California's Sleight Of Hand On Aliso Canyon

No sooner had the PUC and oil regulators greenlighted resumed natural gas injections at Aliso Canyon last week, than Los Angeles County sued to block it.

LA County is suing Southern California Gas for failing to conduct required safety and environmental studies on its natural gas storage facillity and to turn over public documents before it is reopened. As well the County should.

For starters, an ex-SoCalGas employee has warned regulators of "potential catastrophic loss of life" at Aliso Canyon in the event of a major earthquake, as Los Angeles County court documents show, according to the Los Angeles Daily News. Regulators have not conducted proper seismic tests.

Breathing life into a giant cavern of rickety injection wells where off-gassing from the biggest methane leak in US history continues makes no sense. Especially when a root cause analysis of what went wrong to cause the leak is barely underway, and the PUC is simultaneously in a proceeding to determine the feasibility of closing the facility. 

Judging by this latest green light, state regulators are following through on letting the facility reopen before knowing what went wrong there, most likely at the behest of Governor Jerry Brown. That would allow SoCalGas and its parent Sempra, on whose board Brown’s sister Kathleen is paid to sit, to continue making revenue from the facility on the backs of ratepayers. 

Right now, the PUC is also involved in yet another proceeding to determine if it is fair to allow SoCalGas to bill ratepayers for a new $200 million compressor station when Aliso Canyon is still idle. If the compressor remains offline long enough, then billing ratepayers clearly won’t be fair. 

Sempra has been under the gun to show that the facility and its new compressor station are needed. That's why Sempra staged an artificial natural gas shortage last January to withdraw gas from the facility and make it appear critical to keeping customers' heat going and the lights on.  

In creating the fake shortage, Sempra thumbed its nose at state-ordered mitigation measures that have worked beautifully by having utilities order natural gas supplies for delivery straight from pipelines a day in advance. The PUC has done nothing to sanction SoCalGas. Attorney General Xavier Becerra has also not undertaken a called-for investigation by Consumer Watchdog and Food & Water Watch.

One reason may be that if the storage facility can be shown to have a pulse, ratepayers stay on the hook for some $70 million a year to cover the cost of the compressor, other maintenance, and a fat, guaranteed rate of return.

Regulators said that injections would resume in order to fill the canyon to 28 percent, the amount they claim is needed to ensure power reliability. But the state put forth nothing to justify this arbitrary number.

Experts, including those hired by the County of Los Angeles, have already proven that Aliso Canyon is not needed to ensure that reliability.

The real reason Sempra and SoCalGas want to reopen Aliso Canyon is commercial. Residential and small commercial customers don’t need Aliso Canyon because the power company serving them can buy gas directly off of pipelines to meet demand. Big commercial customers such as refineries and power companies play the market, buying gas cheap, paying SoCalGas to store it, and then using it themselves or selling it high.

No one has publicly quantified just how much commercial business SoCalGas does at Aliso Canyon—that information resides in a black box. All we know is that ratepayers are the ones footing the cost of keeping the facility open and upgrading it so that more gas can be injected at higher pressures for commercial customers.

If state regulators were really interested in protecting the public’s welfare, they would reveal whether most of Aliso Canyon exists to make revenue off of commercial customers that don’t depend on the storage facility to make their products or provide their services. Then, the PUC would tell Sempra to bill shareholders.

But the sleight of hand just witnessed attests to the opposite aim of milking ratepayers at the expense of powerful donors and friends.

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