BILL ANALYSIS
AB 1235
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Date of Hearing: April 2, 2001
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
AB 1235 (Pescetti) - As Introduced: February 23, 2001
SUBJECT : Natural gas surcharge: interstate pipelines.
SUMMARY : Specifically, this bill : imposes the existing Public
Utilities Commission (CPUC) surcharge on natural gas consumed in
the state upon interstate pipelines subject to regulation by the
Federal Energy Regulatory Commission (FERC). This bill effects
this change by modifying the definition of "interstate pipeline"
in Section 891 of the Public Utilities Code.
EXISTING LAW requires CPUC to establish a surcharge on natural
gas consumed in this state to fund certain low-income assistance
programs, cost-effective energy efficiency and conservation
activities, and public interest research and development, as
prescribed.
Requires all person consuming natural gas in this state that has
been transported by an interstate pipeline to be liable for the
surcharge.
FISCAL EFFECT : Unknown.
COMMENTS :
CPUC currently imposes a surcharge on electrical services
provided to core and non-core customers and to customers
purchasing natural gas in the state that has been transported by
an interstate pipelines subject to rate regulation by FERC.
Both groups of consumers, natural gas and electric, benefit from
the programs specified to be funded by the surcharges. In
particular, the California Alternative Rates for Energy Program
(CARE), provides rate assistance to low-income customers of gas
and electric services and provides for weatherization and other
programs.
FERC no longer regulates the price of natural gas at the border,
meaning that all non-native gas consumed in the state is no
longer subject to the surcharge. Since California imports
significantly more natural gas than it produces internally, the
majority of natural gas consumed in the state is surcharge free.
AB 1235
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This puts a greater burden on consumers of electricity and of
native natural gas to subsidize the programs funded through the
surcharge.
This bill would modify the statutory definition of interstate
pipeline to indicate that as long as the pipeline is regulated,
not strictly rate regulated, that gas transported on such
pipelines into the state and consumed here is subject to the
surcharge. This bill would provide for a larger base over which
to distribute the surcharges funding these important programs
that benefit low-income customers of all these commodities.
Since the end-users of interstate pipeline natural gas benefit
from the programs whether or not the pipeline is subject to FERC
"rate" regulation, this bill appears to provide an equitable
solution to meeting the growing demands for assistance and other
programs.
Staff Recommends.
While this measure may nominally increase the consumer price of
natural gas imported into the state, it corrects an inequity in
subsidy provision resulting from federal price deregulation of
interstate pipelines. Whether or not gas comes from out of
state, low-income assistance is available through the existing
surcharge funding. If all end-use customers meeting the
criteria for assistance and the other programs have equal access
to the funds, then all end-use customers of the commodities in
question should have equal responsibility for surcharge
payments.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Kelly Boyd / U. & C. / (916) 319-2083