BILL ANALYSIS                                                                                                                                                                                                    

                                                                AB 1257
                                                                Page 1

        AB 1257 (Bocanegra)
        As Amended  September 10, 2013
        Majority vote
        |ASSEMBLY:  |77-0 |(May 29, 2013)  |SENATE: |37-2 |(September 11, |
        |           |     |                |        |     |2013)          |
         Original Committee Reference:   NAT. RES.

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

         The Senate amendments  :

        1)Change the deadline for the initial report from January 1 to  
          November 1, 2015.

        2)Delete the requirement for the Governor to review the report and  
          report his or her agreement or disagreement to the Legislature  
          within 180 days.

        3)Make other minor and conforming changes.

         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.  

         AS PASSED BY THE ASSEMBLY  , this bill:

        1)Required 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:


                                                                AB 1257
                                                                Page 2

           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  

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

           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  

           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  


                                                                AB 1257
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             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)Required the CEC, in developing the report, to consider and  
          respond to comments and consult with relevant state agencies.

        3)Required 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  :  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. 

         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 was not 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.

         Analysis Prepared by  :  Lawrence Lingbloom / NAT. RES. / (916)  
        319-2092                                               FN: 0002746