Natural Gas Surcharge Guide

Helping your business succeed is important to the California Department of Tax and Fee Administration (CDTFA). The taxes or fees you collect and pay to the state help fund state and local services and programs that are important to you and your community.

We created this guide to provide you with easily accessible information to assist you in understanding your obligations related to the Natural Gas Surcharge.

Natural Gas Surcharge

The California Department of Tax and Fee Administration (CDTFA) administers the Natural Gas Surcharge Law. The surcharge is imposed upon the consumption of natural gas in California on and after January 1, 2001.

How the Revenue is Used

The natural gas surcharge is used to fund rate reductions and home weatherization services for low-income electric and gas customers of public utility corporations.

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 may need.

The Industry Topics section addresses specific topics important to the natural gas 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.

Open All Close All

The natural gas surcharge is assessed at a specific rate per therm upon the consumption of natural gas in California. Public utility gas corporations are required to separately state the natural gas surcharge on customer billing statements.

The natural gas surcharge is owed by any person consuming natural gas in California who receives gas service from a public utility gas corporation. A public utility gas corporation is required to collect the surcharge from its customers, unless the customers are otherwise exempt from the surcharge. The natural gas surcharge is also owed by any person consuming natural gas in California that has been transported by an interstate pipeline.

Online Registration – Register with us for a natural gas surcharge account by selecting "Register for a New Business Activity." Visit the Information Needed to Register for a Permit, License, or Account 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 a:

  • Public utility gas corporation, or
  • Person consuming natural gas delivered by an interstate pipeline.

The natural gas surcharge rates are set annually by the California Public Utilities Commission for each class of customer for the service territory of each public utility gas corporation.

Visit our Tax Rates – Special Taxes and Fees page to view current and historical natural gas surcharge rates.

Consumers that receive natural gas directly from an interstate pipeline pay the same surcharge rate as if the consumer received service from a public utility gas corporation in the service territory the consumer is located. If the consumer is not located in a specific service territory, then the consumer must use the surcharge rate of the public utility gas corporation service territory closest to where the consumer is located.

The energy surcharge returns, and payment are due 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. Then select the File a Return link for the filing period you want to file 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(s) by mail using the return forms listed below:

Public utility corporations are required to file:

Consumers that receive natural gas directly from an interstate pipeline are required to file:

Visit our Tutorials page for how to file your Natural Gas 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 postmarked or received by the next business day will be considered timely.

Payments

Make a Payment – Make payments through our online services homepage. Log in using your username and password and select the account for which you want to make a payment. Under the I Want To section, 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.

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.

Update Business Information Online – Update your business information through our online services homepage. 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 Accounts, or
  • Contacting our Customer Service Center at 1-800-400-7115 (CRS: 711) and selecting the option for "Special Taxes and Fees," or
  • Sending a message through our website at Email Your Tax Questions.

Records must be retained for at least four years from the time the fee is due unless we authorize you in writing to destroy them sooner.

For more information about record retention, please view Regulation 4901.

Open All Close All

Typically, natural gas storage providers are not required to register with us for a natural gas surcharge account and do not owe the natural gas surcharge on the natural gas consumed in the storage operations.

This is because the natural gas consumed by the natural gas storage provider is not provided as a service from a public utility gas corporation and is not taken directly from an interstate pipeline. In addition, natural gas storage providers normally do not sell or even own the natural gas stored for its customers. Natural gas storage providers are required by the California Public Utilities Commission (CPUC) to annually submit a list of customers to both the CPUC and the CDTFA.

The surcharge does not apply to the following:

  • Natural gas consumed that was not provided to you as a service from a public utility gas corporation or was not received by you directly from an interstate pipeline.
  • Use of natural gas to generate power for sale.
  • Sale or purchase of natural gas for resale.
  • Sale or use of natural gas for enhanced oil recovery.
  • Natural gas used in cogeneration technology projects to produce electricity.
  • Natural gas produced in California and transported on a proprietary pipeline.
  • Natural gas consumption that is prohibited from taxation under the United States Constitution or the California Constitution.
  • A public utility gas corporation 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.
  • A municipality, district, or public agency that offers in published tariffs home weatherization services, rate assistance for low-income customers, or similar programs is relieved from liability to collect the surcharge from its customers located within its service territory.

LNG sold for use in a motor vehicle is not subject to the natural gas surcharge unless the seller of the LNG is a public utility gas corporation.

If the seller is a public utility gas corporation, then the LNG sold to consumers would be subject to the natural gas surcharge and the seller would be required to collect the surcharge on the LNG sold to consumers.

Public utility gas corporations must register with the California Public Utilities Commission prior to selling natural gas to any customers in California.

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 about 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 your 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 the refund by whichever of the following dates that occurs last:

  • Three years after the due date of the return on which you overpaid the surcharge.
  • Six months after you overpaid the surcharge.
  • Six months from the date a determination (billing) became final.
  • Three years from after the CDTFA collected an involuntary payment, such as from 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 8:00 a.m. and 5:00 p.m., Pacific Time (except state holidays).

Need to know more? Follow the links below for more information about the topics covered in this guide, as well as other information you might find helpful:

Laws and Regulations

Special Notices

Related Websites

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.