State Energy Policy on Liquefied Natural Gas

Senate Bill 1389 (SB 1389; Bowen, Statutes of 2002, Chapter 568) requires the Energy Commission, in collaboration with other state agencies, to adopt an Integrated Energy Policy Report (Energy Report) every two years. Under SB 1389, the Energy Commission has the responsibility for developing energy policies for California that conserve resources, protect the environment, ensure energy reliability, enhance the state's economy, and protect public health and safety.

The 2005 Energy Report discusses ensuring adequate electricity supplies, reducing energy demand through efficiency and alternative resources, improving energy infrastructure and global climate change. Regarding LNG, the 2005 IEPR states the following:

An important addition to natural gas infrastructure in North America is the construction of liquefied natural gas import facilities. These facilities will increase natural gas supplies available to the U.S. over the next ten years and also help meet California's additional natural gas needs. Currently, no liquefied natural gas terminals are located on the West Coast. The 2003 Energy Report highlighted the need for development of these facilities and their associated infrastructure to serve the natural gas needs of the western U.S.

The cost of delivering natural gas to the West Coast via a liquefied natural gas project is well below the market prices that California pays at its borders and could have a dramatic effect on the market prices in the state. For example, if market prices dropped by 50 cents per million British thermal units, Californians would save more than $1 billion on their natural gas bills.

The 2005 Energy Report was adopted by the Energy Commission at its November 21, 2005, Business Meeting