WEBVTT

00:00:00.000 --> 00:00:15.939
Momentarily, thank you for your patience.

00:00:15.939 --> 00:00:19.390
Good morning. This is the time and place for the California

00:00:19.390 --> 00:00:23.690
Public Utility Commission's En Banc Hearing (inaudible) natural

00:00:23.690 --> 00:00:27.219
gas market conditions and the impacts of natural gas

00:00:27.219 --> 00:00:31.589
prices on electricity markets. My name is Leuwam Tesfai and

00:00:31.589 --> 00:00:35.329
I serve as the CPUC's Deputy Executive Director

00:00:35.340 --> 00:00:40.009
for Energy and Climate Policies.

00:00:40.009 --> 00:00:43.170
In this role, I serve as the head of the CPUC's Energy

00:00:43.170 --> 00:00:48.979
Division. I would like to thank all of the (inaudible) California

00:00:49.140 --> 00:00:53.299
Election Commissioners and CAISO CEO for joining us on the

00:00:53.299 --> 00:00:56.729
dais today. I would also like to thank all of our

00:00:56.729 --> 00:01:00.520
panelists and members of the public for your participation

00:01:00.530 --> 00:01:04.950
in today's En Banc. The purpose of our En Banc is to

00:01:04.950 --> 00:01:08.629
discuss the recent high natural gas prices, that have

00:01:08.629 --> 00:01:12.060
been present throughout the West this Winter. We have

00:01:12.060 --> 00:01:15.560
already started to see the human impact of these prices

00:01:15.569 --> 00:01:18.400
in customer bills. That have skyrocketed due to these

00:01:18.409 --> 00:01:22.260
gas commodity costs. So the Commission has responded

00:01:22.260 --> 00:01:25.700
quickly by directing the utilities to enhance customer

00:01:25.700 --> 00:01:29.689
communications. Starting back in mid-December and last

00:01:29.689 --> 00:01:32.799
week acceleration of the California Climate Credit

00:01:32.810 --> 00:01:36.280
from the States Cap and Trade Program. We are leaving

00:01:36.280 --> 00:01:40.829
no stone unturned to address this crisis.

00:01:40.829 --> 00:01:43.650
Through the diverse panels we have curated for today's

00:01:43.659 --> 00:01:47.079
hearing, we will be examining possible drivers of these

00:01:47.090 --> 00:01:51.900
prices and impacts on (inaudible). While also exploring

00:01:51.900 --> 00:01:55.370
potential measures to mitigate the impact of natural

00:01:55.370 --> 00:01:59.709
gas and electric market volatility. I would also like

00:01:59.719 --> 00:02:02.829
specifically thank the following Staff for preparing this

00:02:02.829 --> 00:02:07.439
important event. Christina Aborigine, Jean Spencer,

00:02:07.450 --> 00:02:13.889
Bruce Kaneshiro, Molly Sterkel, Michelle Keto, Lynn Mosley,

00:02:13.900 --> 00:02:19.840
Simon Baker, Robert Stanford, Joe Haga, Perry Prosper,

00:02:19.840 --> 00:02:23.569
and Allison Brown. With that, I want to turn things

00:02:23.580 --> 00:02:28.659
over to our MC for the day Christina Aborigine. A senior regulatory

00:02:28.659 --> 00:02:32.759
analyst on our Gas, Policy and Reliability team. Over

00:02:32.759 --> 00:02:35.889
to you Christina.

00:02:35.889 --> 00:02:39.669
Thank you so much Leuwam, and thank you for everyone for joining

00:02:39.669 --> 00:02:47.509
us um, at our En Banc today. Uh, next slide please.

00:02:47.509 --> 00:02:51.960
Uh, one more thank you, perfect. Before I turn the proverbial

00:02:51.960 --> 00:02:54.639
mic over to President Reynolds and the rest of the

00:02:54.639 --> 00:02:57.050
dais. I just wanted to go over some quick logistics

00:02:57.050 --> 00:03:01.099
for today's meeting. So the agenda and presentations

00:03:01.110 --> 00:03:04.530
are available on our website at the URL link shown

00:03:04.530 --> 00:03:08.360
here. Uh, there will be three panel discussions today,

00:03:08.370 --> 00:03:11.879
followed by a 15-minute Q&A after each panel.

00:03:11.889 --> 00:03:15.500
Only moderators and dais members will have an opportunity

00:03:15.500 --> 00:03:19.080
to ask questions of the panelists. There will be an

00:03:19.080 --> 00:03:22.050
opportunity for public comment at the end of the En Banc.

00:03:22.060 --> 00:03:25.030
Uh, to make a public comment during the public comment

00:03:25.030 --> 00:03:31.930
portion of the En Banc, please call 800-857-1917 and

00:03:31.930 --> 00:03:38.789
the access code is 1767567#. If you wish to not make

00:03:38.789 --> 00:03:42.169
comments, um today. You may also email your comments

00:03:42.180 --> 00:03:46.620
directly to us. The email address is GasPolicy@

00:03:46.629 --> 00:03:50.610
cpuc.ca gov. Uh, as a reminder this

00:03:50.620 --> 00:03:57.810
En Banc is being recorded. Next slide please.

00:03:57.810 --> 00:04:00.620
So this slide is just some instructions for our participants

00:04:00.629 --> 00:04:04.099
today. Please mute yourself, when you are not speaking.

00:04:04.110 --> 00:04:07.530
To self-mute, you may press *6. To unmute, please

00:04:07.539 --> 00:04:10.819
press *0. Or you can press the mute button on

00:04:10.819 --> 00:04:14.210
your Iphone. Um, for the members of dais, if you have

00:04:14.210 --> 00:04:17.069
a question during the Q&A portion of each panel

00:04:17.069 --> 00:04:20.399
discussion. Please utilize the "Raise Hand" function

00:04:20.410 --> 00:04:23.930
on Webex, and then unmute yourself when the moderator

00:04:23.930 --> 00:04:27.839
has called your name. With the panelists, if you would like

00:04:27.839 --> 00:04:30.689
to respond to a general question that's coming from

00:04:30.689 --> 00:04:34.079
the dais. Please utilize the "Raise Hand" function, and

00:04:34.089 --> 00:04:39.040
unmute yourself once you're called upon. Uh, with that next

00:04:39.040 --> 00:04:41.509
slide please.

