California regulators decided Thursday they will not try to establish a separate set of rules for utilities to file in undertaking supply contracts involving liquefied natural gas (LNG) imports. It was agreed that LNG imports should compete “head-to-head” with domestic gas supplies, the California Public Utilities Commission (CPUC) said.

“LNG supply procurement and cost recovery should continue to be subject to the procedures that apply to the procurement and cost recovery for natural gas supply generally,” the CPUC said in its order, which concludes a proceeding the state regulatory commission opened in anticipation of the state’s utilities having the option of buying LNG imports from one or more West Coast terminals.

Regulators said they wanted to look at two areas related to the new sources of gas supplies: how utility ratepayers could benefit from long-term LNG contracts, and what procedures utilities and the CPUC should use regarding utilities negotiating LNG deals.

In the end, the CPUC concluded that most of the stakeholders in the proceeding recommended against the regulators adopting specific reliability and/or cost guarantee requirements for long-term LNG contracts, and that the commission should not attempt to establish guidelines for utilities or pre-approved contracts for them in negotiating LNG supplies.

The CPUC also concluded from the feedback it received that “ratepayers may benefit from LNG without the need for utilities to serve as anchor tenants and, in any event, will benefit most by allowing LNG supply to compete head-to-head with domestic supply.”

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.