The California Public Utilities Commission (CPUC) acted this week to enhance energy resiliency and protect ratepayers in Southern California from potential volatile wholesale natural gas prices this upcoming winter season. Today, the CPUC increased the inventory levels of natural gas at the Aliso Canyon Natural Gas Storage Facility up to the safety limit set by the state’s Geologic Energy Management Division to guard ratepayers from the type of natural gas price spikes that occurred last winter. In a concurrent action, the CPUC issued a Ruling on August 29, 2023, that outlines the steps toward releasing a plan by the first quarter of 2024 to reduce the state’s reliance on Aliso Canyon.
This decision allows more natural gas to be injected and stored at Southern California Gas Company’s (SoCalGas) Aliso Canyon in the fall season, which acts as a financial hedge against potential high winter market prices; this decision does not impact how much natural gas will be consumed. The Western region of the U.S. saw substantial increases in wholesale natural gas prices from November 2022 to March 2023. Preliminary estimates from stakeholders suggest that the CPUC’s decision to temporarily increase natural gas storage at Aliso Canyon could lead to savings ranging from $200 to $450 million for Southern California natural gas customers during the winter of 2023-2024. Electricity customers may also see savings due to the close connection between natural gas and electricity prices.
As the energy landscape continues to evolve, the CPUC remains dedicated to taking steps across a wide array of proceedings to reduce the state’s demand for natural gas through such measures as electrification deployment and building decarbonization programs.
More information is available on today’s decision in the CPUC’s fact sheet. The proposal voted on is available here. Documents related to the proceeding are on the Docket Card.
Reducing dependence on Aliso Canyon in the long-term
Today’s decision is part of the CPUC’s ongoing proceeding to assess the feasibility of reducing or eliminating the use of Aliso Canyon while supporting energy reliability, affordability, and advancing towards a zero-emission energy landscape. Importantly, today’s decision does not hinder the progress of the proceeding aimed at phasing out the need for Aliso Canyon.
As highlighted in the CPUC’s August 29, 2023 Ruling, this ongoing proceeding is on track to present a Proposed Decision on alternatives to replace Aliso Canyon, which would be issued for public comment in the first quarter of 2024. This Proposed Decision will address the CPUC’s statutory responsibility to outline the feasibility and pathway to lessen or eliminate the state’s reliance on Aliso Canyon from its current interim level. A previously published CPUC Staff Proposal outlines potential strategies to diminish the reliance on Aliso Canyon by augmenting electricity generation, battery storage, building electrification, and energy efficiency initiatives and a biennial process to assess progress.
The CPUC has proactively taken measures across various initiatives to decrease the reliance on Aliso Canyon. In 2021, the CPUC solicited public input on preliminary actions that could be undertaken before the comprehensive Alison Canyon analysis concludes. And in February 2022, the CPUC’s Integrated Resource Plan proceeding committed to the development of a modeling toolkit capable of local analysis that could assist with decisions such as Aliso Canyon replacement. Additionally, ongoing proceedings are underway to chart a course for statewide decarbonization and reduced fossil gas usage.
Furthermore, in a study exploring the evolution of California’s electric transmission system to achieve the State’s target of serving 100 percent clean energy by 2045, the CPUC, in collaboration with the California Energy Commission and the California Independent System Operator, explored scenarios that consider the absence of the Aliso Canyon facility.
Comprehensive Response to the Aliso Canyon Leak
Separately, the CPUC has taken action to hold SoCalGas accountable for the Aliso Canyon leak. On Aug. 10, 20203, the CPUC adopted a settlement between SoCalGas, the CPUC’s Safety and Enforcement Division (SED), and the Public Advocates Office (Cal Advocates) for the Aliso Canyon leak. The settlement included a penalty of $71 million and required that SoCalGas forgo cost recovery for a significant number of costs related to the incident.
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About the California Public Utilities Commission
The CPUC regulates services and utilities, protects consumers, safeguards the environment, and assures Californians access to safe and reliable utility infrastructure and services. Visit www.cpuc.ca.gov for more information.
