5. Applicant's Response to the Intervenors
CVGS concurs with the positions advocated by DRA, Lodi, and PG&E, and CVGS was able to reach a settlement agreement with these parties that effectively adopts their positions. The settlement is addressed later in today's decision.
Gill Ranch and Wild Goose generally support CVGS's application, and their pleadings did not elicit any substantive response from CVGS.
The only contested issues were those raised by Enerland and SoCalGas. What follows is a summary of CVGS's response to these intervenors.
5.1. Response to Enerland's Safety Concerns
CVGS does not believe that Enerland's concern about safety is credible. On several occasions Enerland has tried unsuccessfully to have the California Energy Commission approve the placement of natural gas-related facilities on its property, including an interstate gas pipeline, a gas-fired power plant, and a hub connecting multiple gas pipelines. CVGS opines that Enerland's eagerness to place these facilities on its property belies its concern about the purported dangers of CVGS's proposed interconnection with PG&E's Line 400/401.
Moreover, there are already significant energy facilities located on Enerland's property where CVGS plans to interconnect with PG&E's Line 400/401. These include PG&E's Line 400/401, PG&E's 660 MW Colusa Generation Station, PG&E's Delevan Compressor Station, PG&E's primary north-south, high-voltage electric transmission line, and Wild Goose's interconnection with PG&E's Line 400/401.6 With so many facilities already located on Enerland's property, CVGS finds it hard to believe that Enerland has a genuine concern about the safety of CVGS's proposed facility.
CVGS represents that its proposed construction and operating activities at the Enerland site are commonplace, and most will be undertaken by PG&E, not by CVGS. Specifically, the following will occur on or near the Enerland site:
· CVGS will construct approximately 1,000 feet of 24-inch diameter pipeline that leads to the meter station. The pipeline will comply with all state and federal safety regulations and seismic standards. The pipeline will be constructed of API 5L grade X-60 or X-65 steel pipe, and will use epoxy coating and cathodic protection to resist corrosion.
· PG&E will construct and operate a meter station on a one-acre site immediately adjacent to Wild Goose's meter station.
· PG&E will construct a 600-foot, 24-inch diameter pipeline from the meter station to PG&E's Line 400/401. PG&E will also construct the interconnection with Line 400/401.
None of CVGS's proposed storage field is located on Enerland's property.
CVGS represents that it will maintain $35 million of comprehensive general liability insurance. The policy will cover injuries and damages to third parties to the extent CVGS is found liable. Thus, if there is ever an accident causing damage to Enerland property or injury to Enerland personnel and CVGS is at fault, the policy would pay up to $35 million per incident.
The policy will be issued to Nicor, the ultimate parent of CVGS, and will cover Nicor's subsidiaries, including CVGS. The coverage includes a SIR of $2 million, which means that Nicor is responsible for paying the first $2 million of a claim and the insurance company pays all covered expenses beyond that, up to the $35 million limit. Nicor (the named insured) will be responsible for paying the premiums and the $2 million SIR.
CVGS asserts there can be no legitimate concern about Nicor's ability to pay the premiums and SIR, as Nicor has a market capitalization of approximately $1.9 billion and a debt rating of AA.
5.2. Response to SoCalGas's Proposed Reporting Requirements
CVGS submits that it is unreasonable for it to comply with the same information posting requirements that apply to SoCalGas. CVGS states that SoCalGas agreed to these posting requirements in order to settle a lawsuit and a Commission enforcement proceeding triggered by SoCalGas's role in the California energy crisis. The posting requirements address alleged market abuses by SoCalGas and were never intended to apply to another entity.
CVGS asserts that its situation is very different than SoCalGas's. CVGS's proposed facility is small compared to SoCalGas' five storage fields. In addition, CVGS will own no gas transportation, will have no captive ratepayers, will be completely at-risk for project costs, and have no affiliates that own natural gas transportation or storage assets in the western United States. In short, there are none of the market power concerns that led to SoCalGas's posting requirements.
CVGS contends that the posting requirements proposed by SoCalGas are burdensome for small players such as CVGS. For example, the daily posting obligations will require both up-front costs to build and test a web site, and ongoing operational costs. CVGS sees these costs as unduly onerous for small providers that lack market power and economies of scale.
6 Wild Goose's meter station and pipeline feeding into the meter station are located in close proximity to the Enerland site on land owned by Enerland's lessor.
