BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1257|
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THIRD READING
Bill No: AB 1257
Author: Bocanegra (D)
Amended: 6/25/13 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMMITTEE : 8-0, 7/2/13
AYES: Fuller, Corbett, De León, DeSaulnier, Hill, Knight,
Pavley, Wolk
NO VOTE RECORDED: Padilla, Cannella, Wright
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/30/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 77-0, 5/29/13 - See last page for vote
SUBJECT : Energy: State Energy Resources Conservation and
Development Commission: natural gas
SOURCE : Author
DIGEST : This bill requires the California Energy Commission
(CEC) to prepare a report on or before January 1, 2015, and
every four years thereafter, regarding natural gas, as
specified.
ANALYSIS :
Existing law:
1. Requires CEC to conduct assessments and forecasts of all
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aspects of energy industry supply, production,
transportation, delivery and distribution, demand, and
prices. The CEC uses these assessments and forecasts to
develop energy policies that conserve resources, protect the
environment, ensure energy reliability, enhance the state's
economy, and protect public health and safety. The CEC is
required to adopt and publish a comprehensive assessment of
energy markets, trends, forecasts, and impacts on the public
and the environment every two years in the Integrated Energy
Policy Report (IEPR).
2. Requires the CEC to develop and adopt a state plan to
increase the use of alternative transportation fuels,
including natural gas.
This bill:
1. Requires CEC, on or before January 1, 2015 and every four
years after, prepare and submit a report to the Legislature
on natural gas use and its potential in regards to various
aspects of the energy industry including an analysis of
economic and environmental costs and impacts.
2. Requires the report to identify both near- and long-term
policy strategies to maximize the benefits of natural gas.
Background
A study by Massachusetts Institute of Technology from June 2011
examined the natural gas market in the United States. Unlike
other fossil fuels, natural gas plays a significant role in most
sectors of the modern economy, including power generation,
industrial, commercial, and residential. The study found that
natural gas can play a significant role in supporting efforts to
reduce greenhouse gasses nation-wide. This conclusion should be
modified slightly for the case of California, because as
explained below, California has a different power mix and energy
use profile from the U.S. as a whole.
CEC assessments . The CEC conducts regular assessments of energy
markets and issues, including natural gas, which are adopted and
published every two years as part of the IEPR. In May 2012, the
CEC published a supplemental report specifically on natural gas
market trends in which it examined trends related to natural
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gas supply, pricing, demand, and infrastructure.
Supply has increased in recent years, driving prices lower.
Natural gas production in the lower 48 United States has
increased from 50 billion cubic feet per day in 2005 to 63
billion cubic feet per day in 2011, as production has shifted
from conventional sandstone basins to shale and tight sandstone
formations. The monthly spot-price for natural gas increased by
an average of 29% per year between 2000 and 2008. However, from
January 2009 to April 2012, spot prices decreased at an average
annual rate of 19%.
Demand, however, has remained relatively constant over the last
10 years. Demand in the commercial sector increased, while
decreasing in the industrial sector. There is also an emerging
issue in California related to natural gas demand in the
transportation sector. Natural gas continues to be a major
contributor to electricity generation, but varies from year to
year depending on the availability of hydroelectric resources
and weather.
Natural gas electric generation . Natural gas has significant
benefits over coal in terms of its emissions profile when
combusted. While coal combustion releases large amounts of
black carbon (ash), particulate matter, and other toxins into
the atmosphere, natural gas is primarily composed of methane.
Natural gas produces far fewer pollutants than coal when burned.
California has largely removed coal from its generation
portfolio. Existing law prohibits long term contracts for power
from plants with emissions profiles worse than combined cycle
natural gas power plants. This statute effectively prohibits
future contracts with coal plants. The CEC reports that in
2011, coal made up 8.2% of the California power mix, while
natural gas contributed 35.6%.
The Renewables Portfolio Standard is also having a significant
impact on natural gas powered electric generation. Major
renewable sources (e.g., wind, solar) are intermittent in
nature, and the power output depends on season, weather, and
time of day. Modern natural gas plants have quick start times,
and can be ready to deliver power in as little as 15 minutes. T
his makes them an attractive resource to balance the needs of
renewables as they come online. Additionally, the recent
closure of the San Onofre Nuclear Generation Station leaves a
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2200 megawatt deficit in power capacity. While some of this
power deficit may be filled by renewable energy, quick-start
natural gas plants are another option for providing baseload
generation in the region.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, on-going costs
of at least $140,000 from the Energy Resources Programs Account
(General) for developing the information required in a
quadrennial report.
SUPPORT : (Verified 8/30/13)
American Handforge
American Lung Association, California
Antelope Valley Board of Trade
Association of California Cities, Orange County
Breathe California
Breathe California of Los Angeles County
California Asian Pacific Chamber of Commerce
California Chamber of Commerce
California Contract Cities Association
California Die Casting
California Manufacturers & Technology Association
California Municipal Utilities Association
California Natural Gas Vehicle Coalition
Calpine
CALSTART
Cities of Beaumont and Murrieta
Coachella Valley Association of Governments
Coachella Valley Economic Partnership
Congress of California Seniors
David Couch, 4th District Kern County Supervisor
Economic Development Collaborative-Ventura County
Environmental Defense Fund
Fontana Wood Preserving Inc
Foothill Transit
Glendale Chamber of Commerce
Industry Manufacturers Council
Inland Empire Economic Partnership
John C. Zaragoza, 5th District Ventura County Supervisor
Kern Economic Development Corporation
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Kings County Economic Development Corporation
Latin Business Association
Los Angeles Conservation Corps
Los Angeles County Business Federation
Miguel A. Pulido, City of Santa Ana Mayor
Millennium Biltmore Hotel, Los Angeles
Mojave Desert Air Quality Management District
Mothers of East Los Angeles
Natural Resources Defense Council
Orange County Business Council
Orange County Hispanic Chamber of Commerce
San Diego Gas and Electric Company
San Gabriel Valley Economic Partnership
San Gabriel Valley Regional Chamber
San Joaquin Valley Air Pollution Control District
Santa Barbara Technology and Industry Association
Southeast Community Development Corporation
Southern California Gas Company
Southern California Minority Supplier Development Council
Southern California Public Power Authority
Southwest Gas Corporation
The Valley Economic Alliance
United Chambers of Commerce
Waste Management
Western States Petroleum Association
Zack Scrivner, 2nd District Kern County Supervisor
OPPOSITION : (Verified 8/30/13)
Sierra Club California
ASSEMBLY FLOOR : 77-0, 5/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell,
Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson,
Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. Pérez
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NO VOTE RECORDED: Holden, Skinner, Vacancy
JG:k 8/31/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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