Western Gas Resources said last week it is weighing its optionsin the wake of a judge’s rejection of its proposed pipeline bypassof Pacific Gas & Electric Co. Administrative Law Judge AndreaBiren recommended regulators approve the gas utility’s motion toreject Western’s application, and reject a contention by Westernthat PG&E was engaging in anti-competitive behavior. Thejudge’s recommendation is scheduled to be considered by theCalifornia Public Utilities Commission Oct. 7.

Western said it is re-thinking its arguments and strategy, whichpreviously were focused on converting an existing Shell-Mobilproprietary gas gathering and delivery pipeline system into aregulated intrastate pipeline.

“We’re still trying to decide what we are going to do inresponse to the CPUC process for making comments,” said CraigSupplee, Western’s business development director in Denver, addingthat his company has not determined yet whether it would exerciseits option to buy the pipelines as an unregulated venture. “We’renot really commenting at this time on what we’re going to do inthose rebuttals. We’ll just have to see what happens.”

The ALJ’s proposed decision stresses that the CPUC has no policyallowing local gas transmission and distribution competition, andtherefore, Western’s filing does not conform to the current policy.The proposed decision, however, does not preclude Western fromre-filing so it conforms to the current policy and waiting untilthe CPUC’s “ongoing investigation into restructuring the naturalgas industry reaches a conclusion with regard to local transmissionand distribution competition that would allow the type ofcompetition in which [Western] wishes to engage.”

If the CPUC agrees with the ALJ and dismisses the filing, itshould also deny Western’s complaint about the PG&E utility’salleged anti-competitive behavior, according to a separate proposeddecision by ALJ Biren.

Through a subsidiary, WGR California, Western proposed to buy170 miles of two-inch- and 10-inch-diameter pipelines crossing morethan a dozen local gas fields in northern California to eventuallyserve the growing industrial load in North Contra Costa County inthe East San Francisco Bay area. The pipeline would interconnectwith PG&E’s gas utility transmission backbone pipeline systemand move up to 70 MMcf/d to industrial customers in Pittsburg andMartinez, CA. The merchant power plant developer, Calpine Corp.,has plans for two generation plants in Pittsburg and is supportingWestern Gas Resources’ CPUC filing.

Richard Nemec, Los Angeles

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