Nuclear

Socal Gas denies its California intrastate capacity is insufficient

By the OGJ Online Staff

HOUSTON, Oct. 18, 2001 — Southern California Gas Co. said it has sufficient intrastate capacity to deliver gas to the California market, disputing allegations by interstate pipelines and the Federal Energy Regulatory Commission.

“Let me say emphatically that the Socal Gas system has adequate infrastructure to meet the needs of all its customers,” Lad Lorenz, Socal Gas director of capacity and planning, testified Tuesday before the US House of Representatives Subcommittee of Energy Policy, Natural Resources, and Regulatory Affairs.

Lorenz reacted to allegations at the hearing by the Interstate Natural Gas Association of America and FERC Chairman Pat Wood. INGAA said California’s pipeline capacity is inadequate to meet current needs. Legislators are looking into infrastructure constraints that may have caused unusually high gas prices in California last winter (OGJ Online, Oct. 16, 2001).

Wood said that interstate capacity to southern California is 755 MMcfd, vs. only 585 MMcfd of intrastate “take-away” capacity. He also said the constraint, to some extent, pushed gas prices to the highest levels in the nation.

Last winter, colder than normal temperatures, unplanned nuclear power outages, and limited hydroelectric power imports combined to increase gas demand in California especially by gas-fired generators, said Lorenz. But he said despite the unprecedented increase in demand, the company was able to serve its customers without curtailments.

The only problem occurred with San Diego Gas & Electric’s distribution system in the San Diego area, he said. That system experienced a gas peak demand for utility customers in the winter and an electric generation peak comparable to a summer day, something that had never occurred before. Lorenz said to fix the problem, the link between the Socal Gas intrastate pipeline and the SDG&E distribution system was expanded.

However, the interstate pipelines continue to focus their complaints on whether the intrastate system of Socal Gas is matched to the interstate system.

Interstate pipeline capacity is expanding to meet the demands of gas-fired generation served directly from their systems.

Lorenz said new power plants are not locating on the Socal Gas pipeline system and not making contracts to take gas from that system.

“If demand is not increasing in our service territory, we do not believe our customers should pay to match the interstate expansions. If new power plants want to commit to locate on the Socal Gas system, we will gladly execute a long term contract with them and make any necessary expansions.”

Lorenz said further expansions on the intrastate system are not required because demand is expected to decline. Power from newer, more efficient gas-fired generation taking gas directly from the interstate pipelines will be displacing demand on the Socal Gas system by local California generation that is older and more inefficient, he explained.

“Allegations have been made that the planned intrastate capacity is not sufficient to meet the anticipated load growth,” said Lorenz. “These arguments are self serving. Interstate pipelines are expanding to serve electric generation load directly. The interstate pipelines simply want intrastate utility systems to expand their take-away capability to have somewhere to dump surplus supplies when the electric generation plants are not operating.”