BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 879
                                                                  Page  1

          Date of Hearing:   August 17, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                    SB 879 (Padilla) - As Amended:  July 12, 2011 

          Policy Committee:                              
          UtilitiesVote:13-0

          Urgency:     No                   State Mandated Local Program: 
          Yes    Reimbursable:              No

           SUMMARY  

          This bill:

          1)Requires the Public Utilities Commission (PUC)-in any 
            ratemaking proceeding authorizing a gas corporation to recover 
            expenses for (a) its federally-mandated transmission pipeline 
            integrity management program or (b) capital expenditures for 
            maintenance and repair of transmission pipelines-to require 
            establishment of a balancing account for recovery of such 
            expenses.

          2)Requires that any unspent moneys in the balancing account at 
            the end of each rate case cycle be returned to ratepayers.  

           FISCAL EFFECT 

          Any costs to the PUC would be minor and absorbable.

           COMMENTS  

           1)Purpose  . Through the PUC's ratemaking process, a gas 
            corporation's budget for a specified period (usually three or 
            four years) is submitted, subject to public hearings, 
            modified, and approved by the commission.  With regard to 
            funds budgeted for maintenance and repair, the gas 
            corporations have been allowed to use this funding for repairs 
            deemed most necessary over the funding cycle and have not been 
            required to justify changes in spending or needed repairs to 
            the PUC. According to the author, this bill is intended to 
            increase the transparency of ratepayer funding for 
            maintenance, repair and safety of gas transmission pipelines 








                                                                  SB 879
                                                                  Page  2

            by requiring that funds authorized for these activities remain 
            in a separate account specifically for this purpose. 

           2)Related Legislation  . The following bills are also on today's 
            committee agenda:

             a)   SB 44 (Corbett) requires the PUC to set emergency 
               response standards for gas pipeline and distribution 
               systems and requires that access to pipeline maps be made 
               accessible to the State Fire Marshal and the local fire 
               marshal.

             b)   SB 216 (Yee) requires the PUC to require the 
               installation of automatic shut-off valves or remote 
               controlled valves on interstate natural gas transmission 
               lines located in certain high-risk locations.

             c)   SB 705 (Leno) requires natural gas utilities regulated 
               by the PUC to develop service and safety plans.

            In addition, AB 56 (Hill), pending in Senate Appropriations, 
            contains almost identical provisions as SB 216, and in 
            addition requires gas utilities to pressure test interstate 
            transmission lines and to report biannually to the PUC on 
            pipeline safety-related projects.


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