00:04:41.509 --> 00:04:45.500
All right, it is now time for remarks from the dais. So

00:04:45.500 --> 00:04:49.029
I will turn it over to Commission President Reynolds.

00:04:49.040 --> 00:04:53.790
Thank you. Thank you very much Christina, and welcome

00:04:53.790 --> 00:04:57.699
to everyone who is joining us today. Um, I wanted to

00:04:57.699 --> 00:05:01.410
start by thanking my fellow members of the dais and

00:05:01.410 --> 00:05:04.759
welcoming them to the workshop today. We have all five

00:05:04.769 --> 00:05:08.750
PUC Commissioners here today. As well as California

00:05:08.759 --> 00:05:12.819
Energy Commission Chair David Hochschild, Vice Chair

00:05:12.829 --> 00:05:17.389
Siva Gunda, and Elliot Mainzer the CEO of the California

00:05:17.399 --> 00:05:20.860
Independent System Operator, so welcome everyone. Um,

00:05:20.870 --> 00:05:23.379
as you heard from Ms. Tesfai's introduction. We're

00:05:23.379 --> 00:05:26.399
here today because wholesale natural gas prices have

00:05:26.399 --> 00:05:30.519
risen to alarming levels this Winter. At the height

00:05:30.529 --> 00:05:34.389
of the gas price spike, this past December 2022. The

00:05:34.389 --> 00:05:37.430
commodity natural gas price in Southern California

00:05:37.430 --> 00:05:40.089
was almost 8x as much as the average price

00:05:40.100 --> 00:05:43.259
the previous December. And it was also greatly, it

00:05:43.259 --> 00:05:46.209
also greatly exceeded prices in the rest of the country.

00:05:47.230 --> 00:05:51.089
Since these costs are passed directly to customer bills.

00:05:51.100 --> 00:05:54.430
The fact is that customers are really hurting here.

00:05:54.439 --> 00:05:58.449
And as we've heard at the CPUC Voting Meeting last week.

00:05:58.459 --> 00:06:01.319
People have experienced severe sticker shock on their

00:06:01.319 --> 00:06:04.959
energy bills. With average residential gas bills in

00:06:04.959 --> 00:06:09.250
Southern California increasing 2 to 2 1/2 times what

00:06:09.250 --> 00:06:13.430
they were compared to the same month a year ago. To

00:06:13.430 --> 00:06:17.329
provide immediate relief, uh the CPUC voted last week

00:06:17.339 --> 00:06:22.790
to accelerate a $90 to $120 energy bill credit

00:06:22.800 --> 00:06:26.100
to customers of PG&E, SDG&E,

00:06:26.110 --> 00:06:29.300
SoCalGas and SCE. As well as to provide an

00:06:29.310 --> 00:06:33.269
expedited credit to customers of Bear Valley, Liberty

00:06:33.279 --> 00:06:38.560
uh, Pacific Core and Southwest Gas. But we recognize

00:06:38.569 --> 00:06:41.310
that, that was a short term band-aid and this is a

00:06:41.310 --> 00:06:46.980
longer term problem. While the CPUC, um and

00:06:46.990 --> 00:06:50.709
neither the CPUC nor any other state agency here today

00:06:50.720 --> 00:06:55.100
regulates natural gas prices. We are determined, um 

00:06:55.160 --> 00:06:57.240
are determined entirely by the regional spot

00:06:57.240 --> 00:07:00.779
markets. This issue really is critical for ratepayer

00:07:00.779 --> 00:07:04.480
bill affordability going forward. And because of that

00:07:04.480 --> 00:07:07.860
we've rapidly convened this En Banc to get, to get to the bottom

00:07:07.860 --> 00:07:11.879
of what's going on here. Today, market experts will

00:07:11.879 --> 00:07:14.589
discuss some of the known drivers of the price spikes

00:07:14.600 --> 00:07:17.579
including exceptionally cold weather early in the Winter

00:07:17.579 --> 00:07:21.430
season, outages on multiple interstate pipelines, and

00:07:21.430 --> 00:07:24.680
limitations to natural gas storage. Panelists will

00:07:24.680 --> 00:07:27.759
also be exploring other possible drivers behind these

00:07:27.769 --> 00:07:31.670
unprecedented natural gas price spikes. Because frankly

00:07:31.670 --> 00:07:34.069
we don't know all of the pieces of the puzzle, and this

00:07:34.079 --> 00:07:37.709
issue is critically important and needs to be examined

00:07:37.709 --> 00:07:41.670
further. Finally, I want to stress that we need to

00:07:41.670 --> 00:07:45.519
be mindful that we are undertaking a really monumental

00:07:45.519 --> 00:07:48.639
transition in California to decarbonize our economy

00:07:48.639 --> 00:07:51.689
right now. Which means transitioning away from our

00:07:51.689 --> 00:07:55.430
dependence on gas. There are a lot of complex interactions

00:07:55.430 --> 00:07:59.579
here between gas and electric, electricity usage and

00:07:59.579 --> 00:08:02.120
impact to customer bills. And we need to be considering

00:08:02.120 --> 00:08:05.670
the big picture when we think about mitigation strategies.

00:08:06.720 --> 00:08:10.480
So I'll end with a thank you to the Energy Division

00:08:10.490 --> 00:08:14.730
Staff, that were previously mentioned by Ms. Tesfai.

