Lynch Questions California?s Need for LNG

By Published On: June 7, 2004

Despite conventional wisdom, California may not need liquefied natural gas to ensure adequate energy supplies over the next 10 to 20 years, California Public Utilities Commission member Loretta Lynch told environmental and consumer advocates this week. She called for the commission to undertake hearings on the need for LNG. ?The question of need is not even on the table at the agency that is supposed to determine need,? said Lynch in a luncheon address at the Global LNG Summit in San Diego. ?It?s a presumptive need? that threatens to crowd out green power and foster greater future reliance on fossil fuel, she added. The commissioner made her remarks just days before the close of the comment period in a CPUC rulemaking aimed at ensuring a reliable long-term supply of natural gas. In that proceeding (<i>R-04-01-025</i>), Lynch said California gas utilities are seeking approval for having ratepayers cover up to $250 million of intrastate gas transmission system modifications to facilitate use of LNG in California. In a joint filing with the commission, Southern California Gas and San Diego Gas & Electric have indicated that they will need to spend up to $200 million to facilitate new supplies of gas in the region, said Denise King, a spokesperson for the utilities. The companies based their assessment on a recent National Petroleum Council report that indicates traditional gas fields in North America will be able to supply only about 75 percent of long-term gas needs. Nontraditional sources?such as LNG or coal-bed methane from the Rocky Mountain area?will have to be developed to meet the additional demand. While upgrading the gas transmission system to accommodate new supplies will require expenditures, King said that providing new supplies will support ?gas-on-gas competition,? which will bolster the state?s economy by reducing the price and increasing the reliability of gas supplies. However, a report filed with the CPUC by Synapse Energy Economics claims that more aggressive conservation programs could cut residential and commercial use by 4.8 percent by 2008 and industrial use by 5.2 percent. Repowering old gas power plants could cut their gas use by 29 percent. Greater use of renewable energy would save additional gas. ?The state has the duty to assess the extent of the need for LNG and to provide that information to the public before it moves ahead on any projects under consideration,? according to a coalition of environmental groups. It includes a range of organizations from the Natural Resources Defense Council to local activists. The groups are seeking meetings with Schwarzenegger administration officials on the matter. Administration officials will be happy to meet with groups, said Joe Desmond, assistant secretary for energy at the Resources Agency. He noted that examining need for LNG in California will have to account for rising demand for natural gas across the entire Western United States, where new gas power plants have been built.

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