X. Assignment of Proceeding
John A. Bohn is the Assigned Commissioner, and A. Kirk McKenzie is the assigned ALJ in this proceeding.
1. The application is unopposed.
2. A hearing is not necessary.
3. The terms of the settlement with PG&E that LGS filed in this docket on October 5, 2005 are reasonable.
4. LGS is a wholly-owned subsidiary of Lodi Holdings, 50% of which is owned by WHP Acquisition Company, and 50% of which is owned by WHP Acquisition II.
5. The proposed Facility consists of three parts, the first of which is a gas storage field and compressor/dehydration station located on a 128-acre parcel near the western edge of the Montezuma Hills, about 12 miles west of Rio Vista and seven (7) miles southeast of Fairfield.
6. The second part of the proposed Facility is a 5.9-mile pipeline that will run from the compressor/dehydration station east to a remote monitoring station and interconnection facility.
7. The third part of the proposed Facility consists of the remote monitoring station and interconnection facility, which will be located near milepost 286.65 on PG&E's Line 400.
8. LGS seeks authority for a gas storage and withdrawal facility with a total storage capacity of seven Bcf. The firm injection and withdrawal capacity of the initial phase of the Facility would be 50 MMcf/d. As market conditions dictate, LGS proposes to add compressors and wells to increase the firm injection and withdrawal capacity of the Facility up to a maximum of 100 MMcf/d.
9. As part of the authority sought here, LGS requests permission to charge market-based rates for the gas injection, withdrawal and related services that will be offered by the Kirby Hills Facility.
10. During the six to eight months necessary to construct the permanent facilities, LGS proposes to construct a temporary gas injection system that could inject up to 10 MMcf/d into the gas reservoir. The temporary system would include a temporary interconnection with PG&E's Line 182, a temporary meter, a temporary 4-inch pipeline running from this interconnection to Well Site S-2, and a temporary gas-fired compressor unit of up to 1,000 horsepower. Once the permanent facilities are operational, LGS proposes to remove the temporary meter and compressor, and to abandon the temporary gas injection pipeline in place.
11. The Lodi Facility operated by LGS is fully-subscribed.
12. As stated in Energy Action Plan II, the proposed Facility is needed to provide additional natural gas storage facilities in Northern California so as to enhance reliability and mitigate price volatility.
13. As part of the environmental review required by CEQA, the Commission staff (through the Energy Division) prepared a Draft IS/MND, which was issued for 30 days of public review and comment on January 17, 2006.
14. The Final IS/MND, which responds to the comments received on the Draft IS/MND, was issued on February 24, 2006.
15. The Final IS/MND reflects the independent judgment of this Commission.
16. The Final IS/MND conforms to the requirements of CEQA.
17. The Final IS/MND identifies no significant environmental effects of the proposed Kirby Hills Facility that cannot be avoided or reduced to less-than-significant levels by implementing the Mitigation Monitoring Plan set forth in Section C of the Final IS/MND.
18. The Commission has considered the Final IS/MND in deciding to grant the authority requested in the instant application.
19. Based upon the mitigation measures set forth in the Mitigation Monitoring Plan contained in the Final IS/MND, the Kirby Hills Facility will not have a significant effect upon the environment.
20. In order to construct and operate the proposed Kirby Hills Facility, LGS must obtain various permits from local, state and federal agencies, as well as Solano County.
21. The Commission has considered community values, recreational and park areas, historical and aesthetic values and influence on the environment in deciding to grant the authority requested by LGS in this application, and concludes that granting LGS authority to construct and operate the Kirby Hills Facility would not be inconsistent with them.
22. Although the passive nature of the investment by WHP Acquisition Company and WHP Acquisition II in Lodi Holdings, LGS's parent, serve to reduce concern about the possible exercise of market power and the possible abuse of affiliate relationships, the fact remains that the natural gas storage and injection market in California is a highly-concentrated market.
23. To continue the necessary monitoring of the natural gas storage and injection market, the reporting requirements that were imposed on LGS in D.03-02-071 should be retained here.
1. Wild Goose's August 25, 2005 petition to intervene in this proceeding should be granted.
2. The terms of the settlement with PG&E that LGS filed in this proceeding on October 5, 2005 are reasonable and should be approved.
3. LGS's July 25, 2005 motion for leave to file under seal its audited financial statements dated December 31, 2004, which financial statements are included as Exhibit 6 to the application, should be granted.
4. LGS has provided the showing required by Pub. Util. Code §§ 1001 and 1002 as a condition of granting a CPCN.
5. Because ratepayers will not be at risk if expected demand for the Facility's gas storage and withdrawal services fails to materialize, it is appropriate to grant LGS the authority it has requested to charge market-based rates for the gas storage, withdrawal and related services that will be offered by the Kirby Hills Facility.
6. The Final IS/MND has been completed in compliance with the requirements of CEQA.
7. The Draft IS/MND and the Final IS/MND should be received into the record of this proceeding.
8. Permits from various state, federal, and local agencies, as well as from Solano County, will be necessary before the Kirby Hills Facility can be constructed.
