Energy Resources (Electrical Energy) Surcharge Guide
The California Department of Tax and Fee Administration (CDTFA) administers the Energy Resources Surcharge Law. For purposes of this tax guide, the energy resources surcharge is referred to as the electrical energy surcharge.
We created this guide to provide you with easily accessible information to assist you in understanding your obligations related to the electrical energy surcharge.
Electrical Energy Surcharge
The surcharge is imposed upon the consumption in California of electrical energy purchased from an electric utility on and after January 1, 1975. Every electric utility in California making energy sales to consumers must collect and remit to the state the amount of surcharge applicable to its consumers.
When a California consumer purchases electrical energy from a utility which is not subject to the electrical energy surcharge (such as an out-of-state utility or the Bureau of Reclamation) or a utility which has not collected and paid the surcharge to the state, the consumer must report and pay the amount of the surcharge directly to the CDTFA.
How the Revenue is Used
The revenue collected through the electrical energy surcharge is deposited in the Energy Resources Programs Account of the General Fund and is used for ongoing energy programs and projects deemed appropriate by the Legislature, including but not limited to, activities of the California Energy Commission (CEC).
How to Use This Guide
Each section of this guide contains information important to your business.
The Getting Started section provides key resources related to registration, filing returns, making payments, account maintenance, and other important information you need.
The Industry Topics section contains specific topics important to the electrical energy surcharge, including information about exemptions and refunds.
The Resources section provides links to useful information, including special notices, publications, and applicable statutes/regulations.
Please note: The general information provided in this Tax Guide does not supersede any law or regulation. This guide summarizes the law and applicable regulations in effect when it was published. However, changes in the law or regulations may have occurred. If there is a conflict between this guide and current law, the current law governs.
If You Need Help
If at any time you need assistance with topics included in this guide – or with topics not included – feel free to contact us by telephone or email. For contact information and hours of operation, please visit our How to Contact Us webpage.
If you have suggestions for improving this guide, please contact us by email.
Application of Surcharge
The Electrical Energy Surcharge is a tax imposed on consumers, based on the quantity of kilowatt-hours consumed in California, for the consumption of electrical energy purchased from an electric utility.
Every electric utility in California making energy sales to consumers must collect and remit to the state the amount of surcharge applicable to its consumers. Every person who consumes electrical energy in California that is purchased from an electric utility is liable for the surcharge.
Online Registration – Register with us for an electrical energy surcharge account by selecting “Register for a New Business Activity.” Visit the Online Services webpage for a list of information you may need to complete your registration.
Who is required to Register?
You are required to register if you are:
- An electric utility, electrical service provider, or electrical corporation that sells electrical energy to California consumers; or
- A California consumer who purchases electrical energy from a utility, which is not subject to the Electrical Energy Surcharge (such as an out-of-state utility or the Bureau of Reclamation), or from a utility which has not collected and paid the surcharge to the CDTFA.
The California Energy Commission determines the surcharge rate at a public meeting each November to be effective January of the following calendar year (RTC 40016).
Visit our Tax Rates – Special Taxes and Fees page to view current and historical electrical energy surcharge rates.
Return and Payment
The Electrical Energy Surcharge returns and payments are due quarterly on or before the last day of the month following each calendar quarter. For example, the First Quarter 2020 return was due April 30, 2020.
File a Return Online – File your return through our online services homepage. Log in using your username and password and select the account for which you want to file a return. Select the More link under the I Want To section. Then select the File a Return link and follow the prompts.
Note: If you do not have a username and password, select the Sign Up Now link under the Create a Username heading from the online services homepage.
Additional Return Filing Options – You may also file your return by mail using the return form listed below:
- CDTFA-501-EU, Electrical Energy Surcharge Return
- CDTFA-501-EC, Consumer’s Electrical Energy Surcharge Return
Visit our Tutorials page for how to file your Electrical Energy Surcharge returns through our online services.
Returns must be received or postmarked by the due date to be considered timely, even if no amount is owed. If the due date falls on a Saturday, Sunday, or state holiday, returns and payments postmarked or received by the next business day will be considered timely.
Make a Payment – Make payments through our online services homepage. Log in using your username and password and select the account for which you wish to make a payment. Select the More link under the I Want To section. Then select the Make a Payment link and follow the prompts.
Additional Payment Options – Visit our website for additional convenient payment methods.
Electronic Funds Transfer (EFT) – Taxpayers with an estimated average monthly surcharge liability of $20,000 or more are required to pay amounts due by electronic funds transfer (EFT). We will notify you in writing if you are required to pay your surcharge electronically. Please visit our Electronic Funds Transfer (EFT) – Frequently Asked Questions (FAQ's) for payment methods and payment deadline information.
Payments must be received or postmarked by the due date to be considered timely. If the due date falls on a Saturday, Sunday or state holiday, payments postmarked or received by the next business day will be considered timely.
Penalty and Interest
The penalty for filing a late return and/or late fee payment is ten percent of the fee amount due for the period. Interest also applies to late fee payments.
You may log into your account to submit an online request for an extension to file a return or relief from penalty (including interest due to a disaster).
Updating Your Business Information with CDTFA
Update Business Information Online – Update your business information through our online services. Log in using your username and password and select the account for which you wish to update. Select the More link under the I Want To section. Then select the option you are requesting to update under Account Maintenance.
Additional Business Update Options – You may also notify us of any changes by:
- Using form CDTFA-345-SP, Notice of Business Change, Special Taxes and Fees Account, or
- Contacting our Customer Service Center at 1-800-400-7115 (CSR: 711) selecting the option for “Special Taxes and Fees,” or
- Sending a message through our website at Email Your Tax Questions.
You should retain records for at least four years from the time the surcharge is due unless we authorize you in writing to destroy them sooner.
