California natural gas shippers, power-plant owners and other large gas consumers have reached a compromise with SoCal Gas that avoids implementation of a 5pc-daily balancing rule that SoCal said it needs to prevent gas shortages and electric blackouts in the wake of the Aliso Canyon gas leak.
A 112-page settlement was filed with the California Public Utilities Commission (PUC) late last week, with the parties asking the commission to quickly approve the compromise with a shortened comment period and no changes.
SoCal, a unit of Sempra Energy, asked the PUC in late March to allow implementation of a 5pc daily-balancing requirement to cope with the loss of its largest gas storage facility near Los Angeles, Aliso Canyon. Since a major gas leak at Aliso Canyon was halted in February after four months, state agencies have ordered SoCal to end injections and withdrawals until an independent study is done to show if Aliso Canyon can be operated safely.
Testing of is underway on 114 injection wells at Aliso Canyon and SoCal officials have said the 86 Bcf (2.4bn m³) storage facility may return to partial service by late summer. State regulators have been more cautious about future prospects for the site.
Under conditions of a measure working its way through the California legislature, SoCal would have to temporarily seal wells that do not pass a series of well-integrity tests and isolate them from the facility before gas injections resume.
Aliso Canyon represents 63pc of SoCal's storage capacity and 51pc of its daily withdrawal capacity. The facility supplies gas to 17 Los Angeles-area power plants with combined capacity of 9,800MW.
Without Aliso Canyon, gas supply problems are likely to disrupt electric service this summer for millions of southern California residents, four state agencies have warned.
Under the settlement, SoCal Gas dropped its push for a daily balancing rule and agreed to manage its supply shortages and surpluses with modifications to existing high and low operational flow order (OFO) procedures.
The compromise would allow SoCal to tighten its existing 110pc high OFO tolerance limit to 105pc.
The agreement calls for SoCal to revise its current low OFO formula so that the balancing trigger is based on actual operational constraints.
Through 1 July, SoCal's high OFO buyback rate will be lower to give customers time to adjust to the tighter OFO standards.
SoCal will have discretion to waive OFO noncompliance charges for electric generators dispatched to maintain electric grid reliability after gas nomination deadlines.
The parties said the compromise could end by commission order, when Aliso Canyon returns to partial service of at least 450 mn cf/d of injection capacity and roughly 1.4 Bcf/d of withdrawal capacity or by 30 November, whichever is earlier.
The settlement calls for further work to consider reliability measures needed over the winter when additional gas is needed to heat homes as well as to generate power.
SoCal reserved the right to resubmit the daily balancing proposal at any time if the low and high OFO procedures do not provide the necessary supply-related response.
SoCal said the compromise represents the results of five meetings held between 4 April and 19 April with as many as 70 representatives of producer and customer groups in attendance.
Customers initially labeled SoCal's daily balancing proposal "a draconian solution" that would not improve access to stored gas at Aliso Canyon.
The California Independent System Operator (ISO) supported the change, but warned that the narrow tolerance band would create significant operating problems for power plants. The ISO is scrambling to develop new rules to give the grid agency discretion to manage potential gas disruption this summer.
