Energy Commission Auction Increases California's Yield of Green Power

For immediate release: October 3, 2001
Contact: Claudia Chandler : 916-654-4989

Energy Commission Report Projects
Improved Natural Gas Supplies For the State


Sacramento -While current natural gas prices in California have dropped to approximately half of 2000’s average price, the specter remains of last December, when tight supplies caused prices to spike to 25 times their present rates. Now, as winter approaches, industry watchers wonder if the State has enough of the clean-burning fuel for the upcoming heating season, even as new gas-fired electricity generators come on line.

The Natural Gas Infrastructure Issues Report , adopted today by a 4-to-0 vote of the California Energy Commission, gives a qualified “yes” to the question of adequate supplies this winter. It identifies sufficient storage as a critical factor, and notes that utilities have substantially increased natural gas storage, largely because conservation and efficiency have dampened summer electricity demand.

Nearly 85 percent of the natural gas used by Californians comes by pipeline from gas fields located outside the State. Since California typically uses more natural gas in the winter than interstate pipelines can provide, additional supplies must be set aside in summer months to help balance supply and demand. For this reason, the report recommends that the Energy Commission continuously assess storage levels and monitor infrastructure improvements throughout the year.

The newly adopted report points out that California’s natural gas supply system was designed years ago to provide enough gas for winter’s peak heating demand. An increasing reliance on natural gas for generating electricity, however, has strained the system and revised old patterns of consumption.

“This report helps Californians understand what we have to do to assure that we have a reliable and reasonably priced electricity and natural gas system in the future,” said Energy Commissioner Michal (spelling correct) Moore, Presiding Member of the Electricity and Natural Gas Committee that developed the document.

To help resolve possible supply problems, the document analyzes not only natural gas storage requirements but the interstate pipelines that bring the fuel from distant gas fields to the California border. These pipelines can deliver slightly more natural gas than intra-state gas pipelines — those within our State’s borders — can receive. As a result, there are bottlenecks in getting some supplies to gas consumers that the report says must be improved.

Pacific Gas and Electric Company (PG&E) and Southern California Gas Company (SoCal Gas) are improving and expanding their intra-state pipeline systems to help eliminate these constraints. According to the report, planned expansions of the interstate pipeline network should increase natural gas delivery to the State beginning next year, and additional improvements to the natural gas system should help prevent higher-than-normal prices that plagued California last winter.

Natural gas supplies in North America appear to be sufficient to meet demand in California and the rest of the United States for the next 50 years. The report recommends that the Energy Commission continue to monitor drilling rig activity and production levels for the long-term outlook. It also suggests that the Energy Commission, along with the Public Utilities Commission, should find ways to encourage and increase the in-state supply of natural gas.

The just adopted Natural Gas Infrastructure Issues Report can be found on the Energy Commission’s Web Site at:

www.energy.ca.gov/reports/

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