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Controversy Surrounds Idle SoCal Storage

Controversy Surrounds Idle SoCal Storage

Southern California Gas' attempt to sell its smallest Los Angeles Basin underground natural gas storage facility has been abruptly halted by state regulators while an investigation is conducted into how the nation's largest gas utility has dealt with regulators and surrounding landowners in the Eastern LA suburb of Montebello, CA, bordering the storage facility. It is now in the hands of the California Public Utilities Commission, which could assess some large fines if SoCalGas is found to have violated state rules.

A prehearing conference has been set for June 11, after which time a schedule will be set for comments on the issues and allegations.

In question is whether SoCalGas misrepresented its intentions and misused its eminent domain powers regarding ownership of the West Montebello Storage Field, a facility operated on property it leased until 1995 - dating back to 1956 when the CPUC authorized it as a utility underground storage facility in a depleted oil field. SoCal owns the property encompassing its other four storage fields, and since 1995 has been purchasing the rights to West Montebello from surrounding residential property owners.

The statewide investigation was launched April 22 and the pending sale halted based on the allegation that SoCalGas told civil courts one story in attempting to secure all of the property and mineral rights at West Montebello, based on the need to operate the facility as part of the gas utility, at the same time it was telling the CPUC the field was no longer needed and was seeking authorization for its sale. One long-time insider at the CPUC familiar with natural gas matters says if a consultant's report that accompanies the order of the statewide investigation proves to be true, this could turn out to be "one of the most extreme cases of utility abuse" ever to reach the five-member CPUC. "Shocking" is what the observer called the consultant's chronicle of the past four years and SoCalGas' seemingly simultaneous pursuit of the property/mineral rights ownership and sale of the property in two different forums.

For its part, SoCalGas officials vehemently deny any wrong-doing or intention to mislead. They do not think SoCal has violated any CPUC rules. When the investigation is completed, the utility will be "fully exonerated," they said.

"We have communicated openly and honestly and honestly with the commission," said a Los Angeles-based SoCalGas spokesperson. The large natural gas utility which operates four other underground storage fields - two of the largest ones in the nation to the north of Los Angeles, and two smaller coastal facilities - filed Jan. 16, 1998 with the CPUC to sell West Montebello "due to reduced gas storage requirements."

Before, during and after the sale application, the consultant's report in the CPUC investigation alleges that SoCalGas was applying eminent domain in the courts (from 1996 through 1998) to get the last remaining landowners' ownership and mineral rights, claiming that they were needed for utility operations at the storage field.

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