or debit cards. The sponsor notes that other
forms of payment normally generate some costs to the utility
processing it. Unlike credit or debit card fees, all the
other payment transaction fees are spread across the entire
customer base and recovered in rates. By moving the
transaction costs into a water corporation's general rate
case, individual customers would no longer see the transaction
cost as a separate line item, but instead it would be blended
into the cost of the utility bills for all customers.
AB 1180
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This bill authorizes a water corporation with more than 10,000
service connections to seek CPUC approval through its general
rate case; to create a pilot program designed to evaluate
customer interest in and utilization of bill payment options,
including credit or debit cards for their water bills; and to
assess the effectiveness of such payment options for
customers, as specified. This bill requires the CPUC, in
consultation with the Low-Income Oversight Board, by July 1,
2020, to submit a report on pilot programs, as specified, to
the Assembly Utilities and Commerce Committee and the Senate
Energy, Utilities and Communications Committee. This bill
sunsets the pilot program on January 1, 2022.
Analysis Prepared by:
Edmond Cheung / U. & C. / (916) 319-2083 FN:
0002578