BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 1257
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          Date of Hearing:  April 29, 2013

                                Wesley Chesbro, Chair
               AB 1257 (Bocanegra) - As Introduced:  February 22, 2013
          SUBJECT  :  State Energy Resources Conservation and Development  
          Commission:  natural gas

           SUMMARY  :  Requires the California Energy Commission (CEC) to  
          prepare a report every four years regarding the benefits and  
          uses of natural gas.  

           EXISTING LAW  requires CEC to assess electricity infrastructure  
          trends and issues facing California and develop and recommend  
          energy policies for the state to address and resolve such issues  
          as part of its biennial Integrated Energy Policy Report (IEPR).   
          [SB 1389 (Bowen), Chapter 568, Statutes of 2002].   The IEPR  
          must contain an overview of major energy trends and issues  
          facing the state, including, but not limited to, supply, demand,  
          pricing, reliability, efficiency, and impacts on public health  
          and safety, the economy, resources, and the environment.  The  
          IEPR requires an examination of natural gas issues, including  
          forecasts of natural gas supply, demand and prices and  
          evaluation of a wide range of related factors.  The CEC has  
          discretion to examine other relevant issues.

           THIS BILL  enacts the "Natural Gas Act" within the Warren-Alquist  
          Act, including:

          1)Codified findings and declarations touting the benefits of  
            natural gas as an energy resource.

          2)Requires the CEC, by January 1, 2015 and then every four years  
            thereafter, to prepare a report for the Legislature  
            identifying strategies to maximize the benefits of natural  
            gas.  As part of the report, the CEC must identify strategies  
            and options to:

               a)     Make the best use of natural gas as a transportation  
                 fuel, including for movement of freight, vessels, mass  
                 transit, and other commercial and passenger vehicle use  
                 and identifying methods to increase the development of  
                 natural gas refueling infrastructure.


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               b)     Determine the optimal role of natural gas-fired  
                 generation as part of a resource portfolio, including,  
                 but not limited to, combined heat and power, and the  
                 impact of that role on meeting greenhouse gas (GHG)  

               c)     Take the best advantage of natural gas as a  
                 low-emission and renewable resource, including potential  
                 zero and near-zero GHG emissions, natural gas, and biogas  
                 options, taking into account impact on electric system  

               d)     Optimize the advantage of natural gas as a flexible  
                 and convenient end use energy source, including the  
                 efficient use of natural gas for heating, water heating,  
                 cooling, cooking, engine operation, and other end uses,  
                 and the optimization of appliances for these uses.

               e)     Identify methods by which gas corporations can  
                 facilitate implementation of any of the strategies  
                 identified in the study.

               f)     Determine the extent to which a long-term policy is  
                 needed to ensure adequate infrastructure and storage, and  
                 developing strategies for pursuing additional  
                 infrastructure development to maintain or enhance  
                 pipeline and system reliability, including increased  
                 natural gas storage. In developing those strategies, the  
                 commission shall consider needed policies to protect  
                 against system capacity constraints, mitigate investment  
                 risk associated with the long term investment in  
                 infrastructure in an evolving energy market, and identify  
                 factors that could limit the ability to receive maximum  
                 benefits from natural gas as an energy resource.

               g)     Determine the role that natural gas can play in the  
                 development of zero net energy buildings.

               h)     Optimize the methods by which the pursuit of these  
                 strategies can facilitate jobs development in the private  
                 sector, particularly in distressed areas.

               i)     Optimize the methods by which state and federal  
                 fiscal policy can facilitate any of the proposed  


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          3)Requires the CEC, in developing the report, to consider and  
            respond to comments and consult with relevant state agencies.

          4)Requires the Governor to review the report and report his or  
            her agreement or disagreement to the Legislature within 180  
            days.  The report, as modified by the Governor, shall  
            thereafter comprise the natural gas policy of the state.

           FISCAL EFFECT  :  Unknown

           COMMENTS  :

           1)Author's statement  :

               Natural gas is an affordable, low-carbon, and clean-burning  
               fuel source that can result in substantial reductions of  
               greenhouse gas emissions.  For example, natural gas  
               consumers in California have already reduced carbon  
               emissions down to 1990 levels due to energy efficiency  
               investments and the adoption of low emission gas technology  

               While natural gas is being recognized for the importance it  
               plays in meeting the state's energy needs and helping to  
               achieve the state's historic greenhouse gas emission  
               reduction goals, California lacks a long-term strategy to  
               maximize its benefits as a part of its alternative energy  

               Natural gas represents a flexible energy supply source for,  
               among other things, heating, water heating, cooling,  
               cooking, engine operation, transportation fuel, and  
               electric generation and provides a valuable complement to  
               the development of renewable generation sources,  
               particularly intermittent generating sources. Natural gas  
               can also provide these services at comparatively lower  
               cost, while remaining relatively environmentally friendly.

               AB 1257 focuses on the use of natural gas, not about the  
               origin or method of production. Regardless of what the  
               state decides its policy will be on (hydraulic fracturing),  
               we need a clear roadmap that effectively guides our current  
               supply and use of natural gas to further reduce emissions  
               and lead in the clean energy economy.


