STATE OF CALIFORNIA Gray Davis, Governor

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Agenda for Workshop

October 31, 2003

Dear Colleagues:

Re: Natural Gas Market Outlook 2006-2016

This letter is to inform you that the California Public Utilities Commission (CPUC) and the California Energy Commission (Energy Commission) are jointly sponsoring a workshop to plan for California's future natural gas needs and that we are seeking speakers for this workshop. The workshop is entitled "Natural Gas Market Outlook 2006-2016," and it will take place in San Francisco on December 9-10, 2003. The workshop is not intended to be a formal proceeding, but will be informative on very important issues to California.

December 9 & 10, 2003
9 a.m. to 5 p.m.

Hiram W. Johnson State Office Building
455 Golden Gate Avenue, Auditorium
San Francisco, CA 94102

The staffs of the CPUC and the Energy Commission have prepared an agenda for the topics to be discussed at this workshop. Attached to this letter is the outline of the topics. For each of the subheadings in the outline (e.g., Forecast of Future Demand), we hope to have a cross-section of speakers representing various perspectives in the industry, consumer groups, staff of governmental agencies or other interested parties. Each speaker on a panel will give a short presentation, and we hope that the speakers will address the questions next to the bullets under each subheading in the outline. After the presentations by the full panel, representatives of the CPUC and CEC will ask the members of the panel to respond to questions.

We are currently soliciting speakers to participate on each of the panels. If you, or a member of your organization, are interested in participating, please send an e-mail expressing your interest to both of the following staff members of the CPUC and CEC by November 14, 2003:

Wendy Maria Phelps Jairam Gopal
CPUC Energy Division Energy Commission Natural Gas and Special Projects Office
E-mail: E-mail:
Telephone: 415-703-2311 Telephone: 916-654-4880

Please provide your name, your organization, your regular mail address, your phone number, your e-mail address and the subtopic(s) you are interested in addressing on a panel. Depending upon the number of people requesting to speak on a panel, we may have to limit the number of panelists since we are distributing this announcement to a wide audience and only have a limited number of speaking slots available. Once we have finalized the workshop and can announce the speakers on each of the panels, we will publish this information on our websites. This workshop will be open to the public, so you are invited to attend the workshop even if you do not speak on any of the panels.

Based upon what we learn at this workshop, the CPUC intends to issue an Order Instituting Rulemaking or an Order Instituting Investigation in early 2004, which would address some of the matters discussed at the workshop and would culminate by the end of the year with a decision affecting natural gas supply and infrastructure issues for California investor-owned energy utilities under the CPUC's jurisdiction. The CEC staff will use this information to update their natural gas outlooks and provide a foundation for future energy policy recommendations to the Energy Commission that can be considered in future updates to the Integrated Energy Policy Report. Both agencies are conducting this effort to help implement the previously adopted Energy Action Plan.

We will be posting by December 1, 2003, updated information on both our websites, including the location of this workshop, a detailed agenda with start and ending times, list of panelists, and other relevant information.

We look forward to hearing from you if you are interested in participating in this natural gas infrastructure workshop.


_____signed_____ _____signed_____
Michael R. Peevey, President William J. Keese, Chairman
California Public Utilities Commission California Energy Commission


Agenda - Outline
Natural Gas Market Outlook 2006-2016
Workshop Sponsored by CPUC and CEC
December 9-10, 2003
San Francisco, California

I. Future Demand for Natural Gas in California: 2006-2016
A. Forecast of Future Demand
  • What is the outlook for natural gas demand for California and the other Western states?

  • What is the outlook for gas demand for power generation in and around California?

  • How will the growth for gas demand for power generation in the WECC impact California supplies?

  • How will energy efficiency, conservation and renewable resource utilization influence gas demand in California?

B. Capacity of Current Infrastructure for Supplies of Natural Gas
  • What is the outlook for natural gas supply sources in North America to meet the expected demand in California, the other Western states, and, in general, North America?

  • What is the current certificated interstate pipeline capacity to California?

