Franchise Fees on Electricity Energy Supplied by Others

As a result of emergency legislation signed by Governor Davis in January 2001, the California Department of Water Resources (DWR) began purchasing electricity on behalf of customers within the service territory of SDG&E. The new law further required SDG&E to collect from ratepayers and remit to DWR the revenue required to recover the cost of the purchased power.

Instead of displaying a line item on customers’ bills showing the cost of DWR supplied power and a separate line item displaying the cost of power supplied by SDG&E, the costs are combined and displayed as a single price. This single price is contained in SDG&E’s rate, Schedule EECC.

While the price for energy supplied by SDG&E contains a built in component to recover franchise fees, the price for the power supplied by DWR does not. Therefore, in order to recover the franchise fees associated with DWR power sales, SDG&E must calculate and display a separate line item on customers’ bills entitled, “Franchise Fees on Electricity Supplied by Others.”

Calculating the Franchise Fee on Electricity Energy Supplied by Others