California’s first merchant natural gas storage facility, Canadian-backed Wild Goose Storage, was fined $51,500 and criticized by state regulators Thursday for its handling of its change in ownership, which occurred when EnCana was formed by the merger of Alberta Energy Co. and PanCanadian last year. Wild Goose’s certificate to operate was amended, but the company still needs to file a formal application with state regulators for approval of its new ownership.

The CPUC in a contentious 4-1 vote in which an alternative for a $1.5 million fine was narrowly defeated, approved “the indirect change of control” at Wild Goose. Although divided on how hard to fine the merchant storage operator in northern California, the regulators agreed that it was “in the public interest” to give its approval.

At issue was the certificate Wild Goose obtained from the California Public Utility Commission (CPUC) in 1997 to develop the first nonutility, market-based underground gas storage facility in the state using a depleted natural gas field north of Sacramento. That approval was subject to certain conditions, some of which related to the facility’s change of ownership. Since the change, the CPUC has for about a year been trying to more closely monitor the natural gas storage markets, and therefore, the state regulators did not want to legally disclaim control over the ownership change.

Contending that the CPUC needs to keep jurisdiction to avoid foregoing its ability to monitor market power issues related to storage in the future, CPUC Commissioner Loretta Lynch argued unsuccessfully for a bigger fine to send a stronger message to future operators in the state.

Wild Goose attorneys had argued with the CPUC in its case that the merger only affected its holding company, Alberta Energy, to which it still reports, and that the change took place at a higher organization level with the formation of EnCana. AEC stock is now privately held, and EnCana is the publicly traded company. Thus, Wild Goose did not think it needed to inform the California regulators prior to AEC’s shares being exchanged for EnCana shares.

In the minority on the eventual 4-1 vote approving the action was the CPUC’s newest member, Susan Kennedy, who wanted a smaller fine because of an administrative law judge’s recommendation. Kennedy called Wild Goose a “company with a sterling record of compliance that is guilty of violating a law that even the judge says in unclear when no harm has been caused to consumers in any way, shape or form due to the violation,” quoting from the ALJ’s recommended decision.

Commissioner Geoffrey Brown, who calls himself an old criminal lawyer, said “there was no harm to the public or no intentionality” in the actions for which Wild Goose was being fined.

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