Background

The petition focuses on three issues. The first issue is whether third party gas storage providers can interconnect with non-utilities such as California gas producers and end-use customers, and whether such connections amount to a pipeline transportation service. The second issue is whether third party storage facilities and private pipelines are being used to avoid or bypass utility backbone or local transmission tariffs. The third issue is whether third party storage encourages the development of in-state gas production by allowing lower British Thermal Unit (btu) gas to mix in storage with higher btu gas.

The petitioners note that the need for the requested rulemaking was "heightened" by a complaint brought by Pacific Gas and Electric Company (PG&E) against Lodi Gas Storage, LLC (an independent storage provider) and Calpine Corporation (and a number of Calpine's affiliates).² PG&E alleged violations of California law, Commission orders, and various tariff provisions in relation to interconnection, and related transactions, between the named defendants. The petitioners assert that although certain of the matters raised in the PG&E Complaint concern only the named parties, some issues have serious implications for third party storage providers, private producers of natural gas owners and operators of gas fired power plants, and owners and operators of private natural gas pipelines. The petitioners assert that the issues "of industry-wide importance" should be addressed in a generic rulemaking in which all affected interests may be represented.

We note regarding the PG&E Complaint that the parties have reached a settlement and have filed a motion requesting our approval of the settlement. Consideration of the motion is pending.