BILL ANALYSIS Ó AB 1456 Page 1 Date of Hearing: April 25, 2012 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1456 (Hill) - As Amended: April 17, 2012 Policy Committee: UtilitiesVote:15-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill requires the Public Utilities Commission (PUC), with regard to natural gas pipeline safety and reliability, to: 1)Perform an analysis of benchmark data and adopt performance standards. 2)Evaluate a regulated gas corporation's safety performance based on the standards adopted per (1). The commission is further authorized to implement a rate incentive program that may contain penalties based on a gas corporation's performance. FISCAL EFFECT The PUC would incur one-time special fund costs of around $140,000 for an administrative law judge to conduct a rulemaking to revise the utilities' rate case plan and ongoing special fund costs of around $250,000 for two positions to conduct the initial analysis and subsequent updating of benchmark data, define performance metrics and performance standards, and develop rates based on safety. ÝPublic Utilities Reimbursement Account] COMMENTS Purpose . The impetus of this bill was the September 9, 2010 explosion and fire from a 30-inch natural gas transmission pipeline, owned and operated by PG&E, in the City of San Bruno, which claimed eight lives and injured dozens more and destroyed or damaged dozens of homes. Almost immediately thereafter, the AB 1456 Page 2 PUC formed an Independent Review Panel (IRP) to examine contributing factors to the San Bruno disaster and offer recommendations for action by the PUC to best ensure such an accident is not repeated. The IRP issued its report in June 2011. One of its recommendations was that "Upon thorough analysis of benchmark data, Ýthe PUC should] adopt performance standards for pipeline safety and reliability for PG&E, including the possibility of rate incentives and penalties based on achievement of specified levels of performance." Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081