Dive Brief:
- The California Public Utilities Commission (PUC) has rejected a proposal by two Sempra Energy affiliates to build a 65-mile natural gas pipeline that would run from Adelanto to Moreno Valley, according to media reports.
- The PUC also denied a $621 million in rate increases requested by the Sempra affiliates, Southern California Gas and San Diego Gas & Electric, to support the pipeline.
- The PUC ruling said there are more cost effective alternatives available to support the utility's natural gas system.
Dive Insight:
With its last nuclear plant on the chopping block, natural gas looks to be California’s last conventional power generation fuel source. But that is not winning it preferential treatment from regulators.
California has banned coal, even coal-fired power imports, and plans to shut Diablo Canyon, its last nuclear power plant, by 2025.
With a growing share of generation coming from renewable resources, natural gas is sometimes touted as the most obvious choice to balance out the intermittent generation.
SoCal Gas argued that the 36-inch North-South pipeline would provide access to supplies and storage in the northern portion of the gas transmission system and be the most cost effective option.
In the end, though, the commission sided with the PUC’s proposed decision issued in the spring, in which an administrative law judge said three other companies offered less expensive alternatives.
The proposed decision lists projects proposed by El Paso Natural Gas, TransCanada Pipelines and Transwestern Pipeline.
Some parties, including PUC Commissioner Mike Florio, question the need for the pipeline. The Utility Reform Network and other groups argue that Southern California’s gas needs could be met by operational reforms that could increase the amount of gas under contract in the southern part of the state.
"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," Florio said, according to The San Diego Union-Tribune.