SoCalGas Biogas Projects 

Background

On April 2012, SoCalGas submitted an Application to the CPUC requesting approval to process raw biogas for onsite use or for pipeline injection. Raw biogas is a mix of methane and other gasses derived from the anaerobic digestion of organic waste.  As bacteria breaks down organic matter, these gasses are produced and can be collected for energy use. Biogas can be sourced from dairies, wastewater treatment plants, or organic waste such as food scraps. It can currently be used for on-site power generation and will in the future be able to be injected directly into the natural gas pipeline. Before it can enter the pipeline however, the raw gas must be processed in order to increase methane content and remove trace constituents which could be harmful to human health or pipeline integrity. SoCalGas proposes to design, build, own, operate and maintain biogas conditioning and upgrading equipment on non-residential customer premises. SoCalGas estimates that this project will provide environmental benefits in the form of decreased greenhouse gas emissions. SoCalGas has indicated that a representative project would cost approximately $13.2 million.

The CPUC issued a Scoping Ruling in December 2012 and an Amended Ruling in January 2013 updating the proceeding schedule.

The CPUC opened a Proceeding in January 2013 to determine Rules for pipeline injection of biomethane.  

 

ORA Position

ORA recommends that the CPUC deny SoCalGas’ request to implement a Biogas program and instead encourage the utility to provide such service through an unregulated utility affiliate.  The purpose of using an affiliate is to encourage a competitive market for gas services, as well as to ensure a clear separation between the utility owning the gas transmission and distribution system and the entities producing gas, to protect ratepayers from liability should contaminants be introduced into the distribution system.  The sole beneficiary of the proposed tariff is SoCalGas shareholders, while the majority of the proposal’s risk accrues to ratepayers.  SoCalGas’ plan:

  • Fails to demonstrate required substantive ratepayer benefits.
  • Increases substantial potential for market power in an unregulated and competitive gas market, and should be subject to a high level of scrutiny.
  • Proposes a Biogas project where economics of biogas production are uncertain, the industry has yet to settle on a workable business model, and the potential for project failure is substantial.
  • Creates substantial liability and conflict of interest in the event contaminants enter the gas stream, with limited recourse for customers.
  • Proposes activities outside of SoCalGas’ core distribution business, and therefore it is not appropriate for the utility to recover associated costs from customer rates or use the CPUC’s traditional ratemaking procedures. 

However, if the CPUC approves SoCalGas’ proposal, it should ensure that any resulting program be subject to ratepayer protections, including :

  • Exclusion of any investments made through the program tariff from ratebase.
  • Prevention of anti-competitive behavior on SoCalGas’ part as required by CPUC policy.   

See ORA’s February 22, 2013 Testimony.

See ORA’s June 1, 2012 Protest to SoCalGas’ Application.

 

Proceeding Status

This proceeding is closed.

See the Proceeding docket.  

  

 

 

Other Resources

ORA Biogas Rulemaking webpage.