BILL NUMBER: AB 1350 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Canciamilla
(Coauthor: Assembly Member Pescetti)
FEBRUARY 23, 2001
An act to amend Sections 785, 785.1, and 785.5, of the Public
Utilities Code, relating to energy, and declaring the urgency
thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1350, as introduced, Canciamilla. Natural gas: producers:
hookup: gas corporation.
(1) The California Gas Policy Act requires the Public Utilities
Commission, among other things, to encourage as a first priority the
increased production of gas in this state, as specified. The act
also makes it the policy of the state that natural gas produced in
this state is not placed at an unfair economic disadvantage relative
to gas from sources outside of the state as the result of any
transportation tariffs or conditions of service.
This bill would require a gas corporation to provide a producer in
California with a hookup to a pipeline of the gas corporation within
3 weeks of the producer providing the gas corporation with specified
information. The bill would prohibit a gas corporation from
assessing local transportation charges on gas moved from storage when
the gas corporation has been paid backbone rates to move the gas
into storage. The bill would establish procedures for the commission
to review a gas corporation's denial or delay in making a requested
hookup. The bill would permit the commission to order the gas
corporation to pay the producer up to $10,000 per day from the day
following the 3-week period until the hookup is completed, if the
commission finds the denial or delay unwarranted or unreasonable.
The bill would also make technical, nonsubstantive changes in those
provisions.
Because violations of the Public Utilities Act and orders of the
commission are crimes under existing provisions of law, the bill
would create a state-mandated local program by expanding the
definition of a crime.
(2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
(3) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) California is one of the largest producers of oil and natural
gas in the nation.
(b) Natural gas is a critical commodity necessary to electrical
production, residential heating, commodity production, and industrial
manufacturing.
(c) California has historically produced up to 25 percent of its
total natural gas needs.
(d) It is in the long-term economic interest of the state to
encourage and increase the amount of natural gas produced in
California.
SEC. 2. Section 785 of the Public Utilities Code is amended to
read:
785. (a) To the extent consistent with federal law and regulation
and contractual obligations regarding other available gas, the
commission shall, in consultation with the Division of Oil and Gas of
the Department of Conservation and with the State Energy Resources
Conservation and Development Commission, encourage, as a first
priority, the increased production of gas in this state, including
gas produced from that area of the Pacific Ocean along the coast of
California commonly known as the outer continental shelf, and shall
require, after a hearing, every gas corporation to purchase
that gas which that is
compatible with the corporation's gas plant and which
that is produced in this state having an actual
delivered cost, measured in equivalent heat units, equal to or less
than other available gas, unless this requirement will result in
higher overall costs of gas or other consequences adverse to the
interests of gas customers.
(b) The commission shall annually report to the Legislature on its
implementation of this section.
(c) If the following conditions are met, a gas corporation shall
provide a producer of natural gas in this state a hookup to connect a
gas well of the producer with a gas pipeline of the gas corporation
at the closest feasible site to the well not later than three weeks
from the date the producer requested the hookup:
(1) The well is complete and is ready to begin flowing gas to the
pipeline connection.
(2) The producer provided the gas corporation with a certified
test demonstrating that the quality of the gas submitted for delivery
meets the gas corporation's quality specifications.
(3) Either a certified representative of the gas corporation or an
independent third party inspector who is properly certified in
conducting gas quality tests and inspections conducted the test
required by paragraph (2).
(d) Notwithstanding Section 785.7, a gas corporation providing a
hookup pursuant to subdivision (c) in addition to any charges
permitted by the commission may charge the producer for any increased
costs in labor, including costs for overtime, that the gas
corporation expended in order to meet the three week requirement of
subdivision (c). The charges for labor may not exceed the gas
corporation's actual per hour costs as specified in any applicable
labor contract of the gas corporation.
(e) When a producer requests a hookup pursuant to subdivision (c)
and the gas corporation either cannot provide a hookup or will not be
able to provide the hookup within the three-week period, the gas
corporation shall immediately notify the producer in writing of the
reasons for the denial or the delay.
(f) A gas corporation may not deny or delay a requested hookup
based on the quality of the gas unless the gas corporation can
demonstrate the gas presents a health or safety problem to the gas
corporation's downstream customers.
(g) The gas corporation shall send a copy of the notification to
the commission. The gas producer may send a copy of the notification
to the commission.
SEC. 3. Section 785.1 of the Public Utilities Code is amended to
read:
785.1. (a) The commission shall require, after a hearing, every
gas corporation to revise its transportation tariffs and conditions
of service to eliminate all components that assess shippers of gas
produced in California for the costs of interstate transmission of
gas produced outside of this state. These revisions shall eliminate
direct or indirect charges for the interstate transportation of gas
produced outside of this state, commonly referred to as "double
demand" charges.
(b) The commission shall consider and approve tariffs consistent
with subdivision (a) on or before October 1, 1994.
(c) Nothing in this section shall be construed to prohibit the
commission from approving intrastate transmission tariffs which
include interstate transition cost surcharges, as described in
commission decisions 91-11-025 and 92-07-025, in an appropriate
manner.
(d) The commission shall prohibit a gas corporation from assessing
local transportation charges on gas moved from storage when the gas
corporation has been paid backbone rates to move the gas into
storage.
SEC. 4. Section 785.5 of the Public Utilities Code is amended to
read:
785.5. (a) The commission shall require every gas corporation to
adopt and pursue purchasing and procurement practices which
that assure its customers the lowest rates
consistent with security of supply and with Section 785.
(b) Pursuant to subdivision (a), the commission may establish and
periodically revise for each gas corporation
the guidelines for each gas corporation for
priorities among suppliers and sources of supply of gas to gas
corporations, taking into consideration the requirements of Section
785. The establishment of these guidelines does not relieve a gas
corporation of any requirement to make reasonable and prudent
purchases of gas or diminish the authority of the commission to
review the reasonableness of any purchase or procurement decision of
the corporation.
(c) Notwithstanding any other provision of law, if the commission
receives a notification pursuant to subdivision (e) of Section 785,
the commission shall, within one week of receiving the notification,
order a hearing to be completed within 30 days to determine if the
denial or delay in the hookup was unwarranted or unreasonable. If
the commission determines the denial or delay was unwarranted or
unreasonable, in addition to any other remedies available to the
commission, the commission may order the gas corporation to pay the
producer up to ten thousand dollars ($10,000) per day from the day
following the three-week period until the hookup is completed.
SEC. 5. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
SEC. 6. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to ensure, at the earliest possible time, the sufficient
availability of affordable natural gas necessary for electrical
production, residential heating, commodity production, and industrial
manufacturing, it is necessary for this act to take effect
immediately.