00:08:14.740 --> 00:08:17.610
Who stood up this En Banc and lined up market experts,

00:08:17.620 --> 00:08:21.689
regulators and advocates to speak today, um in really

00:08:21.689 --> 00:08:24.379
record time. This workshop was pulled together very

00:08:24.379 --> 00:08:28.399
quickly. And I would like to give a special things to

00:08:28.410 --> 00:08:32.190
Christina Aborigine for the heavy lifting, and from moderating

00:08:32.190 --> 00:08:35.629
this event. As well as Leuwam Tesfai for doing so much

00:08:35.629 --> 00:08:40.370
of the organization. And uh with that, I will turn to the

00:08:40.370 --> 00:08:42.700
other Commissioners on the dais. Starting with the

00:08:42.710 --> 00:08:45.730
CPUC Commissioners, um for anyone who would like to

00:08:45.730 --> 00:08:49.360
make some opening remarks. Um, let's see. I'll go first

00:08:49.370 --> 00:08:52.169
to Commissioner Shiroma.

00:08:52.169 --> 00:08:55.419
I thank you, President Reynolds. Good morning, I'm also

00:08:55.419 --> 00:08:59.179
very appreciative of the team that has put together

00:08:59.179 --> 00:09:04.820
this En Banc. All the speakers and panelists who will be educating

00:09:04.830 --> 00:09:09.429
us today and filling our questions. It is very important

00:09:09.429 --> 00:09:12.370
that the CPUC and our sister agencies conduct this

00:09:12.379 --> 00:09:17.659
En Banc. For fully understanding the root cause of the extraordinarily

00:09:17.659 --> 00:09:22.009
high wholesale natural gas prices. I'm glad that the

00:09:22.009 --> 00:09:25.850
Commission accelerated the Climate Credit last week. For

00:09:25.860 --> 00:09:29.500
helping Californians with high bills, especially low-

00:09:29.509 --> 00:09:34.070
income utility customers. I'm also glad that this Governor

00:09:34.080 --> 00:09:37.450
has asked the Federal Energy Regulatory Commission

00:09:37.460 --> 00:09:41.149
to investigate the soaring prices. Meanwhile, I'm looking

00:09:41.149 --> 00:09:45.190
forward to hearing what more can we do here in California.

00:09:45.740 --> 00:09:49.970
Uh and also want to remind the viewing audience that

00:09:50.500 --> 00:09:54.399
there are customer programs, for low-income customers

00:09:54.409 --> 00:09:59.039
for discounts. There are rules for disconnections.

00:09:59.049 --> 00:10:05.570
There are monies that are being, um pushed out through

00:10:05.570 --> 00:10:09.230
with something called arrearages. Towards helping to defray bills

00:10:09.240 --> 00:10:13.159
that uh where customers have fallen behind. We also

00:10:13.159 --> 00:10:17.039
have some programs for looking at, uh spreading out

00:10:17.049 --> 00:10:20.399
bills so that they are more manageable. With that, thank

00:10:20.399 --> 00:10:23.370
you, and back to you President Reynolds.

00:10:23.370 --> 00:10:26.700
Thank you, Commissioner Shiroma. Um, let's see. I'll go next to

00:10:26.700 --> 00:10:29.639
Commissioner Douglas.

00:10:29.639 --> 00:10:34.000
Thank you, President Reynolds. Uh, appreciate your comments

00:10:34.000 --> 00:10:36.759
and I just and, and Commissioner Shiroma's. And I just wanted

00:10:36.759 --> 00:10:41.990
to add, that this is a really important topic. I'll

00:10:41.990 --> 00:10:45.750
be listening closely to the discussion. I really appreciate

00:10:45.759 --> 00:10:50.590
uh, Energy Division and Leuwam Tesfai efforts to pull

00:10:50.590 --> 00:10:55.710
together this fantastic uh, En Banc. And uh dais,

00:10:55.720 --> 00:11:00.350
panelists and speakers. Um, as the Governor noted in

00:11:00.360 --> 00:11:07.019
his letter. It's concerning that the um, as we look

00:11:07.019 --> 00:11:10.350
at the many factors that clearly are contributing to

00:11:10.350 --> 00:11:14.490
high natural gas prices. It's just really very difficult

00:11:14.500 --> 00:11:18.039
to understand what the factors are that has led to

00:11:18.049 --> 00:11:23.000
this extensive price spike. And, and so I'll be listening

00:11:23.009 --> 00:11:28.000
really with great interest to the discussion of causes.

00:11:28.009 --> 00:11:32.509
And also, um yeah I think it's incumbent on all

00:11:32.509 --> 00:11:36.450
of us. To just try to understand how we can protect

00:11:36.460 --> 00:11:39.120
consumers against these kinds of dynamics, today and

00:11:39.120 --> 00:11:43.129
into the future. So thank you.

00:11:43.129 --> 00:11:52.679
Thank you. Let's go next to Commissioner Houck. Commissioner Houck you're on mute.

00:11:52.679 --> 00:11:57.269
Can you hear me now? Yes. Okay, thank you. Thank you

00:11:57.269 --> 00:11:59.750
President Reynolds. I want to thank our Staff. Especially

00:11:59.750 --> 00:12:04.490
Christina Aborigine and Leuwam Tesfai. As well as Molly

00:12:04.490 --> 00:12:07.740
Sterkel, Michelle Keto and Bruce Kaneshiro for all

00:12:07.740 --> 00:12:11.169
of their work. Um, and expediting and making this on

00:12:11.169 --> 00:12:14.409
En Banc happen so quickly. I want to thank Robert Stanford

00:12:14.419 --> 00:12:17.419
and Lynn Mosley for providing IT Support today.

00:12:17.429 --> 00:12:20.950
I concur with the comments of my fellow Commissioners.

