Sempra’s US$621 mn natural gas pipeline proposal rejected by regulators

The five-member California Public Utilities Commission rejected Sempra Energy’s proposal to build a US$621 million natural gas pipeline in Southern California, saying that the company has failed to demonstrate the need for the project.

According to Sempra’s Southern California Gas Co. and San Diego Gas & Electric utilitiesthe pipeline could help ease potential gas shortages by delivering more gas from its northern system to its southern one, which serves an area that includes the city of San Diego.

Commissioner Mike Florio said during the meeting: “It just doesn’t seem sensible to me, at a time when we are looking to decrease our reliance on fossil fuels, that we would spend US$621 million on a new pipeline that just moves gas around.”

He said there were less costly ways to address gas reliability needs such as using modified gas contracts and tariffs.

After a series of high-profile incidents, the state has increased its scrutiny of natural gas infrastructure. In 2010, eight people were killed and 38 homes were destroyed by an explosion of a PG&E Corp. gas line in a San Francisco suburb. Earlier this year, Sempra stopped a nearly four-month gas leak at its Aliso Canyon facility near Los Angeles that forced the evacuation of thousands of residents. As a result of the leak, California officials have warned of potential gas shortages that could lead to blackouts this summer.

Southern California Gas is disappointed with the decision. They also said that they remain concerned about energy reliability for their southern system customers in the high-growth areas of San Bernardino, Riverside, San Diego and Imperial counties.