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Energy Resources Surcharge Regulations

Title 18. Public Revenues
Division 2. California Department of Tax and Fee Administration — Business Taxes (State Board of Equalization — Business Taxes — See Chapters 6 and 9.9)
Chapter 5. Energy Resources Surcharge Law

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Regulation 2300. Collection of Surcharge.

Reference: Sections 40019, 40019.1, 40020, and 40045, Revenue and Taxation Code.

Every electric utility making sales of electrical energy to consumers in this state shall collect the surcharge from each consumer other than a consumer that is an electric utility or is exempt under Chapter 3 of Part 19 of Division 2 of the Revenue and Taxation Code, at the time it collects its billing from the consumer for the electrical energy sold. A consumer is any person receiving electrical energy furnished by an electric utility and includes a person receiving electrical energy for redistribution for the use of his tenants.

An electric utility may collect the surcharge on sales of electrical energy to another electric utility if the purchasing utility certifies in writing to the selling utility that all purchased electrical energy will be consumed by it in such a manner as to be subject to the surcharge, that all self-generated electrical energy will be sold to other electrical utilities without collection of the surcharge, and that purchased electrical energy will not be pooled with self-generated electrical energy.

For the purpose of the proper administration of this part, it shall be presumed that electrical energy sold by an electric utility in this state to other than an electric utility is consumed by the purchaser in this state until the contrary is established.

Whenever the rate of the surcharge is increased or decreased, the duty to collect the surcharge from a consumer at such new rate shall commence with the first regular billing period applicable to that consumer which begins on or after the effective date of the change of rate.

The surcharge required to be collected by the electric utility from the consumer shall be added to the charges to the consumer for the electrical energy sold. The amount of the surcharge may be stated separately. If the electric utility does not separately state the amount of the surcharge, the electric utility shall print on the billing a notice to the effect that the charges include energy resources surcharge computed at (applicable rate) mil per kilowatt-hour.

History—Adopted December 18, 1974, effective January 26, 1975.

Amended May 4, 1978, effective June 21, 1978. Deleted original third and fifth paragraphs (obsolete). Added new second and fourth paragraphs to conform to Stats. 1977 (AB 1167, Chap. 624).

Amended January 27, 2010, effective March 30, 2010. Replaced "Chapter 3, Part 19" with "Chapter 3 of Part 19 of Division 2" in the first paragraph. Replaced "40001-40191" with "40019, 40019.1, 40020, and 40045" in the reference note.

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Regulation 2301. Due and Payable Dates.

Reference: Sections 40051, 40052, and 40053, Revenue and Taxation Code.

The surcharges required to be collected by electric utilities are due quarterly on or before the last day of the month next succeeding each calendar quarter.

Amounts of surcharge due for which a billing for the electrical energy is issued by an electric utility to the consumer prior to the close of a calendar quarter are payable with the surcharge return for that quarter.

Any amounts of the surcharge required to be paid or collected that are not billed in the ordinary course of the billings by an electric utility may be determined by the Board against the utility or the consumer, or both.

History—Adopted December 18, 1974, effective January 26, 1975.

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Regulation 2302. Surcharge Collections a Debt.

Reference: Sections 40021 and 40022, Revenue and Taxation Code.

The surcharge required to be collected by the electric utility, and any amount unreturned to the consumer which is not a surcharge but was collected from the consumer as representing a surcharge, constitute debts owed by the electric utility to this state.

Any amounts collected by an electric utility from a consumer on account of the purchase of electrical energy the consumption of which is subject to the surcharge shall be applied proportionately between the liability of the consumer on account of the purchase of the electrical energy and the liability of the consumer for the surcharge. An electric utility may not apply partial payments by a consumer preferentially to the amount owing the utility for electrical energy, even though the partial payment is in an amount equal to the charge for such energy.

History—Adopted December 18, 1974, effective January 26, 1975.

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Regulation 2303. Relief from Liability.

Reference: Section 40104, Revenue and Taxation Code.

A person may be relieved from the liability for the payment of the energy resources surcharge, including any penalties and interest added to the surcharge, when that liability resulted from the failure to make a timely return or a payment and such failure was found by the board to be due to reasonable reliance on written advicegiven by the board as described in California Code of Regulations, Title 18, Section 4902.

History—Adopted February 5, 2003, effective May 28, 2003. The underscored citation indicates an electronic hyperlink to the cite. Common administrative provisions for special taxes programs have been consolidated in Chapter 9.9 Special Taxes Administration. Requirements for relief from liability can be found at the referenced cite.

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Regulation 2303.1. Innocent Spouse or Registered Domestic Partner Relief from Liability.

Authority cited: Section 40171, Revenue and Taxation Code. Reference: Sections 40105, Revenue and Taxation Code; Sections 297, 297.5, and 308, Family Code.

A spouse or registered domestic partner claiming relief from liability for the energy resources surcharge, interest, penalties, and other amounts shall be relieved from such liability where all the requirements set forth in California Code of Regulations, title 18, section 35055 are met.

History—Adopted March 23, 2010, effective June 17, 2010.