00:12:20.960 --> 00:12:24.899
And um, I just want to recognize given these dire,

00:12:24.909 --> 00:12:29.299
the dire situation and the unusually high gas prices. Um,

00:12:29.730 --> 00:12:32.850
that I recognize and support the Governor's request

00:12:32.850 --> 00:12:35.509
to federal regulators. To investigate the causes and

00:12:35.509 --> 00:12:38.809
activities that are driving the ongoing elevated prices

00:12:38.809 --> 00:12:41.720
in the Western gas market. And today, I hope we can

00:12:41.720 --> 00:12:44.649
explore options to bring stability to an unregulated

00:12:44.649 --> 00:12:48.500
gas commodity market. And prevent um, price volatility

00:12:48.500 --> 00:12:51.279
thereby ensuring stable and affordable utility gas

00:12:51.279 --> 00:12:54.080
prices for Californians. And the first step there is

00:12:54.320 --> 00:12:57.070
I think today's En Banc to listen and to hear from

00:12:57.070 --> 00:13:00.129
those um, that are going to be presenting today. So

00:13:00.139 --> 00:13:02.879
um, I want to again thank all the panelists for being

00:13:02.879 --> 00:13:08.690
here. And I will be carefully listening, um to the presentations

00:13:08.700 --> 00:13:12.389
today. And with that, will close my remarks. Thank you

00:13:12.389 --> 00:13:15.620
Commissioner Houck. Commissioner Reynolds.

00:13:15.620 --> 00:13:18.159
Thank you President Reynolds. I will echo the thanks

00:13:18.159 --> 00:13:21.360
of my colleagues to PUC Staff for putting on this 

00:13:21.360 --> 00:13:23.970
En Banc so quickly. As well as responding so quickly to

00:13:23.980 --> 00:13:26.389
um, to the price spike and bill spikes that we're seeing.

00:13:26.389 --> 00:13:28.480
To provide some relief to Californians through the Climate

00:13:28.480 --> 00:13:32.559
Credit. Um, thank you to my colleagues both on the dais

00:13:32.559 --> 00:13:35.950
here from the PUC, from the ISO and from the Energy Commission.

00:13:35.960 --> 00:13:39.960
For their attendance and focus on, on the impact that

00:13:39.960 --> 00:13:44.139
these prices are having on Californians. Um, it's really

00:13:44.139 --> 00:13:50.049
not, not hyperbole to say that. A bill price spike of

00:13:50.059 --> 00:13:53.659
this amount makes Californians, puts Californians in a position

00:13:53.659 --> 00:13:55.179
where they've got to make some really tough choices.

00:13:55.190 --> 00:13:58.909
About what bills they can pay and what they can afford

00:13:58.919 --> 00:14:03.210
for their families. Um,

00:14:03.210 --> 00:14:05.759
I think that today's discussion is, is really important.

00:14:05.759 --> 00:14:10.019
I'm looking forward to further evaluation of some of the key

00:14:10.019 --> 00:14:13.340
market drivers. I also think that there are a couple

00:14:13.340 --> 00:14:17.470
of lessons that I'm, I'm really keen on the gas utilities

00:14:17.480 --> 00:14:23.080
taking home and, and to heart. Um, first I think there's,

00:14:23.090 --> 00:14:26.240
there's an important question about how we can protect

00:14:26.240 --> 00:14:30.330
ourselves from the vulnerability we have to the natural

00:14:30.330 --> 00:14:32.379
gas commodity market. And I think that's a long term

00:14:32.379 --> 00:14:35.799
question that we should all be focused on. And second

00:14:35.809 --> 00:14:38.460
and really importantly, I think the gas utilities have

00:14:38.470 --> 00:14:40.840
a lot of room to improve how they communicate with their

00:14:40.840 --> 00:14:46.929
customers. Um, I think that when we look at other types of

00:14:46.929 --> 00:14:50.450
services that Californians rely on. Um, you know, in

00:14:50.450 --> 00:14:54.149
advance how much (inaudible).

00:14:54.149 --> 00:14:58.220
I think that's uh, that's utilities and utilities more

00:14:58.220 --> 00:15:01.029
probably should really be thinking about how they can

00:15:01.029 --> 00:15:03.409
communicate much more proactively with their customers.

00:15:03.419 --> 00:15:08.009
About an impending um, spike (inaudible) so their customers can

00:15:08.009 --> 00:15:11.440
take action in advance. Like reducing their thermostat,

00:15:11.450 --> 00:15:15.960
like (inaudible) temperature on their hot water heaters. And I'm really looking forward

00:15:15.960 --> 00:15:19.190
to how we can all collaborate on making that a reality.

00:15:19.200 --> 00:15:23.330
So that Californians have a chance to take action before

00:15:23.330 --> 00:15:27.600
they get their bills in the mail and uh (inaudible) prices. Thank

00:15:27.600 --> 00:15:31.360
you so much. Thank you President Reynolds. Thank you. I'll

00:15:31.360 --> 00:15:35.960
now turn to um, a fellow members of the dais. Let's

00:15:35.970 --> 00:15:40.830
start with is Chair Hochschild on? I can't see you. He is on but uh,

00:15:40.840 --> 00:15:44.799
only by audio. Having a weather issue, but you're not missing much. I've

00:15:44.799 --> 00:15:48.320
been told I have a great face for radio here. Wonderful. So, I

00:15:48.330 --> 00:15:51.909
wanted to, I want to just begin by thanking President Reynolds.

00:15:51.919 --> 00:15:55.559
Um, you and your team for leadership and pulling together

00:15:55.559 --> 00:15:58.769
this important conversation. About how we can best protect

00:15:58.779 --> 00:16:02.460
Californians from these price spikes. Thanks to Leuwam Tesfai and um,

00:16:02.470 --> 00:16:05.370
all my colleagues with the PUC. As well as um, Energy

00:16:05.370 --> 00:16:07.970
Commission Vice Chair Siva Gunda for all his work.