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               Natural gas is a pivotal component in California's  
               achievement of the historic greenhouse gas emission  
               reduction goals and standards required by AB 32. It is an  
               essential partner to the development of renewables in  
               providing reliable backup power when the sun is not shining  
               or when the wind dies down.

           2)Bill is written to favor natural gas as a resource.    
            Notwithstanding natural gas' undisputable value as an energy  
            source, California's dependence on natural gas, approximately  
            85 percent of which is imported, comes with significant  
            consequences for the economy, environment, public health and  
            safety.  Examples include significant greenhouse gas (GHG)  
            emissions, air and water pollution associated with electric  
            generation, as well as environmental and safety hazards  
            associated with pipeline leaks and natural gas production.  In  
            addition, while natural gas is currently cheap and plentiful  
            due to the recent boom in domestic shale production  
            attributable to hydraulic fracturing, it wasn't so long ago  
            that California experienced severe price spikes and  
            reliability problems associated with constrained supplies of  
            natural gas and natural gas-powered electric generation.  This  
            was perhaps the most significant factor behind the enactment  
            of the original Renewables Portfolio Standard in 2002.

            Though this bill is posed as a study, neither the findings nor  
            the operative directions to the CEC seem to recognize these  
            consequences.  A balanced study to support natural gas policy  
            would ask the CEC to evaluate risks as well as benefits.   
            Toward that end,  the author and the committee may wish to  
            consider  additional findings and report considerations as  

               a)     According to the Air Resources Board's GHG  
                 inventory, natural gas accounts for 87 percent of GHG  
                 emissions from in-state electric generation and 26  
                 percent of total statewide GHG emissions.

               b)     While natural gas holds promise to displace coal for  
                 electric generation on a national scale, California's  
                 significantly less GHG-intensive energy portfolio reduces  
                 those potential benefits.

               c)     California has adopted leading energy efficiency and  


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                 renewable energy policies, including a "loading order,"  
                 which favor efficiency, demand response and renewable  
                 energy sources.

               d)     Achieving the 2050 GHG emission target established  
                 in Executive Order S-03-05 will require virtual  
                 elimination of GHG emissions associated with combustion  
                 of fossil fuels, including natural gas.

               e)     In California, the primary short and medium-term air  
                 quality and GHG benefits associated with natural gas use  
                 lie in displacement of petroleum transportation fuels. 

               f)     The CEC should examine lifecycle GHG emissions from  
                 natural gas, including combustion and leakage in the  
                 transportation and distribution system, as well as health  
                 and safety issues associated with natural gas pipelines.
            3)Dis-integrating the Integrated Energy Policy Report.   The IEPR  
            was enacted in 2002 as part of an effort to restore the CEC's  
            planning functions in the wake of the energy crisis that  
            followed electric industry restructuring.  One of the IEPR's  
            objectives to was to update and consolidate the dozens of  
            statutory reports that had accumulated over the preceding 25  
            years of the CEC's existence.  In the 10 years since the IEPR  
            was enacted, the Legislature has enacted additional reporting  
            requirements, but each time a report subject fits within the  
            broad scope of the IEPR, the Legislature has made the subject  
            part of the IEPR.  It's not clear why the report called for by  
            this bill should be an exception.  Whatever appropriate  
            questions the Legislature may have about natural gas can be  
            asked through the IEPR in a more efficient and cost-effective  
            fashion.   The author and the committee may wish to consider   
            integrating the questions posed by this bill into the IEPR,  
            with a report to the Legislature and Governor at four-year  



           Alhambra Chamber of Commerce
          Alhambra Hospital Medical Center
          American Die Casting
          American Handforge


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                                                                  Page 6

          A.M. Ortega Construction
          Antelope Valley Board of Trade
          Antelope Valley Chamber of Commerce
          ARB, Inc.
          Arcadia Chamber of Commerce
          Asian Business Association
          Asian Business Association of Orange County
          Association of California Cities - Orange County
          Athens Services
          Bakewell Company 
          Band of Angels
          Beaumont Chamber of Commerce
          Black Business Association
          Black Chamber of Commerce of Orange County
          Boys and Girls Clubs
          Brandt Company
          Breathe California of Los Angeles County
          Burbank Chamber of Commerce
          California Asian Pacific Chamber of Commerce
          California Black Chamber of Commerce
          California Building Industry Association of California
          California Business Properties Association
          California Contract Cities Association
          California Construction and Industrial Materials Association
          California Die Casting
          California Independent Petroleum Association
          California Manufacturers and Technology Association
          California Municipal Utilities Association
          California Retailers Association
          California State Polytechnic University, Pomona
          Camarillo Chamber of Commerce
          Catalina Cylinders
          Center for Sustainable Suburban Development
          Central City Association of Los Angeles
          Cerritos Regional Chamber of Commerce
          Chambers of Commerce Alliance of Ventura & Santa Barbara  
          Chinese American Construction Professionals
          Chinese Chamber of Commerce of Los Angeles
          City of Beaumont
          City of Covina
          City of Glendale
          City of Hemet
          City of Lompoc
          City of Murrieta


