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CPUC Approves Sempra Gas Utility Transmission Integration Dependent on LNG Deliveries

Liquefied natural gas (LNG) receipt terminal development along the Mexican and California coasts has spurred the California Public Utilities Commission (CPUC) to take measures to create market diversity and stimulate LNG importation.

With the prospect of LNG import facilities being available along the North Baja California, Mexico, and California coasts, the CPUC Thursday unanimously approved the integration of Sempra Energy's two utilities' natural gas transmission costs. Added costs to Southern California Gas Co. customers will be offset by greater diversity of supplies in the state, the regulators indicated.

As a result, both SoCalGas and San Diego Gas and Electric Co. will develop integrated transmission rates and receipt points, allowing customers from either utility "to transport gas from any existing or new receipt point at a single integrated transmission rate," CPUC Commissioner Geoffrey Brown said. The commissioner emphasized that this will assure the existing and prospective LNG terminal operators and marketers will know they can reach the full breadth of the Southern California retail gas market, which is sizable.

"This decision [passed 5-0] promotes the goal of California's Energy Action Plan for diversifying natural gas sources to include LNG and to ensure the adequate, reliable, and reasonably priced gas supplies -- including prudent reserves -- are achieved and provided through policies, strategies and actions that are cost-effective and environmentally sound for California," Brown said.

The integrated rates covering the whole Southern California gas transmission pipeline system will be effective the day that re-gasified supplies begin to flow from the now-under-construction LNG receiving terminal at Costa Azul in Baja and the connecting transmission pipeline coming into the United States at Otay Mesa south of San Diego, Brown said. If "sufficient" quantities of regasified LNG don't materialize in California, he said, the CPUC maintains the power to disband the integrated transmission rates for the Sempra utilities.

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