CPUC encouraged to
head off supply ‘crisis’

GAS DAILY - Friday, May 23, 2003

      The California Public Utilities Commission must tackle gas supply issues with greater urgency during the coming months to protect the state from an anticipated supply crunch, Commissioner Carl Wood said Thursday.
      At the commission’s regular meeting, Wood said that while the gas supply/demand balance remains at a healthy level in California, “we are not immune to the national crisis.”
      Wood cautioned that California utilities could end up competing with companies across the country for access to supply and that “prices could soar” over the next several years. To avert such a scenario in California, he recommended that the CPUC aggressively pursue polices that include controlling in-state gas demand, providing funding for energy conservation programs, improving power plant efficiency and showing a greater com- mitment to developing renewable energy sources.
      “California is relatively well-positioned to weather the storm if we take action to regulate,” Wood said. “We can take steps now to promote the use of California’s own [gas] supplies. In order to avoid price volatility, we should require utilities to maintain full storage reservoirs and pay special attention to how utilities manage fuel supplies.”
      Wood added that California “is the primary market for Rockies gas … and we need to continue our yearlong effort to acquire interstate pipeline capacity for California.” Commissioner Loretta Lynch echoed Wood’s remarks and stressed that cooperation with other states and FERC will keep the gas market “free from manipulation and abuse.”
      Lynch said that keeping both core and noncore customers in mind when looking at storage will also help protect the state from price spikes, adding that utilities should fill storage facilities beyond their core needs as a cushion against price volatility.   LH