Amendments filed March 19, 2018, as an emergency; effective and operative March 19, 2018. Amendments refiled September 17, 2018, as an emergency; effective and operative September 17, 2018. Amendments refiled December 17, 2018, as an emergency; effective and operative December 17, 2018. Certificate of Compliance transmitted to OAL on February 20, 2019, and filed March 19, 2019. The amendments replaced the reference to Regulation "4903" with a reference to Regulation "35055" in the regulation's text and replaced the reference to "Sections 40105 and 40111-40117" with a reference to "Section 40105" in the regulation's reference note.

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Regulation 2304. Worthless Accounts.

Reference: Section 40023, Revenue and Taxation Code.

An electric utility is relieved from liability to collect the surcharge insofar as the base upon which the surcharge is imposed is represented by accounts which have been found to be worthless and charged off in accordance with generally accepted accounting principles. If the electric utility has previously paid the amount of the surcharge, it may take as a deduction on its return the amount found to be worthless and charged off. If such accounts are thereafter collected in whole or in part, the surcharge so collected shall be paid with the first return filed after such collection.

Electric utilities may charge off their worthless accounts on the basis of their experience ratio provided the write-off percentage includes an allowance for collection on worthless accounts made subsequent to the write-off.

History—Adopted December 18, 1974, effective January 26, 1975.

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Regulation 2315. Exemptions and Exclusions.

Reference: Section 40041, Revenue and Taxation Code.

The consumption of electrical energy which this state is prohibited from taxing under the Constitution of the United States or under the Constitution of this state is exempt from the surcharge. The surcharge does not apply to the consumption of electrical energy by foreign governments or by any state of the United States other than the State of California. The surcharge applies to the consumption of purchased electrical energy by the State of California, by any county, city and county, municipality, district, public agency, or subdivision of this state unless otherwise exempt. The surcharge applies to the consumption of purchased electrical energy by charitable, religious, scientific, or educational corporations, funds, or foundations, whether or not the organizations qualify for exemption from property tax or franchise tax.

History—Adopted December 18, 1974, effective January 26, 1975.

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Regulation 2316. Specific Applications.

Reference: Section 40041, Revenue and Taxation Code.

The surcharge does not apply to the consumption of electrical energy by the following persons:

(1) The United States, its unincorporated agencies and instrumentalities;

(2) Any incorporated agency or instrumentality of the United States wholly owned by either the United States, or by a corporation wholly owned by the United States;

(3) The American National Red Cross, its chapters and branches;

(4) Insurance companies, including title insurance companies, subject to taxation under California Constitution, Article XIII, Section 28;

(5) Banks, including national banking associations, located within the limits of this state. The exemption for state banks and national banking associations has been repealed beginning with the bank's income year for Bank and Corporation Tax purposes commencing on or after January 1, 1981. The surcharge shall be collected by the electric utility from each state bank and each national banking association beginning with the first regular billing period applicable to that bank which commences on or after the date the bank becomes subject to the surcharge.

(6) Enrolled Indians purchasing and consuming electrical energy on Indian reservations;

(7) Career consular officers and employees of certain foreign governments who are exempt from tax by treaties and other diplomatic agreements with the United States;

(8) Federal credit unions organized in accordance with the provisions of the Federal Credit Union Act.

History—Adopted December 18, 1974, effective January 26, 1975.

Amended January 9, 1980, effective February 29, 1980. In (5), changed semicolon to period after "this state," and added the remainder of the paragraph.

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Regulation 2317. Consumption by Electric Utilities.

Reference: Sections 40043 and 40044, Revenue and Taxation Code.

The consumption by an electric utility of self-generated electrical energy is not subject to the surcharge. The consumption by an electric utility of purchased electrical energy that is used directly, lost by dissipation, or unaccounted for in accordance with generally accepted accounting principles by the electric utility in the process of generation, transmission, and distribution of electrical energy is exempt from the surcharge. However, the surcharge applies to the consumption by electric utilities of purchased electrical energy for any other purpose. (The term "consumption" does not include the receiving of purchased electrical energy by an electric utility for resale.)

When an electric utility purchases electrical energy and pools in its system the energy with electrical energy generated by it, the consumption of electrical energy in this state from the pool by the utility during any quarter shall be deemed to be a consumption of energy generated by it to the extent that the kilowatt-hours of the electrical energy generated by it during the quarter exceed the kilowatt-hours consumed by the electric utility. When an electric utility consumes electrical energy purchased from another electric utility, which has not been pooled in its system with electrical energy generated by it, the surcharge will apply to the consumption of the purchased electrical energy, unless the consumption is otherwise exempt.

History—Adopted December 18, 1974, effective January 26, 1975.

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Regulation 2318. Exemption Procedure.

[Repealed May 4, 1982, effective August 19, 1982.]

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Regulation 2329. Registration.

Reference: Section 40035, Revenue and Taxation Code.

Every electric utility selling electric energy for consumption in this state shall register with the Board upon a form prescribed by the Board and shall set forth the name under which the utility transacts or intends to transact business, the principal office address and the mailing address of the utility, and such other information as the Board may require.

History—Adopted December 18, 1974, effective January 26, 1975.

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Regulation 2330. Electric Utility Returns.

