BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1234
                                                                  Page  1

          Date of Hearing: April 23, 2001

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                              Roderick D. Wright, Chair
                AB 1234 (Pescetti) - As Introduced:  February 23, 2001
           
                               AS PROPOSED TO BE AMENDED
           
          SUBJECT  :  Public utilities:  natural gas.

           SUMMARY  :  This bill would add Section 857 to the Public  
          Utilities Code to require gas corporations to put gas gathering  
          lines that have been retired but are still functional to auction  
          by December 31, 2001.

           EXISTING LAW  prohibits public utilities from transferring or  
          encumbering in whole or in part any property necessary or useful  
          in performance of its duties to the public without prior  
          authorization from the California Public Utilities Commission  
          (CPUC). 

           FISCAL EFFECT  :  Unknown.

           COMMENTS  :  This bill contains provisions formerly contained in  
          AB X1 117 (Pescetti) regarding auctioning of gas gathering  
          lines.  Language from AB X1 117 was subsequently placed in AB X1  
          2 (Campbell-Pescetti), and the section referring to auction of  
          gas gathering lines was deleted from this measure.

          AB 1234 defines gas gathering lines as pipelines that transport  
          liquid hydrocarbons between multiple wells, testing facilities,  
          treating and production facilities, storage facilities or  
          custody transfer facilities.  This measure requires gas  
          corporations to obtain approval of CPUC prior to retiring any  
          portion of their gas gathering systems, and requires gas  
          corporations to put retired but still functional gas lines to  
          auction by December 31, 2001.

          This measure would allow the retired, functional lines to be  
          placed into service by other providers to augments the gas  
          distribution system in California and alleviate some of the  
          strain on gas supply which is believed to have contributed to  
          skyrocketing natural gas prices.  This measure allows CPUC to  
          determine the manner, terms and conditions of the auctions, to  
          keep these parameters within CPUC's purview. this measures  








                                                                  AB 1234
                                                                  Page  2

          provisions ensure that no lines will be prematurely retired and  
          that terms of auction should account for any ratemaking or other  
          considerations under the jurisdiction of CPUC. 

           Staff recommends:

           The author may wish to amend this measure to add an urgency  
          clause.  AB 1234 requires gas corporations to put retired gas  
          gathering lines to auction by December 31, 2001, but this  
          measure, if not an urgency, will not take effect until January  
          1, 2002.  Alternatively, the author could amend this measure to  
          make the operative auction date June 30, 2002.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file.

           Opposition 
           
          None on file.
           

          Analysis Prepared by  :    Kelly Boyd / U. & C. / (916) 319-2083