Dive Brief:

• Facing operational difficulties resulting from a massive methane leak at the Aliso Canyon storage facility in California, Southern California Gas and San Diego Gas & Electric have asked state regulators to approve strict restrictions on gas nominations heading into the peak summer season. 
• RTO Insider reports customers whose gas flow deviates more than 5% beyond nominations could face penalties up to 150% of daily gas prices, which left the California ISO scrambling to respond to the proposal and generators worrying relatively fluctuations could result in outsized penalties.
• SNL Energy reports that the Aliso Canyon leak depleted the Aliso Canyon gas storage facility to about one-fifth of its capacity, and California customers could face as much as two weeks of blackouts stemming from constrained gas supplies. 
• Robert Weisenmiller, who chairs the California Energy Commission, told reporters in a conference call on Tuesday the region may need to import more power from within and outside of the state, while customers may need to curtail their demand when generators' supplies run low. 

Dive Insight:

California may have permanently sealed the Aliso Canyon methane leak, but fallout from the "catastrophic failure" continues, say environmental advocates.

"Southern California Gas Company’s Aliso Canyon storage facility is exposing a critical weakness in the state’s energy system," EDF said in a blog post this week. "Overdependence on natural gas – and on one provider of that gas – means we don’t have the flexibility we need to cope if things go wrong. And now that they have gone wrong."

Southern California Gas Company’s Aliso Canyon facility began leaking methane in October, and was finally sealed in February. Earlier this year, the California Energy Commission, California Public Utilities Commission, and the California Independent System Operator expressed concern about the reliability of electric and gas service during the summer months if withdrawals cannot resume from gas stored at the facility.

That led Southern California Gas and San Diego Gas & Electric to propose penalties should gas burn deviate more than 5%, which has in turn led the California grid operator to launch an expedited process to deal with the move.

“Depending on the scope of curtailment, the ISO’s ability to redispatch might be hindered,” Mark Rothleder, CAISO vice president of market quality and renewable integration, told RTO Insider.

California's energy agencies have issued a report examining how to maintain reliability this summer, "including the use of 15 billion cubic feet of natural gas that was preserved in the Aliso Canyon facility."

Concerns that electrical customers might face 14 days of blackouts have officials calling for customers to reduce demand. The blackouts will not be rolling blackouts, California Energy Commission's Weisenmiller said, but more planned, rotating power reductions, SNL Energy reports. 

"We could be in situations this summer where we may not have enough gas in the basin, and when that occurs, we have a variety of things we'll do. … With those measures, we will work hard to reduce the possibility of an outage," Weisenmiller said. "If we do have outages, we anticipate they will be controlled outages … for, say, an hour or two."

EDF has chimed in, saying "maintaining a stable and reliable electricity system will require short-term actions by regulators and utilities," including demand response, efficiency and more renewables. The group also continued its call for time-of-use pricing, which California is working to implement.

"The state is well on its way to automatically transition all residential customers to TOU in 2018. In the meantime, utilities need to better educate consumers so they take full advantage of the benefits," EDF said.