BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2643
                                                                  Page  1

          Date of Hearing:   April 28, 2004

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                   Judy Chu, Chair

                 AB 2643 (Canciamilla) - As Amended:  March 26, 2004 

          Policy Committee:                               
          UtilitiesVote:10-2
                        Natural Resources                     10-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill requires the California Energy Commission (CEC) to  
          incorporate into its 2005 integrated energy policy report an  
          assessment of the costs and benefits of siting liquefied natural  
          gas (LNG) facilities in California.

           FISCAL EFFECT  

          Negligible fiscal impact, as the bill is consistent with efforts  
          already underway at the CEC.

           COMMENTS  

           Background and Purpose  . Current law requires the CEC to  
          biennially adopt an integrated energy policy report containing  
          an overview of major energy trends and issues, including supply,  
          demand, pricing, reliability, efficiency, and impacts on public  
          health and safety, the economy, resources, and the environment.  
          There are three sections to the report:  electricity and natural  
          gas markets; transportation fuels, technologies, and  
          infrastructure; and public interest energy strategies.

          While natural gas demand continues to rise, there are few  
          existing options for additional supply within California.  
          Although pipeline capacity to California has increase by over 20  
          percent since 2001, increased demand in other western states  
          will ultimately limit the available of natural gas from these  
          pipelines. 

          One alternative to meet the growing demand pressures is LNG,  








                                                                  AB 2643
                                                                  Page  2

          which is natural gas that has been turned into a liquid by  
          cooling it to minus 259 degrees Fahrenheit. The liquefaction  
          reduces volume by a factor of 600, thus allowing it to be  
          transported overseas and regassified onshore. Building LNG  
          receiving terminals in or near California would thus open the  
          state to other sources of natural gas supply. There is currently  
          a dispute between the Federal Energy Regulatory Commission and  
          the California Public Utilities Commission as to the scope of  
          each agency's jurisdiction over a LNG facility proposed at the  
          Port of Long Beach.
           
          Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081