BILL ANALYSIS 1
1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
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|SB 1153 - Brulte |Hearing Date:April 13, | S|
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|As Introduced: February 26, | | B|
|1999 | | |
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DESCRIPTION
Current law provides for several programs which help
achieve statutorily directed social goals, including aid to
low income natural gas customers, as well as assistance for
natural gas research and development efforts.
This bill requires the State Auditor to conduct a study to
review the existing funding sources for these programs,
consider the impacts of these programs on competitive
natural gas markets and make recommendations for a stable
funding source.
BACKGROUND
Over the years, a number of natural gas public purpose
programs have been enacted into statute. These programs
provide discounts to low income customers, assist in home
weatherization efforts, encourage research and development,
and aid in the deployment of cleaner generation
technologies. The total expenditures for these programs by
California's major natural gas utilities approaches $140
million annually, financed by ratepayers via a surcharge on
gas transported by intrastate pipelines.
Large customers are permitted to shop for natural gas and
can buy from out-of-state producers via interstate pipeline
that, because they are interstate, are not subject to the
state surcharges which pay for the public purpose programs.
This creates a competitive inequity which potentially
biases customers against natural gas provided by the
regulated utility and leads to a decrease in the money
available to funds the state's natural gas public purpose
programs.
The study required in this bill is aimed at assessing the
impact of the competitive inequity and recommending stable
funding sources for these programs, as well as looking at
the costs incurred in connection with these programs. This
study is required to be completed by January 1, 2001.
COMMENTS
1)This bill is sponsored by the California Manufacturers
Association, which believes the study will help answer
questions about the effect of competition on natural gas
public purpose programs.
2)The Legislature will deal with a large number of natural
gas bills this year, all of which deal with disputes
between competitors, incumbent natural gas utilities, and
customer groups over costs and charges. One of the main
disputes is over the degree to which competition by
interstate pipelines, which are not subject to state
surcharges, is impacting the incumbent natural gas
utilities. This bill is intended to investigate that
issue.
3)Considering the number of potential approaches to
resolving this issue pending in the Legislature, the
Committee may wish to consider whether a study merely
delays its ability to resolve an important issue.
4)The study required in this bill is to be conducted by the
State Auditor, in consultation with the California Public
Utilities Commission (CPUC), the Energy Commission, and
the Office of the Ratepayer Advocate. However, a study
by the State Auditor does not require legislation - in
fact, it may be sufficient to contact the Joint
Legislative Audit Committee and request it to direct the
Auditor to undertake such a study.
5)If the Committee believes a study is warranted, it may
wish to consider the State Auditor's limited expertise in
energy matters and the fact that there may be other
organizations, such as the CPUC or the University of
California Energy Institute, both of which have expertise
in this area, that may be better equipped to conduct such
a study.
POSITIONS
Support:
California Manufacturers Association (Sponsor)
The Williams Companies
Oppose:
None reported to Committee.
Randy Chinn
SB 1153 Analysis
Hearing Date: April 13, 1999