Aliso Canyon to Store More Gas to Prevent Winter Price Spikes

(Reuters) — California's utilities regulator on Thursday raised the inventory level of Aliso Canyon natural gas storage to prevent price spikes seen last winter, while seeking to wean the state off the facility that in 2015 caused the biggest gas leak in U.S. history.

The California Public Utilities Commission (CPUC) allowed Southern California Gas Co. to store up to 68.6 billion cubic feet (Bcf) of natural gas at Aliso Canyon, raising the maximum level from 41.16 Bcf to the safety limit.

It estimated that the temporary inventory lift "could lead to savings ranging from $200 to $450 million for Southern California natural gas customers during the winter of 2023-2024," adding electricity customers could also benefit.

In March, the regulator had launched a probe into why natural gas prices spiked on wholesale markets in December 2022, driving up utility bills for customers.

In parallel, the CPUC on Tuesday ordered a feasibility study on phasing out the use of Aliso Canyon, the fourth-largest U.S. underground gas reserve which released about 4.6 Bcf of methane between October 2015 and February 2016.

CPUC staff proposed in September 2022 to replace Aliso Canyon by improving non-gas electricity generation, battery storage, building electrification and energy efficiency initiatives.

They projected the need to fill or reduce 214 million cubic feet per day of gas demand, or 1,084 megawatts of electricity demand, each year after 2023 to eliminate reliance on Aliso Canyon by 2027.

On Aug. 10, the regulator also adopted a settlement with Southern California Gas for its 2015 leak that included a penalty of $71 million towards helping customers and improving local air quality and public health.

The settlement also requires the company not to recover from customers more than $2.8 billion of costs related to litigation and community-related work surrounding the incident.

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