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California Regulator Sees Possible NatGas Shortages For Power Generation

A member of the California Public Utilities Commission (CPUC) on Monday signaled concerns about possible curtailments of natural gas to power generation plants due to the closure of the state’s largest underground gas storage field, Aliso Canyon.

In a commissioner's ruling, the CPUC's Catherine Sandoval directed Southern California Gas Co. (SoCalGas) and Southern California Edison Co. (SCE) to take steps to protect consumers, particularly low-income residents, from possible gas reliability problems this summer.

The focal point of Sandoval's concerns is SoCalGas' 86 Bcf capacity, 3,600-acre Aliso Canyon storage facility, which stopped injecting new supplies in the midst of a prolonged well leak and is prohibited from resuming operations until after all of its 115 storage wells are inspected, tested and cleared for operation by state regulators (see Daily GPIFeb. 25). Residents near the facility who were displaced by the incident want it closed permanently.

In her ruling Monday, Sandoval expressed concerns about potential curtailment of gas to residential customers and gas-fired power plants that could "cause hardship and negatively affect the health, safety and comfort of low-income customers in the state's energy savings assistance program (ESAP)."

Sandoval noted "safety and ratemaking issues, and broader implications" from the storage well leak, which has cost SoCalGas more than $300 million to date (see Daily GPIMarch 7). She acknowledged these broader impacts are being addressed in other regulatory proceedings but said "certain actions may be appropriate" within the ESAP proceeding.

By taking more aggressive steps under the energy saving program, Sandoval said demand for natural gas may be reduced in the geographic areas most impacted by the well leak, namely, the greater Southern California basin.

"While the full extent of natural gas resource reliability issues arising from Aliso Canyon is still unknown, it is highly likely that a natural gas shortage could lead to a rise in the price of natural gas in Southern California, or to curtailments of gas supply to both core and noncore customers, including electric generators and hospitals," Sandoval said. "I am particularly concerned that low-income customers will be disproportionately impacted by this natural gas shortage."

Sandoval urged concentrating on multi-family dwellings where 80% of the ESAP-eligible customers reside, focusing on water heater and furnace replacements, along with weatherization measures that can cut energy consumption. Both SoCalGas and SCE have substantial amounts of unused funds for the program.

At a meeting last month, the Sempra Energy gas utility estimated it had $158.6 million in unused ESAP funds, and SCE determined that it had another $89.7 million of unspent funds. Because of these large balances, "it is appropriate to ask SCE and SoCalGas to step up their efforts under existing grants of ESAP authority to mitigate future negative bill impacts," Sandoval said.

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