00:16:07.980 --> 00:16:11.779
There's obviously many forces that are kind of conspiring

00:16:13.029 --> 00:16:16.940
to drive up the,

00:16:16.940 --> 00:16:19.690
to drive up prices right now. Including the war in

00:16:19.690 --> 00:16:23.559
Ukraine and the cold snap, among other things. Uh,

00:16:23.559 --> 00:16:27.450
and so it's a great moment to come together and explore

00:16:27.460 --> 00:16:29.950
what else we can do differently. I do want to stress

00:16:29.950 --> 00:16:32.299
there are some things that we need to continue doing.

00:16:32.309 --> 00:16:35.730
We rank number one in the United States on energy efficiency

00:16:35.740 --> 00:16:39.100
and that's something we have to maintain. To avoid,

00:16:39.110 --> 00:16:41.340
you know, waste and additional costs for ratepayers.

00:16:41.340 --> 00:16:44.230
And we're absolutely committed to, to do that and continue

00:16:44.230 --> 00:16:47.259
to decarbonize. Uh, but look forward to exploring all the

00:16:47.259 --> 00:16:50.250
other things we can do to, to best protect Californians.

00:16:50.259 --> 00:16:54.679
Look forward to the discussion today. Thank you. Turning

00:16:54.679 --> 00:16:59.070
now to Vice Chair Gunda. Thank you President Reynolds.

00:16:59.080 --> 00:17:02.980
Uh, just also want to extend my thanks to the Staff. Uh, specifically

00:17:02.980 --> 00:17:07.309
Leuwam Tesfai, and Christina Aborigine and all the other

00:17:07.309 --> 00:17:10.480
Energy Division Staff that work in natural gas. Um,

00:17:10.480 --> 00:17:13.289
and specifically work collaboratively with the Energy

00:17:13.289 --> 00:17:15.759
Commission. So big thanks to everybody for helping

00:17:15.759 --> 00:17:20.299
pull this, uh En Banc together. And, and to you President

00:17:20.299 --> 00:17:23.609
Reynolds and all the Commissioners at PUC. For, for

00:17:23.609 --> 00:17:26.740
the comments you just noted. I just want to reiterate

00:17:26.750 --> 00:17:30.059
um all the points that you, that you made extremely

00:17:30.059 --> 00:17:33.210
important. And just recognizing that we are in this

00:17:33.220 --> 00:17:36.819
energy transition in this moment of, you know, ambitious

00:17:36.819 --> 00:17:40.190
climate goals. And as we go through this inflection

00:17:40.190 --> 00:17:43.210
and transition of the climate goals. It is extraordinarily

00:17:43.210 --> 00:17:46.619
important for us whether it's petroleum, natural gas,

00:17:46.630 --> 00:17:49.180
electricity and, and also the combination of the

00:17:49.180 --> 00:17:52.019
interactive effects of all of those things. To ensure

00:17:52.019 --> 00:17:57.230
that we are as a state, all the stakeholders, the agencies

00:17:57.240 --> 00:18:00.390
are providing additional transparency and communication

00:18:00.390 --> 00:18:04.019
to people. To understand and know how exactly we are

00:18:04.019 --> 00:18:06.589
transitioning and what the implications are. And it

00:18:06.589 --> 00:18:09.140
becomes more important that we have those answers today.

00:18:09.140 --> 00:18:11.640
So looking forward to learning for this En Banc. Uh, thank

00:18:11.640 --> 00:18:14.769
you so much for including uh, CEC on this workshop. Thank

00:18:14.769 --> 00:18:19.180
you so much. Thank you. I'll now, now turn to Mr. Mainzer

00:18:19.190 --> 00:18:22.319
for any opening comments you'd like to make. Thank

00:18:22.319 --> 00:18:25.549
you President Reynolds, and Chair Hochschild, and all the Staff that uh, pulled

00:18:25.549 --> 00:18:27.759
today's En Banc meeting together. You know, the CAISO really

00:18:27.759 --> 00:18:31.970
appreciates uh, the opportunity part of this very important

00:18:31.970 --> 00:18:35.039
discussion. I think like everyone here today. We are

00:18:35.049 --> 00:18:38.299
very concerned with the high natural gas and electricity

00:18:38.299 --> 00:18:41.960
prices that have been occurring across California and 

00:18:41.960 --> 00:18:44.970
the West, since December and through the new year. And

00:18:44.970 --> 00:18:47.569
also very sensitive and concerned about the impacts

00:18:47.569 --> 00:18:50.859
of these higher prices on both gas and electricity

00:18:50.869 --> 00:18:53.329
customers. So we've been uh, since December we've

00:18:53.329 --> 00:18:55.720
actually had a internal strike team stood up. Where

00:18:55.720 --> 00:18:59.190
we've been closely monitoring the impact of high gas

00:18:59.190 --> 00:19:01.319
prices on the electric market prices and wholesale

00:19:01.319 --> 00:19:03.950
electricity costs. And we're going to continue to do

00:19:03.950 --> 00:19:07.450
that as the Winter progresses. We've also tried to

00:19:07.460 --> 00:19:11.240
make transparent how gas prices are impacting electricity

00:19:11.240 --> 00:19:14.690
markets through regular reporting, including the report

00:19:14.690 --> 00:19:18.240
we provided to CPUC just this past week. And these data

00:19:18.240 --> 00:19:21.339
and observations will hopefully help inform policy

00:19:21.400 --> 00:19:25.940
and investment choices. Members of my CAISO team have also met

00:19:25.950 --> 00:19:28.750
several times with several Staff members, and groups

00:19:28.750 --> 00:19:31.839
of the Federal Energy Regulatory Commission. To discuss

00:19:31.839 --> 00:19:33.920
natural gas markets in the West, United States and

00:19:33.920 --> 00:19:37.390
the conditions that may be affecting natural gas prices.

00:19:37.390 --> 00:19:39.509
And we've also of course been engaging consistently

00:19:39.509 --> 00:19:43.190
with the CPUC, the Energy Commission and other entities.

