Amended in Senate March 28, 2016

Senate Bill No. 1422

Introduced by Senator Glazer

February 19, 2016

An act to amend Section begin delete 727.5 end delete begin insert 799 end insert of the Public Utilities Code, relating to public utilities.

LEGISLATIVE COUNSEL’S DIGEST

SB 1422, as amended, Glazer. begin delete Water corporations: rate regulation. end delete begin insert Public utilities and other service suppliers: collection of local taxes. end insert

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Under existing law, public utilities are required to bill their customers for various taxes imposed by public entities and remit the revenues from those taxes that are collected to the public entity. The Public Utilities Act provides that a public utility or other service supplier is not liable to any customer as a result of collecting these taxes, and grants various rights to, and imposes various requirements on, public utilities and other service suppliers with respect to the imposition, repeal, or collection of the taxes. Existing law, the Digital Infrastructure and Video Competition Act of 2006, establishes a procedure for the issuance of state franchises for the provision of video service, defined to include cable service and open-video systems, administered by the Public Utilities Commission.

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This bill would explicitly define the term “other service supplier” for the purpose of those provisions to include, but not be limited to, a holder of a state franchise for the provision of video service.

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Under existing law, the Public Utilities Commission is vested with regulatory authority over public utilities and other specified entities, including water corporations. Existing law authorizes the Public Utilities Commission, in establishing rates for water service, to establish separate charges for costs associated with customer service, facilities, and fixed and variable operating costs, as specified.

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This bill would make nonsubstantive changes to these provisions.

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Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert Section 799 of the end insert begin insert Public Utilities Code end insert begin insert is
amended to read: end insert

799.  

(a) With respect to all taxes enacted by any local
jurisdiction, including any city, county, or city and county,
including a chartered city or county, any district, including an
agency of the state, formed pursuant to general law or special act,
for the local performance of governmental or proprietary functions
within limited boundaries, or any public or municipal corporation,
and imposed on the customers of public utilities or other service
suppliers, which taxes have been collected by the public utilities
and other service suppliers and remitted to the local jurisdiction
all of the following shall apply:

(1) The public utility or other service supplier shall have no
duty to independently investigate or inquire with the local
jurisdiction concerning the validity of the tax ordinance.

(2) In connection with any actions or claims relating to or arising
from the invalidity of the tax ordinance, in whole or in part, the
public utility or other service supplier shall not be liable to any
customer as a consequence of collecting the tax.

(3) In the event a local jurisdiction is ordered to refund the tax,
it shall be the sole responsibility of the local jurisdiction to refund
the tax. Unless a public utility or other service supplier is
reimbursed by the local jurisdiction for the actual cost of assisting
the local jurisdiction, including, but not limited to, calculating or
verifying refunds, distributing refunds, providing data, or providing
data processing assistance, the public utility or other service
supplier shall not be required to assist the local jurisdiction to
refund the tax, including, but not limited to, calculating or verifying
refunds, distributing refunds, providing data, or providing data
processing assistance.

(4) In any action seeking to enjoin collection of taxes imposed
on customers of utilities or other service suppliers and collected
by the utilities or other service suppliers, in any action seeking
declaratory relief concerning the taxes, in any action seeking a
refund of the taxes, or in any action seeking otherwise to invalidate
the taxes, the sole necessary party defendant in the action shall be
the local jurisdiction on whose behalf the taxes are collected and
the public utility or other service supplier collecting the taxes shall
not be named as a party in the action.

(5) If a local jurisdiction repeals the tax, reduces an existing tax
rate, changes the tax base, or makes any other changes to the tax
that would affect the collection and remittance of the tax, the local
jurisdiction shall submit, on and after the effective date of the
enactment of the change, a written notification and supply all
requisite information to the public utility or service supplier, in
accordance with the procedures established by the public utility
or service supplier. The public utility or other service supplier shall
not be required to implement the changes any earlier than 60 days
from the date on which the public utility or other service provider
receives the written notification and all other information required
by the public utility or other service supplier. If the 60th day is not
the first day of a month, then the public utility or other service
provider shall implement the changes on the first day of the month
following the month in which the 60th day occurs.

(6) If a local jurisdiction adopts a new tax, the local jurisdiction
shall submit, on and after the effective date of the adoption of the
new tax, a written notification to the public utility or other service
supplier, in accordance with procedures established by the public
utility or other service supplier, requesting that the tax be collected.
The public utility or other service supplier shall not be required to
begin collecting the tax any earlier than 90 days from the date on
which the public utility or other service provider receives written
notification and all other information required by the public utility
or other service supplier. If the 90th day is not the first day of a
month, then the public utility or other service provider shall begin
the tax collection on the first day of the month following the month
in which the 90th day occurs. Nothing in this section shall be
construed to prevent the public utility or other service provider
from beginning the tax collection at an earlier date.

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(b) For purposes of this section, “other service supplier” shall
include, but not be limited to, a holder of a state franchise issued
pursuant to Section 5840.

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(b)

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begin insert (c) end insert  The Legislature finds and declares that the limitations
imposed by this section constitute an issue of statewide concern.
The Legislature further finds and declares that the limitations
imposed by this section are not municipal affairs as that term is
used in Article XI of the California Constitution. Therefore, it is
the intent of the Legislature that the limitations imposed by this
section apply to all cities, counties, and cities and counties,
including chartered cities and chartered counties, any district,
including an agency of the state, formed pursuant to general law
or special act, for the local performance of governmental or
proprietary functions within limited boundaries, and any public or
municipal corporation.

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begin insert SEC. 2. end insert   

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The amendment of Section 799 of the Public Utilities
Code made by this act does not constitute a change in, but is
declaratory of, existing law.

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SECTION 1.  

Section 727.5 of the Public Utilities Code is
amended to read:

727.5.  

(a) The commission, in establishing rates for water
service, shall consider, and may establish, separate charges for
costs associated with customer service, facilities, variable operating
costs, including fixed and variable costs associated with supplying
the water, or other components of the water service provided to
water users.

(b) The commission shall consider, and may authorize, a water
corporation to assess a fee for future water service, or a reservation
charge for future water service, for persons or entities occupying
or owning property within the service territory of the water
corporation.

(c) The commission shall consider, and may authorize, a water
corporation to establish a balancing account, rate stabilization
fund, or other contingency fund, the purpose of which shall be the
long-term stabilization of water rates.

(d) The commission shall consider, and may authorize, a water
corporation to establish programs, including rate designs, for
achieving conservation of water and recovering the cost of these
programs through the rates.

(e) In establishing rates for recovery of the costs of used and
useful water plant, the commission may utilize a capital structure
and payback methodology that shall maintain the reliability of
water service, shall minimize the long-term cost to ratepayers,
shall provide equity between present and future ratepayers, and
shall afford the utility an opportunity to earn a reasonable return
on its used and useful investment, to attract capital for investment
on reasonable terms and to ensure the financial integrity of the
utility.

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