BILL ANALYSIS �
Bill No: AB
650
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2013-2014 Regular Session
Staff Analysis
AB 650 Author: Nazarian
As Amended: June 4, 2013
Hearing Date: June 11, 2013
Consultant: Paul Donahue
SUBJECT
State government: general services: Natural gas services
program.
DESCRIPTION
Sets parameters for the Natural Gas Services Program and
requires most executive branch agencies to purchase through
the program. Specifically, this bill :
1)Requires the Director of the Department of General
Services (DGS) to operate the Natural Gas Services
Program to consolidate and address the needs of multiple
state agencies for the procurement of natural gas and
related services.
2)Requires DGS to make its services with respect to the
acquisition of natural gas and related services available
by way of interagency agreements, to any city, county,
city and county, district, or other local governmental
body, and to any nonprofit hospital or educational
institution that expends public funds.
3)Authorizes DGS to buy, sell, exchange, transfer, or
otherwise dispose of natural gas it acquires, and permits
DGS to recover acquisition and other costs to operate the
program through customer charges or fees.
AB 650 (Nazarian) continued
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4)Allows DGS to enter into gas purchase transactions for a
term longer than five years, if specifically approved by
the director of DGS.
5)Exempts DGS from including disabled veteran business
enterprise requirements for the purchase of natural gas
and related services unless DGS determines it is
necessary.
6)Requires executive branch agencies, except the Department
of Water Resources, to use the DGS natural gas program
for noncore gas purchases of natural gas to ensure
maximum participation resulting in the best discounts and
prices for the commodity, but allows the director of DGS
to allow exemptions from this requirement.
7)Defines "natural gas" to include, natural gas, methane,
biomethane, compressed natural gas, liquefied natural
gas, and other energy commodity that is similar to
natural gas, and related services, including, but not
limited to, gas storage, gas transportation, and forward
purchases of natural gas as related to the program.
8)Changes fiscal management practices by establishing the
DGS Natural Gas Services Program Fund.
EXISTING LAW
The existing law generally authorizes DGS to contract with
suppliers for the purchase of a wide range of goods and
services.
BACKGROUND
The DGS has operated the natural gas services program for
25 years pursuant to its general statutory authority.
Currently, the program provides natural gas delivery to
nine executive agency departments, eight University of
California campuses, 21 California State University
campuses, 13 community college districts, 15 counties, 11
cities, and 16 special districts. Total gas delivered
through the program, which supplies state and local
government agencies in Fiscal Year 2012-13 was valued at
more than $180 million.
Although the program has been operating pursuant to DGS'
AB 650 (Nazarian) continued
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general purchasing authority for more than two decades, DGS
is seeking to codify the program and enact statutory
parameters for its operation.
Currently, approximately 16% of gas purchased through the
program is bought by state executive agencies. If the law
changed, as proposed, to mandate purchases by these
agencies, DGS explained that it would have more certainty
when entering into contracts for longer-term gas purchases.
This certainty could mean reduced costs.
The bill establishes a separate fund in the State Treasury
into which revenues payable to DGS for natural gas and
related services would be deposited. In addition, funds in
the account would be continuously appropriated regardless
of fiscal year. Customer fee revenues in the account could
not be shifted or borrowed from and unexpended revenues at
year end would be retained in the account and be reserved
for future program expenses.
SUPPORT:
Department of General Services
OPPOSE:
None on file
FISCAL COMMITTEE: Senate Appropriations Committee
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