Natural Gas Surchage – Frequently Asked Questions (FAQs)Open All Close All
About the Surcharge
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.
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 used to fund rate reductions and home weatherization services for low-income electric and gas customers of public utility corporations.
- Public utility gas corporations must register with CDTFA, collect the fee, file returns and make payments.
- Persons consuming natural gas delivered by an interstate pipeline must register with CDTFA, file returns and make payments.
Typically natural gas storage providers are not required to register with CDTFA 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 the CDTFA and the CPUC.
You may register for a natural gas surcharge account using the CDTFA's online registration system. Online registration is a convenient, fast, and easy way to register and is available 24 hours a day. Select "New Registration" to get started. The CDTFA website has more information to help you complete an application.
You may also register in person at one of our office locations. If you have questions, please contact our Customer Service Center at 1-800-400-7115 (TTY:711), Monday through Friday, 8:00 a.m. – 5:00 p.m. Pacific time, excluding state holidays.
Public utility gas corporations must register with the California Public Utilities Commission prior to selling natural gas to any customers in California.
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 its assistance centers, visit their website at business.ca.gov.
Visit www.calgold.ca.gov for help with 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.
Also, see California's Tax Service Center, www.taxes.ca.gov. You may also want to consult a tax professional for assistance on other agencies' requirements.
You should notify CDTFA of any change of business ownership, email address, mailing address or location, phone or fax number, to ensure that returns and information about the surcharge are received timely. Use form CDTFA-345-SP, Notice of Business Change, Property and Special Taxes to notify CDTFA of changes.
If you have questions contact CDTFA Customer Service Center at 1-800-400-7115 (TTY:711) Monday through Friday (except state holidays) 8:00 a.m. to 5:00 p.m. (Pacific time), and select the option for Special Taxes and Fees or email your question to Email Your Tax Questions.
Collecting the Surcharge
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. The current and historical rates are available on the BOE website under the Special Taxes and Fees, Tax and Fee Rates tab.
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 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 taxing 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.
Filing and Making a Payment
The reporting period is quarterly. The due date for the return and payment is the last day of the month following each calendar quarter. Public utility corporations are required to file a Natural Gas Surcharge Return for Public Utility Gas Corporations, BOE-501-NU. Consumers that receive their natural gas directly from an interstate pipeline are required to file a Natural Gas Surcharge Return for Consumers – Interstate Pipeline, BOE-501-NC.
CDTFA will mail a return within 15 days of the due date to all registered accounts. If you do not receive a return, please contact our Customer Service Center toll-free at 1-800-400-7115 (TTY: 711), Monday through Friday, 8:00 a.m. – 5:00 p.m., Pacific time, excluding state holidays, or download a BOE-501-NU return or a BOE-501-NC return from the BOE website at www.boe.ca.gov. Your return must be filed timely even if you do not receive a return from CDTFA.
Returns and payments must be postmarked by the due date to be considered timely. 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.
There are several options for paying any amount due. You can easily and conveniently make your payment online. Select the "Make a Payment" tab on the CDTFA website. You can also pay by credit card or electronic funds transfer (EFT) at "Make a Payment" or by calling 1-855-292-8931 (for credit card payments).
You may also submit your payment with your return. Make your check or money order payable to California Department of Tax and Fee Administration. Always write your account number on your check or money order and make a copy for your records. Payments must be 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.
If your estimated average monthly surcharge payment will be $20,000 or more, you will be required to pay the surcharge by Electronic Funds Transfer (EFT). If you are not required to make tax payments through EFT, you can do so on a voluntary basis. You must submit an Authorization Agreement for Electronic Funds Transfer form CDTFA-555-ST to enroll in EFT. For more information on the EFT program, visit the CDTFA website and click on the "Make a Payment" tab then select Electronic Funds Transfer (EFT) Information.
Records required to document your surcharge liability must be retained for a period of not less than four years from the time the surcharge is due unless the CDTFA authorizes in writing their destruction sooner.
If you have overpaid the surcharge directly to the California Department of Tax and Fee Administration, you may file a claim for refund by using form CDTFA-101, Claim for Refund or Credit, or by filing an amended return(s) stating the specific reason(s) for the overpayment. Claims for refund should specify the period for which the claim is being made and the amount of the refund being claimed. The claim for refund must be in writing, be signed by you, and state the reason(s) why an overpayment was made. Additional information on filing claims for refund may be found on the CDTFA's website at: Filing Claims for Refund – Special Taxes and Fees. Mail claims to:
California Department of Tax and Fee Administration
Special Taxes and Fees
Appeals and Data Analysis Branch (MIC: 33)
P.O. Box 942879
Sacramento, CA 94279-0033
You must file a claim for refund by whichever of the following dates that occurs last:
- Three years from the due date of the payment 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 CDTFA collected an involuntary payment, such as from a levy or lien.
Be sure to file your claim for refund by the applicable deadline. If you don't file on time, CDTFA cannot consider your claim, even if you overpaid the surcharge.