Some state officials already are dubbing the upcoming heatingseason as California’s “winter of discontent” as continued highwholesale natural gas prices are driving up consumer bills andstate regulators look at options for unbundling Southern CaliforniaGas Co.’s transmission and storage system.
According to other state energy officials he talks with, RichardBilas, commissioner at the California Public Utilities Commission,said, “We could have some real problems.” Bilas, the former energycommissioner and immediate-past president of the CPUC, has proposeda modest unbundling of SoCalGas’ system, given the current energyprice volatility, in a proposed settlement decision now beingreviewed. Action on the proposed decision could come Dec. 21, butobservers predict alternate orders will be offered by some ofBilas’s colleagues on the five-member CPUC, and that could pushinto next year final action.
If gas prices continue at their precedent-setting levels,California likely will be intervening at the Federal EnergyRegulatory Commission as it already has been doing regarding lastsummer’s electricity price spikes, Bilas said.
“There are a lot of things the state can do, but whether theyare done is a matter of philosophical and political judgment,” hesaid. “If gas prices get totally out whack in the view of a numberof state decision-makers, there is likely to be intervention onbehalf of the state into gas pricing. And I don’t know if any ofthat serves the public well in the long run, but this is ashort-run political problem.”
As for his proposed decision on settlement for the unbundling ofthe SoCalGas’s system, Bilas is unsure at this point if it willstimulate a more robust core aggregation market — now almost adecade old — with added volumes and marketers. He said he needsto hear from participants in the market in response to the proposeddecision, which basically adopts the more modest compromise ofthree different settlements filed with the CPUC.
“I’ll know better where this proposed decision is going inanother two weeks after I have talked with the other commissionersand some of the parties,” said Bilas, noting that the pending gassettlements should be the last major changes in California’s gasmarket for awhile, unless the state legislature decides to getinvolved as it has on several occasions in the past three years.
“Everything to do with gas matters statewide is on the table andI am not going to make any predictions,” Bilas said during atelephone interview in which he expressed concerns about bothnatural gas and electricity issues in California in the comingyear. He said the supply-demand imbalance for the state’selectricity market needs long-term solutions, but he thinksshort-term political answers will win out.
Bilas said the recent state energy commission conclusion thatCalifornia’s electricity needs can be met with the existing plantsunderway or proposed could pan out, but only if an unlikelycombination of three factors converge: all the plants now on thedrawing board actually get built, no major electric or gastransmission bottlenecks occur, and energy prices stabilize.
“Even if all of the proposed plants came on line in two yearsrather than three, I think we still would have problems,” he said.”Let’s face it, demand for electricity in the Pacific Northwest andCalifornia is growing like crazy. So, until there is something doneon the demand side, so we get some demand responsiveness, justattacking the supply side I don’t think is going to do it.”
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