Controversy

Southern California Gas’ attempt to sell its smallest LosAngeles Basin underground natural gas storage facility has beenabruptly halted by state regulators while an investigation isconducted into how the nation’s largest gas utility has dealt withregulators and surrounding landowners in the Eastern LA suburb ofMontebello, CA, bordering the storage facility. It is now in thehands of the California Public Utilities Commission, which couldassess some large fines if SoCalGas is found to have violated staterules.

Southern California Gas’ attempt to sell its smallest LosAngeles Basin underground natural gas storage facility has beenabruptly halted by state regulators while an investigation isconducted into how the nation’s largest gas utility has dealt withregulators and surrounding landowners in the Eastern LA suburb ofMontebello, CA, bordering the storage facility. It is now in thehands of the California Public Utilities Commission, which couldassess some large fines if SoCalGas is found to have violated staterules.

Adding to the lengthy and often heated controversy surroundingits contractual relationship with El Paso Natural Gas, Dynegy hassigned up for another 196 MMcf/d of El Paso pipeline capacity,bringing under its control a total of 1.5 Bcf/d of space on thesouthwestern pipeline.

The controversy over the terms and conditions of the contractsgiving Natural Gas Clearinghouse a large bite of the westboundtransportation capacity on El Paso Natural Gas – capacity that wasdestined to be turned back to the pipeline at the end of last year- is expected to take center stage at FERC next week. Marketers andproducers say they plan to make a case that the contracts areanticompetitive and contain illegal negotiated terms andconditions, and are responsible for the run-up in transportationrates on El Paso’s system to the California border.