California Consultant Critical of SoCalGas
Southern California Gas' so far ill-fated attempt to sell a
small metropolitan-based underground storage field is catching
potential flak from regulators and nearby residents fueled by a
36-page report that accuses the nation's largest natural gas
utility of unethical, if not illegal, business practices. A
prehearing conference will be convened June 11 by an administrative
law judge at the California Public Utilities Commission to begin an
investigation into the alleged violation of the regulatory body's
SoCalGas officials strongly contend that they have done nothing
wrong and that through the CPUC investigation the utility expects
to be fully vindicated in its handling of the storage field in
recent years. Meanwhile, any potential sale has been put on hold.
Staff members at the CPUC consumer services division think the
report by consultant Margaret C. Felts is one of the more critical
pieces ever submitted concerning the actions of one of the four
major investor-owned energy utilities in the state. "Shocking" is
how one staff member characterized the document. It offers three
- Over the course of the last four years, if not longer,
SoCalGas (allegedly) has provided "inaccurate information to
property owners, the CPUC and the courts about its current and
future need for acquisition of the storage and mineral rights
at the West Montebello Gas Storage Project."
- SoCalGas (allegedly) misled a civil court concerning the
authority it had to condemn storage and mineral rights under
its CPUC certificate authorizing its operation of the storage
field since 1956, and the fact that it needed those rights to
continue operation of the field when it was concurrently
making plans to sell the facility.
- The utility (allegedly) in mid-1997 misled the CPUC by
misrepresenting facts about the ongoing need to operate
Montebello, causing the CPUC to give "a flawed analysis of
events" to a state legislator who sought to investigate
complaints of surrounding property owners who were being
forced through eminent domain to sell their property and
mineral rights in the field.
The report ends by alleging that SoCalGas followed a pattern of
misleading regulators concerning the Montebello Storage
facility-its only leased storage field-dating back to 1956 when it
began natural gas storage operations. "(Southern California Gas)
advanced inaccurate information to the (CPUC), leaseholders (for
property and mineral rights) and the court."
In addition to the concluding points, the report by Felts
alleges that at various times earlier in the 1990s, the utility
manipulated the gas storage operations to affect the perceived
value of the oil reserves still in place at Montebello, which
originally was a working oil field owned and operated by Union Oil
Company of California starting in 1939. The report also alleges
that there may have been actions taken to assure that whether or
not the field was sold, ratepayers-not shareholders-would pay for
what are expected to be high costs for environmental clean-up at
the field. The gas storage field is adjacent to a superfund
landfill, one of the worst such sites in California.
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