Regional LNG: California raises state-federal jurisdiction debate on Long Beach LNG project
Saturday, March 6 2004 - 02:22 AM WIB
But by Monday, California Public Utilities Commission President Michael Peevey adopted a conciliatory tone in a letter to Federal Energy Regulatory Commission Chairman Pat Wood, saying that while the state still believes it has jurisdiction over the proposal, it really only wants to work together with FERC.
The Long Beach plant, proposed by Sound Energy Solutions, a unit of Mitsubishi Corp., is one of about two dozen such LNG import plants under consideration in North America to help accommodate the United States' growing appetite for natural gas. Studies show that U.S. production of natural gas is not keeping pace with demand for the fuel, so the market will be increasingly dependent on imports.
As with other proposed LNG facilities elsewhere in the country, the Long Beach proposal has raised safety fears among nearby residents, who question whether the federal agency will properly look after their interests in light of the nation's economic need for LNG. The proposed Long Beach plant is located about two miles from neighborhoods in the metropolitan Los Angeles area, and the Port of Long Beach has granted the Mitsubishi subsidiary the exclusive rights to pursue the LNG plant, which would produce 700 million cubic feet of natural gas each day.
In an unusual filing with the commission dated Feb. 23, the California Public Utilities Commission (CPUC) questioned FERC's jurisdiction over the proposed LNG plant, contending that FERC only has authority over the import of the gas at the facility.
"Indeed, nowhere in its application does [Sound Energy Solutions] claim to be a natural gas company subject to FERC's broad jurisdiction," the CPUC said.
The California commission added that the courts have not interpreted FERC's natural gas import/export jurisdiction to include regulation of facilities or other matters.
The CPUC also argues that as SES proposes to transport the re-gasified LNG from the plant over one of Southern California Gas Co.'s intrastate pipelines, the facilities, the sales and the transportation of natural gas are wholly under its jurisdiction. The CPUC regulates all natural gas facilities in California under the Hinshaw exemption of the Natural Gas Act, and has a history of jurisdictional fights with FERC over both natural gas and electricity matters.
The CPUC says it has been asking SES to file its state applications since October, but SES's application to FERC states it already has complied with all state rules and regulations regarding the facility.
Peevey's March 1 letter maintains the California claim to authority over the facility but tones down the rhetoric.
Once SES files an application with the state for a certificate of public convenience and necessity for the facility, Peevey said, "we would be interested in having CPUC staff work with FERC staff in order to make arrangements for how our two agencies could jointly conduct concurrent hearings in California. The jointly held hearings would avoid duplication, furnish both agencies with record evidence, and provide [stakeholders] a meaningful opportunity to be heard on the important issues involving this project."
FERC Chairman Pat Wood yesterday expressed a measure of surprise at the initial CPUC filing, telling reporters that he had talked with Peevey about the SES case before it was filed with the commission but that they had not come to a conclusion about it.
"We're very interested in working with that commission," Wood said of CPUC. "Yet we do have a statutory responsibility to administer programs for international imports of LNG. Stay tuned."(*)