FERC Launches Regular Review of CA Energy Progress

FERC Chairman Curt Hebert signaled last week that the Commission plans to keep a watchful eye on moves by California regulators and other government officials to improve the natural gas and power infrastructure within the state, reviewing progress or lack thereof at every regular meeting of the Federal Energy Regulatory Commission.

Hebert ordered a letter to be sent to the California Public Utilties Commission (CPUC) and California Energy Commission, requesting that they update FERC on the status of three proposed storage and intrastate gas pipeline projects that are due to be in service by next December.

"Their lips [in California] are saying that they got the message" about the need for more takeway gas capacity in the state, said new Commissioner Pat Wood III, who recently met with CPUC officials. But Hebert questioned whether that was so.

He estimated there's 6,150 MMcf/d of interstate gas pipeline capacity going into the Southern California Gas delivery point at the California border, but it's being met by only 5,530 MMcf/d of takeaway capacity. "We've got to do something about that," Hebert said at Wednesday's Commission meeting.

Moreover, he said the state has fallen far short of the new generation capacity that it promised to have on line. California had said it would have 4,168 MWs of new capacity by the end of the summer, but Hebert noted that it has added only 1,420 MWs since January. "That capacity is not even close to where we need to be to make certain that we do not have blackouts, and to make certain that prices remain reasonable."

Hebert's threat to hold California's feet to the fire in areas over which FERC has no jurisdiction was seen as a rebuttal to the flood of accusations and charges coming from the state's politicians, blaming the Commission for the state's energy problems. The fact that FERC has had to bail out the state with unprecedented price controls was seen as opening the door to the Commission's new and unusual oversight role on in-state activities.

In a related development, FERC last week gave Transwestern Pipeline the go-ahead for a 150 MMcf/d expansion of the western portion of its system that terminates at the California border. Transwestern plans to install 166,000 horsepower of new compression on its mainline, which will provide additional firm capacity from Thoreau, NM, to California, and increase total system capacity to 1.24 Bcf/d. The proposed in-service date for the new capacity is June 1, 2002.

In approving the project, FERC said it found that an "adequate market exists for the proposed facilities and that the proposed expansion is necessary to provide additional transportation capacity into California." Transwestern submitted nine precedent agreements for 106.7 Dth/d of the proposed capacity. The agreements were with BP Energy Co., Calpine Energy Service L.P., Frito Lay Inc., Oneok Energy Marketing & Trading Inc., PPL Energy Plus LLC, U.S. Gypsum and Western Gas Resources Inc.

During the open season for the capacity that it held last October, Transwestern reported it had received requests for 1.31 Bcf/d of capacity on the western portion of its system. The pipeline told FERC that it plans to further expand its system in the future.

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