Southern California Gas’ so-far ill-fated attempt to sell asmall metropolitan-based underground storage field is catchingpotential flak from regulators and nearby residents fueled by a36-page report that accuses the nation’s largest natural gasutility of unethical, if not illegal, business practices. Aprehearing conference will be convened June 11 by an administrativelaw judge at the California Public Utilities Commission to begin aninvestigation into the alleged violation the regulatory body’srules.

SoCalGas officials strongly contend that they have done nothingwrong, and that through the CPUC investigation the utility expectsto be fully vindicated in its handling of the storage field inrecent years. Meanwhile, any potential sale has been put on hold.

Staff members at the CPUC consumer services division think thereport by Consultant Margaret C. Felts is one of the more criticalpieces ever submitted concerning the actions of one of the fourmajor investor-owned energy utilities in the state. “Shocking” ishow one staff member characterized the document. It offers threebasic conclusions:

1. Over the course of the last four years, if not longer,SoCalGas (allegedly) has provided “inaccurate information toproperty owners, the CPUC and the courts about its current andfuture need for acquisition of the storage and mineral rights atthe West Montebello Gas Storage Project.”

2. SoCalGas (allegedly) misled a civil court concerning theauthority it had to condemn storage and mineral rights under itsCPUC certificate authorizing its operation of the storage fieldsince 1956, and the fact that it needed those rights to continueoperation of the field when it was concurrently making plans tosell the facility.

3. The utility (allegedly) in mid-1997 misled the CPUC bymisrepresenting facts about the ongoing need to operate Montebello,causing the CPUC to give “a flawed analysis of events” to a statelegislator who sought to investigate complaints of surroundingproperty owners who were being forced through eminent domain tosell their property and mineral rights in the field.

The report ends by alleging that SoCalGas followed a pattern ofmisleading regulators concerning the Montebello Storagefacility-its only leased storage field-dating back to 1956 when itbegan natural gas storage operations. “(Southern California Gas)advanced inaccurate information to the (CPUC), leaseholders (forproperty and mineral rights) and the court.”

In addition to the concluding points, the report byFeltsalleges that at various times earlier in the 1990s, the utilitymanipulated the gas storage operations to affect the perceivedvalue of the oil reserves still in place at Montebello, whichoriginally was a working oil field owned and operated by Union OilCompany of California starting in 1939. The report also allegesthat there may have been actions taken to assure that whether ornot the field was sold, ratepayers-not shareholders-would pay forwhat are expected to be high costs for environmental clean-up atthe field. The gas storage field is adjacent to a superfundlandfill, one of the worst such sites in California.

Richard Nemec, Los Angeles

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