Pacific Gas and Electric Co., the giant San Francisco, CA-basedutility branch of PG&E Corp., acknowledged Tuesday that it isin danger of running short of gas supplies later this winter due tothe venerable utility’s electricity-induced credit woes spillingover to its natural gas operations. “Most” of the company’s 30 to40 interstate gas suppliers are refusing to sell to the giantutility beyond existing contract terms, some of which expire withina few weeks, according to a PG&E utility spokesperson.

‘We’ve got about 15 to 20 gas suppliers who have said they won’tsell to us beyond what their current contractual arrangements are,”said Jon Tremayne, the PG&E utility spokesperson in SanFrancisco. “Many of them go until the end of the month, others gothrough February and beyond. The supplies include virtually ourentire supply of long-term contracts.

“And obviously if we are in the position where we can’t buy gasfor our customers, we do have storage, but that is somewhat limitedin how long we would be able to do that, and it also depends on thetemperatures and the weather we have. A cold snap could push ourload from 1.2 Bcf/d to closer to 2 Bcf/d.

PG&E continues to negotiate with the suppliers in hopes theywill change their attitude, along with seeking remedies throughvarious regulatory and court venues.

Texas-based Reliant Energy and Dynegy are among the suppliersrefusing to extend existing contracts, Tremayne said. The SouthernCompany is another one, although it has publicly said that itcontinues to sell into the California market, without specifyingthe customers.

“It is the some of the same companies that on the electric sidehave created the financial crisis by gouging (in the wholesalepower market),” Tremayne said.

The longer the PG&E utility and Southern California Edisonin the southern half of the state are forced to sell power atfrozen retail rates that are four or five times lower than thewholesale cost of the electricity, the utilities cash flow willcontinue to erode, and the suppliers will remain reluctant toextend their gas supply contracts with the utilities.

Rate coverage to cover the cash flow drain is the only action inthe short-term that will resolve the heightening problem, Tremaynesaid.

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