Wild Goose Storage Raises Competitive Issues in CA
A Canadian-backed merchant underground storage operator has
raised a red flag in California's ongoing, but delayed, natural gas
restructuring proceedings by questioning how new energy market
players can compete with, but be dependent on, the state's major
Wild Goose Storage, Ltd., a subsidiary of Calgary-based Alberta
Energy Co., is focusing on the current issue of the proposed work
and eventual costs of building a four-mile, 18-inch-diameter
pipeline linking its newly developed storage facility in northern
California with Pacific Gas and Electric Co.'s utility gas
transmission pipeline about 50 miles north of Sacramento.
Despite interest by Wild Goose in building the line to PG&E's
utility transmission pipeline, the utility is building the pipeline
and then determining how much of those costs ultimately will be
charged to Wild Goose's backers. "It is one of those situations
that you come away from not feeling all that comfortable," said
Phil Davies, Wild Goose's Calgary-based vice president and general
counsel. "It is one of those situations where there is the
potential - and I emphasize 'potential' - for conflict of interest.
We're in a situation where PG&E competes with us, yet PG&E is
building a facility for us and we can't criticize the costs because
we can't get details on the costs."
Another issue that Wild Goose is raising in California's ongoing
natural gas restructuring debate is how the customers of merchant
storage or other nonutility-provided services are treated in the
restructured world. For example, Wild Goose's contractual
obligations stop at the storage facility. Each of its customers
have to cut separate gas transportation deals with PG&E's
utility transmission operations.
Davies references a 1992 California Public Utilities Commission
decision that cited the need for "nondiscriminatory access by
customers to an independent storage facility" as a policy issue
that should be clarified for the future. A CPUC staff member
assigned to the gas strategy said the regulators' proposed changes
in natural gas assume an open-access approach to both transmission
and storage. "We would like to see the CPUC taken at its word on
that," Davies said.
"We have a good relationship with PG&E and we have a lot of
respect for them, so I am sure we can work out the nitty-gritty of
how we function on their system as we go along.
"Longer term, however, our concerns are that if there are
structural conflicts of interest that leave the potential for
abuse, we think it is wrong to leave the potential there."
Wild Goose is scheduled to open California's first market-based,
merchant underground storage facility in April in a depleted dry
gas field in the Sacramento Valley. It is offering 14 Bcf of
inventory, with firm withdrawal capability of 200 MMcf/d and
injection of 80 MMcf/d.
Richard Nemec, Los Angeles
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