SoCalGas North-South Gas Pipeline Project  

Background

On December 20, 2013, SoCalGas and SDG&E submitted a joint Application to the CPUC requesting approval to: 

  • Recover North-South Project revenue requirements in customer rates. 
  • Implement related cost allocation and rate design proposals.   

The Applicants’ proposal purports to address reliability concerns on the Southern System, and consists of: 

  • Installing 60 miles of new pipelines between the town of Adelanto and the Moreno Pressure Limiting Station 
  • Upgrades to the compressor station at Adelanto 
  • Installing approximately 31 miles of new pipeline from Moreno to Whitewater   

 

Updated Application 

On November 12, 2014, SoCalGas and SDG&E submitted an Update to their proposed Project which removed the Moreno to Whitewater pipeline component.  The proposed Project will connect two existing backbone transmission facilities and is proposed to transport 800 MMcfd of gas supply from the northern system to the southern system in the event of low deliveries at Blythe and/or Otay Mesa receipt points.

The utilities forecast for revenue requirement estimates to be:
 

  • First full year the Project is in service = $133.6 million 
  • Total for Entire operating service life of the Project =  $2.78 billion   

The amount requested for rate recovery is based on actual costs that will be incurred, not the estimated costs which are presented in the application. The Project has no proposed cost cap.  If approved, the proposed Project could increase the SoCalGas Backbone Transmission Service (BTS) rates by 81.3% over current levels.  

 

CPUC Scope and Schedule

On March 9, 2015  the CPUC issued an amended Scoping Memo and Ruling with updates to the proceeding schedule.   

 

CPUC Proposed Decision

On April 5, 2016, the CPUC issued a Proposed Decision denying the utilities' request to recover the costs of constructing the North-South natural gas pipeline. The Proposed Decision finds that there are more reasonable and cost-effective alternatives to enhance supply reliability to the Southern System.  

 

Evidentiary Hearings were held at the CPUC for July 7-10, July 20-24, and August 10-12, 2015.   

 

  

ORA's Policy Position

ORA supports the CPUC's Proposed Decision, which comports with ORA's recommendation that the CPUC should deny SoCalGas’ request to implement the proposed North-South Project and instead find that SoCalGas/SDG&E failed to demonstrate that it is necessary to build this pipeline project in order to address the SoCalGas Southern System supply-related reliability issue.    

ORA also recommended that the CPUC should:  

  • Adopt a broad range of non-physical “no-build” alternatives to address the SoCalGas Southern System minimum requirements and long-term reliability before considering and authorizing any physical infrastructure alternatives.  
  • Allocate the cost of non-physical alternatives to the Backbone Transmission Service (BTS) and share these costs across all customers of SoCalGas, consistent with how cost allocation is currently done.  

Alternatively, should the CPUC find that a physical infrastructure alternative is necessary in order to address supply-related SoCalgas Southern System reliability issue, then it should order SoCalGas/SDG&E to:  

  • Reassess first the demand criteria used to determine the amount of capacity needed and negotiate with interested interstate pipeline company who offers the safest and most reliable service at the lowest reasonable cost.  
  • Adopt an incremental ratemaking treatment for a physical infrastructure alternative where only those who have need for the physical project should pay for it.  

See ORA's May 8, 2015 Testimony:  

 

Proceeding Record

See the Proceeding docket.  

Subscribe at the docket for proceeding updates.