4. Relief Requested by Wild Goose

Wild Goose seeks Commission authority to increase the storage, injection and withdrawal capabilities of its natural gas storage facilities in Butte County and refers to this undertaking as the Phase 3 expansion. The chart below shows Wild Goose's current storage capacity and its injection and withdrawal capabilities, as well as the respective increases sought.

	Storage	Injection	Withdrawal
Current	29 Bcf2	450 MMcf/d3	700 MMcf/d
Requested	50 Bcf (+21 Bcf)	650 MMcf/d (+200 MMcf/d)	1,200 MMcf/d (+500 MMcf/d)

The proposed expansion will increase the physical footprint and current operations. The expansion will increase utilization of four storage reservoirs (the L-1 and L-4 reservoirs, which already are in use, and the U-1/U-2 reservoirs, which have not been developed, though Wild Goose has authority to do so pursuant to D.02-07-036). The 8.5 acre facility known as the Well Pad Site provides access to these reservoirs, which are located in wetlands. As part of the Phase 3 expansion, Wild Goose will need to drill up to 11 additional wells (which D.02-07-036 also authorized). Likewise, Wild Goose will need to expand the above-ground process facility site, known at the Remote Facility Site, located outside the wetlands on 12.2 acres of agricultural land. The expansion will include installation of additional compression and dehydration and related equipment.

The Remote Facility Site interconnects with PG&E's Line 400/401, the major intrastate natural gas transmission pipelines known as the PG&E backbone, through two PG&E metering facilities - the Line 167 Meter Station and the Delevan Meter Station. The Phase 3 expansion must interconnect with, and requires modifications or upgrades to, the PG&E backbone and the Delevan Meter Station. PG&E will need to install up to four new hot tapped pipeline connections between the Wild Goose facilities and Line 400/401 (a hot tap process is a means of safely cutting/tying into a pressurized system while under full operating conditions). PG&E also will need to reconductor up to 6.1 miles of electrical line.

As clarified at the PHC, Wild Goose asks the Commission to issue an order that:

1. Pursuant to Pub. Util. Code § 1001,⁴ amends the existing CPCN to authorize Wild Goose to construct and operate the Phase 3 expansion facilities.

2. Authorizes Wild Goose to use the Phase 3 expansion facilities to provide baseload and short-term storage services at market-based rates.

3. Requires PG&E to interconnect the Phase 3 Wild Goose expansion with the backbone and with the Delevan Meter Station.

4. Pursuant to the California Environmental Quality Act (CEQA) and § 15163 of the CEQA Guidelines, approves a supplement to the EIR certified by D.02-07-036.

No party has contested Items 1 and 2. Item 3 is now uncontested as well, since PG&E's concerns were resolved by Wild Goose's clarification at the PHC that Wild Goose merely seeks to ensure "equal and nondiscriminatory access to the system according to the rules of PG&E's tariff."⁵

We discuss, below, the affirmative showing in Wild Goose's application on all issues except Item 4 (preparation and content of the SEIR), which we review separately in Section 5.

4.1. Discussion

A request for an amendment of an existing CPCN triggers the same kind of review as the request for the original CPCN. Before granting a CPCN to construct the project at issue, pursuant to § 1001, the Commission must consider need and, pursuant to § 1002(a), four other factors: community values, recreation and park areas; historical and aesthetic values, and the influence of the proposed project on the environment. The Commission's obligation to consider community values and the three additional § 1002(a) factors is independent of its obligation to conduct a review under CEQA.⁶ However, since the review process established by CEQA is the primary vehicle for review of all § 1002(a) issues except community values, we defer discussion of the three other § 1002(a) issues to Section 5.

4.1.1. Issues Under § 1001

Consistent with Commission decisions on Wild Goose's initial CPCN and the previous amendment to its CPCN (D.97-06-091 and D.02-07-036, respectively) and with decisions on the CPCN for another independent gas storage owner/operator in California, Lodi Gas Storage, LLC (Lodi), the Wild Goose application includes a presumptive showing of need⁷ and then consistent with the Lodi CPCN decision, expands upon that to underscore the benefits of gas storage indentified in the Lodi decision. Those benefits continue to be necessary today: "(a) increased reliability; (b) increased availability of storage in California; (c) the potential for reduced energy price volatility; and (d) the potential for reduced need for new gas transmission facilities."⁸ Wild Goose points to several developments in the energy markets that indicate the need for additional natural gas capacity, and therefore, support construction of the Phase 3 expansion. These include:

· The 1-day in 10-year planning standard for PG&E, pursuant to D.06-07-010, and the potential use of independent natural gas storage to support that incremental demand, pursuant to
D.04-09-022.

· Increases in gas fired electric generation in California between 2004 and 2008 by more than 4800 megawatts (MW), according to data from the California Energy Commission, and estimates of a further increase in 2009 of 3200 MW or more.

· Potential construction of various proposed interstate pipeline projects, including El Paso Corporation's Ruby Pipeline, LLC Project (1.5 Bcf/d to Malin, Oregon), Spectra Energy's Bronco Pipeline (1.0 Bcf/d to Malin, Oregon), and Williams and TransCanada Corporation's Sunstone Pipeline (1.2 Bcf/d to Stanfield, Oregon).