00:19:43.430 --> 00:19:46.519
To identify the main factors that are driving high

00:19:46.519 --> 00:19:49.359
gas prices and to identify potential solutions. So

00:19:49.359 --> 00:19:52.430
we remain in touch with FERC and others in the regulatory

00:19:52.430 --> 00:19:55.299
community. Uh, with responsibility for ensuring that rates

00:19:55.299 --> 00:19:58.279
remain just and reasonable. And of course, uh the CAISO

00:19:58.279 --> 00:20:01.279
stands ready to work with California agencies. As well

00:20:01.279 --> 00:20:04.250
as other state utility commissions and entities throughout

00:20:04.250 --> 00:20:07.779
the West on this very important and timely issue.

00:20:07.779 --> 00:20:09.740
So, thanks again for the opportunity to participate

00:20:09.750 --> 00:20:11.720
today.

00:20:11.720 --> 00:20:14.690
Thank you and that concludes remarks from the dais.

00:20:14.700 --> 00:20:20.619
So I'll turn back to you, Christina.

00:20:20.619 --> 00:20:24.930
Thank you President Reynolds. Um, Francisco can we

00:20:25.779 --> 00:20:30.789
show the slide. Thank you, perfect. Um, before I introduce

00:20:30.799 --> 00:20:33.460
our moderator for the first panel. I did just want

00:20:33.460 --> 00:20:36.660
to know, if you have joined us via adminmonitor and

00:20:36.660 --> 00:20:40.640
you are having audio or video difficulties. Um, please

00:20:40.650 --> 00:20:45.700
send us an email. It's help@adminmonitor.com

00:20:45.710 --> 00:20:49.059
That information is also located on the bottom of the

00:20:49.069 --> 00:20:53.609
adminmonitor page. Thank you. All right with that,

00:20:53.619 --> 00:20:56.769
I'd like to introduce Jean Spencer, who is going to

00:20:56.769 --> 00:21:00.190
moderate our first panel of the day. Jean is the Supervisor

00:21:00.190 --> 00:21:04.029
with the CPUC's Energy Division. Jean, whenever you're ready.

00:21:05.940 --> 00:21:10.250
Thank you Christina. Next slide please.

00:21:10.250 --> 00:21:12.420
But before I jump into the panel, I just wanted to

00:21:12.420 --> 00:21:17.170
take a minute to set the stage. Next slide please.

00:21:17.170 --> 00:21:19.750
And as that everyone's been saying. The high gas prices

00:21:19.759 --> 00:21:21.769
in the West have been very high. This has really been

00:21:21.769 --> 00:21:24.849
a situation of gas prices for the West of the Rockies.

00:21:24.859 --> 00:21:30.220
Um, this figure shows the prices uh from November 1,

00:21:30.220 --> 00:21:33.319
which is the start of the gas Winter. Um, the actuals

00:21:33.319 --> 00:21:36.569
prices through February 3, and then futures prices

00:21:36.569 --> 00:21:39.880
heading out into June. Um, and futures prices are just

00:21:39.880 --> 00:21:41.839
what the market thinks prices are going to be. It's

00:21:41.839 --> 00:21:44.180
not a guarantee that they will actually see that price.

00:21:44.190 --> 00:21:48.309
So if you look at this figure you can see that um,

00:21:48.319 --> 00:21:51.579
that these prices are are high across the West. Um,

00:21:51.589 --> 00:21:54.089
it includes different gas hubs which are listed here.

00:21:54.089 --> 00:21:57.940
There's the PG&E citygate, the SoCal citygate, Northwest Sumas

00:21:58.359 --> 00:22:04.029
here at the border between Canada and Washington. Opal

00:22:04.039 --> 00:22:08.349
is in the Southwest corner of Wyoming. El Paso San

00:22:08.349 --> 00:22:12.279
Juan in the Northwest corner of New Mexico. All these

00:22:12.279 --> 00:22:14.920
gas hubs that you see in this chart, we're experiencing

00:22:14.920 --> 00:22:18.299
quite high prices in the last few months. Next slide

00:22:18.299 --> 00:22:21.569
please.

00:22:21.569 --> 00:22:24.140
And I won't belabor this, because people are very aware

00:22:24.140 --> 00:22:27.349
of what their bills have been like. Um, this chart shows

00:22:27.359 --> 00:22:31.509
actual average bills for 2022, and forecasted bills for

00:22:31.509 --> 00:22:35.829
2023. Uh, this has been particularly, January was particularly

00:22:35.839 --> 00:22:39.460
um high in the SoCalGas service territory. Where average

00:22:39.460 --> 00:22:42.009
bills were expected to be almost $300, and more than

00:22:42.009 --> 00:22:44.910
double where they had been the previous year. Um, in

00:22:44.910 --> 00:22:47.880
the PG&E service territory there are about 30% higher.

00:22:48.460 --> 00:22:51.490
Heading into February, um they will be lower. They're

00:22:51.490 --> 00:22:54.990
expected to be lower than January, but still significantly

00:22:54.990 --> 00:23:01.259
higher than last year. Um, next slide please.

00:23:01.259 --> 00:23:04.180
So among the questions that we ask, that all of the

00:23:04.180 --> 00:23:08.640
panelists. Uh, where we asked them to comment on the analysis

00:23:08.650 --> 00:23:12.119
that's been provided by the U. S. Energy Information

00:23:12.119 --> 00:23:15.039
Administration. And they put out two posts on the high

00:23:15.039 --> 00:23:18.099
gas prices in the West, and they came to the same conclusions

00:23:18.109 --> 00:23:22.230
both times. Um, they said the drivers were widespread

00:23:22.230 --> 00:23:25.690
below normal temperatures, high natural gas consumption,

00:23:25.700 --> 00:23:29.299
lower natural gas flows from Canada, pipeline constraints

00:23:29.309 --> 00:23:32.119
including maintenance in West Texas, and low natural

00:23:32.119 --> 00:23:35.039
gas storage levels in the Pacific region. So we've

00:23:35.039 --> 00:23:37.880
asked all the panelists to consider this analysis as

