SoCal Battles Consumers on Storage Sale
The controversy surrounding an idle Southern California Gas Co.
underground storage field in the Los Angeles Basin continues to
simmer as the ongoing state investigation into SoCal's potential
misuse of the power of eminent domain goes forward with hearings
scheduled for October. All the facts may never surface publicly,
and even if they do, it will take months of complicated regulatory
The case covers a past period of three to seven years, during
which SoCalGas declared it no longer needed a relatively small
underground storage field in the southeast LA suburb of Montebello
and began preparing to sell the storage operations, which dated
back to 1956 on leased parts of a depleted oil field.
Based on an independent consultant's report, the CPUC consumer
services staff contends SoCalGas allegedly violated state rules by
misleading the regulators and may have misused its power of eminent
domain in recent years in its attempt to get 550 separate
surrounding property owners to sell their interests in the property
to the utility.
Angry property owners have been calling a specially established
toll-free telephone hotline to comment on their part in the case to
CPUC attorneys and staff members.
Although all of the past civil court proceedings have been
completed, reportedly they involved as many as 220 of the property
owners who refused SoCalGas's attempts to buy their interests. The
gas utility took them to court, asserting its rights to eminent
domain, claiming they needed to own the storage field property to
continue utility operations.
The consultant's report alleges that at the same time SoCalGas
was attempting to sell the property and telling regulators and
others that the storage field was unnecessary for its operations.
A CPUC staff source says that many of the property owners
calling in their comments are claiming they were never notified of
either the chance to sell their interests or the court proceeding
seeking eminent domain. Their first inkling that something was
wrong was when the royalty checks stopped, according to the CPUC
staff source. "We've seen a pattern of what looks like abusive
behavior by SoCalGas," the staff source said. "They first asked for
sale of property in a letter to all of the property owners.
A second letter warned they'd take property through
condemnation. People I talked to indicated they all felt
threatened. They all got phone calls from the gas company (in
addition to the letters) sort of pestering them."
The state's case will be filed Aug. 6; SoCalGas' reply by Sept.
13; and hearings begin Oct. 12, with dates scheduled through the
22. With the potential to be embarrassing to the nation's largest
natural gas distribution company, the case could be settled before
it reaches the administration law hearing stage at the California
Public Utilities Commission, although a CPUC consumer services
staff member working on the case indicated there is no activity as
of July 1 in that regard.
"We have an open door policy about settlements," the staff
"Certainly we will sit down and talk to people. If we can reach
a fair and equitable settlement in the interest of judicial
economy, that is what we would do."
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