Dive Brief:

• The California Public Utilities Commission (CPUC) on Friday issued two proposals aimed at ensuring there are sufficient natural gas supplies in the Los Angeles Basin this winter, both of which would increase the amount of gas that can be stored at Southern California Gas Co.’s Aliso Canyon facility.
• While one proposed decision would allow SoCalGas to increase the storage capacity at Aliso Canyon to 68.6 billion cubic feet (Bcf), an alternative, from CPUC Commissioner Martha Guzman Aceves, would cap that capacity at 41.16 Bcf. 
• The 41 Bcf limit will allow California to get through the winter while continuing to figure out how to reduce or eliminate the use of Aliso Canyon in the coming years, Guzman Aceves said in a statement. “As we transition to a clean energy economy, we need to ensure energy reliability. We must do so in a manner that does not detract from our mandate to ultimately reduce our reliance on natural gas infrastructure like Aliso Canyon."

Dive Insight:

The proposals come just days after SoCalGas announced that it will record an after-tax charge of $1.1 billion after reaching settlement agreements to resolve lawsuits brought against the utility due to a leak at the Aliso Canyon facility in 2015. However, those settlements have been criticized by plaintiffs and residents of the area, who are continuing to push for the state to permanently shut down the storage field. 

After the leak at Aliso Canyon, the CPUC was given the authority to establish a specific range of working gas at the facility. Last November, the commission issued a decision that maintained the maximum storage level at 34 Bcf. 

Late last year, the commission’s energy division also put together a report that analyzed natural gas price volatility and how the limited use of Aliso Canyon was affecting electricity costs. The report found that average gas commodity procurement costs for SoCalGas customers increased in 2016, 2017 and 2018 when compared with costs from 2013 through 2015, the period before the Aliso Canyon leak and associated capacity limitations. Based on the 2016 numbers, the report estimated that the loss of capacity at Aliso Canyon cost core residential gas customers around $102 million per year. 

The new proposed decision from CPUC Administrative Law Judge Zhen Zhang would increase the interim storage capacity at the Aliso Canyon facility to a maximum of 68.6 Bcf. The decision “is an interim solution to address the immediate needs of the upcoming winter season,” according to the filing, “because if there is inadequate gas to meet demand in winter 2021-2022, there will be health and safety consequences.”

While the regulators acknowledged the calls to close down Aliso Canyon immediately, the proposed decision notes that the commission is simultaneously looking at the portfolio of resources that could replace the facility in the long term. 

“In the meantime, however, the record shows that continuing to rely on Aliso Canyon is necessary to protect customers from natural gas reliability issues and rate impacts for both natural gas and electricity in the current timeframe,” the proposal states. 

Guzman Aceves’ alternative proposal, however, would limit Aliso Canyon to an approximately 41 Bcf capacity. Her filing points to outages on certain SoCalGas lines and a recent assessment from the utility that found it could reach a maximum of 66.8 Bcf of underground storage inventory across its entire system — Aliso Canyon as well as facilities in Playa del Rey, La Goleta, and Honor Rancho — by Nov. 1. In addition, Guzman Aceves said in her proposal that a 41 Bcf level is more in line with California’s public policy, given direction from state politicians to wean the state off Aliso Canyon.

CPUC commissioners are scheduled to select and potentially approve one of the two proposals on Nov. 4

SoCalGas spokesperson Chris Gilbride said in an email that the utility is reviewing both proposed decisions and that experts and CPUC staff have recognized that Aliso Canyon continues to play a vital role in the resiliency of California’s energy system.

“In the last two years, Aliso Canyon has provided support to the region’s electric and gas systems on more than 150 days. Use of this facility has kept energy prices stable and helped prevent outages during periods of peak energy demand, including earlier this month,” Gilbride said. 

But Tyson Siegele, energy analyst with the Protect Our Communities Foundation, said increasing the storage at Aliso Canyon is the exact opposite of what California Gov. Gavin Newsom and many other elected officials, as well as the public, have been requesting from the commission — to shut the facility down. 

“When you have a major natural gas facility that California simply does not need anymore and has created major health consequences for Californians, and has created an enormous climate change disaster — that is a facility that needs to be shut down,” Siegele said. 

Siegele said that while the commission’s most recent report includes an analysis that says Aliso Canyon’s storage limit should be increased, it has done many different analyses over the years that came to the conclusion that the state does not need this much storage at the facility.

“It is worth mentioning how far apart the [two proposals] are in terms of the required storage capacity at Aliso,” Siegele added. “If there were a good factual basis for a specific number, then you would at the very least have those numbers much closer to each other."