BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1456
                                                                  Page  1

          Date of Hearing:   April 25, 2012

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    AB 1456 (Hill) - As Amended:  April 17, 2012 

          Policy Committee:                              
          UtilitiesVote:15-0

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:               

           SUMMARY  

          This bill requires the Public Utilities Commission (PUC), with 
          regard to natural gas pipeline safety and reliability, to:

          1)Perform an analysis of benchmark data and adopt performance 
            standards.

          2)Evaluate a regulated gas corporation's safety performance 
            based on the standards adopted per (1). The commission is 
            further authorized to implement a rate incentive program that 
            may contain penalties based on a gas corporation's 
            performance.

           FISCAL EFFECT  

          The PUC would incur one-time special fund costs of around 
          $140,000 for an administrative law judge to conduct a rulemaking 
          to revise the utilities' rate case plan and ongoing special fund 
          costs of around $250,000 for two positions to conduct the 
          initial analysis and subsequent updating of benchmark data, 
          define performance metrics and performance standards, and 
          develop rates based on safety. �Public Utilities Reimbursement 
          Account]

           COMMENTS  

           Purpose  . The impetus of this bill was the September 9, 2010 
          explosion and fire from a 30-inch natural gas transmission 
          pipeline, owned and operated by PG&E, in the City of San Bruno, 
          which claimed eight lives and injured dozens more and destroyed 
          or damaged dozens of homes.  Almost immediately thereafter, the 








                                                                  AB 1456
                                                                  Page  2

          PUC formed an Independent Review Panel (IRP) to examine 
          contributing factors to the San Bruno disaster and offer 
          recommendations for action by the PUC to best ensure such an 
          accident is not repeated. The IRP issued its report in June 
          2011. One of its recommendations was that "Upon thorough 
          analysis of benchmark data, �the PUC should] adopt performance 
          standards for pipeline safety and reliability for PG&E, 
          including the possibility of rate incentives and penalties based 
          on achievement of specified levels of performance."

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081