BILL ANALYSIS                                                                                                                                                                                                    



                                                                AB 1234
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        CONCURRENCE IN SENATE AMENDMENTS
        AB 1234 (Pescetti)
        As Amended August 7, 2002
        Majority vote
         
         
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        |ASSEMBLY: |78-0 |(August 29,     |SENATE: |39-0 |(August 27, 2002)    |
        |          |     |2002)           |        |     |                     |
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        |COMMITTEE VOTE:  |12-0 |(August 29, 2002)   |RECOMMENDATION: |Concur    |
        |                 |     |                    |                |          |
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        Original Committee Reference:    U. & C.  

         SUMMARY  :  Permits an individual natural gas producer to acquire an  
        easement from a public utility.

         The Senate Amendments   

        1)Permit an individual natural gas producer to acquire an easement  
          from a public utility.

        2)Provide the easement shall be deemed to be held for a public  
          purpose if the Public Utilities Commission (PUC) finds the use is  
          in the public interest. 

        3)Require a public utility, within 10 days after applying to PUC  
          for an order authorizing the transfer of an easement, to provide  
          written notification of the application and of PUC's pending  
          review to each owner of real property affected by the easement.

         EXISTING LAW  :

        1)Permits a cooperative association of natural gas producers to  
          acquire an easement from a public utility and provides the  
          easement shall be deemed to be held for a public purpose if PUC  
          finds the use is in the public interest.  

        2)Provides that easements held for public purposes revert to the  








                                                                AB 1234
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          grantor if the public purpose is abandoned. 

         AS PASSED BY THE ASSEMBLY , this bill required any gas corporation  
        that has entered into a specified settlement before the PUC to put  
        its historical gas gathering system to auction not later than April  
        30, 2002. 

         FISCAL EFFECT :   Unknown

         COMMENTS  :   

        This bill was substantially amended in the Senate and the  
        Assembly-approved provisions of this bill were deleted.  The  
        amended bill is inconsistent with Assembly actions on the bill.

        Pacific Gas & Electric Company (PG&E) currently owns the gathering  
        lines used to transport natural gas from the production wells in  
        its service area to PG&E's main gas transmission system. According  
        to PG&E, it has 530 miles of gathering lines currently in  
        operation. Over the course of developing its natural gas delivery  
        system, PG&E secured easements in the form of rights-of-way to  
        allow these gathering lines to cross the property of others. 

        According to PG&E, none of these easements were acquired using  
        eminent domain; all were granted by the property owners under  
        varying terms and conditions.  

        PUC decisions associated with the deregulation of the natural gas  
        industry have encouraged the divestiture of PG&E's gathering lines.  
         In a 1989 decision, PUC authorized rates that allowed PG&E to  
        amortize its investments in gathering lines in eight years. In  
        1996, PUC approved a settlement between PG&E and gas producers,  
        which contemplated that PG&E's lines would be sold to the gas  
        producers who used them. 

        This bill allows a private gas producer purchasing a public  
        utility's gas facility to also acquire the underlying easement, and  
        allows the easement to retain its public purpose status if the PUC  
        finds its use is in the public interest. Absent this bill, many  
        easements associated with a gathering line purchased by a private  
        gas producer would likely revert to the property owner, thus  
        requiring the gas producer to negotiate a new easement with the  
        property owner on terms less favorable to the producer.










                                                                AB 1234
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         Analysis Prepared by  :    Paul Donahue / U. & C. / (916) 319-2083 

                                                                FN: 0007894