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AB-1799 Natural gas.(2019-2020)

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Date Published: 04/12/2019 04:00 AM
AB1799:v97#DOCUMENT

Amended  IN  Assembly  April 11, 2019
Amended  IN  Assembly  April 01, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1799


Introduced by Assembly Member Friedman

February 22, 2019


An act to add Section 25303.7 to the Public Resources Code, and to add Section 454.57 to the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1799, as amended, Friedman. Natural gas.
Existing law requires the State Energy Resources Conservation and Development Commission (Energy Commission) to conduct electricity and natural gas forecasting and assessment activities, as specified. Under existing authority, the Energy Commission has established the Petroleum Market Advisory Committee to assist the Energy Commission in better understanding the factors and conditions related to petroleum price fluctuations and associated impacts, as well as policy options that may affect petroleum markets.
This bill would require the Energy Commission to identify, collect, and analyze certain data regarding the natural gas market to determine causes of natural gas price volatility experienced by end-use customers. The bill would require the Energy Commission, in coordination with the Public Utilities Commission (PUC), to establish the Joint Agency Natural Gas Market Oversight Committee to review the data gathered and analyzed and to provide ongoing comments, insight, and recommendations about natural gas market behavior and transactions related to potential exercise of market power and market manipulation and methods to deter those activities. The bill would require the committee, if it identifies evidence suggestive of illegal market manipulation or the exertion of market power by natural gas distribution and transmission companies or core transport agents, to provide the evidence to the enforcement division of the PUC for further evaluation. The bill would authorize the committee to require natural gas distributors to submit certain data regarding the natural gas market.
Existing law requires the PUC to require each electrical corporation, electric service provider, and community choice aggregator to file an integrated resource plan, and a schedule for periodic updates to the plan, to ensure that those entities achieve certain objectives.
This bill would require the integrated resource plans filed by those entities to include an evaluation of wholesale market risks, including each entity’s risk management policy, strategy, practices, and measures to manage and reduce risk from price volatility in the wholesale electricity and natural gas markets.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.
By requiring the PUC to direct electrical corporations and electric service providers to include wholesale market risk management plans as a part of their integrated resource plans, thereby making it a crime for those entities to fail to comply, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) California is in the process of reducing its reliance on fossil-fuel-based natural gas for a variety of end-use purposes, including the generation of electricity.
(2) California’s transition to a carbon-neutral economy can be threatened by natural gas price volatility resulting from a range of factors, making it difficult to understand the real impact of new standards and regulations while also potentially inspiring investments in additional gas infrastructure and delivery.
(3) Wholesale electricity prices are highly correlated with and impacted by wholesale natural gas prices. Volatility of natural gas market prices therefore affects not only natural gas end users, but also electricity customers of the state.
(b) It is the intent of the Legislature to do both of the following:
(1) Implement policies to increase transparency in natural gas markets in such a way as to protect both natural gas and electricity consumers against price volatility in the wholesale markets for natural gas production, marketing, and delivery services.
(2) Use existing resources of the State Energy Resources Conservation and Development Commission and the Public Utilities Commission to develop additional expertise to identify circumstances and segments of the natural gas market sector vulnerable to market manipulation and recommend actions to deter that manipulation.

SEC. 2.

 Section 25303.7 is added to the Public Resources Code, to read:

25303.7.
 (a) In addition to its obligations pursuant to Sections 25303 and 25303.5, the commission, in consultation with the Public Utilities Commission and other relevant state and federal agencies, shall do all of the following:
(1) Identify and evaluate data collected or developed by the commission that is necessary and important to determine the cause of natural gas price volatility experienced by end use customers in the state.
(2) Evaluate whether natural gas prices have been affected, or likely will be affected, by the exercise of market power or improper natural gas price manipulation.
(3) In furtherance of accomplishing paragraphs (1) and (2), collect data that may include, but shall not necessarily be limited to, all of the following:
(A) Gas corporations, as defined in Section 222 of the Public Utilities Code, or other entities authorized to sell natural gas pursuant to Chapter 2.2 (commencing with Section 328) of Part 1 of Division 1 of the Public Utilities Code, including sales to core and noncore customers pursuant to that chapter, shall provide company data, including but not limited to, all of the following:
(i) Throughput, sales, and delivery volumes.
(ii) Natural gas storage facility injection and withdrawal volumes and rates, storage facility capacity, and facility maintenance and operational outage schedules.
(iii) Pipeline maintenance, outage, and operational data, including periods of operation and reduction in capacity and deliverability.
(iv) Proposed investment schedules for new and replacement pipelines.
(v) Existing pipeline investment depreciation rates and schedules for all pipelines owned and operated by the company, including the time until full depreciation.
(vi) Observed retail gas prices as charged to core and noncore customers.
(vii) Throughput of biomethane and hydrogen natural gas and other fuels as authorized by the Public Utilities Commission for use in the distribution system.
(B) Observed and forecasted wholesale fuel prices, including, but not limited to, natural gas, biomethane, and hydrogen gas and other fuel prices.
(C) Core transport agent data, including, but not limited to, both of the following:
(i) Marketing materials used in describing the core transport agent services.
(ii) Prices charged to end-use customers.
(4) Beginning January 1, 2021, analyze, in an ongoing manner, the data specified in paragraph (3) that is in the possession of the commission and identify natural gas market segments and circumstances vulnerable to price manipulation or the exercise of market power that may have the effect of increasing the aggregate price or price volatility in wholesale and retail gas markets.
(b) (1) In furtherance of the requirements of this section, the commission, in coordination with the Public Utilities Commission, shall establish the Joint Agency Natural Gas Market Oversight Committee, consisting of four individuals with relevant professional or academic expertise, to review the data gathered and analyzed pursuant to subdivision (a) and to provide ongoing comments, insight, and recommendations about natural gas market behavior and transactions, as relates to the potential exercise of market power or market manipulation and methods to deter those activities.
(2) If the Joint Agency Natural Gas Market Oversight Committee identifies evidence suggestive of illegal market manipulation or the unlawful exertion of market power by natural gas distribution and transmission companies or core transport agents, as defined in Section 980 of the Public Utilities Code, the committee shall provide the identified evidence to the enforcement division of the Public Utilities Commission for further evaluation.
(3) Beginning July 1, 2021, and continuing thereafter, the commission shall include in the integrated energy policy report developed pursuant to Section 25301 an assessment of the information collected by the Joint Agency Natural Gas Market Oversight Committee, including a determination on whether volatility or prices for natural gas in California are affected by market power or manipulation.
(c) The Joint Agency Natural Gas Market Oversight Committee may require natural gas transmission and distribution companies and core transport agents, as defined in Section 980 of the Public Utilities Code, to submit to the committee data specified in paragraph (3) of subdivision (a) that are in their possession.
(d) All reasonable costs incurred by the Joint Agency Natural Gas Market Oversight Committee in carrying out its duties pursuant to this section, including staffing, travel, and administrative costs, shall be reimbursed and shall be part of the budget of the commission.

SEC. 3.

 Section 454.57 is added to the Public Utilities Code, to read:

454.57.
 The commission shall direct each load-serving entity, as defined in Section 380, to include, as a part of the integrated resource plan prepared pursuant to Section 454.52, a wholesale market risk management plan, including, but not limited to, the load-serving entity’s risk management policy, strategy, practices, and measures to reduce risk from price volatility in the wholesale electricity and natural gas markets while reducing overall emissions of greenhouse gases and increasing the use of clean energy.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.