BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1233
                                                                  Page  1

          Date of Hearing:   May 16, 2001

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Carole Migden, Chairwoman

                  AB 1233 (Pescetti) - As Amended:  April 26, 2001 

          Policy Committee:                               
          UtilitiesVote:15-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill: 

          1)Prohibits local transmission charges on natural gas blended  
            with in-state produced gas-in order to achieve a usable  
            thermal rate-and delivered to end-use customers through a gas  
            corporation's transmission system.

          2)Requires the Public Utilities Commission (PUC) to prohibit any  
            cost shifting to core customers from the above transmission  
            charge exemption.

           FISCAL EFFECT  

          Minor absorbable special fund costs to the PUC.

           COMMENTS
           
           1)Background  .  Low-BTU gas contains a lower thermal value than  
            required for use in utility pipelines and must be blended  
            off-line with propane or other gas with a higher-BTU content  
            in order to meet the utility's pipeline specifications.  To  
            accomplish this, the gas must be taken off and then put back  
            onto the utility's primary transmission pipelines for blending  
            purposes.  Current law permits gas corporations to assess  
            end-use customers for multiple local transmission charges if  
            the gas supplies they contract for are brought on and off the  
            pipeline system for blending purposes.  This adds to the cost  
            of purchasing this gas and acts as a disincentive to the  
            production of low-BTU gas.  









                                                                  AB 1233
                                                                  Page  2

           2)Purpose  .  Currently, 15% of natural gas consumed in California  
            comes from in-state production.  According to the author, this  
            bill is intended to maximize the use of in-state resources and  
            encourage the increased production of natural gas by assisting  
            in-state gas producers in finding new markets for low-BTU gas  
            resources.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916)319-2081