Pacific Gas and Electric Co. is attempting to block Denver-basedWestern Gas Resources’ plans for moving into a heavilyindustrialized part of the utility’s East San Francisco Bay serviceterritory by converting a proprietary gas pipeline to astate-regulated, open-access supply line serving proposed newmerchant power plants in Pittsburg, CA, along with surroundinglarge industrial loads.
A ruling from a California Public Utilities Commissionadministrative judge (ALJ) on the PG&E utility’s request todismiss Western’s application has been delayed, but is now expectedsome time in September. In the meantime, the two merchant powerplants, both of which are slated to be developed by Calpine Corp.,are planning to hook into PG&E’s transmission system, accordingto a San Jose, CA-based Calpine spokesperson.
At stake in the ALJ’s ruling is whether Western is going to bepermitted to exercise its option to purchase a Shell-Mobil gasgathering and pipeline delivery system, including 170 miles oftwo-inch- and 10-inch-diameter pipelines crossing more than a dozenlocal gas fields between Sacramento Airport north of the capitaland the industrialized north Contra Costa County area in northernCalifornia. Western earlier this year projected wrapping up thedeal by the end of this year. Now that is in doubt, according toWestern’s Denver-based officials.
“We expected something from the CPUC a month ago,” said CraigSupplee, Western’s business development director. The assigned ALJindicated she has circulated a draft proposed ruling that is nowbeing reviewed internally at the CPUC, and it is “out of my hands.”
Supplee said the PG&E action is a “stalling tactic” in whichthe large utility has submitted a long list of arguments why theproject should be rejected, including an 1896 ruling from stateregulators upholding PG&E’s exclusive franchise throughoutnorthern California.
Western, through a subsidiary called WGR California, isproposing to buy the pipeline, interconnect it with PG&E’sexisting intrastate backbone transmission system and transportsupplies of up to 70 MMcf/d to the industrial customers in thePittsburg and Martinez, CA, area. Eventually, Supplee sees the twonew power plants, which are located adjacent to the pipeline, aspotential customers, although until the regulatory process iscompleted Western has had to hold off pursuing any deals.
“We’ve done a lot of hand shaking with the local producers,telling them what we want to do, but that’s about all,” Suppleesaid. “Once we get the pipe, the power plants definitely will beprospective customers. In fact, they could fill the pipeinstantaneously. So they are definitely going to be part of theopen season for customers.”
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