Citing the more than two years since its approval and the new investigation of the state’s natural gas utility system, the California Public Utilities Commission Thursday suspended the long-standing Southern California Gas Co. unbundling settlement. What, if anything, is eventually implemented will be decided in a future proceeding after the first phase is completed this summer on the new statewide gas investigation.
All parties had agreed that the settlement could be suspended, or entirely vacated, as was proposed in an alternate decision that was rejected. Both the rejection of the alternate and the approved suspension were accomplished on 3-2 votes by the five-member CPUC.
San Diego-based Sempra Energy’s SoCalGas utility and all the major stakeholders wrote to the CPUC earlier this year urging that the much-delayed implementation be dropped in lieu of the new statewide natural gas investigation for which SoCal and others filed initial information in late February. SoCal’s submittal outlines potential system upgrades that could expand its backbone transmission capacity by up to 2 Bcf/d, spending several hundred million dollars for new upgrades at key points on its system.
A majority of the CPUC members expressed support for key elements of the SoCalGas unbundling, including the establishment of a system of firm, trade-able rights.
In its filing to the CPUC for Phase One, SoCalGas urged the CPUC to expand its policies on natural gas to embrace more diversity of sources with ability to get into the transmission backbone systems on a firm access basis, new receipt points for Sempra’s gas transmission system, and rolling in the overall costs of its system expansion into the general transmission rate systemwide in Southern California.
Beth Musich, LNG program manager for the Sempra utility, told an industry LNG conference in Long Beach earlier this year that there clearly is a “benefit to adding nontraditional supplies,” such as liquefied natural gas (LNG) to SoCal’s 3.875 Bcf/d backbone pipeline system. The ongoing CPUC gas investigation will address the unbundling of SoCal’s transmission/storage system and the need for a “simple system of firm trade-able capacity rights” flowing from the interstate pipelines to the burner-tip, she predicted.
“[A trade-able rights system] doesn’t exist for us today,” Musich said. “Right now, who gets into our system is set by the upstream, interstate pipeline. We send the nominations to them, then upstream they confirm who’s gas gets sent.”
Potential upgrades concentrate on three major areas in the Sempra system — the Otay Mesa area in San Diego Gas and Electric Co.’s territory south of San Diego near the Mexican border; the Long Beach area where a proposed LNG receiving terminal is slated to be developed; and the coast of Ventura County where two proposed offshore LNG terminals are being considered.
Also as part of the so-called OIR (Order Instituting Rulemaking) by the CPUC is the integration of new receipt points into the SoCal pipeline system, and potential LNG receiving terminals at Long Beach Harbor or offshore Ventura County or supplies from North Baja will create these points, she said. “The system will provide our customers with the ability to choose their supply source and keep rates competitive [with more gas-on-gas competition].”
Three years after the first state regulatory decision on SoCal’s comprehensive settlement, whose origins date back to 1998, a state regulatory administrative law judge last month released a proposed decision aimed at implementing the basic provisions of the original settlement by April 1. After a tumultuous three to five years during which settlement parties balked at numerous implementation attempts, the judge proposed to close the case.
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