BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1257
                                                                  Page 1


          ASSEMBLY THIRD READING
          AB 1257 (Bocanegra)
          As Amended  May 6, 2013
          Majority vote 

           NATURAL RESOURCES   9-0         APPROPRIATIONS      17-0        
           
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          |Ayes:|Chesbro, Grove, Bigelow,  |Ayes:|Gatto, Harkey, Bigelow,   |
          |     |Garcia, Muratsuchi,       |     |Bocanegra, Bradford, Ian  |
          |     |Patterson, Skinner,       |     |Calderon, Campos,         |
          |     |Stone, Williams           |     |Donnelly, Eggman, Gomez,  |
          |     |                          |     |Hall, Ammiano, Linder,    |
          |     |                          |     |Pan, Quirk, Wagner, Weber |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Requires the California Energy Commission (CEC) to  
          prepare a report every four years regarding natural gas.   
          Specifically,  this bill  :

          1)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.

               b)     Identifying the 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) targets.

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

               d)     Optimizing natural gas as a flexible and convenient  
                 end use energy source, including the efficient use of  








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                 natural gas for heating, water heating, cooling, cooking,  
                 engine operation, and other end uses, and the  
                 optimization of appliances for these uses.

               e)     Analyzing effective methods and strategies by which  
                 the electric and natural gas industries can facilitate  
                 implementation of any of the strategies identified in the  
                 study.

               f)     Determining 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. 

               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  
                 strategies.

               j)     Evaluating the incremental beneficial and adverse  
                 economic cost and environmental impacts of proposed  
                 strategies, including lifecycle GHG emissions from  
                 production, transportation, and use of natural gas based  
                 on authoritative, peer-reviewed, and science-based  
                 analysis, or as determined by the Air Resources Board.

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

          3)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.

           EXISTING LAW  requires CEC to assess electricity infrastructure  
          trends and issues facing California and develop and recommend  








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          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.  

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, increased one-time and ongoing costs for the CEC to  
          prepare the report, potentially in the $100,000 to $300,000  
          range.

           COMMENTS  :  Notwithstanding natural gas' undisputable value as an  
          energy source, California's dependence on natural gas,  
          approximately 85% of which is imported, comes with significant  
          consequences for the economy, environment, public health and  
          safety.  Examples include significant 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.

          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 is not clear why the report called for by  
          this bill should be an exception.  Whatever appropriate  








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          questions the Legislature may have about natural gas can be  
          asked through the IEPR in a more efficient and cost-effective  
          fashion. 
           

          Analysis Prepared by  :    Lawrence Lingbloom / NAT. RES. / (916)  
          319-2092 


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