BILL ANALYSIS
AB 1233
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1233 (Pescetti )
As Amended September 5, 2001
Majority vote
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|ASSEMBLY: |75-0 |(May 24, 2001) |SENATE: |40-0 |(September 14, |
| | | | | |2001) |
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Original Committee Reference: U. & C.
SUMMARY : Provides policy guidance to the California Public
Utilities Commission (CPUC) to remove disincentives to in-state
production and storage of natural gas.
The Senate amendments delete the operative provisions of this
bill and instead:
1)Require CPUC to investigate, as part of the rate proceeding
for any gas corporation, impediments to the in-state
production and storage of natural gas.
1)Authorize CPUC to adopt a tariff that encourages in-state
production or storage of natural gas, including reducing local
transmission rates applicable to in-state gas blends, unless
CPUC finds that adopting the tariff will likely result in
consequences adverse to the interests of gas customers.
EXISTING LAW requires CPUC to allow a gas corporation to recover
all reasonable and prudent costs associated with ownership and
operation of the gas plant used for transportation.
AS PASSED BY THE ASSEMBLY , this bill prohibited assessment of
local transmission rates for natural gas if it is delivered to
an end-use customer through a transmission system owned by a gas
corporation, and is blended with gas supplies produced from an
in-state source for the purpose of achieving a usable thermal
rate.
FISCAL EFFECT : Unknown. Minor absorbable special fund costs to
CPUC.
COMMENTS : Currently, 15% of natural gas consumed in California
comes from in-state production. The purpose of this bill,
AB 1233
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according to the author, is to maximize the use of in-state
resources and encourage the increased production of natural gas.
The Gas Accord, a comprehensive, CPUC-approved settlement that
establishes the rates and terms and conditions of service on
Pacific Gas and Electric's (PG&E's) gas transmission system
through December 31, 2002, requires that backbone and local
transmission charges be paid by all on-system end users without
exception.
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 natural 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 changes can make it uneconomical for generators of
electricity or the entities that supply their gas to employ the
blending process needed to make low-BTU gas usable.
Analysis Prepared by : Joseph Lyons / U. & C. / (916) 319-2083
FN: 0003668