BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1234
                                                                  Page  1

          Date of Hearing:   May 9, 2001

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Carole Migden, Chairwoman

                    AB 1234 (Pescetti) - As Amended:  May 3, 2001 

          Policy Committee:                              UtiltiesVote:15-0

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

           SUMMARY  

          This bill:

          1)Requires the Public Utilities Commission (PUC) to require  
            Pacific Gas and Electric Company (PG&E) to auction its natural  
            gas gathering system.  

          2)Establishes a process and timeline for the auction, which is  
            to be conducted by April 15, 2002.  The process includes  
            submittal of the company's system inventory to the PUC, and a  
            determination by the PUC as to which lines must be excluded  
            from the auction.  The PUC must also establish minimum terms  
            and conditions under which the auction shall be conducted.

           FISCAL EFFECT 

          Absorbable special fund costs for the PUC to oversee the auction  
          as required above.

           COMMENTS  

           1)Background  .  In 1985, PG&E entered into a settlement before  
            the PUC known as the Gas Accord.  As part of this settlement,  
            PG&E agreed to enter into negotiations with interested natural  
            gas producers to sell its gathering line system, which is the  
            pipelines running from the wellhead to PG&E's various primary  
            transmission lines.  

          Since enactment of the Gas Accord, the independent producers in  
            California contend minimal progress has been made in  
            transferring any portion of the system from PG&E to the  
            producers.  Less than 2000 feet of gathering lines have been  








                                                                  AB 1234
                                                                  Page  2

            produced to date.  Producers contend that since 1995, PG&E has  
            moved to reduce the gathering pipelines it owns by actively  
            retiring or "reclassifying" large sections of the system.  In  
            1995, PG&E's records show it owned over 1,000 miles of such  
            lines, but it's current inventory lists slightly more than 300  
            miles of lines.  

           2)Purpose  .  The author indicates that he intends this bill to be  
            a vehicle "to spur negotiations between the interested  
            parties, establish minimum guidelines for administering an  
            open auction system of the gathering system assessments, and  
            facilitating the ultimate transfer of the system in a manner  
            consistent with what was intended under the Accord."

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