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: 9/10/13 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), beginning November 1, 2015, and every four years
thereafter, to identify in conjunction with the integrated
energy policy report (IEPR) strategies to maximize the benefits
regarding natural gas, as specified.
Senate Floor Amendments of 9/10/13 clarify that the report
required by this bill will be a report separate from the IEPR,
and be prepared in conjunction with the IEPR, and not within the
IEPR.
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Senate Floor Amendments of 9/5/13 narrow this bill by eliminate
the portion requiring the CEC to transmit the report to the
Governor for review and clarify that the natural gas report will
be included as part of the IEPR.
ANALYSIS :
Existing law:
1. Requires CEC to conduct assessments and forecasts of all
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 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 the CEC, beginning November 1, 2015, and every four
years thereafter, to identify with the IEPR strategies to
maximize the benefits obtained from natural gas, including
biomethane as an energy source, helping the state realize the
environmental and cost benefits afforded by natural gas.
2. States that as part of this report, the CEC, at a minimum,
is required to identify strategies and options for each of
the following:
A. Making the best use of natural gas as a transportation
fuel, as appropriate, including for movement of freight,
vessels, mass transit, and other commercial and passenger
vehicle use and identifying methods to develop natural gas
refueling infrastructure.
B. Determining the role of natural gas-fired generation
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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. Taking the best advantage of natural gas as a
low-emission resource, including potential zero and
near-zero GHG emissions, natural gas, and biogas options,
taking into account the impact on electric system
operations.
D. Optimizing the role 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. Identifying effective methods by which the electric
and natural gas industries can facilitate implementation
of any of the strategies identified.
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. Determining the role that natural gas can play in the
development of zero net energy buildings.
H. Optimizing the methods by which the pursuit of these
strategies can facilitate jobs development in the private
sector, particularly in distressed areas.
I. Evaluating the incremental beneficial and adverse
economic cost and environmental impacts of proposed
strategies, including life-cycle GHG emissions from
production, transportation, and use of natural gas, based
on authoritative, peer-reviewed, and science-based
analysis or in consultation with the Air Resources Board.
Background
A study by Massachusetts Institute of Technology from June 2011
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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 GHGs 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
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
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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.
This 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
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 9/11/13)
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 and Technology Association
California Municipal Utilities Association
California Natural Gas Vehicle Coalition
Calpine
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CALSTART
Cities of Beaumont and Murrieta
City of Santa Ana Mayor, Miguel A. Pulido
Coachella Valley Association of Governments
Coachella Valley Economic Partnership
Congress of California Seniors
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
Kern County Supervisor, 2nd District, Zack Scrivner
Kern County Supervisor, 4th District, David Couch
Kern Economic Development Corporation
Kings County Economic Development Corporation
Latin Business Association
Los Angeles Conservation Corps
Los Angeles County Business Federation
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
Ventura County Supervisor, 5th District, John C. Zaragoza
Waste Management
Western States Petroleum Association
ASSEMBLY FLOOR : 77-0, 5/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
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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
NO VOTE RECORDED: Holden, Skinner, Vacancy
JG:k 9/11/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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