June 19–State utility regulators are asking why certain transmission pipelines owned and managed by the Southern California Gas Co. have been out of service for “significant periods of time” and want to know if ratepayers are being unfairly charged for them.
Monday’s letter from the director of the California Public Utilities Commission’s Energy Division to SoCalGas’ president was sent the same day the Division recommended boosting the amount of natural gas that can be stored at the company’s Aliso Canyon storage facility. The volume would be the highest since it was curtailed following the massive 2015-16 gas leak there.
“The Commission is concerned with SoCalGas’ responsiveness to these outages and with the impact it is creating on system reliability and costs for ratepayers,” the CPUC’s Edward Randolph wrote to Bret Lane, SoCalGas’ president and CEO.
Randolph noted that one pipeline has been out of service since July of 2016 while another line ruptured on Oct. 1, 2017. He asked Lane to notify the commission of the status of these lines by June 29.
Randolph also noted that the CPUC has the responsibility to ensure rates charged by regulated utilities such as SoCalGas are “just and reasonable.” Ratepayers should not cover the costs of facilities, such as out-of-service pipelines, that are not used and useful.
He added that the information the Commission is requesting is needed to determine whether action needed to be taken, including potentially launching an investigation, to determine whether a reduction in rate-base and required revenue is needed.
SoCalGas spokeswoman Melissa Bailey said the company is reviewing the CPUC’s letter about the unanticipated pipeline outages and capacity reductions affecting its system.
“SoCalGas has been, and will continue to work diligently to safely assess, repair and restore service to the pipelines as quickly as possible,” she said in an email.
The California Public Utilities Commission’s Energy Division suggested in a draft report Monday that the cap for natural gas inventory be increased at the facility above Porter Ranch from 24.6 to 34 billion cubic feet. Public input is being sought on the report through Monday.
The Division cited several reasons for the recommendation, including continuing transmission pipeline outages on the SoCalGas system, declining inventory and limited injection capacity at other storage fields and the ability for the system to meet demand on a peak day that is expected to occur once every decade.
“Given the precarious state of the SoCalGas system, Southern California was fortunate to have experienced extremely mild temperatures for most of winter 2017-18, with sustained cold weather hitting only late in the season,” according to the Energy Division draft report.
“However, hoping for continued mild weather is not a prudent strategy for ensuring future energy reliability. Pipeline capacity has not improved appreciably since winter 2017-18, and there is a chance that it could deteriorate further.”
Following the massive gas leak that spewed more than 100,000 metric tons of methane into the atmosphere and drove thousands from their homes, Senate Bill 380 required the CPUC to determine the range of Aliso inventory to ensure safety and reliability along with just and reasonable rates.
SoCalGas’ Bailey said that the Aliso Canyon Joint Agency Task Force, which includes the CPUC and the California Energy Commission among others, have observed without enough storage inventory, energy reliability is dependent on the weather.
“Hoping for mild weather is not a prudent strategy for ensuring energy reliability,” she said.
Bailey added that the company remains committed to working with state regulators and encouraging policies “that promote reliability and protect consumers against higher energy costs.”
Issam Najm, president of the Porter Ranch Neighborhood Council, called the recommendation to boost natural gas inventory at the underground facility disappointing. He blamed SoCalGas for its “actions or lack thereof” regarding the out-of-service pipelines.
“At the end of the day, our goal is to … go to zero, not to go up in volume,” Najm said, referring to the Council’s desire to have the facility shut down.
“It’s a disappointing course of action, and we have concerns about whether that’s going to increase the amount and the incidents of leaks, when we look at the risk of any additional failures, the more gas there is, the higher is the implications of that type of failure.”
SoCalGas and state regulators have maintained that Aliso Canyon is safe to operate following rigorous inspections and upgrades to the facility prompted by the environmental disaster that sprung from a leaking well there more than two years ago.
Those who wish to comment on the CPUC’s draft report can email Aliso@cpuc.ca.gov through Monday. The agency may revise the report based on those comments, according to regulators.
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