At least one of the proponents competing to build California’s first liquefied natural gas (LNG) receiving terminal has squared off in a state regulatory proceeding with Sempra Energy’s two utilities over future transmission rights for getting regasified LNG into the utilities’ backbone transmission pipeline system in Southern California.

Regardless of what system ultimately is established, Clearwater Port LNG urged state regulators to made it “open, transparent and able to allow all LNG projects and interconnection points to compete on an equal basis.”

Clearwater Port sponsors are crying foul about the way Sempra’s Mexico-based Costa Azul LNG terminal seems to be getting preferential treatment in its costs and access to transmission capacity in California through its affiliate utilities, Southern California Gas Co. and San Diego Gas and Electric Co. Clearwater Port said it supports a system of firm access rights (FAR) as outlined by the two Sempra utilities.

“Clearwater agrees with the Sempra utilities that the FAR proposal will provide the necessary long-term certainty, reliability and diversity to suppliers and customers to schedule their gas supplies,” it said in a filing Sept. 27. However, the company said it opposes another “joint proposal” that has an unclear implementation plan.

Clearwater’s attorneys filed briefs in September at the California Public Utilities Commission looking at transmission pipeline rates, FAR and off-system services. Their contention is that Sempra LNG has received “nominal cost and preferential or exclusive” access to capacity on the SoCal Gas-SDG&E transmission system that was already paid for by the utilities’ existing customers.

The allegation is that transparency and gas-on-gas competition is being eroded by the utility-affiliate transactions involving LNG supplies scheduled to start in 2008 at Sempra’s North Baja California, Mexico facility, which is under construction.

Separately, CPUC President Michael Peevey said in response to a settled lawsuit between Sempra’s utilities and the CPUC that a “key provision” of the deal, which included the utility holding company and the California attorney general, requires that SoCalGas and SDG&E disclose more information about changes in utility operations or services that may benefit one of their nonutility affiliates, such as Sempra LNG.

While noting that its LNG receiving terminal is geared to be a “competitive access” facility as opposed to a single-source, noncompetitive port, Clearwater attorneys said in the Sept. 14 brief to the CPUC that it is “economically motivated to ensure that the terminal capacity is utilized to the maximum extent, thereby resulting in the lowest practicable unit cost for the terminal services.”

Clearwater alleged that Sempra LNG and its joint venture partner Coral Energy Resources already “have received substantial advantages over other shippers.”

“First, they are the beneficiary of $100 million in ‘System 2000’ pipeline improvements downstream of Otay Mesa [to the Mexican border], preceding their interconnection, such that the only remaining cost is a mere $10 million,” the CPUC filing states. “Second, they are the beneficiaries of system rate integration that will substantially lower their cost of delivering gas to the SDG&E market, at the expense of SoCalGas ratepayers. Third, they received a refund from SDG&E of the costs paid for the interconnection studies — a benefit not realized by other LNG projects.”

In their latest filing, Clearwater’s attorneys reminded the CPUC that it must decide how best to allocate firm access rights to all credit worthy market participants seeking such rights in a fair, transparent manner.

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