PG&E Questions Calpine?s Pipeline End-Run

Pacific Gas & Electric wants Calpine to pay for transporting natural gas to Calpine?s power plants even through the utility?s pipelines were not used. The San Jose-based company attempted without success to get the California Public Utilities Commission to throw out PG&E?s complaint October 16. Hearings on the dispute will begin next February. PG&E?s ?grievance offers a preview of its novel theory that PG&E has the absolute and unconditional right to collect its maximum possible tariff on every molecule of natural gas consumed within its service territory, even when no PG&E facility is used to transport the gas at any time,? Calpine?s attorney stated. Early this year, Calpine began moving natural gas from Lodi Gas Storage, which is also a target of PG&E?s petition, through new non-utility lines to Calpine generating units. PG&E responds that Calpine surreptitiously circumvented its gas pipeline in violation of CPUC rules. ?They are not playing by the rules that everyone has to play by,? said Jason Alderman, PG&E spokesperson. Calpine?s dismissal motion ?is filled with self serving and irrelevant discussions regarding its investment in natural gas production and activities that purportedly benefit California consumers,? argued utility lawyers. Because there was no CPUC hearing before non-utility interconnections were built that allows the transported gas to avoid utility pipelines, PG&E and its ratepayers are suffering financial losses in the millions of dollars. Just how much, according to PG&E, will not be known until it investigates the matter via discovery. PG&E also asserts Calpine and Lodi are using the claims of gas storage?which is open to competition?as a ruse to get around restrictions on gas transportation rules?which are not competitive. PG&E asked the commission to issue a cease and desist order, require Calpine to pay PG&E transportation fees and to disgorge profits. The Utility Reform Network intervened in the matter ?to find out whether there were any ratepayer interests to be protected,? said TURN spokesperson Mindy Spatt. If PG&E?s assertions are true, the consumer advocate supports the relief PG&E is seeking. Calpine claims it built the gas transmission lines to hook to Lodi?s new interconnection to boost limited natural gas supply in the area and ease its transport. It also noted it did so because of PG&E?s lack of investment and its ?inability? to add gas gathering facilities. Calpine injects gas into Lodi storage, withdraws it, and moves it in the new system ?because PG&E facilities were, and remain, incapable of allowing the full California gas production to be delivered reliably and cost efficiently to Calpine and its end users.? The company also noted it paid PG&E $30 million over the past year in gas transportation charges. Case # C03-070031

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PG&E Questions Calpine?s Pipeline End-Run

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