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CPUC Member Bullish on Gas, LNG

The newest of the five California Public Utilities Commission (CPUC) regulators, Timothy Alan Simon, with the usual safety and environmental qualifiers, came out last Tuesday strongly in favor of a liquefied natural gas (LNG) terminal being sited in California, and for natural gas being viewed as a key component of what he termed the "blue bridge to a new green economy," giving it equal standing with energy efficiency and renewable energy resources -- the state's two mandated top energy choices.

Speaking at the LDC Forum Rockies & West conference in Irvine, CA, Simon was critical of the state's permitting process for LNG facilities, noting that he thinks gas imports can help dampen prices longer term for the nation's most populous state.

He is hopeful the "changing of the guard" in Washington, DC, with the advent of President-elect Obama's new administration, will provide "new inspiration and direction" on energy policy in the United States. Simon advocates a new direction for economic, environmental and national security reasons. In fact, somewhat parting company with some of his CPUC colleagues, the newest state energy regulator said he favors more offshore drilling because he thinks energy independence needs to have equal consideration with environmental and economic factors.

Hitting on reliability and current CPUC policies, Simon stressed that the state and nation are moving toward the new green economy by including what he called "the proper reliable sources that can assure the ratepayers of this state are not subject to intermittency and potential blackouts." He advocates regulators doing all they can to "ensure a very liquid and viable gas market," while recognizing that the industry is interested in rising energy prices and he wants to see them fall if possible. Simon said there are "complex market forces and dynamic policy changes at work in the natural gas industry that present challenges."

All of the significant policy shifts, along with the growing global credit crunch, will have major impacts on natural gas, said Simon, who is the CPUC's assigned regulator for natural gas issues. "We're all waiting to see how President-elect Obama fine-tunes his energy policy and what it will mean for natural gas."

Noting that natural gas is clearly part of the climate change agenda, Simon urged the Obama administration to "integrate gas policy to provide a bridge to a future more reliant on renewable resources. Natural gas is clearly part of the solution to climate change.

"LNG has the potential to serve as the gateway to a lower carbon environment, and I support an LNG facility on the West Coast, if those facilities can be sited in a safe and environmentally benign manner. Although increases in unconventional domestic production of gas are currently having a favorable impact on natural gas prices, we need to remain open to LNG development as a means of increasing supply options.

"I support market mechanisms that create opportunities for continued gas exploration, transport and importation of LNG. Natural gas is a critical component of California's energy portfolio."

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