Relationships are still in the developmental stages between thenation’s largest natural gas distributor, Southern California GasCo., and a new set of fossil fuel electric generation plant ownerswho bought a dozen plants totaling more than 8,000 MW of capacityand billions of cubic feet of natural gas load earlier this year.
Still to be approved by state regulators is a new singleelectric generation rate. SoCalGas officials are expecting actionto come this month. In the interim, the new owners pay for gastransportation under the existing rates that applied to SouthernCalifornia Edison Co. before it sold the plants as part of itsdivestiture of generation assets in California’s ongoing electricindustry restructuring. California traditionally has maintained gasrates for utility generation customers and cogeneration independentpower producers, but it has not had a rate category for merchantplants.
“We filed for a single rate to lump everyone together,” saidJeff Hartman, SoCalGas’ director of energy markets-sales andmarketing. “It was part of an agreement we have with cogeneratorsin the state as part the merger [Sempra Energy] negotiations.”
The new owners are using third parties for their gas suppliesand it is those firms that are now SoCalGas customers fortransportation. For example, AES has a deal with Williams Co. forits fuel supplies and other needs at the three Edison plants itpurchased, and Houston Industries is using its corporate partnerNorAm for its four newly purchased plants.
“All of the new plants have separated operations from energypurchases and marketing,” said Jeff Horn, SoCalGas’ account managerwho interfaces with all of the former Edison plants, noting thatthe new players have varying levels of familiarity and experienceoperating in California under CPUC-impacted operations.”Essentially the relationships are still in development. There area lot more people to meet and there is a lot of new information forus to learn and for the customers to learn.
The gas supply issues are just one small part of the learningcurve the new operators are on. After all, they are taking over newplants and using former Edison employees to operate the plants. Andfinally, they have to deal with the state’s new independent systemoperator (ISO) of the transmission grid and the power exchange(PX). “[The gas transportation is] just a relatively small piece ofa much bigger equation, so they’re learning about us and we’relearning about them. Things are going pretty well, given thatthere is so much new information in the market.”
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