First Big Test for Attorney General Becerra: Investigating Sempra and SoCalGas

State Attorney General Xavier Becerra has just been confirmed. Now he's got a big test in front of him. Our public interest group, together with Food & Water Watch, just wrote him, urging him to investigate unfair business practices in the manipulation of Los Angeles natural gas supplies by Southern California Gas, its parent Sempra, and pipeline manager Kinder Morgan.

Data from the U.S. Energy Information Administration and Southern California Gas show that the company is creating the misimpression of a shortage of natural gas where none exists in order to make the case for its business objective: keeping the Aliso Canyon natural gas storage facility open. It has already claimed that colder weather is forcing withdrawals from Aliso. But there’s a catch. We are awash in plenty of cheap and available pipeline gas supplies.

Sempra has been caught with its hand in the cookie jar before. A 2003 lawsuit against Sempra and other defendants for forcing utilities to buy natural gas at inflated prices states that, in addition, between 1996 and 2001, the defendants tried to decrease competition by limiting pipeline capacity to boost prices. Sempra ultimately agreed to a $580 million settlement in the class action lawsuit.

Following the money is all it takes to see why the utility would be doing what it’s doing. The Aliso Canyon natural gas facility is the scene of the largest methane well blowout in U.S. history, sickening thousands in the vicinity and forcing them to flee. Sempra and SoCalGas have a lot of money on the line and they need to reopen as fast as possible to cover a new $200 million compressor station plus millions for the facility’s maintenance. 

Regulators have made noises that they are willing to reopen the facility before knowing what caused that well blowout, which is inadvisable. What better way to force the issue right before public hearings on the topic on February 1 and 2 than to make it look like the area doesn’t have enough supply to meet increased demand? The only way to make that happen is to manipulate the supply.

In the wake of the 2015 well blowout, state energy regulators implemented more than two dozen mitigation measures ensuring no supply disruptions, including closely balancing supply with demand via pipeline deliveries, rather than balancing on a monthly basis as was the past practice with Aliso Canyon. 

The utility appears to be violating the measures put in place to ensure the area can meet demand with no need for Aliso at all, particularly the close balancing of pipeline supply with demand, in order to force withdrawals of large volumes of gas from storage facilities. In doing so, the company is creating the misimpression of a shortage where none exists. 

SoCalGas issued a warning of shortages on December 18 and again on January 22 when gas demand is actually forecast to be relatively moderate compared to historic SoCalGas peak winter demand days. In fact, the utility projects a peak far lower than SoCalGas stated it could handle before having to turn to Aliso in the regulators’ winter electric reliability plan. Instead, we find that SoCalGas is manipulating supplies to push them way out of balance with demand.

The US Energy Information Administration shows that SoCalGas is keeping its orders for natural gas pipeline deliveries flat – and planning to reduce them significantly - while they forecast a big jump in demand for each day this week. The utility’s gas supply deliveries will be 30 percent lower than demand by Thursday this week. 

Californians have lived through the gaming of the state’s energy markets before and deserve to know it will not happen again. Regulators aren’t holding Sempra and SoCalGas to account. So, we urge Mr. Bacerra to use legal means to do so.

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