BILL ANALYSIS
AB 1235
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Date of Hearing: April 23, 2001
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Roderick D. Wright, Chair
AB 1235 (Pescetti) - As Amended: April 17, 2001
SUBJECT : Natural gas: gas corporations: service.
SUMMARY : This bill prohibits non-core gas customers from
switching to core gas service during the months of November
through March. This bill also prohibits a customer that receive
non-core or core gas transportation service from switching to
core bundled service unless the customer agrees, in writing, to
remain on core bundled service for a minimum period of one year.
EXISTING LAW requires the California Public Utilities Commission
(CPUC) to require each gas corporation to provide bundled basic
gas service to all core customers in its service territory
unless the customer chooses or contracts to have natural gas
purchased or supplied by another entity.
FISCAL EFFECT : Unknown.
COMMENTS :
There are two basic types of customers of natural gas, core,
meaning a customer provided basic gas service as defined in the
Public Utilities Code, and includes residential and small
commercial customers with average monthly gas usage of less than
20,800 therms. The class also includes non-electric generation
customers with average monthly gas use equal to or greater than
20,800 therms who require the highest level of service
reliability and have not elected non-core service. Non-core gas
service includes customers that meet the usage requirements
specified under filed tariffs of the gas corporation and these
customers are restricted from purchasing gas from gas
corporations. Core bundled service includes transportation and
utility gas procurement, while core gas transportation service
does not include utility gas procurement.
Non-core customers, in times of uncertain supply, may wish to
switch to core bundled service, to provide them with the
certainty that a gas corporation will be procuring the gas for
them and that there will be sufficient natural gas supply to be
transported to the customer as needed.
AB 1235
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AB 1235 prohibits any non-core gas customer from switching to
core service during the peak winter heating months of November
through March to secure procurement. AB 1235 also prohibits any
non-core customers from switching to core bundled service unless
they commit in writing to keep that level of service and to pay
for both transportation and procurement of natural gas for a
period of at least one year.
Staff recommends:
Non-core gas customers have reacted strongly to supply
fluctuations and to the escalating price of natural gas coming
in to California. AB 1235 ensures that if such customers seek
the security of obtaining core bundled natural gas service, that
they must commit to continue on such service for at least a
year, to allow gas corporations to accurately forecast demand
and adequately supply all classes of natural gas customers.
Similarly, AB 1235 protects core and core bundled customers from
any supply constraints or curtailments which might occur if
non-core customers opted to switch to core bundled status and
have their gas both delivered and procured by a gas corporation
during peak demand months. Natural gas is purchased ahead of
time. Adding large non-core customers during peak months would
create a supply constraint. This could impact all customers
adversely both with regard to the likelihood of curtailments,
since not enough gas was purchased in advance to meet
significantly higher than forecasted demand, and with regard to
rate increases to meet the demands of purchasing larger
quantities of gas in real time at spot prices.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Kelly Boyd / U. & C. / (916) 319-2083