4. Need
Pursuant to § 1001 and § 1002, CPCN applicants must demonstrate that the present or future public convenience and necessity require or will require construction and operation of the Proposed Project. The Gas Storage Decision adopted a "let the market decide" policy for the construction or expansion of competitive natural gas storage facilities, concluding that the Commission should not test storage projects for need as long as all of the risk of unused new capacity resides with the builders and users of the new facilities.20 Thus, the Commission's policy presumes a need for new gas storage facilities dedicated to non-core customers.
In addition to presumed need for gas storage services established by the Gas Storage Decision, Applicants provide evidence of actual need for the Proposed Project. Applicants state that the Proposed Project is needed because the market has expressed support for Applicants' services. Applicants state that the Commission's and the California Energy Commission's (CEC's) 2005 Energy Action Plan II and the CEC's 2007 Integrated Energy Policy Report recognize the need for increased storage as a way to ensure California's natural gas infrastructure is sufficient to meet California's peak demand requirements, enhance supply reliability, and provide price stability.
Applicants point to a CEC report which found that, since 1997, natural gas demand in the electric sector increased more than 50 percent, primarily as a result of the increased reliance on natural gas-fired electric generation.21 According to the CEC report, California's demand for natural gas in the electric power generation sector is expected to increase by 2.4 percent over the next decade. PG&E states that natural gas demand for the electric power sector in its service area is projected to increase by 4 percent annually.
Applicants state that the Proposed Project's central California location will make it possible to more efficiently and cost-effectively use existing utility gas infrastructure, and will provide increased reliability and price stability during periods of high demand and during supply interruptions in California resulting from disruptions on the interstate gas delivery system.
Applicants assert that other independent gas storage providers are fully subscribed and have received Commission authority to expand their storage operations. GRS states that it has conducted an open season for its share of the Proposed Project's storage capacity, and that response demonstrates that demand exceeds its share of the Proposed Project's capacity.
GRS contends that projected increases in demand for natural gas in the electric generation sector, the lack of storage in central California, the desire for reliable supply and price stability, and the potential for increasing the use of liquefied natural gas demonstrate the need for additional gas storage services.
No party disputes the need for the Proposed Project. Therefore, pursuant to D.93-02-013, and in light of the record in this proceeding indicating the need for additional gas storage services, Applicants have demonstrated need for the Proposed Project, as required under § 1001.
20 D.93-02-013 (48 CPUC2d 107, 127). See, also, Finding 37.
21 2007 Final Natural Gas Market Assessment, In Support of the 2007 Integrated Energy Policy Report, Final Staff Report (December 2007).
