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SoCal Battles Consumers on Storage Sale

SoCal Battles Consumers on Storage Sale

The controversy surrounding an idle Southern California Gas Co. underground storage field in the Los Angeles Basin continues to simmer as the ongoing state investigation into SoCal's potential misuse of the power of eminent domain goes forward with hearings scheduled for October. All the facts may never surface publicly, and even if they do, it will take months of complicated regulatory proceedings.

The case covers a past period of three to seven years, during which SoCalGas declared it no longer needed a relatively small underground storage field in the southeast LA suburb of Montebello and began preparing to sell the storage operations, which dated back to 1956 on leased parts of a depleted oil field.

Based on an independent consultant's report, the CPUC consumer services staff contends SoCalGas allegedly violated state rules by misleading the regulators and may have misused its power of eminent domain in recent years in its attempt to get 550 separate surrounding property owners to sell their interests in the property to the utility.

Angry property owners have been calling a specially established toll-free telephone hotline to comment on their part in the case to CPUC attorneys and staff members.

Although all of the past civil court proceedings have been completed, reportedly they involved as many as 220 of the property owners who refused SoCalGas's attempts to buy their interests. The gas utility took them to court, asserting its rights to eminent domain, claiming they needed to own the storage field property to continue utility operations.

The consultant's report alleges that at the same time SoCalGas was attempting to sell the property and telling regulators and others that the storage field was unnecessary for its operations.

A CPUC staff source says that many of the property owners calling in their comments are claiming they were never notified of either the chance to sell their interests or the court proceeding seeking eminent domain. Their first inkling that something was wrong was when the royalty checks stopped, according to the CPUC staff source. "We've seen a pattern of what looks like abusive behavior by SoCalGas," the staff source said. "They first asked for sale of property in a letter to all of the property owners.

A second letter warned they'd take property through condemnation. People I talked to indicated they all felt threatened. They all got phone calls from the gas company (in addition to the letters) sort of pestering them."

The state's case will be filed Aug. 6; SoCalGas' reply by Sept. 13; and hearings begin Oct. 12, with dates scheduled through the 22. With the potential to be embarrassing to the nation's largest natural gas distribution company, the case could be settled before it reaches the administration law hearing stage at the California Public Utilities Commission, although a CPUC consumer services staff member working on the case indicated there is no activity as of July 1 in that regard.

"We have an open door policy about settlements," the staff member said.

"Certainly we will sit down and talk to people. If we can reach a fair and equitable settlement in the interest of judicial economy, that is what we would do."

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