VII. Discussion - Changes in Storage Regulations at This Time Are Unnecessary

A second objective of this proceeding is to determine whether changes in gas storage policy at this time are needed to reduce the chance of gas curtailments. We are convinced that no changes in storage regulations are necessary at this time because gas curtailments on the PG&E and SoCalGas systems, with the exception of those occurring because of adverse weather conditions, are unlikely this year. With system-wide shortages highly unlikely over the next twelve months, there is no urgent need to change storage policies.

In addition, the filings of SoCalGas and PG&E make clear that current physical, operational, and legal constraints make most changes in storage policies either impossible to implement or superfluous. Also, SoCalGas's storage situation has markedly improved since Comments and Reply Comments were submitted.

Similarly, in northern California, where all storage is subscribed, PG&E reports that under current rules, it already has the ability to reclaim unused firm storage capacity for use by other customers, and it sees no need for any regulatory changes to give them this ability. Thus, PG&E can inject as much gas as it deems prudent, and any regulations in this area would be superfluous. In summary, there are no short-term actions that the Commission can take to induce SoCalGas to increase the injection of gas in southern California, and no changes needed to enable PG&E to increase the amount of storage it deems prudent to inject.

As described above, TURN has proposed a comprehensive "Excess Core Storage Program." TURN's justification for this proposal does not demonstrate that it is needed. TURN says that someone must store gas for the winter in order to avoid the problems of last winter and TURN alleges that wholesale customers fail to store adequate amounts. As indicated above, no changes to our current regulations are necessary to address these concerns for this year.

In its Reply Comments, TURN provides an elaborate discussion of the use of storage by wholesale customers. TURN also modifies its prior position to claim that it is concerned that SDG&E's storage is "less than adequate." In addition, it adds a footnote stating, "We have not researched the core storage arrangements made by other wholesale customers, such as Long Beach Gas."

TURN's modification of its position makes sense. In particular, SoCalGas notes that SDG&E holds 6Bcf of storage inventory rights (plus 28MMcf/d of firm injection and 225 MMcf/d of firm withdrawal) on the SoCalGas system. On November 1, 2000, SDG&E's storage inventory was essentially at its contract maximum of 6 Bcf. SDG&E's retail gas spike was therefore not exacerbated by a failure by SDG&E to store gas up to the limit of its authorized storage. Moreover, TURN's prior allegation that wholesale customers do not hold any gas in storage is clearly inaccurate.

TURN has failed to make a case that its Excess Core Storage Program would serve any real need. It is therefore not surprising that PG&E, SoCalGas, ORA, Long Beach, Palo Alto, Calpine, DENA, DETM, CGC, WHP directly oppose TURN's proposal, Aquila argues that it is bad policy to require PG&E and SoCalGas to buy gas for noncore customers, and Wild Goose asks for the termination of the proceeding without addressing TURN's issues. Furthermore, no party expressed any support for TURN's proposals.

Second, TURN's proposal was intended to meet the needs of customers this summer and winter. It cannot be implemented now, and is therefore moot. Since TURN's Excess Core Storage Program cannot be implemented in the near term, we will not adopt it in this proceeding, which remains focused on making changes in regulations to improve the adequacy of gas supplies over the next twelve months. Moreover, there is now no need to implement TURN's storage program.

EPUC-IP-CAC and PCES propose the monitoring of gas storage. Aquila opposes such a strategy as unneeded interference in gas markets. EPUC-IP-CAC and PCES do not acknowledge that the Commission does currently monitor gas in storage and do not explain why change is needed. Thus, neither EPUC-IP-CAC nor PCES has convinced us that further formal monitoring and disclosure would serve the public interest.

Wild Goose and WHP propose changes in gas policy regarding issues such as storage requirements and gas balancing rules. Electric generators using gas are not respondents to this proceeding, and we cannot adopt such a requirement here. Perhaps in recognition of this limitation, Wild Goose, in reply comments, recommends that the Commission end this current proceeding and examine gas storage and infrastructure issues in a separate proceeding. We concur that there is no need to address gas storage and infrastructure issues in this proceeding. Storage issues are currently being examined in I.99-07-033 for SoCalGas and A.01-10-011 for PG&E.