BILL ANALYSIS
AB 1002
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Date of Hearing: May 19, 1999
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Carole Migden, Chairwoman
AB 1002 (Wright) - As Amended: April 22, 1999
Policy Committee: Utilities and
Commerce Vote: 11-0
Urgency: No State Mandated Local
Program:NoReimbursable:
SUMMARY :
This bill:
1)Requires the Public Utilities Commission (PUC) to establish
and impose a surcharge on all natural gas consumed in the
state, with specified exceptions, to fund low-income energy
assistance programs, energy efficiency activities, and
research and development.
2)Requires the Board of Equalization (BOE) to collect and
administer the surcharge to fund the specified programs and
the administrative costs of the PUC and BOE.
3)Requires the PUC to create an advisory board to make
recommendations as to how the PUC should fund the specified
programs.
4)Requires the PUC to repeal an existing "residual load service"
tariff on natural gas and replace it with a new tariff using a
specified calculation.
FISCAL EFFECT :
The BOE estimates annual costs of $70,000 to administer the
surcharge and the PUC would incur minor absorbable costs.
COMMENTS :
1)Background and Purpose . In recent years, federal deregulation
of the gas industry has enabled interstate pipelines regulated
by the Federal Energy Regulatory Commission (FERC) to compete
AB 1002
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with PUC-regulated intrastate pipelines. This competition has
caused a significant exodus of large, non-core customers from
intrastate pipelines, and resulted in the reduction of the
funding base for California's public purpose programs. When
non-core customers abandon the public utility gas
corporation's pipeline, their contributions to the public
purpose programs are shifted and reallocated amongst core
customers remaining on the system. This bill is intended to
level the playing field and require all customers to share in
funding California's public purpose programs which benefit
core utility customers.
The bill also proposes a change in the manner in which the
public purpose programs are administered. Utility companies
currently administer the programs and, as a result, customers
are offered varying benefits under the programs. This bill
proposes that program administration be transferred to the PUC
or to an entity to be designated by the PUC.
2)Residual Load Service (RLS) Tariff . The residual load service
tariff imposes a higher rate on any customer that partially
bypasses the public utility gas corporation but continues to
use the gas corporation for its peak load demands. The PUC
authorized the tariff because providing occasional peaking
service is more costly for a pipeline operator. Opponents of
the RLS tariff believe the tariff should be eliminated and
replaced with a standby rate based on the actual cost of
providing peaking service to non-core customers.
The author agrees that that the RLS tariff in its current form
discourages customers from taking a portion of their gas from
another pipeline. While that was PUC's intention, the author
believes that the RLS should be modified and has been working
with the gas corporations and interstate pipelines to
establish a different model that would a) continue to meet PUC
goal of discouraging uneconomic bypass, b) compensate the
public utility gas corporation for providing standby service
and c)provide reasonable standby rates for the fully and
partially bypassing customer.
Customers proposing to utilize competitor pipelines have
suggested that failure to reform the RLS tariff prevents
competing pipelines from entering the market.
Analysis Prepared by : Chuck Nicol / APPR. / (916)319-2081
AB 1002
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