Southern California Gas’ attempt to sell its smallest LosAngeles Basin underground natural gas storage facility has beenabruptly halted by state regulators while an investigation isconducted into how the nation’s largest gas utility has dealt withregulators and surrounding landowners in the Eastern LA suburb ofMontebello, CA, bordering the storage facility. It is now in thehands of the California Public Utilities Commission, which couldassess some large fines if SoCalGas is found to have violated staterules.

A prehearing conference has been set for June 11, after whichtime a schedule will be set for SoCal and other parties to commenton the issues and allegations.

In question is whether SoCalGas misrepresented its intentionsand misused its eminent domain powers regarding ownership of theWest Montebello Storage Field, a facility operated on property itleased until 1995 – dating back to 1956 when the CPUC authorized itas a utility underground storage facility in a depleted oil field.SoCal owns the property encompassing its other four storage fields,and since 1995 has been purchasing the rights to West Montebellofrom surrounding residential property owners.

The statewide investigation was launched April 22 and thepending sale halted based on the allegation that SoCalGas toldcivil courts one story in attempting to secure all of the propertyand mineral rights at West Montebello, based on the need to operatethe facility as part of the gas utility, at the same time it wastelling the CPUC the field was no longer needed and was seekingauthorization for its sale. One long-time insider at the CPUCfamiliar with natural gas matters says if a consultant’s reportthat accompanies the order of the statewide investigation proves tobe true, this could turn out to be “one of the most extreme casesof utility abuse” ever to reach the five-member CPUC. “Shocking” iswhat the observer called the consultant’s chronicle of the pastfour years and SoCalGas’ seemingly simultaneous pursuit of theproperty/mineral rights ownership and sale of the property in twodifferent forums.

For its part, SoCalGas officials vehemently deny any wrong-doingor intention to mislead. They do not think SoCal has violated anyCPUC rules, and when the investigation is completed, the utilitywill be “fully exonerated,” they said.

“We have communicated openly and honestly and honestly with thecommission,” said a Los Angeles-based SoCalGas spokesperson. Thelarge natural gas utility which operates four other undergroundstorage fields – two of the largest ones in the nation to the northof Los Angeles, and two smaller coastal facilities – filed Jan. 16,1998 with the CPUC to sell West Montebello “due to reduced gasstorage requirements.”

Before, during and after the sale application, the consultant’sreport in the CPUC investigation alleges that SoCalGas was applyingeminent domain in the courts (from 1996 through 1998) to get thelast remaining landowners’ ownership and mineral rights, claimingthat they were needed for utility operations at the storage field.

Richard Nemec, Los Angeles

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