9. LGS's application for authority to construct and operate the Kirby Hills Facility should be granted, subject to full compliance by LGS and each of its employees, agents and contractors with each and every condition set forth in the Mitigation Monitoring Plan that comprises Section C of the Final IS/MND.
10. LGS's application for authority to construct and operate the Kirby Hills Facility should be granted, subject to the condition that LGS, Lodi Holdings and their owners comply with all of the reporting requirements and with the prohibition on affiliate transactions for gas storage and related services set forth in D.03-02-071.
11. In order to allow construction of the Kirby Hills Facility to proceed expeditiously, this order should be effective immediately.
IT IS ORDERED that:
1. The August 25, 2005 petition of Wild Goose Storage, Inc. to intervene in this proceeding is granted.
2. The terms of the settlement with Pacific Gas and Electric Company (PG&E) that applicant Lodi Gas Storage, L.L.C. (LGS) filed in this proceeding on October 5, 2005 are hereby approved.
3. LGS's motion for leave to file confidential materials under seal, dated July 25, 2005, is granted with respect to the audited financial statements for LGS dated December 31, 2004, which financial statements comprise Exhibit 6 to the application. The aforesaid materials should be placed under seal for a period of two years from the effective date of this decision, through and including March 2, 2008, and during that period the material so protected shall not be made accessible or disclosed to anyone other than Commission staff except upon the further order or ruling of the Commission, the Assigned Commissioner, the assigned Administrative Law Judge (ALJ), or the ALJ then designated as Law and Motion Judge. If LGS believes that further protection of the aforesaid materials is needed after March 2, 2008, then LGS may file a motion stating the justification for further withholding of these materials from public inspection, or for such other relief as the Commission's rules may then provide. Such a motion shall explain with specificity why the designated materials still need protection in light of the passage of time involved, and shall attach a clearly-identified copy of the ordering paragraphs of this decision to the motion. Such a motion shall be filed at least 30 days before expiration of the protective order set forth in this paragraph.
4. LGS's application to construct and operate the Kirby Hills Natural Gas Storage Facility, as described in the application, is approved pursuant to Pub. Util. Code § 1001, subject to the terms and conditions set forth in the following Ordering Paragraphs (OPs).
5. The authority granted in OP 4 is conditioned upon compliance by LGS and each of its employees, agents and contractors with each and every condition set forth in the Mitigation Monitoring Plan that comprises Section C of the Final Mitigated Negative Declaration and Supporting Initial Study (Final IS/MND) issued in connection with this application on February 24, 2006.
6. The authority granted in OP 4 is conditioned upon compliance by LGS with the following requirements. Disclosure of the information required herein, including contracts and other documents, shall be made by LGS and its owners to the Director of the Commission's Energy Division. Competitively sensitive, confidential information may be submitted under seal in accordance with General Order 66-C and Pub. Util. Code § 583. LGS shall:
a. Provide prompt disclosure of the following changes in status that reflect a departure from the characteristics the California Public Utilities Commission has relied upon in approving market-based pricing for LGS: (i) the purchase by LGS of natural gas facilities, transmission facilities, or substitutes for natural gas, such as liquefied natural gas facilities; (ii) an increase in the storage capacity or in the interstate or intrastate transmission capacity held by affiliates of LGS's ultimate parents, ArcLight Energy Partners Fund I, L.P. (ArcLight Fund I) and ArcLight Energy Partners Fund II, L.P. (ArcLight Fund II), or their respective successors; or (iii) a merger or other acquisition involving ArcLight Fund I or ArcLight Fund II, or their respective affiliates or successors, and any other entity that owns gas storage or transmission facilities, or facilities that use natural gas as an input, such as electric generation.
b. Provide, for transactions to be completed within one year or less (short-term transactions), true copies of all service agreements for such transactions within 30 days after commencement of the short-term service, to be followed by quarterly transaction summaries of specific sales. If LGS enters into multiple service agreements within a 30-day period, LGS may file these service agreements together so as to conserve the resources of both LGS and the Commission. The quarterly summary of transactions shall list, for all tariffed services, the purchaser, the transaction period, the type of service (e.g., firm, interruptible, balancing, etc.), the rate, the applicable volume, whether there is an affiliate relationship between LGS and the customer, and the total charge to the customer.
c. Provide, for transactions that will not be completed within one year (long-term transactions), true copies of all service agreements for such transactions within 30 days after commencement of the long-term service. To ensure the clear identification of filings, and in order to facilitate the orderly maintenance of the Commission's records, service agreements for long-term transactions shall not be filed with summaries of short-term transactions.
d. Not engage in any storage or related service transactions with ArcLight Fund I, ArcLight Fund II or ArcLight Capital Partners, L.L.C. or their respective successors, or with any entity owned, affiliated with, or controlled by any one or more of them.
7. No hearing was held in this proceeding.
8. The authority granted herein shall expire if not exercised within one year of the date of this order.
This order is effective today.
Dated , at San Francisco, California.
