Peevey Rejects Congressional Call for Hearings on LNG

California Public Utilities Commission president Mike Peevey rebuffed calls from a California congressional delegation to conduct evidentiary hearings on the state?s need for liquefied natural gas. In a July 21 letter to Congress members, though, Peevey hedged, saying some hearings on LNG?s necessity might be held. Meanwhile, a draft policy plan embracing development of the imported fuel is up for a vote on August 19 as controversy swirls over an industry-backed tour of Australian and Korean LNG sites by top advisers to the governor. The draft plan adopts strategies that ?do not involve factual disputes and therefore do not require evidentiary hearings,? said Peevey. He added that the commission held a workshop on the matter last December and has absorbed three rounds of written comments. However, only a few environmental and alternative-energy groups attended the two-day workshop cited by the commission president. BHP Billiton, which is proposing a terminal off the Ventura County coast, supports Peevey?s stance. Steve Meheen, BHP project manager, said he sees nothing in the letter that demands hearings on the need for natural gas. Congress members ?specifically asked for hearings on matters that affect ratepayers,? said Meheen, a position the company supports. ?BHP has never asked ratepayers to subsidize any part of our project.? Peevey?s missive came in response to a July 8 letter from Representative Barbara Lee and 10 other California Democratic Congress members urging hearings before the CPUC sets policy on liquefied gas and other gas supply issues. As the state grapples with expiring interstate pipeline contracts and the emergence of LNG as a possible resource, ?we strongly encourage the commission to build the best factual record before making these critical decisions shaping California?s energy future,? said the delegation. ?It?s almost like we?re talking two different languages,? said Bill Powers, chair of the Border Power Plant Working Group. ?The whole thrust of intervenors is to open discussion on the core question of whether utilities should be granted access to LNG,? he said. ?There should be a rigorous evidentiary process before core customers are exposed to the risk? of supporting LNG contracts?instead of treating liquefied natural gas as a given. The Border Power Plant Working Group is part of the Statewide LNG Environmental Working Group, a coalition of more than 20 environmental groups that pressed for hearings. Among other things, the draft plan would allow liquefied natural gas to ?compete on equal footing? with other gas supplies. According to the proposed decision, investor-owned utilities would need to detail how LNG projects can interconnect with utility systems. LNG suppliers, however, would pay for interconnection and other infrastructure costs for their projects. Requests for rolled-in ratemaking that have been challenged by intervenors were punted to a later phase of the case. With natural gas prices showing no sign of dropping from about $6/MMBtu and suppliers saying they can bring in LNG more cheaply, state policy makers are insisting there?s a role for the imported fuel. However, Rich Ferguson, director of research for the Center for Energy Efficiency & Renewable Technologies, maintains that an infusion of liquefied natural gas might not bring down natural gas prices because domestic production would drop off in response to increased LNG imports. Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights, charges that special interests have sweetened the pot. The governor?s campaign plans supporting liquefied natural gas were drafted by people with close ties to the LNG industry, he said. ChevronTexaco, Calpine, Sempra, and Southern California Edison reciprocated the governor?s early endorsement of LNG with $256,000 in contributions, said Heller, citing recent campaign finance reports filed with the secretary of state. Besides hefty donations, the governor?s top aides have been lavished with an all-expenses-paid 11-day junket to Australia and Asia, including a stay at the Four Seasons Hotel in Sydney ( Circuit , July 16, 2004). A number of companies that were involved in the trip are big contributors to the governor, fumed Heller.

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Peevey Rejects Congressional Call for Hearings on LNG

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