For more information about record retention, please view Regulation 2343 and Regulation 4901.
The electrical energy surcharge does not apply to:
- The consumption of electrical energy which this state is prohibited from taxing under the United States Constitution or under the California Constitution. (RTC 40041.)
- 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. (RTC40043.)
- The consumption of electrical energy by foreign governments or by any state of the United States other than the State of California. (Regulation 2315.)
- The consumption of electrical energy by the following persons (Regulation 2316):
- The United States, its unincorporated agencies, and instrumentalities;
- 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;
- The American National Red Cross and its chapters and branches;
- Insurance companies, including title insurance companies, subject to taxation under California Constitution, Article XIII, 28;
- Banks located within the limits of this state (excludes state banks and national banking associations);
- Enrolled Indians purchasing and consuming electrical energy on Indian reservations;
- Career consular officers and employees of certain foreign governments who are exempt from tax by treaties and other diplomatic agreements with the United States;
- Federal credit unions organized in accordance with the provisions of the Federal Credit Union Act.
- The consumption by an electric utility of self-generated electrical energy. (Regulation 2317)
- The consumption by an electric utility for purposes other than directly in the process of generation, transmission, and/or distribution of electrical energy that was used from a pool of self-generated and purchased electricity. Examples include electrical energy used in street lighting or for office/warehouse, outdoor advertising, off-street parking facilities, and other similar purposes. (Regulation 2317)
Sales of Electrical Energy Delivered by another Utility
If your business sells electrical energy to consumers, your business is required to collect the surcharge regardless of who delivers the electrical energy to your customers.
Delivery charges are not subject to the surcharge.
Registration with Other Agencies
If you are an electrical energy provider, please contact the California Public Utilities Commission (CPUC) as you may be required to register with them.
Visit the sites below for more information about other state, federal, and local taxing and licensing information:
- The Governor's Office of Business and Economic Development (GO-Biz) offers extensive information on state, local, and federal permit requirements. For a listing of their assistance centers, visit GO-Biz.
- CalGold for information regarding permit and licensing requirements for other state, federal, and local authorities (for example, you may need to be registered with the Franchise Tax Board or the Employment Development Department).
- California Tax Service Center for additional tax information.
You may also want to consult with a tax professional for assistance on other agency requirements.
Submit a Claim for Refund – File your claim for refund through our online services homepage. Log in using your username and password and select the account for which you want to claim a refund. Select the More link under the I Want To section. Then select the Submit a Claim for Refund link and follow the prompts.
Additional Refund Filing Options – You may also file a claim for refund by filing either:
- A form CDTFA-101, Claim for Refund or Credit, or
- An amended return(s) stating the specific reason(s) for the overpayment.
Claims for refund must be in writing, state the reason for overpayment, specify the period for which you made the overpayment, and the amount of the refund requested. Additional refund details can be found on our Filing Claims for Refund – Special Taxes and Fees webpage.
You may email the claim form to the Refund Team or mail it to:
California Department of Tax and Fee Administration
Appeals and Data Analysis Branch (MIC 33)
P.O. Box 942879
Sacramento, CA 94279-0033
Deadline to File a Claim for Refund
Be sure to file your claim for refund by the applicable deadline. If you do not file on time, we cannot consider your claim, even if you overpaid the surcharge. You must file a claim for refund by whichever of the following dates that occurs last:
- Three years from the due date of the return on which you overpaid the surcharge.
- Six months from the date you overpaid the surcharge.
- Six months from the date a determination (billing) became final.
- Three years from the date we collected an involuntary payment, such as a levy or lien.
If you have questions about your deadline to file a refund claim, contact our Customer Service Center at 1-800-400-7115 (CRS: 711) weekdays between 7:30 a.m. and 5:00 p.m., Pacific Time (except state holidays).
Laws and Regulations
- 2023 Energy Resources (Electrical Energy) Surcharge Rate
- 2022 Energy Resources (Electrical Energy) Surcharge Rate
- Revisions to Electrical Energy Surcharge Returns and Launch of Online Filing Effective November 9, 2020
Other Helpful Resources
- CDTFA Online Services – Learn about the online services CDTFA offers, including online registration for seller’s permits and other accounts.
- Contact Us – This page shows the various ways you may reach us to resolve your questions and concerns.
- Sign Up for CDTFA Updates – Sign up to receive a monthly email detailing important business information, including Special Notices, Tax Information Bulletins, and updates for local services.
- Videos and How-To Guides – These resources will help you avoid common mistakes, file your tax returns online, and more.
- CDTFA Locations – Contact us using this comprehensive listing of all CDTFA offices.
- Get It In Writing! – Tax and fee laws can be complex, and you are encouraged to put your tax questions in writing.
- News Releases – CDTFA News Releases cover a broad range of topics, including updates to tax laws and to resources for taxpayers.
- Taxpayers' Rights Advocate (TRA) – The TRA Office helps taxpayers when they are unable to resolve a matter through normal channels (for example, by speaking to a supervisor), when they want information regarding procedures related to a particular set of circumstances, or when there are apparent rights violations.
- Verify a Permit or License – You can use this search feature to verify a seller’s permit, cigarette and tobacco products retailer’s license, eWaste account, manufacturer battery fee account, or underground storage tank maintenance fee account.
- GO-Biz – The Governor’s Office of Business and Economic Development offers extensive information on state, local, and federal permit requirements. For a listing of their assistance centers, visit their website.
- CalGold – For information with permit and licensing requirements on the other state, federal, and local authorities. For example, you may need to register with the Franchise Tax Board or the Employment Development Department. You may also want to consult with a tax professional or your local city and county authorities for assistance regarding other agencies’ requirements or restrictions.
- California's Tax Service Center – A one-stop tax help and resource website that guides taxpayers to forms and services they need.