00:23:37.880 --> 00:23:40.180
they're preparing their response. You know, kind of

00:23:40.190 --> 00:23:42.519
indicate whether they agree that this is correct? Whether

00:23:42.519 --> 00:23:44.269
they think it's correct, but that there's some more nuance

00:23:44.269 --> 00:23:46.680
that we should all understand? Or whether there's points

00:23:46.690 --> 00:23:50.869
where they diverge from this analysis? So with that,

00:23:50.880 --> 00:23:53.309
we'll move into the panel. I just want to note that

00:23:53.309 --> 00:23:56.460
I'm going to give, we have a lot of panelists. So I'm

00:23:56.460 --> 00:23:59.140
going to give very abbreviated bios for everyone. But

00:23:59.140 --> 00:24:00.670
if you would like to see their full bio, they will

00:24:00.670 --> 00:24:03.390
be posted on the website. So I'm gonna turn it over

00:24:03.390 --> 00:24:06.799
to our first speaker, Aleecia Gutierrez who is the Director

00:24:06.799 --> 00:24:09.410
of the California Energy Commission's Energy Assessment

00:24:09.410 --> 00:24:12.369
Division. Which forecasts and assesses energy demand

00:24:12.369 --> 00:24:16.579
and supply. Aleecia?

00:24:16.579 --> 00:24:20.529
Good morning. Uh as Jene said, I'm Aleecia Gutierrez. I'm

00:24:20.529 --> 00:24:22.930
the Director of the Energy Assessment Division at 

00:24:22.930 --> 00:24:26.009
CEC. And appreciate the invitation to participate

00:24:26.009 --> 00:24:29.069
in today's En Banc. And for the opportunity to present

00:24:29.069 --> 00:24:31.480
information on natural gas prices in the West over

00:24:31.480 --> 00:24:34.400
these recent Winter months. That's the topic of today's

00:24:34.599 --> 00:24:37.700
En Banc. I look forward to hearing the perspectives and

00:24:37.700 --> 00:24:43.839
insights shared today. Next slide please.

00:24:43.839 --> 00:24:47.029
Next slide.

00:24:47.029 --> 00:24:50.839
Uh, there we go. Uh, this slide sets the stage by providing

00:24:50.839 --> 00:24:53.380
a snapshot of the gas system in the Western States,

00:24:53.380 --> 00:24:56.799
and how gas goes into California. California imports

00:24:56.799 --> 00:25:00.250
about 90% of its natural gas from out of state sources.

00:25:00.250 --> 00:25:03.630
And this graphic shows a percentage breakdown, actually

00:25:03.630 --> 00:25:06.130
it does not show all. I'll tell you the percentage breakdown

00:25:06.130 --> 00:25:09.160
of supplies from Northern American Production Basins.

00:25:09.430 --> 00:25:13.200
So, California receives about 30% from Western Canada,

00:25:13.210 --> 00:25:18.960
30% from the Rockies, 30% from San Juan Basin, and about

00:25:18.960 --> 00:25:22.859
10% from West Texas-Permian Basin. As you can see

00:25:22.859 --> 00:25:25.750
California is dependent on gas imports, insists at

00:25:25.750 --> 00:25:29.170
the end of a pipeline network that transports the gas

00:25:29.180 --> 00:25:32.789
from these out of state sources. This makes California

00:25:32.789 --> 00:25:35.829
vulnerable to natural disaster, pipeline maintenance

00:25:35.829 --> 00:25:39.299
or other outages. And other events that could cut off

00:25:39.309 --> 00:25:43.690
or greatly reduce our natural gas supplies. Next slide please.

00:25:45.579 --> 00:25:49.079
This graphic focuses in on the topic of today. Showing

00:25:49.079 --> 00:25:52.740
the pricing situation in California and compares average

00:25:52.750 --> 00:25:56.319
gas prices at California hubs. To prices at Henry Hub

00:25:56.329 --> 00:25:59.339
which is the national benchmark in Louisiana, over the

00:25:59.339 --> 00:26:02.799
past two Winters. The solid lines show the prices for

00:26:02.799 --> 00:26:07.740
Winter 2022-2023. And the dotted lines show prices for

00:26:07.740 --> 00:26:12.700
Winter 2021-2022. The key takeaways here are prices

00:26:12.710 --> 00:26:15.250
for California began to climb in early November, as

00:26:15.259 --> 00:26:18.730
Jean was pointing out. And started climbing more rapidly

00:26:18.730 --> 00:26:22.049
towards the end of that month. Prices hit a peak of

00:26:22.059 --> 00:26:28.819
$53.11 per MMBtu on December 22. This was 7 times

00:26:28.819 --> 00:26:33.509
higher than Henry Hub on that date. Next slide please.

00:26:35.460 --> 00:26:38.329
We gain perspective on what has been happening with

00:26:38.329 --> 00:26:41.279
prices in California, by comparing to other price hubs

00:26:41.279 --> 00:26:44.470
in the West in greater United States. This graphic

00:26:44.470 --> 00:26:49.200
shows uh, some key takeaways that are um price spikes

00:26:49.200 --> 00:26:52.789
were not unique to California. Prices throughout the

00:26:52.789 --> 00:26:56.619
West and Southwest were elevated during November 2022

00:26:56.630 --> 00:27:00.059
through January 2023, with December prices being the

00:27:00.059 --> 00:27:03.849
highest. In comparing Western U.S. with the rest of the

00:27:03.849 --> 00:27:07.500
country. Shows that Eastern hub like Chicago and Boston

00:27:07.509 --> 00:27:10.589
had much lower prices and did not experience the same

00:27:10.589 --> 00:27:13.900
price surge. Kingsgate, which is the main delivery

00:27:13.900 --> 00:27:16.970
point for Canadian gas to California. Is a Western hub

00:27:16.970 --> 00:27:19.269
that did experience the price spike in December, but

00:27:19.269 --> 00:27:23.299
has since come down to normal range in January. Next slide

00:27:23.299 --> 00:27:25.710
please.