Reference: Sections 40061 and 40062, Revenue and Taxation Code.

Every electric utility shall file an electrical energy surcharge return on a form prescribed by the Board showing the number of kilowatt-hours of electrical energy generated, purchased, and used together with deductions claimed and the amount of surcharge due for the preceding quarterly period. The return shall be signed by a responsible officer or agent of the electric utility and shall be accompanied by a payment for the surcharge due.

The return and the payment shall be filed quarterly on or before the last day of the month next succeeding each calendar quarter. Amounts of surcharge due for which a billing for the electrical energy is issued by an electric utility to the consumer prior to the close of a calendar quarter are payable with the surcharge return for that quarter.

History—Adopted December 18, 1974, effective January 26, 1975.

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Regulation 2331. Consumer Returns.

Reference: Sections 40063 and 40064, Revenue and Taxation Code.

Every person purchasing electrical energy the consumption of which is subject to the surcharge and who has not paid the surcharge billed and required to be collected by an electric utility shall file a return with the Board on or before the last day of the month following each calendar quarter for the preceding quarterly period. The return shall be filed in such form as the Board may prescribe and shall be filed by the person required to file the return or by his duly authorized agent. The person required to file a return shall deliver the return together with a remittance of the amount of the surcharge payable to the office of the Board.

The Board may require the filing of returns by consumers in circumstances where it finds that consumers' liabilities are not being included in the return of an electric utility or it determines that consumer returns are necessary for the efficient administration of the electrical energy surcharge. The Board may require consumers' returns to cover periods other than calendar quarters.

History—Adopted December 18, 1974, effective January 26, 1975.

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Regulation 2332. Reports.

Reference: Sections 40171 and 40175, Revenue and Taxation Code.

Every electric utility registered with the Board shall annually file a report with the Board in such form as the Board may prescribe setting forth its estimate of the kilowatt-hours it will sell and use to which the surcharge will apply during the period September 1 through August 31 following the date of the estimate. The report shall be filed no later than June 30 of each year. In addition, every electric utility registered with the Board shall annually file a report with the Board in such form as the Board may prescribe setting forth its estimate of the kilowatt-hours it will sell and use to which the surcharge will apply during the period March 1 through the last day of February following the date of the estimate. This report shall be filed no later than December 31 of each year.

In addition to any other reports or returns required, the Board may require additional, supplemental, or other reports from electric utilities, consumers, and any other person generating, purchasing, transmitting, distributing, or consuming electrical energy, including verification of the information to be given on and the times for filing of such reports. The Board may require reports of estimates of future availability, generation, sales, and consumption of electrical energy from electric utilities and other persons as it may deem necessary.

History—Adopted December 18, 1974, effective January 26, 1975.

Amended August 1, 1979, effective September 16, 1979. Deleted commencing date in second sentence. Added third sentence describing annual report due December 31.

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Regulation 2333. Payment by Electronic Funds Transfer.

Reference: Sections 40067 and 40069, Revenue and Taxation Code.

Payments by electronic funds transfer shall be made in accordance with California Code of Regulations, Title 18, Section 4905.

History—Adopted March 22, 2005, effective July 7, 2005. The underscored citation indicates an electronic hyperlink to the cite.

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Regulation 2343. Records.

Reference: Sections 40172, 40173, 40174, and 40175, Revenue and Taxation Code.

(a) General. A taxpayer shall maintain and make available for examination on request by the board or its authorized representatives, records in the manner set forth at California Code of Regulations, Title 18, Section 4901.

(b) Specific Applications. In addition to the record keeping requirements set forth in subdivision (a), a taxpayer shall comply with the following requirements.

Every electric utility engaged in generating, purchasing, transmitting, distributing, consuming, or selling electrical energy in this state shall keep and maintain adequate and complete records showing:

(1) The electrical energy generated, purchased, transmitted, distributed, consumed, and sold in this state.

(2) Meter readings and other records as may be necessary for the accurate determination of the kilowatt-hours of electrical energy generated, purchased, consumed, or sold in this state. For sales or use measured by a basis other than metering, the records shall show the other measurement and the method of computing the kilowatt-hours of electrical energy so sold or used.

(3) All deductions allowed by law and claimed in filing returns, except for the electrical energy used or lost in generation, transmission, and/or distribution.

(4) The methods and amounts used in computing its reports of estimates of future availability, generation, sales, and consumption of electrical energy.

History—Adopted December 18, 1974, effective January 26, 1975.

Amended February 5, 2003, effective May 28, 2003. The underscored citation indicates an electronic hyperlink to the cite. Common administrative provisions for special taxes programs have been consolidated in Chapter 9.9 Special Taxes Administration. General record keeping requirements can be found at the cite referenced in subdivision (a). Subdivision (b) has been added to identify additional record keeping requirements.

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Regulation 2344. Microfilm Records.

[Repealed February 5, 2003, effective May 28, 2003.]

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Regulation 2345. Records Prepared by Automated Data Processing Systems.

[Repealed February 5, 2003, effective May 28, 2003.]

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Regulation 2346. Records Retention.

[Repealed February 5, 2003, effective May 28, 2003.]