By the OGJ Online Staff
HOUSTON, Oct. 16 -- The Interstate Natural Gas Association of America told a US House of Representatives subcommittee today that California state regulators had approved a pipeline tariff that limits competition and discourages the development of new interstate pipelines needed to directly serve California consumers.
INGAA said the CPUC in August approved a "peaking service" tariff on Southern California Gas Co.'s pipeline that discourages comparison-shopping. Under the tariff, if an electric generator wants to take gas service from two pipelines, said INGAA, it will pay a higher rate on Southern California Gas Co.'s pipeline than a customer who takes gas entirely from Southern California Gas.
Last week, San Diego Gas & Electric Co. filed a request at the CPUC for the same kind of "peaking service" tariff for its intrastate pipeline.
Regulatory actions like these will discourage new interstate pipelines from being built in the state, INGAA said.
"INGAA believes that additional pipeline capacity in California is critical," said Gay Friedmann, senior vice-president of legislative affairs. "Absent additional pipeline capacity, California customers will never get to a truly competitive market and the choice and lower prices that such a market can provide.
"The peaking service discourages the development of interstate pipelines that can directly serve California end-users," Friedmann said.
Last winter, California experienced natural gas demand by electric generators at unprecedented levels. The demand -- caused by weather, economic growth, a drought that reduced hydropower generation, and low gas storage levels -- meant the natural gas infrastructure system was "severely strained," she said.
Also, California prices diverged from the benchmark Henry Hub price, in part because of the inability of Southern California Gas Co.'s intrastate pipelines to 'take away' gas delivered by interstate pipelines to the border. The high prices resulted from the premium paid by non-firm capacity customers like power generators to obtain transportation on the intrastate systems.
Because of the shortage of intrastate capacity, Southern California Gas is now expanding its intrastate pipeline system by 375 MMcfd.