FERC has authorized the California grid operator to make permanent its four-year-old natural gas maximum burn constraint to avoid future shortages from continuing limits on the state’s largest gas storage facility at Aliso Canyon.

When warranted, the constraint by the California Independent System Operator (CAISO) can limit the volumes of gas used for power generation in Southern California to avoid the need for blackouts when gas supplies are constrained.

CAISO, which requested the action, and the Federal Energy Regulatory Commission view making the authority permanent as a further guarantee of reliability in the regional grid in Southern California given continued restraints on the use of the 86 Bcf Southern California Gas Co. (SoCalGas) underground storage facility.

In its FERC filing last October, SoCalGas cited its winter 2019-20 technical assessment that concluded the system is "insufficient to maintain natural gas reliability to electric generation customers during high demand periods."

Given the assessment, CAISO told FERC that gas constraint authority enables the grid operator “to operate the system reliably when faced with natural gas constraints in the southern region of the CAISO system."

According to the FERC order, Aliso Canyon “is still operating only at approximately 40% capacity, and it is expected that the Southern California natural gas system will remain constrained in the future.”

CAISO has been granted its request to implement three measures that were temporarily authorized by FERC in 2016:

  • Enforcing the maximum constraint limiting the amount of gas used to generate electricity and allowing it to operate the grid reliably when facing gas system constraints in the southern half of California;
  • Allowing it to designate as uncompetitive certain internal transmission constraints as part of its local mitigation of gas-fired power; and
  • Allowing it to suspend virtual bidding when “virtual bids may detrimentally affect market efficiency due to the implementation of gas constraints.”

SoCal Gas concluded there was no scenario in which it could expect to have adequate supplies to handle a one-in-10-year cold day demand forecast, which could prompt curtailments of core customers, but it drew short of saying there is a risk of that happening this winter. With the exception of the worst case pipeline supply scenario without Aliso Canyon, supplies were projected by SoCalGas to be sufficient to meet the one-in-35-year peak day demand.