A range war of sorts has broken out in California between competitive compressed natural gas (CNG) transportation fueling companies and monopoly utilities seeking to serve some of the CNG load to their existing customers.

Seal Beach, CA-based Clean Energy Fuels Corp. is keeping its eyes on a case at the California Public Utilities Commission (CPUC) involving Sempra Energy’s Southern California Gas Co.(SoCalGas), the largest gas-only distribution utility in the nation.

Clean Energy alleges that Sempra and SoCalGas have indicated that they want to eventually grow a CNG business through the utility and eventually spin it off as a nonutility subsidiary. “They want to learn this business on the [utility] ratepayers’ backs, and once they squash the competition, they will roll that into an unregulated affiliate and use that to their advantage, which is simply unfair,” said Clean Energy’s Todd Campbell, vice president for public policy and regulatory affairs.

Campbell told NGI that each utility will have to decide what they want to do, but generally the natural gas transportation market requires players that can operate beyond the confines of a single utility service territory. He also is confident that Clean Energy’s more than 100 customers in California will end up being targeted by utilities if the SoCalGas scheme is eventually implemented.

“We would welcome Sempra Energy setting up a nonutility business that we could compete with…on a level playing field,” Campbell said.

For California, the issue is still unresolved, according to Campbell, and Clean Fuels has filed a petition for rehearing and a protest at the CPUC against SoCalGas’ proposed tariff for compression services, which is an offshoot of an agreement between the utility and the Los Angeles Unified School District (LAUSD) that state regulators approved last Thursday (see Daily GPI, April 8).

The CPUC’s energy division has delayed action on the tariff, and Campbell said he thinks it may be delayed until late this year. “The dust has yet to settle on the issue,” Campbell said. “When everyone steps back and looks at all the issues, I think most utilities will say it is probably better and more logical to participate in the NGV [natural gas vehicle] market through an unregulated affiliate, much like Questar and others have done.”

LAUSD was a customer of Clean Energy, which provided operations and maintenance of the school system’s CNG bus fueling facility in Sun Valley, CA, north of Los Angeles. SoCalGas now has an agreement to provide the CNG to that facility, pending the CPUC’s tariff decision.

“The utility is claiming to provide the compression service to an under-served participant in the market…when examined in regulatory proceedings, the utility has admitted it will be approaching customers in the market that are well served, including our customers,” said Campbell. Clean Energy got LAUSD as a client when it acquired a compression equipment manufacturer that was servicing the school bus facility a few years ago, he said.

The school district has served Clean Energy with a termination notice, but Campbell said he is not clear on the timing or details.

With Southern California being the largest NGV market in the nation, Clean Energy thinks the LAUSD application is “creating mixed messaging in the market and confusion we were afraid of,” Campbell said. “This leaves customers confused. The utility, in our view, has no business using monopoly power here, especially when there is already very healthy competition” in the NGV market.

Ironically, Clean Energy and other natural gas fueling companies and fleet operators, along with SoCalGas, are members of the California Natural Gas Vehicle Coalition, which is specifically chartered to grow the NGV sector. And Clean Energy has contracts to operate four of SoCalGas’ CNG fueling stations for its own fleet and the general public.

©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.