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PG&E Attempts to Block Western's Pipeline Plan

PG&E Attempts to Block Western's Pipeline Plan

Pacific Gas and Electric is attempting to block Denver-based Western Gas Resources' plans for moving into a heavily industrialized part of the utility's East San Francisco Bay service territory by converting a proprietary gas pipeline to a state-regulated, open-access supply line serving proposed new merchant power plants in Pittsburg, CA, along with surrounding large industrial loads.

A ruling from a California Public Utilities Commission administrative judge (ALJ) on the PG&E utility's request to dismiss Western's application has been delayed, but is now expected some time in September. In the meantime, the two merchant power plants, both of which are slated to be developed by Calpine Corp., are planning to hook into PG&E's transmission system, according to a San Jose, CA-based Calpine spokesperson.

At stake in the ALJ's ruling is whether Western is going to be permitted to exercise its option to purchase a Shell-Mobil gas gathering and pipeline delivery system, including 170 miles of two-inch- and 10-inch-diameter pipelines crossing more than a dozen local gas fields between Sacramento Airport north of the capital and the industrialized north Contra Costa County area in northern California. Western earlier this year projected wrapping up the deal by the end of this year. Now that is in doubt, according to Western's Denver-based officials.

"We expected something from the CPUC a month ago," said Craig Supplee, Western's business development director. The assigned ALJ indicated she has circulated a draft proposed ruling that is now being reviewed internally at the CPUC, and it is "out of my hands."

Supplee said the PG&E action is a "stalling tactic" in which the large utility has submitted a long list of arguments why the project should be rejected, including an 1896 ruling from state regulators upholding PG&E's exclusive franchise throughout northern California.

Western, through a subsidiary called WGR California, is proposing to buy the pipeline, interconnect it with PG&E's existing intrastate backbone transmission system and transport supplies of up to 70 MMcf/d to the industrial customers in the Pittsburg and Martinez, CA, area. Eventually, Supplee sees the two new power plants, which are located adjacent to the pipeline, as potential customers, although until the regulatory process is completed Western has had to hold off pursuing any deals.

"We've done a lot of hand shaking with the local producers, telling them what we want to do, but that's about all," Supplee said. "Once we get the pipe, the power plants definitely will be prospective customers. In fact, they could fill the pipe instantaneously. So they are definitely going to be part of the open season for customers."

Richard Nemec, Los Angeles

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