BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1233|
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THIRD READING
Bill No: AB 1233
Author: Pescetti (R)
Amended: 9/5/01 in Senate
Vote: 21
SENATE ENERGY, U.&C. COMMITTEE : 7-0, 8/29/01
AYES: Bowen, Morrow, Alarcon, Battin, Murray, Sher,
Vincent
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/24/01 (Passed on Consent) - See
last page for vote
SUBJECT : Public utilities: transportation charges
SOURCE : Author
DIGEST : This bill provides policy guidance to remove
disincentives to in-state production and storage of natural
gas.
ANALYSIS : Under existing law, gas utilities are
authorized to charge rates for all reasonable and prudent
costs associated with ownership and operation of natural
gas transmission facilities.
This bill:
1. Requires the California Public Utilities Commission
(CPUC) to investigate impediments to the in-state
CONTINUED
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production and storage of natural gas as part of a gas
utility's rate proceeding.
2. Specifies that, to the extent practicable, the CPUC
should not adopt rates that discourage in-state
production or storage of natural gas.
3. Authorizes the CPUC adopt rates to encourage in-state
production or storage of natural gas, including, but not
limited to, reducing local transmission rates applicable
to in-state gas blends, unless it finds that such action
will likely result in consequences adverse to the
interests of gas customers.
Background :
California imports approximately 85% of its natural gas
supply, primarily from gas fields in the southwest and
Alberta, Canada. The 15% of supply derived from in-state
sources is typically a lower quality gas, which burns less
efficiently (low-BTU gas). Low-BTU gas must be blended
with higher efficiency gas, such as propane, to meet
pipeline and end use specifications. Additional supplies
of in-state, low-BTU gas are available, but remain
untapped.
The terms of Pacific Gas and Electric's (PG&E) gas utility
operations are defined by the Gas Accord, a comprehensive
settlement approved by the CPUC in 1997. The Gas Accord
establishes the rates and terms and conditions of service
on PG&E's gas transmission system through December 31,
2002. Pursuant to the Gas Accord, local gas transmission
rates are paid by all end users.
According to the author, current local gas transmission
rates provide disincentives to the storage and blending of
natural gas, as well as the construction of pipelines by
non-utility entities. The author states that gas stored
off-line before moving back to the utility's transmission
system is charged a local transmission rate, then charged
again when the gas is delivered to the end user. The
author says these additional charges can make it
uneconomical for generators of electricity or the entities
that supply their gas to employ the blending process needed
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to make low-BTU gas usable.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/29/01)
California Independent Petroleum Association
California Manufacturers & Technology Association
California Municipal Utilities Association
Calpine
Sacramento Municipal Utility District
OPPOSITION : (Verified 8/29/01)
Pacific Gas and Electric Company
Sempra Energy
ASSEMBLY FLOOR :
AYES: Aanestad, Alquist, Aroner, Ashburn, Bates, Bogh,
Briggs, Calderon, Bill Campbell, John Campbell,
Canciamilla, Cardenas, Cardoza, Cedillo, Chan, Chavez,
Chu, Cohn, Correa, Cox, Daucher, Diaz, Dickerson, Dutra,
Firebaugh, Frommer, Goldberg, Havice, Hollingsworth,
Horton, Jackson, Keeley, Kehoe, Kelley, Koretz, La Suer,
Leach, Leslie, Liu, Longville, Lowenthal, Maddox,
Maldonado, Matthews, Migden, Mountjoy, Nakano, Nation,
Negrete McLeod, Oropeza, Robert Pacheco, Rod Pacheco,
Papan, Pavley, Pescetti, Reyes, Richman, Runner, Salinas,
Shelley, Simitian, Steinberg, Strickland, Strom-Martin,
Thomson, Vargas, Washington, Wayne, Wesson, Wiggins,
Wright, Wyland, Wyman, Zettel, Hertzberg
NC:jk 9/14/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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