                                                                  AB 1257
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          City of Santa Ana
          City of Wildomar
          Coachella Valley Economic Partnership
          College of the Canyons
          Congress of California Seniors
          Continental Heat Treating
          Culver City Chamber of Commerce
          Desert Valleys Builders Association
          D/K Environmental
          Don Knabe, Los Angeles County Supervisor
          Duarte Chamber of Commerce
          East Los Angeles Community Union 
          East Yard Communities for Environmental Justice
          Economic Development Collaborative, Ventura County
          Economic Vitality Corporation of San Luis Obispo County
          Economics and Politics
          El Monte/South El Monte Chamber of Commerce
          Esterline Defense Technologies
          Facility Engineering, City of Hope
          Foothill Transit
          Foothill Workforce Investment Board
          Fullerton Chamber of Commerce
          Glendale Chamber of Commerce
          Glendale Community College
          Go Green Initiative
          Golden Empire Transit
          Goodyear Rubber Company of Southern California
          Greater Antelope Valley Association of Realtors
          Greater Conejo Valley Chamber of Commerce
          Greater Corona Valley Chamber of Commerce
          Greater Los Angeles African American Chamber of Commerce
          Greater San Fernando Valley Chamber of Commerce
          Hollywood Chamber of Commerce
          House Foods America
          IMPCO Technologies
          Industry Manufacturers Council
          Inglewood/Airport Area Chamber of Commerce
          Inland Action
          Inland Empire Asian Business Association
          Inland Empire Economic Partnership
          Kern County Board of Supervisors
          Kern Economic Development Corporation
          Kevin Jeffries, Riverside County Supervisor
          Kings County Economic Development Corporation


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          Korean Community Services
          Landi Renzo USA
          La Conservation Corps
          Latin Business Association
          Lincoln Training Center
          Los Angeles Area Chamber of Commerce
          Los Angeles Business Council
          Los Angeles Chapter of Elite SDVOB Network
          Los Angeles County Business Federation
          Los Angeles Business Source, East Los Angeles Region
          Los Angeles Sentinel
          Michael Antonovich, Los Angeles County Supervisor
          Millennium Biltmore Hotel, Los Angeles
          Montebello Chamber of Commerce
          Moreno Valley Black Chamber of Commerce
          Mothers of East Los Angeles
          National Association of Women Business Owners, Los Angeles
          National Latina Business Women Association
          North Orange County Legislative Alliance
          Orange County Business Council
          Orange County Coastkeeper
          Orange County Hispanic Chamber of Commerce
          Orange County Taxpayers Association
          ORCO Block Company
          Pacoima Beautiful
          Palm Desert Area Chamber of Commerce
          Pasadena Chamber of Commerce
          Pet Center
          Plaza Community Services
          Porterville Chamber of Commerce
          Quality Heat Treating
          RBD Communications/Recycling Black Dollars
          Redondo Beach Chamber
          San Diego Gas & Electric Company
          San Dimas Chamber of Commerce
          San Fernando Valley Green Team
          San Gabriel Valley Economic Partnership
          San Gabriel Valley Legislative Coalition of Chambers
          San Gabriel Valley Regional Chamber of Commerce
          San Joaquin Valley Air Pollution Control District
          Santa Barbara County Taxpayers Association
          Santa Barbara Technology & Industry Association
          Santa Clarita Valley Chamber of Commerce
          Santa Clarita Valley Economic Development Corporation
          Seal Beach Chamber of Commerce


                                                                  AB 1257
                                                                  Page 9

          Sierra Madre Chamber of Commerce
          S E Pipe Line Construction Company
          Sequoia Valley Enterprise Zone
          Spreckels Sugar Company
          South Bay Association of Chambers of Commerce
          South Orange County Economic Coalition
          South Pasadena Chamber of Commerce
          Southeast Community Development Corporation
          Southern California Gas Company
          Southern California Minority Supplier Development Council
          Southern California Public Power Authority
          Southwest California Legislative Council
          Southwest Gas Corporation
          System USA
          Temple City Chamber of Commerce
          The Salvation Army
          Torrance Area Chamber of Commerce
          Tulare Chamber of Commerce
          UA Local Union 250
          United Chambers of Commerce San Fernando Valley & Region
          United States Hispanic Chamber of Commerce
          Valley Economic Alliance
          Valley Metal Treating
          Valley Vista Services
          Venice Community Housing Corporation
          Ventura Chamber of Commerce
          Vietnamese American Chamber of Commerce
          Visalia Chamber of Commerce
          Waste Management
          West Hollywood Chamber of Commerce
          West Orange County Regional Chamber of Commerce


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          Clean Energy (unless amended)
          Clean Power Campaign
          Sierra Club California

          Analysis Prepared by  :  Lawrence Lingbloom / NAT. RES. / (916)