In a proposal quietly released by the California Public Utilities Commission (CPUC) this week, the Commission said that natural gas supplies in SoCal Gas’s Aliso Canyon storage field are necessary to meet summer and winter peak demand and to keep natural gas prices reasonable. The proposal defers an assessment of what fossil-free resources could allow the closure of the controversial fossil fuel underground storage site in Los Angeles County.
From the Proposal: “Aliso Canyon is currently needed to support just and reasonable gas and electricity rates, natural gas system reliability, and energy security.”
To close the storage field in 2027 and keep power flowing would necessitate annual reductions “of 214 million metric cubic feet per day in forecast peak gas demand, or an annual increase of 1,084 megawatts of non-gas-fired electric generation capacity, or some combination of both.”
Given the past few summers, and the fact that natural gas capacity is keeping the lights on in California, the conclusions should not come as a surprise. Moreover, the CPUC’s IRP states that natural gas capacity (generation) will be needed through 2045. Not only the currently available capacity of assets but an additional 900 MWs of new capacity will be needed.
The wrinkle here is that former Governor Jerry Brown called for the field’s early closure and then again in 2019, Governor Gavin Newsom directed the field to be closed in advance of 2027.
Since the massive leak from the storage field that started in late 2015 and spewed more than 100,000 tons of methane, forcing evacuations from the nearby Porter Ranch, politicians and policymakers have called for the largest storage facility in the west to be closed because of safety concerns.
In 2017, the CPUC launched an investigation into the feasibility of phasing out the use of gas from Aliso Canyon. Increased well monitoring and testing were subsequently required.
In early November of last year, the CPUC voted unanimously to allow SoCalGas to increase the amount of gas storage at Aliso Canyon from 34 billion cubic feet (Bcf) to a little over 41 Bcf because of concerns about meeting winter demand. At that time, the Commission expected the proceeding’s subsequent research on when to close Aliso—2027 or 2035—and how to fill in reliability gaps, to be completed within a year.
The latest CPUC proposal points to the challenges wrought by limited pathways for importing gas into the state “and existing aging gas pipelines that cannot deliver at their original planned capacities and would need substantial upgrades to do so,” according to the proposal.
An Economic Analysis Report by commission staff estimated that customers in the Southern area of the CAISO market paid about $600 million “in excess electricity costs in 2018 due to pipeline outages and Aliso Canyon restrictions.”