With the state’s chief regulator weighing in, California is poised to establish final rules for natural gas transmission and storage in the state as the end of the second phase of a multi-year industry restructuring. After postponing the issue earlier this month, the California Public Utilities Commission (CPUC) is scheduled Sept. 21 to vote on the issue, which covers various bread-and-butter issues affecting the state’s vast transmission/storage system and its upcoming integration of liquefied natural gas (LNG).

In the interim, the CPUC administrative law judge (ALJ) in the case approved a last-minute request for an oral argument on gas quality issues. The session will be held Sept. 19, allowing time for Southern California Edison Co. and the South Coast Air Quality Management District (AQMD), the parties requesting the hearing, and other stakeholders to make their points on the issue, which is particularly tied to proposed LNG supplies coming into the state’s supply infrastructure.

Opened in January 2004, California’s natural gas proceeding was aimed at heading off any supply shortages, and an amended version of the ALJ’s decision will provide the needed policies and rules to assure that, according to Sempra Energy’s two utilities, Southern California Gas Co. and San Diego Gas and Electric Co. The original proposed decision would fall short of that goal, according to the two Sempra utilities, operators of the largest natural gas distribution utility system in the nation.

Among a broad framework that would be operated to satisfy a one-in-10 year cold/dry year average demand, the alternate decision proposed by CPUC President Michael Peevey would approve interconnection agreements and operational balancing agreements for LNG providers in the SoCalGas and SDG&E gas transmission systems, adopt natural gas quality standards for all three major state gas utilities, assess the adequacy of the utilities’ backbone pipeline transmission capacity and slack capacity ranges along with storage adequacy, and approve a settlement between PG&E and independent storage providers in northern California.

The ALJ’s proposed decision also would direct the CPUC energy division, working with the California Energy Commission (CEC), to hold a workshop to develop a “detailed strategy for additional studies necessary to ensure the new gas quality specifications will preserve safe, reliable and clean natural gas service.”

Sempra’s SoCalGas pressed hard to have gas quality tariff issues resolved, to have long-term storage open season capabilities and to revise rules related to open season for transmission capacity.

“The alternative proposed decision [by Peevey] properly recognizes the importance of new gas supplies to California gas consumers by adopting gas quality specifications that can be met by existing suppliers as well as developers of LNG that promises to be an important gas supply source in the future,” SoCalGas attorneys said in comments filed with the CPUC last month. The Sempra utilities noted that they could not support the ALJ’s proposal because they characterized it as “preserving the status quo,” which the utilities argued as “inconsistent with the CPUC’s goals,” and the goals of the state Energy Action Plan.

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