Merchant natural gas storage operators have joined their counterpart power plant operators in the crosshair of the California Public Utilities Commission, based on remarks Monday at a Canadian energy conference by the CPUC’s president, Loretta Lynch. State regulators likely will be examining the market power and wholesale price manipulation issues related to gas storage next year, she told an industry gathering in Calgary, as part of a broader reregulation effort.

On a broader basis, Lynch told her audience that she will push for full re-regulation of the gas and electricity markets in California, something she has hinted at in various forums in the state over the past 12 to 18 months. The current five-member CPUC seems split on that issue, with three of her colleagues disagreeing with her on some specific issues, such as the handling of the state’s suspension of direct access retail choice in the power market.

EnCana Corp., which is based in Calgary where Lynch was speaking, received approval from the CPUC earlier this year to double the capacity of its Wild Goose Storage facility in California, the state’s first merchant underground storage project. A company official in Calgary Tuesday confirmed that it is moving ahead in ordering pipe and other equipment for boosting Wild Goose’s storage capacity from 14 to 29 Bcf next year.

Lynch said that the CPUC agreed to review its rule on merchant storage that was established before she was head of the regulatory commission. Noting the CPUC rule is more than five years old, Lynch said due to “all kinds of market manipulation in the gas area, it is time to revisit the exemption” (of merchant facilities’ rates being regulated by the CPUC), as quoted in trade and general news media reports on the Ziff Energy Group’s “North American Gas Strategies Conference” in Calgary.

As one of the CPUC’s strongest critics of the state’s electricity restructuring since coming to the commission in 2000, Lynch has repeatedly called deregulation a “failure” in the state, but Monday’s remarks were perhaps her strongest call yet for “reregulation.”

Calling for the Federal Energy Regulatory Commission to uphold its chief administrative law judge’s recommended decision finding El Paso Natural Gas manipulated wholesale interstate gas prices at the California-Arizona border, Lynch repeated her often-voiced criticism of FERC and the fact that California’s 1996 electric restructuring law gave up control of the state’s energy infrastructure to federal regulators, who she often has criticized for not doing their jobs. She has made it clear for some time that she wants California to reassume that allegedly lost control.

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