Southern California Gas Co. agreed last week to provide up to 30MMcf/d to its Northern California gas utility counterpart, PacificGas & Electric, as long as unpaid balances never exceed $16.5million for the supplies. The deal runs through March 31.

PG&E’s gas utility had asked the California Public UtilitiesCommission late in January to order SoCalGas to provide emergencysupplies to the San Francisco-based utility’s core gas customers,but SoCalGas strongly objected. CPUC hearings were held and aproposed decision is scheduled to be considered March 7 byregulators.

SoCalGas Chairman Ed Guiles said his company hopes to be “partof the solution” to California’s energy crisis. “PG&E’s problemis not a lack of natural gas; it is a lack of credit,” said Guiles.”We are providing the assistance we can, but our priority must bein providing reliable service to the 18 million people we serve, aswell as maintaining the financial health of our company.”

Guiles said the contract should not adversely impact supplies orcosts for any of SoCal’s five million customers. SoCalGas, whosecredit has not been adversely affected by either the electricitycrisis or the wholesale natural gas price spikes this fall andwinter, essentially will be a purchasing agent for PG&E’sutility. It intends to buy supplies from the Pacific Northwest andhave them transported over PG&E’s own interstate pipelinesystem, PG&E Gas Transmission — Northwest.

But PG&E said it still is not dropping the emergency filingas a result of this deal. A PG&E spokesperson said the companyhas only about 60% of its projected average daily requirements of 1Bcf/d assured in contracts, including the new deal with SoCalGas,which is the 14th contract among more than two dozen possiblesuppliers that provided volumes prior to the utility’screditworthiness becoming an issue. Because of this shortfall andthe need for more supplies as backup, PG&E will continue topursue the emergency order at the CPUC, said PG&E’s StaciHomrig.

“We need a lot more back-up,” she said, noting that the SoCaldeal, “while welcome,” is relatively small compared to thecompany’s projected needs in March to serve its core loads.

PG&E in a CPUC Feb. 16 hearing said it had sufficientsupplies for the rest of the winter as long as seasonaltemperatures do not drop much below historical levels. Earlier inthe winter because of creditworthiness problems from the electricside of its business, major gas suppliers were refusing to extendshort-term supply without payment in advance. Both federal andstate actions were needed to keep adequate supplies flowing toPG&E.

Richard Nemec, Los Angeles

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