BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 1371
                                                                  Page  1

          Date of Hearing:   August 6, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                     SB 1371 (Leno) - As Amended:  July 1, 2014 

          Policy Committee:                             Utilities and  
          Commerce     Vote:                            10-3

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

           SUMMARY  

          This bill requires the California Public Utilities Commission  
          (PUC) to open a proceeding by January 15, 2015 to adopt rules  
          and procedures to minimize leaks on PUC-regulated natural gas  
          pipelines with the goal of reducing greenhouse gas (GHG)  
          emissions.  This bill requires the PUC to prioritize safety,  
          reliability and the affordability of service and specifies  
          various considerations and components to be included in the  
          proceeding and the resulting rules and procedures.  

           FISCAL EFFECT  

          1)One-time costs to the PUC of approximately $400,000 from the  
            Public Utilities Reimbursement Account (special fund) for the  
            required proceeding.

          2)Ongoing costs to the PUC of approximately $160,000 from the  
            Public Utilities Reimbursement Account (fund) to perform  
            ongoing evaluations, audits and enforcement.

           COMMENTS  

           1)Purpose.   According to the author, leaky gas pipelines have  
            been recognized as a major safety problem in the U.S. and in  
            California.  The significant global warming impact of methane  
            emissions from leaky gas pipes is just now coming into focus,  
            as new studies demonstrate that methane emissions are much  
            larger than previously understood.

            According to the author, fixing leaky gas pipes will improve  
            safety and reduce GHG emissions. 








                                                                  SB 1371
                                                                  Page  2


           2)Background.   The PUC is responsible for ensuring its regulated  
            gas corporations comply with federal pipeline standards for  
            over 108,000 miles of transmission and distribution pipeline.  
            The commission reviews utility reports and records, responds  
            to public inquiries and complaints on gas pipeline and  
            electric safety, and investigates accidents. 
             
             Following the 2010 pipeline explosion in San Bruno, the PUC  
            opened a proceeding (R.11-02-019) in February 2011 to set  
            rules for safe, reliable operation of the state's natural gas  
            pipelines. Another recently initiated proceeding (R.13-11-006)  
            relates to the development of a risk-based decision-making  
            framework to evaluate safety and reliability improvements in  
            the general rate case (GRC) applications of electric and gas  
            utilities. The PUC expects to complete this proceeding in  
            January 2015.

            Although these proceedings are potential venues for developing  
            leak reduction strategies, the focus is on safety and risk,  
            rather than emission reductions, as in this bill.

           3)Methane.  According to the U.S. EPA, methane is the second most  
            prevalent greenhouse gas emitted in the U.S. from human  
            activities.  Major sources of human-related methane emissions  
            are agriculture, energy production, distribution, and use and  
            waste management. 

            Methane emissions have been shown to impact climate, air  
            quality, and public health. The Intergovernmental Panel on  
            Climate Change (IPCC) reports methane has a high global  
            warming potential, stating it is 28 times stronger than carbon  
            dioxide over a 100-year time period.


           Analysis Prepared by  :    Jennifer Galehouse / APPR. / (916)  
          319-2081