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Another LNG Ruse Upcoming From State Regulators?:

When it comes to liquefied natural gas from distant foreign points, the California Public Utilities Commission wants it, and as soon as possible.

The agency, designed early in the last century to protect consumers against rapacious utility companies, used deception to reach the 2004 decision that sparked the current round of plans to bring hyper-expensive LNG to the state in the face of federal forecasts indicating there is no need for it in the foreseeable future.

Now two companies (Kern River Gas Transmission Co. and Spectra Energy Corp.) actively propose building new pipelines to bring far cheaper domestic natural gas from Wyoming to California, and the state Lands Commission maintains there is no established need to run pipelines across state coastal lands from offshore LNG terminals. Yet, the PUC will apparently spend much of this year on yet another misleading proceeding designed to allow utilities to make big profits on LNG.

This gas could as well come from plants in Oregon as from new facilities inside California, for Oregon’s own utilities commission has said 75 percent of any LNG coming to the three plants proposed there would likely end up in California.

That’s the meaning of a California PUC announcement late last year that it will “examine LNG procurement to ensure adequate supplies of natural gas at reasonable costs.”

LNG is natural gas drilled at distant points and then cooled to a subfreezing liquid which is taken across oceans by huge tankers. It is warmed back into a gaseous state at receiving facilities and then placed into existing pipeline networks. If the link to existing pipelines occurs outside California, the PUC would be the only California state agency with any say-so in the matter.

While the Lands Commission, led by Democratic Lt. Gov. John Garamendi, says it will resist construction of any LNG receiving plants on this state’s coast, it would have no authority over gas from LNG that arrives from other states. Meanwhile Oregon state and county governments involved in deciding on LNG appear to lean toward permitting it. And that state’s Democratic Gov. Ted Kulongoski says he sees it as a “bridge fuel” while America moves toward renewable energy sources.

For Californians, the stakes in the newly announced “examination” of LNG are billions of dollars to be paid into the indefinite future. Plus, the state would become dependent on energy from places like the Indonesian portion of the island of Papua New Guinea and Russia’s Far Eastern island of Sakhalin. Neither country is precisely a paragon of stability and reliability.

Those sorts, plus environmental impacts like vastly increased carbon dioxide production that may contribute to climate change, did not bother the PUC’s majority when it made its key 2004 decision allowing California’s big utilities to give up as much as one-fourth of their reserved space on the El Paso and Transwestern pipelines that now bring gas to California from Texas and Oklahoma.

There was no sworn testimony in the 2004 proceeding, only consideration of a report from Sempra Energy, which is about to open an LNG plant in Baja California that will provide some fuel for its big utility subsidiaries, Southern California Gas and San Diego Gas & Electric. Most gas from Oregon LNG plants would likely go to PG&E customers in Northern California.

“The Sempra report inflated future demand estimates and deflated supply estimates,” says Loretta Lynch, the former PUC president who voted against that 2004 decision. Lynch, now an executive fellow at UC Berkeley, predicts the new PUC proceeding will be a “ruse.”

“They will exempt this from most of their rules calling for sworn testimony and cross examination of witnesses, just like they did with the last proceeding,” she said. “They will do a slap-dash evidentiary process at best.”

While there’s nothing strictly illegal about all this, it surely does smell bad, and the ultimate result might be decades of higher-than-ever energy prices and potential environmental disasters for California’s consumers and its coast.

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