In the simmering natural gas transportation fueling dispute in California, Sempra Energy’s Southern California Gas Co. (SoCalGas) sees its proposed tariff to provide utility compression services essential to compressed natural gas (CNG) fueling as adding to, not stifling, competition.
California regulators have approved changes for SoCalGas regarding natural gas producers in the state accessing its pipeline system and, separately, a deal in which SoCalGas provides compression services to a major CNG bus fleet operator. The California Public Utilities Commission (CPUC) action ostensibly allows the gas-only utility to provide CNG services to one of its largest customers, the Los Angeles Unified School District, for fueling its school bus fleet.
Nonutility natural gas transportation providers opposed the move, as did the CPUC’s independent consumer unit, the Division of Ratepayer Advocates (DRA). They are still disputing a proposed tariff and in one instance, asking for a rehearing of the entire case. A DRA official said it considers the CNG market competitive, and although it is disappointed with the CPUC decision, it includes several safeguards against the utility market power.
SoCalGas contends the CPUC already has proposed a “compression service tariff” (CST) to all to allow the utility to allow the production CNG to any customers needing service above standard pipeline pressures, including natural gas vehicle (NGV) fueling customers, but also combined heat-power and peaking power generation plant customers. Twenty-two parties filed support for the CST, a SoCalGas spokesperson told NGI.
“[Opponents] give the impression the utility is trying to enter the market to dispense CNG as a fuel. Instead, what we’re proposing is to offer compression services [to customers with CNG fueling facilities],” the spokesperson said.
Leading the opposition is Seal Beach, CA-based Clean Energy Fuels Corp., which has worked closely with SoCalGas in the past and operates four of the utility’s publicly accessible CNG fueling stations. It alleges that Sempra and SoCalGas have indicated that they want to eventually grow a CNG business through the utility and eventually spin it off as a non-utility subsidiary.
As part of the CPUC proceeding record, there was “ample evidence” presented that shows Southern California’s NGV market, the nation’s largest, is concentrated in Clean Energy and Integrys (parent to Trillium CNG services), which combined serve 82% of the CNG sold in SoCalGas’ territory, the SoCalGas spokesperson said.
SoCalGas officials contend that the opposition is not from a legal or public interest standpoint, but strictly because Clean Energy “seeks to preserve the status quo and its dominance in the marketplace.”
“We would welcome Sempra Energy setting up a nonutility business that we could compete with…on a level playing field,” a Clean Energy vice president, Todd Campbell, told NGI earlier. For California, the issue is still unresolved, according to Campbell, and Clean Energy has filed a petition for rehearing and a protest at the CPUC.
The CPUC approval of the SoCalGas contract with the school district carries various mitigation and requirements on the utility, the utility spokesperson said. “The CST is a fully elective, optional tariff service and will not impact or be tied to any other tariff or non-tariff services that the customer may receive from SoCalGas,” she said.
In its proceedings in this case, the CPUC maintained that the utility entry would be into an already concentrated market so the SoCalGas tariff likely will “increase competition and certainly expand the choices of customers,” according to the utility’s interpretation. Since the 1990s, California has had prohibitions against utilities entering retail CNG fueling markets, but in this case the utility is not dealing with retail sales, the DRA official said.
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