BILL ANALYSIS Ó
SB 1441
Page 1
Date of Hearing: August 10, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1441
(Leno) - As Amended August 3, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill prohibits the California Public Utilities Commission
(PUC) from allowing gas corporations to seek or receive cost
recovery from ratepayers, for the value of natural gas lost to
the atmosphere from certain natural gas facilities, when
establishing rates in an individual rulemaking proceeding or in
general rate cases. This prohibition applies to the following
facilities:
SB 1441
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1) PUC-regulated gas pipeline facilities;
2) Above-ground storage facilities;
3) Underground storage facilities;
4) Processing facilities;
5) Facilities used for the transportation of natural gas;
6) Facilities used for the delivery of natural gas;
This bill does not apply to "a natural gas lost to the
atmosphere resulting from an act of God."
FISCAL EFFECT:
Minor and absorbable PUC costs.
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COMMENTS:
1)Purpose. According to the author, enough natural gas is lost
each year to fuel 6 million homes. Last year, in the United
States, this lost gas had the same negative impact on the
climate as the annual carbon emissions of 117 million cars, or
roughly half the cars in the country. The author contends
that preventing cost recovery from ratepayers of lost natural
gas creates an added incentive to repair leaks to the maximum
extent feasible.
This bill clarifies that utility companies should be prevented
from charging ratepayers for this lost gas.
2)Methane Emission Reduction. Methane is a potent greenhouse
gas (GHG), with roughly 28 times the warming power of carbon
dioxide over a 100-year period and more than 80 times over a
20-year timespan. Methane also affects local air quality by
contributing to the formation of global background levels of
ozone. Methane emissions result from unintentional or
intentional releases of natural gas. Unintentional releases
of methane, or fugitive emissions, can come from leaking
pipelines, abandoned wells, or inefficient combustion.
Intentional releases occur when there is a need to vent
natural gas to reduce excess pressure on pipeline
infrastructure when such pressure presents a safety risk.
3)Previous Legislation. SB 1371 (Leno), Chapter 525, Statutes
of 2014, requires the PUC, in consultation with ARB, to adopt
rules and procedures to minimize natural gas leaks within gas
pipeline facilities regulated by the PUC. As part of this
effort, the PUC is developing a methodology to calculate the
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lost and unaccounted for gas specific to PUC-regulated gas
pipelines. The PUC opened a rulemaking proceeding in January
2015 to instruct the ongoing implementation of this statue
with an expected decision in the first quarter of 2017.
In order to allow for sufficient time for the new procedures
to minimize leaks and the methodologies to calculate
unaccounted for gas to be implemented, the Chair is
recommending a two-year delay in implementation on this bill.
Analysis Prepared by: Jennifer Galehouse / APPR. / (916)
319-2081