SoCalGas: Aliso Canyon Leak Costs Exceed $1 Billion
(Reuters) - Southern California Gas Co (SoCalGas) raised the estimated cost for the massive leak at its Aliso Canyon natural gas storage facility in Los Angeles between October 2015 and February 2016 to $1.014 billion.
That is up about up 6.3 percent from the company's $954 million estimate last quarter, according to a quarterly report with U.S. financial regulators filed Monday.
SoCalGas, a unit of California energy company Sempra Energy, warned the "estimate may rise significantly" due to pending lawsuits, possible fines and other costs. It said costs not covered by insurance or delays in receiving insurance payments "could have a material adverse effect on SoCalGas' and Sempra Energy's cash flows, financial condition and results of operations."
The utility said the latest estimate included $987 million of costs already recovered or likely to be recovered from insurance. It said about 55 percent of the total cost was for temporary relocation of residents who live near the facility, which is close to the Porter Ranch neighborhood in Los Angeles, including cleanup costs.
State regulators estimated 4.62 Bcf of gas leaked at Aliso Canyon, SoCalGas' biggest storage facility. Its capacity of 86 Bcf represents 63 percent of the utility's gas storage capacity, making it a key part of the company's ability to deliver fuel to customers, especially on the coldest winter days when demand for heating is highest and the hottest summer days when a lot of gas is used to generate power for air conditioning.
State regulators have limited the amount of gas SoCalGas can inject into Aliso Canyon to a total of 34 bcf. They have also said the company can only withdraw gas from the facility when other options are not available to meet demand.
The California Public Utilities Commission has said it expects to complete its evaluation under Senate Bill 380 by Nov. 14 to determine the impact of reducing or eliminating the use of Aliso Canyon.
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