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, with the exception of those occurring because of adverse weather conditions, are unlikely this year. With 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. SoCalGas, for example, is running its gas operations at full speed and injecting all gas not currently needed into storage. Thus, there is nothing that can increase SoCalGas ability to inject gas this year.

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 developed 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. Neither proposition withstands scrutiny. In northern California, gas shortages arose last winter from PG&E's financial situation, not from any limitations to its infrastructure. Companies simply refused to sell gas to PG&E. In southern California, there was no shortage, and no change in policy can increase SoCalGas's injections. Concerning TURN's allegation that core wholesale customers fail to store adequate amounts, both Palo Alto and Long Beach state that this is not the case, and Long Beach specifically requests evidentiary hearings so that it can demonstrate that there is no factual basis to TURN's allegations.

In its Reply Comments, TURN provides an elaborate discussion of the use of storage by wholesale customers. From this discussion it emerges that TURN's earlier allegation that wholesale customers do not hold any gas in storage is not accurate. In its reply comments, TURN modifies its prior position to claim that it is concerned that SDG&E's 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 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. Since it cannot be implemented now, it is 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.

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 monitors gas in storage and does not explain why change is needed. Thus, neither EPUC-IP-CAC nor PCES has convinced us that further 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. Unfortunately, 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.