BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1002
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 1002 (Wright)
          As Amended August 25, 2000
          2/3 vote
           
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          |ASSEMBLY:  |     |( June 1, 1999  |SENATE: |27-6 |( August 29,   |
          |           |     |)               |        |     |2000 )         |
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                    (vote not relevant)

          Original Committee Reference:  U. & C.  

           SUMMARY  :  Imposes a surcharge on all natural gas consumed in  
          California to fund specified low-income, energy efficiency,  
          conservation and public interest research programs.   
          Specifically,  this bill  : 

           The Senate amendments  :

          1)Established that the surcharges imposed by this bill are  
            required to be collected quarterly by the State Board of  
            Equalization and prescribes that quarterly returns are to be  
            filed on or before the last day of the month following each  
            calendar quarter.

          2)Exempted from the consumption charge natural gas that is  
            produced in California and transported on a proprietary  
            pipeline.

           EXISTING LAW  :  

           1)Establishes certain public purpose programs, including energy  
            efficiency, public interest research and development,  
            low-income assistance and weatherization.

          2)Authorizes the collection of funds through a surcharge on  
            ratepayers of public utility gas corporations.  
           
          AS PASSED BY THE ASSEMBLY  , this bill:

          1)Required the California Public Utilities Commission (CPUC) to  
            impose a surcharge on all natural gas consumed in the state.

          2)Exempted specified natural gas usage from the consumption  








                                                                  AB 1002
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            surcharge, including natural gas utilized to generate power  
            for sale, for resale to end users, for enhanced oil recovery,  
            in cogeneration technology projects to produce electricity,  
            pursuant to contracts previously approved by CPUC which do not  
            currently impose the surcharge, and gas sold within the  
            service territory of a municipality that provides similar  
            programs.

          3)Required CPUC to establish the surcharge rate for each class  
            of customer and notify the State Board of Equalization (BOE)  
            of the surcharge and requires each end user on an interstate  
            pipeline to notify BOE of their consumption.  

          4)Required that revenues collected from the surcharge be paid to  
            BOE and deposited into the Gas Consumption Surcharge Fund to  
            be created in the State Treasury to fund the public purpose  
            programs. 

          5)Appropriated funds to pay CPUC and BOE for their costs  
            associated with the administration of these programs.  

          6)Established an advisory board to administer programs and  
            conduct financial and compliance audits.

          7)Instituted a tariff rate to apply to customers who bypass  
            public utility gas corporation and subsequently seek to  
            utilize the public utility gas corporation for transportation  
            services. 

           FISCAL EFFECT  :  BOE estimates annual costs of $70,000 to  
          administer the surcharge and CPUC would incur minor absorbable  
          costs.

           COMMENTS  :  This bill establishes a surcharge on all natural gas  
          customers to ensure the financial stability of California's  
          public purpose programs.  

          The Senate amendments establish the filing and collection  
          process for the Board of Equalization.  Gas marketers do not  
          collect or have information on who the end customers receiving  
          the gas is.  A broker handles those activities.   Thus, this  
          bill requires the end user to file reports of its gas  
          consumption to the Board of Equalization.

          Additionally the Senate amendments exempt certain natural gas  








                                                                  AB 1002
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          types that could not otherwise be transported through the gas  
          utility pipeline.   Gas produced in California does not meet the  
          specifications required by the gas utility.  The surcharge is  
          not collected on those fuels today.  This amendment would put  
          into policy the current practice exempting such fuels from the  
          surcharge. 


           Analysis Prepared by  :  Carolyn Veal-Hunter / U. & C. / (916)  
          319-2083


                                                                 FN:  
          0006979