CPUC Denies Sacramento Gas Storage

By Published On: July 13, 2012

The California Public Utilities Commission rejected a plan to convert a depleted natural gas field in Sacramento into a gas storage facility to serve Sacramento Municipal Utility District power plants and others. The controversial July 12 vote was 3-2. “We can’t make the finding that this is really necessary,” said commissioner Mike Florio, who was the leader against the project. Commissioners Catherine Sandoval and Mark Ferron joined Florio in voting to turn down Sacramento Natural Gas Storage’s plan. Sandoval cited safety concerns, such as the risk gas would leak into groundwater or to the surface and potentially cause a fire. She added that unlike other gas storage facilities, the area is highly populated. Ferron called the decision “a close call,” but ultimately concluded the facility wasn’t really necessary. Leading the defense for the project was commissioner Tim Simon. He said the facility would provide a backup supply of gas for the muni’s power plant. He argued for approval, along with several conditions to mitigate potential health and safety risks. In an effort to persuade his fellow commissioners, Simon said the project would have been “a poster boy for natural gas safety,” exceeding federal and state standards. Commission president Mike Peevey maintained there was a clear need for the project, with the benefits outweighing the risks of an accident or gas leak. He called the decision to deny the storage “lacking in rigorous analysis.” Commissioners acted after hearing from residents of the Sacramento community who were split on the project. Opponents of the project--which had been before the commission several times without seeing action-- dwelled on safety risks (Current, June 8, 2012). For months, residents have implored commissioners to deny it. Many said they were hoodwinked or bought off into initially signing off on it. At least one member of the community, Grace Gallagher, pointed out to commissioners the company tried to sway residents by passing cards for free gas and groceries. The environmental analysis showed the project could create impacts that could not be mitigated, including potential contamination of groundwater with natural gas, leakage of gas into the atmosphere, and noise during construction. Some residents objecting to the facility raised environmental justice issues. They claimed that because the facility would have been in a working class area of the city that’s home to people of color the company thought it could steamroll over disadvantaged residents. Supporters said it would bring jobs. The company had entered into mineral rights lease agreements with 556 property owners and pledged to provide money to non-profit groups for neighborhood improvement projects, such as parks, youth development programs, and traffic calming. In acting, the commission weighed three alternative decisions. One by an administrative law judge was to approve the facility. Another--authored by Simon--was to approve it but require several mitigation measures, including ordering the firm to carry high levels of liability insurance and post $30 million in surety bonds. The third, by Florio, was to simply deny approval. Sacramento Natural Gas Storage wanted to convert the Florin Gas Field--tapped out in the 1980s--into a new storage facility. The company planned to inject natural gas into a permeable sandstone formation 3,800 feet below homes, businesses, and a park in South Sacramento and withdraw it to feed the pipeline distribution system when needed. Half of the facility’s planned 8 billion cubic feet of storage capacity was contracted to SMUD under a 20-year agreement, according to the commission. The utility said the project would provide it with reliability benefits, but did not actively push for the facility. “SMUD will reevaluate our options for enhancing the reliability of natural gas supplies to our power plants,” stated the muni.

Share this story

Not a member yet?

Subscribe Now