4. Summary of Intervenor Positions
4.1. DRA
DRA supports CVGS's application because, in DRA's opinion, the proposed gas storage field will enhance supply security and price stability. To help the Commission to monitor CVGS's operations, DRA recommends that CVGS file an annual report that contains the following information:
1. The capacities of the storage facility, injection, and withdrawal.
2. Average monthly inventory in storage, injections, and withdrawals.
3. Daily operating records.
4. Annual firm capacity under contract.
5. Annual interruptible capacity sold.
6. Annual safety report describing all safety-related incidents.
DRA states the Commission has previously adopted similar reporting requirements for other gas storage providers.4 DRA does not object to treating the reports as confidential pursuant to GO 66-C and § 583.
4.2. Enerland
Enerland owns real property underlying the site where CVGS plans to interconnect with PG&E's Line 400/401. The interconnection point is near the 660 megawatt Colusa Power Plant that PG&E is currently building on land leased from Enerland.
Enerland states that a serious accident at the interconnection point could cause catastrophic harm to PG&E's Colusa Power Plant, with the potential loss in the range of one billion dollars. If a large loss were to occur, legal claims are likely to be directed at any conceivable defendants, including underlying property owners such as Enerland. Enerland avers that it is only fair that CVGS be adequately insured, compensate third parties for losses, and indemnify parties against potential liability.
Although CVGS will be covered by the corporate insurance policy of its parent company, Nicor, in the amount of $35 million, Enerland states the amount is inadequate and the policy only protects CVGS, not Enerland or other third parties. In addition, the coverage is subject to a self-insured retention (SIR) of $2 million. Under the SIR, the insurance policy will provide protection only to the extent that CVGS's parent company has incurred and paid costs exceeding $2 million. If the parent company fails to pay the SIR, the insurance policy will be useless to CVGS or any injured third parties.
Finally, Enerland states that even though the draft Initial Study/Mitigated Negative Declaration (Draft IS/MND) has over 100 pages devoted to safety issues, the proposed mitigation measures do not address the concerns raised by Enerland. Accordingly, Enerland urges the Commission to not grant a CPCN or adopt a MND for the CVGS Project until CVGS has taken all appropriate steps to protect property owners and the public at large against the risks of harm presented by its Project, including adequate insurance and indemnification of landowners against potential liability.
4.3. Gill Ranch
Gill Ranch opposes SoCalGas's proposal, described below, to require CVGS to post on a public web site the same information about executed transactions that SoCalGas is required to post. Gill Ranch believes that SoCalGas' motive is to subject all California gas storage providers to the same reporting requirements that apply to SoCalGas.
Gill Ranch states that CVGS is not similar to SoCalGas and should not be subject to the same reporting requirements. SoCalGas is the only gas storage provider in southern California. In contrast, PG&E and two independent providers (Lodi and Wild Goose) currently offer storage services in northern California, and Gill Ranch recently received authorization to provide storage services. CVGS and Sacramento Natural Gas Storage, LLC currently seek such authorization. The presence of multiple gas storage providers in northern California enables customers to compare pricing options, thereby ensuring that no single provider is manipulating the market.
Gill Ranch acknowledges that independent storage providers are subject to certain reporting requirements. For example, Gill Ranch is required to submit (1) copies of all short-term and long-term service agreements, and (2) annual reports that include information regarding capacity, average monthly storage inventory, injections and withdrawals, daily operating records, and firm and interruptible capacity under contract.5 CVGS is willing to provide similar information. Additionally, storage providers are required to provide detailed information to the U.S. Department of Energy.
4.4. Lodi
Lodi is an independent provider of gas storage services. To ensure a level playing field, Lodi recommends that CVGS be subject to the same regulatory requirements that apply to Lodi.
4.5. PG&E
PG&E does not oppose CVGS's application so long as all risks and costs for the proposed gas storage facility are borne by CVGS. These costs include expenses incurred by PG&E to (1) construct a permanent interconnection with PG&E's Line 400/401; (2) construct a temporary interconnection with Line 172; (3) install metering equipment; and (4) update PG&E's computer model of its gas transportation system to reflect CVGS's new gas storage facility. To ensure that the end-use customers served by Line 172 are unaffected, PG&E will require CVGS to use capacity on Line 172 within parameters established by PG&E.
4.6. SoCalGas
SoCalGas generally supports CVGS's application. SoCalGas also recommends that CVGS be required to post on a public web site the following information that SoCalGas is required to post:
1. Information concerning all storage deals.
2. Information on trades and/or assignments of storage rights in the secondary market.
3. A weekly summary of volumetric hub positions.
4. Total storage inventory levels on a daily basis.
5. Index of firm capacity storage rights.
6. Daily contracted firm storage capacity rights and remaining firm capacity.
7. Scheduled injections and withdrawals per scheduling cycle.
SoCalGas believes that uniform posting requirements will result in lower prices because customers will be able to compare prices among competing storage providers. Based on its own experience, SoCalGas is confident that the cost to CVGS would only be a few thousand dollars per year and that the customer benefits would far outweigh the small cost.
4.7. Wild Goose
Wild Goose opposes SoCalGas's proposal to require CVGS to comply with the same information posting requirements that apply to SoCalGas. Wild Goose states the posting requirements that apply to SoCalGas stem from two settlement agreements that SoCalGas executed with numerous parties, including the Commission, to resolve antitrust and market abuse allegations.
According to Wild Goose, the parties to the SoCalGas settlements were concerned about SoCalGas's market power in the gas storage market for southern California and how that could lead to market abuses. Wild Goose asserts that such conditions do not exist in northern California where, unlike in southern California, there are multiple providers of gas storage services. This level of competition has allowed the northern California storage market to operate effectively in the absence of the posting requirements requested by SoCalGas. Thus, the conditions which led to the imposition of posting requirements on SoCalGas do not exist with respect to independent storage providers in northern California such as CVGS.
Wild Goose disputes SoCalGas's statement that it will cost only a few thousand dollars per year to comply with posting requirements. Wild Goose estimates the annual costs would be approximately $40,000, excluding internal personnel cost to input and verify the data. Unlike SoCalGas which can recover such costs from its captive ratepayers, independent storage providers may not be able to recover the costs in the rates they charge their customers.
4 D.08-02-035, Ordering Paragraph (OP) 6; D.03-02-071, OP 3(c); D.05-12-006, OP 3(b); D.06-11-019 at 18-19; and D.08-01-018, Appendix A.
5 D.09-10-035, OPs 22(b), 22(c), 22(e), and 24.