  • How much of the interstate pipeline capacity is no longer available to California, because it is under contracts to other markets as a result of FERC orders, long-term capacity releases or other downstream pipelines (e.g. Tuscarora, North Baja)?

  • How much in-state production will be available in 2006 and thereafter?

  • What is the current storage capacity in California of local distribution companies (LDCs) and independent storage facilities?

  • How much of a difference is there between the forecasted demand and the supply available from the existing infrastructure?

II. Optimum Ways to Meet Anticipated Demand for Natural Gas in California
A. Demand Reduction Efforts
  • Should the state consider more ambitious efforts to reduce natural gas demand?

  • What is the range of possible reductions in demand that could be achieved with greater emphasis on renewable electric generation, energy efficiency, and conservation?

  • Have current efforts to reduce demand for natural gas been effective?

  • What will the impact of R&D funds be on future demand in California?

B. Interstate Pipeline Expansions and/or New Interstate Pipelines
  • To what extent can expansions of the existing natural gas interstate pipelines in the western region provide reliable supplies of natural gas to meet increased demand?

  • What new proposed interstate pipelines are planned to serve California and other Western states?

  • How large should the interstate pipeline capacity to the state be to ensure reliable supplies under annual average and peak conditions?

  • How much "slack capacity" should be built to meet abnormally high demand and/or to prevent market power and manipulation?

  • How much time is necessary to plan, construct and begin service on new pipelines or expansions of existing pipelines?

  • What will be the characteristics of the supply from each of the producing basins accessed by each of the pipelines during the next 13 years?

C. Storage Facilities and Expansions
  • How can and should storage capacity be expanded to complement interstate pipeline capacity in order to meet annual and seasonal demand in California and the Western states?

  • Will expansions of existing storage facilities or new storage projects be preferable to and/or decrease some of the need for interstate pipeline expansions?

  • How should storage be optimized to reduce pipeline constraints and minimize the volatility in the marketplace?

  • Are there problems which need to be addressed to ensure that new and/or expanded storage facilities have access to inter- or intrastate pipelines? If so, what are the possible solutions?

D. LNG Facilities
  • How much of California's demand could be met by proposed LNG facilities?

  • Would LNG be a peak or baseload supply component for California?

  • Where should the LNG facilities be located (Baja California or California coast)?

  • What are the safety or environmental risks associated with LNG facilities?

  • How much time is required to plan, permit, and construct a new LNG facility?

  • What problems need to be addressed to ensure access on intrastate pipelines or in Baja California to optimize use of LNG facilities?

III. Who Will Pay for Needed Infrastructure?
A. The Non-utility Market Participants
  • Will marketers renew their expiring contracts on interstate pipelines at the end of 2005?

  • Will marketers subscribe to new interstate pipelines or pipeline expansions, additional storage facilities, or LNG?

  • How much new interstate pipeline capacity, storage and/or LNG will generators of electricity in California subscribe to?

  • Will noncore customers, other than generators of electricity, subscribe to long-term interstate pipeline capacity, storage, or LNG?

  • How much of the needed infrastructure will be provided for California's long-term needs excluding the California public utilities' commitments?

B. The California Investor Owned Public Utilities
  • What should the California public utilities do about their expiring interstate pipeline contracts?

  • How much of the needed infrastructure should the California public utilities subscribe to?

  • Does there need to be a re-examination of the public service obligations of the California public utilities if there otherwise would not be sufficient infrastructure to meet California's future demand for natural gas?

  • What is the ideal mix for the California public utilities in terms of subscription to existing interstate pipelines, proposed interstate pipelines, use of storage facilities and LNG?

  • Should the California Public Utilities Commission pre-approve the California public utilities' subscription to new contracts with existing interstate pipelines and with new pipelines, storage or LNG facilities?

  • What additional intrastate pipeline expansions might be necessary?

  • How much interstate pipeline and storage capacity should be reserved for core customers?

  • How should the California public utilities' costs for the entire interstate and intrastate infrastructure be allocated in their intrastate rates?

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Updated: November 12, 2003