· Construction and/or development of other natural gas storage projects in Northern California, such as Lodi's Kirby Hills Project and Expansion, Sacramento Natural Gas Storage, and Central Valley Gas.

· Use of natural gas supplies to fill in the gaps between the availability of intermittent wind or solar power supplies in electric utilities' Renewable Portfolio Standards.

Wild Goose has made its showing under § 1001 in compliance with the dictates of both the Gas Storage Decision and the Lodi CPCN Decision. No party, including storage competitors and customers, contests any part of Wild Goose's showing, nor have we reason to do so.

4.1.2. Community Values Under § 1002(a)

In assessing community values, the Commission considers the views of the local community, including the positions of the elected representatives of the area who address a matter on behalf of their constituents.⁹ As the Wild Goose application suggests, the concept of community values is somewhat fluid. The issues that need to be considered can vary greatly depending upon the nature of a project and where its proponents wish to build it.

Other than WGC, whose narrow, legal concern we discuss in Section 6, no local person or entity has registered opposition to the Phase 3 expansion. As evidence of overall community support, the Wild Goose application includes, as Appendix F, letters from two elected officials: Assemblyman Dan Logue from the Third Assembly District; and Senator Sam Aanestad from the Fourth Senatorial District. Both letters commend Wild Goose's existing relationship with the City of Gridley and with Butte and Colusa counties. The letters also note that construction of the Phase 3 expansion will create about 75 local construction jobs and about $750,000 in spending for food and lodging for non-resident personnel during construction; in addition, the Phase 3 expansion will yield additional property tax revenues for the counties of about $600,000 per year.

The Wild Goose application also points to Wild Goose's positive safety record and states: "Since commencing business in April 1999, neither Wild Goose nor PG&E has experienced any operational problems as a result of the management of the Wild Goose Facility."¹⁰ Among other things, the application describes Wild Goose's "operational and maintenance procedures," its commitment to ensuring "safe, efficient, and economical operation," the installation of "safety systems and equipment consistent with all federal, state, and local codes and requirements," and its development of "a detailed emergency response plan . . . that is consistent with DOT regulations."¹¹

The uncontested evidence indicates community support for the Phase 3 expansion.

4.1.3. Market-Based Rate Authority

Wild Goose seeks authority to charge market-based rates for the Phase 3 expansion's storage services. In support, Wild Goose points to the increased competitiveness of natural gas storage in California, attributable both to additional storage provided by new competitors as well as expansions by existing storage operators, and to continued development of additional pipeline capacity. The application includes the following assessment, which no party contests:

The result is significant competition among the providers and service types (e.g. excess pipeline capacity, pipeline or utility balancing services, and price arbitrage provided by natural gas futures markets) with which Wild Goose competes. The presence of these alternatives forces storage providers, such as Wild Goose, to make their services available on competitive terms. In other words, the available alternatives have precluded, and will continue to preclude, Wild Goose from increasing its prices above competitive levels.¹²

We agree that market-based rate authority should be extended to the
Phase 3 expansion.

4.1.4. Interconnection with PG&E

Wild Goose seeks to interconnect with PG&E's gas transportation system pursuant to PG&E's tariff rules and Commission policy, which all require equal and nondiscriminatory access. The Wild Goose application confirms that Wild Goose intends to pay for all necessary modifications/upgrades required to accomplish the interconnection. In a status report made after the PHC, PG&E reported that it has completed the engineering studies required to assess the changes needed. No issues remain for the Commission to resolve.

² Bcf means billion cubic feet.

³ MMcf/d means million cubic feet per day.

⁴ Unless otherwise indicated, all subsequent references to a code section or sections are to the Public Utilities Code.

⁵ PHC Tr. at 815-18.

⁶ See Re Southern California Edison Company, D.90-09-059, 37 CPUC2d 413, 453.

⁷ In granting the Wild Goose and Lodi CPCNs, the Commission interpreted project need under § 1001 in light of its Gas Storage Decision, which determined that a "let the market decide" policy should apply to competitive gas storage providers and therefore, need for new gas storage would not require a resource planning showing but instead would rely on a presumptive showing of need, established by the builders and users of the new project accepting all of the risk of the unused, new capacity. See generally, Gas Storage Decision, (1993) 48 CPUC2d 107.

Subsequently, the Lodi CPCN decision explained that a presumptive showing of need may not suffice for all purposes and that "a fuller showing of need may be necessary to the extent required by law", for example, to establish conformance with community values and the other criteria listed in § 1002, to show grounds for a finding of overriding consideration with respect to an EIR, or in connection with eminent domain under § 625. See Lodi CPCN Decision, D.00-05-048, 2000 Cal. PUC LEXIS 394 at *37.

⁸ Lodi CPCN Decision, 2000 Cal. PUC LEXIS 394 at *41.

⁹ Lodi CPCN Decision, 2000 Cal. PUC LEXIS 394 at *41, as modified by D.00-08-024,
2000 Cal. PUC LEXIS 546 at * 26-27.

¹⁰ Application at 29.

¹¹ Application at 29-30.

¹² Application at 33.