July 14, 2016 - 5:11 PM EDT
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CPUC rejects North-South pipeline

July 14--In a 5-0 vote, the California Public Utilities Commission on Thursday rejected a proposed, $621.3 million natural gas pipeline pushed by San Diego Gas & Electric and Southern California Gas.

"There's a long history here of adequate service, and it just doesn't seem sensible to me that at a time when we're looking at decreasing our reliance on fossil fuels, including natural gas, that we would spend $621 million on a new pipeline," said commissioner Mike Florio.

SDG&E and SoCalGas have said the project, which called for a 36-inch-wide pipeline going 65 miles through the Cajon Pass and connect Adelanto to Moreno Valley, would increase reliability for customers.

But the commissioners Thursday sided with a CPUC administrative law judge who in April recommended scrapping the project, dubbed the North-South Project.

While Karl J. Bemesderfer acknowledged a need for more system-wide reliability, the administrative law judge said in a 24-page proposed decision that three other companies offered alternatives that were less expensive, offered fewer potential safety hazards and lower environmental risks.

"While the North-South Project is not moving forward, the CPUC recognized that there is an energy reliability issue in the region that would have been served by the project," said SDG&E communications manager Hanan Eisenman in an email to the Union-Tribune.

Melissa Bailey, a spokeswoman for SoCalGas, said the utility was "profoundly disappointed" with the CPUC vote.

"SoCalGas still believes new infrastructure is the best and most cost-effective way to address these vulnerabilities for the long term," Bailey said in an email. "This solution is even more crucial given the growing interdependence between natural gas and electric generation."

Florio questioned whether a pipeline was needed at all.

That's a conclusion also reached by three consumer groups -- The Utility Reform Network, the CPUC's Office of Ratepayer Advocates and the Southern California Generation Coalition -- who said the system's reliability can be improved through tariffs and modifying existing contracts.

Earlier this year, TURN staff attorney Marcel Hawiger called the North-South pipeline "a complete waste of money." On Thursday, in an email to the Union-Tribune, Hawiger said, "TURN is gratified that even the CPUC can sometimes spot a turkey when it costs $600 million."

SDG&E and SoCalGas -- subsidiaries of San Diego-based Sempra Energy -- said the current system relied too much on a single natural gas supplier.

The utilities also warned that rising demand for natural gas in Mexico could curtail supplies to the southern end of their system.

But Bemesderfer said Mexico has plenty of natural gas and SoCalGas has "redundant" sources of gas to keep the system going.

SDG&E officials did not directly say whether the utility would come back to the CPUC with a revised pipeline proposal, with Eisenman saying, "We will continue to pursue opportunities to strengthen the flow of reliable natural gas service in this important and growing region."

El Paso Natural Gas, based in Colorado, has said it can expand one of its pipelines under construction in Arizona and deliver a project 40 percent cheaper than the North-South proposal.

The company, which is affiliated with pipeline giant Kinder Morgan, said Thursday it is still open to offering its services.

"El Paso Natural Gas continues to have interest in working with Southern California Gas towards an acceptable solution, including utilization of existing capacity or any expansion needs that may be required," Sara Hughes, of the corporate communications office at Kinder Morgan, said in an email.

TransCanada Pipelines, based in Calgary, Alberta and part of the effort to construct the Keystone XL pipeline, said earlier this year it can do the job for $503 million.

On Thursday, the company said it was reviewing the CPUC decision. "We intend to continue participating in this process, and we look forward to playing a role in this important infrastructure project for Southern California," David Dodson, TransCanada's senior communications specialist, said in an email.

A third company, Transwestern Pipeline Company, headquartered in Houston, said in filings to the CPUC that it can build a pipeline for $463 million. The company did not respond to requests for comment Thursday.

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Source: Equities.com News (July 14, 2016 - 5:11 PM EDT)

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