Gov. Davis asks U.S. to ensure gas supplies for Pacific Gas & Electric

Jan. 15, 2001—California Gov. Gray Davis has asked the Clinton Administration for an emergency order to keep natural gas flowing to Pacific Gas & Electric Co., which says it is threatened with a shut off of its supplies by three natural gas companies.

Monday a utility spokesman said the company had not received a response on the gas issue which it raised with Davis early last week.

In a weekend letter, Davis requested President Clinton to direct Energy Sec. Bill Richardson to invoke provisions of the Natural Gas Policy Act of 1978 to require out-of-state gas producers to continue supplying the utility. The act requires state officials to certify a gas shortage exists.

“Our ability to address the problem is limited by virtue of the fact that more than 80% of our gas sources are located outside of California,” Davis said.

The prospect of gas interruptions threatens service to electric generating plants in northern and central California and endangers residential and business customers, Davis said in his letter. The utility delivers gas to 3.8 million customers, including residential consumers.

Pacific Gas & Electric—a unit of PG&E Corp.—alleges three companies which supply nearly 25% of its needs, including Duke Energy Corp., Western Gas Resources Inc., and J. Aron & Co., threatened last week to stop delivering gas to the utility.

Pacific Gas & Electric first raised the issue Dec. 29. In early January, the California utility said the cash and credit squeeze created by the electricity crisis in California prompted suppliers question to ability of the company to pay its wholesale gas bills.

If Sec. Richardson issues the order, it would be similar to the order he renewed Wednesday requiring power generators and marketers to continue supplying California’s electric utilities.

Pacific Gas & Electric said it could have kept gas prices down, if the California Public Utilities Commission (PUC) had permitted the company to build more in-state storage and lock in capacity rights on various pipelines that deliver gas to California.

It also has asked the Federal Energy Regulatory Commission (FERC) to impose price caps on gas delivered to the California border and points within the state. And the company has requested FERC to suspend contracts between El Paso Natural Gas Co. and its wholly-owned affiliate, which Pacific Gas & Electric Co. alleges have allowed those companies to manipulate prices in the California gas market. El Paso has denied the allegations.