BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          SB 1496 (Simitian) - Energy: State Energy Resources Conservation 
          and Development Commission: natural gas
          
          Amended: April 10, 2012         Policy Vote: EU&C 11-2
          Urgency: No                     Mandate: Yes
          Hearing Date: May 24, 2012      Consultant: Marie Liu
          
          SUSPENSE FILE.  AS PROPOSED TO BE AMENDED.
          

          Bill Summary: SB 1496 would require the California Energy 
          Commission (CEC) to conduct a study of the effect of liquefied 
          natural gas (LNG) exports and imports on the state's energy 
          demand and to revise that study when new terminal facilities are 
          proposed. This bill would also require any proposed LNG terminal 
          project that is subject to the California Environmental Quality 
          Act to have specified information in its environmental impact 
          report.

          Fiscal Impact:  Minor and absorbable costs from the Energy 
          Resources Program Account (General Fund) to incorporate 
          additional information in the Integrated Energy Policy Report.

          Background: Natural gas is typically transported through 
          pipelines, for use as a fuel source for power plants and for 
          domestic heating and other uses. LNG has been cooled to the 
          point that it condenses as a liquid and can be transported in 
          tanker ships. There are no operating LNG port facilities in 
          California, although some have been proposed for future 
          development. Any proposed LNG terminal would require permits 
          from the U.S. Coast Guard, the CEC, the California Coastal 
          Commission, and the State Lands Commission. In addition, any 
          proposed LNG terminal would most likely require an environmental 
          impact report under the California Environmental Quality Act.

          Proposed Law: This bill would require the CEC to study the 
          effect of LNG imports and exports on the state's energy needs as 
          part of its biennial Integrated Energy Policy Report. The CEC 
          would be required to update this study in advance of a hearing 
          held by the State Lands Commission or the Coastal Commission to 
          consider issuing permits for proposed LNG terminals. This bill 
          would also require the CEC to collect and post on the internet 








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          specified information about existing and proposed liquefied 
          natural gas terminals, including those in specified locations 
          outside of California.

          The bill would also require additional disclosure of information 
          under the California Environmental Quality Act for proposed LNG 
          terminal projects. For any proposed liquefied natural gas 
          terminal project that is not complete by January 2013, the 
          environmental impact report must contain an analysis of all 
          feasible alternative project technologies, an analysis of the 
          potential impacts on minority and low-income populations, and a 
          life cycle analysis of the impacts of greenhouse gasses 
          associated with the project.

          This bill would require the CEC to impose a fee on a liquefied 
          natural gas terminal permit applicant that is sufficient to 
          recover the Commission's costs to implement the provisions of 
          the bill.

          Related Legislation: This bill is substantially similar to four 
          prior bills by the same author: SB 37 (2011) - held in the 
          Senate Appropriations Committee, SB 376 (2010) - held in the 
          Assembly Appropriations Committee, SB 412 (2007) - held in the 
          Assembly Appropriations Committee, and SB 426 (2005) - failed in 
          the Assembly). The principal difference between this bill and 
          past efforts is that this bill requires the CEC to consider the 
          impacts of both imports and exports of LNG instead of just 
          imports.

          Staff Comments: The CEC indicates that it will cost about 
          $300,000 to develop the initial needs assessment required under 
          the bill. There would be additional costs to update the needs 
          assessment if the state receives applications for proposed 
          liquefied natural gas terminal projects. While the bill requires 
          the Commission to recover its cost through a new fee on project 
          applications, the Commission will incur upfront costs to develop 
          the initial needs assessment, whether or not it collects fee 
          revenues in the future.

          Proposed Author Amendments: Delete the LNG needs assessment and 
          alternatively require compilation of LNG market prices into the 
          CEC's Integrated Energy Policy Report.










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