00:27:25.710 --> 00:27:29.430
This side is just uh, the same data as slide 4 in a

00:27:29.430 --> 00:27:33.109
map graphic. Uh, giving you a visual, visual perspective

00:27:33.119 --> 00:27:36.420
on locations with price comparisons for each month

00:27:36.430 --> 00:27:40.000
at each location. This map gives us some perspective that

00:27:40.000 --> 00:27:43.250
price spikes were seen in the Western region and impacted

00:27:43.259 --> 00:27:47.859
neighboring states. Next slide please.

00:27:47.859 --> 00:27:51.279
This slide presents information about intrastate and

00:27:51.289 --> 00:27:54.549
interstate pipelines that supply gas to California.

00:27:54.559 --> 00:27:57.859
The map also shows the approximate location of the

00:27:57.859 --> 00:28:01.279
EPNG Line 2000 explosion that occurred in August

00:28:01.279 --> 00:28:05.230
2021, which impacted supplies to Southern California.

00:28:05.240 --> 00:28:07.849
I will share some observations and trends regarding

00:28:07.849 --> 00:28:12.880
pipelines and capacity in California. The state's pipeline

00:28:12.890 --> 00:28:15.700
system has remained relatively unchanged in the last

00:28:15.700 --> 00:28:18.750
10 years, and many pipelines in California are over

00:28:18.759 --> 00:28:23.569
50 years old. Southwest Gas stopped deliveries in California

00:28:23.569 --> 00:28:27.259
in 2019, due to lack of business. But this did not notably

00:28:27.259 --> 00:28:31.299
impact supplies to California. In recent years, several

00:28:31.299 --> 00:28:34.400
pipelines that supply natural gas to California experienced

00:28:34.410 --> 00:28:37.349
unplanned maintenance events, in addition to their

00:28:37.349 --> 00:28:40.990
planned maintenance. For example, EPNG was severely

00:28:40.990 --> 00:28:45.269
hit when Line 2000 suffered an explosion in 2021, resulting

00:28:45.269 --> 00:28:48.849
in loss of capacity throughout that segment. The explosion

00:28:48.849 --> 00:28:54.710
resulted in a loss of 591 BCF per day of capacity through

00:28:54.710 --> 00:28:59.220
the area, and a loss of total delivery capacity to Ehrenberg

00:28:59.220 --> 00:29:05.069
of 21% for 468 BCF per day. It is key to note

00:29:05.069 --> 00:29:08.549
that the posted available delivery capacity at Ehrenberg

00:29:08.559 --> 00:29:14.640
is 1779 BCF per day. If all shippers along EPNG South

00:29:14.640 --> 00:29:19.119
mainline decided to deliver to Ehrenberg. The pipeline

00:29:19.119 --> 00:29:22.049
is still out of service, although repairs are complete

00:29:22.049 --> 00:29:26.089
and repressurization plans are being, are pending

00:29:26.089 --> 00:29:31.150
approval. Five additional force majeure events happened

00:29:31.150 --> 00:29:35.220
on the EPNG gas system that delivers gas to California

00:29:35.230 --> 00:29:39.960
from November 18-December 19, 2022. All but one

00:29:39.960 --> 00:29:44.839
has been resolved as of January 31, 2023. Some other

00:29:44.839 --> 00:29:47.940
notable pipeline events that affected pipeline capacity

00:29:47.940 --> 00:29:51.190
includes Transwestern force majeure event on November

00:29:51.200 --> 00:29:58.769
15, 2021, uh resulting in a loss of 1195 BCF per

00:29:58.769 --> 00:30:03.930
day of capacity. Gas transmission Northwest maintenance

00:30:03.940 --> 00:30:08.450
at Kingsgate, uh in December, reduced capacity uh through

00:30:08.450 --> 00:30:13.339
the compressor station by 8%. BC Pipeline experienced

00:30:13.349 --> 00:30:17.019
unplanned maintenance events reduced, reducing capacity

00:30:17.019 --> 00:30:21.079
to 70% of normal capacity at different times throughout

00:30:21.079 --> 00:30:25.990
December 2022. An unplanned maintenance event severely

00:30:25.990 --> 00:30:29.150
impacted the takeaway capacity in the Permian Basin,

00:30:29.160 --> 00:30:32.940
uh was severely impacted November through December

00:30:32.940 --> 00:30:37.210
2022. Natural gas produced in the basin cannot get

00:30:37.210 --> 00:30:40.920
out to a market which resulted in prices at Waha Hub

00:30:40.930 --> 00:30:44.529
West Texas to drop, and even become negative at different

00:30:44.529 --> 00:30:48.099
times. Next slide please.

00:30:48.099 --> 00:30:51.500
The top two graphs in this slide compare PG&E and

00:30:51.509 --> 00:30:54.420
SoCalGas storage for the last two Winters. And show

00:30:54.420 --> 00:30:57.269
that storage volumes are lower for both utilities.

00:30:57.279 --> 00:31:00.609
The bottom graph shows volumes of independently owned

00:31:00.619 --> 00:31:04.349
storage facilities. These volumes are also shown. We

00:31:04.349 --> 00:31:06.970
have some general observations about storage trends

00:31:06.970 --> 00:31:11.109
in California. Storage capacity increased in California

00:31:11.109 --> 00:31:16.599
from 2005 to 2015, according to EIA data. It has been

00:31:16.599 --> 00:31:20.779
flat, flat since 2015 except for a (inaudible).

00:31:21.599 --> 00:31:25.109
CalGEM regulations went into effect in 2018, which

00:31:25.109 --> 00:31:28.460
implemented new safety rules for gas utilities regarding

00:31:28.460 --> 00:31:31.740
inspection and testing schedules, and pipeline construction

00:31:31.740 --> 00:31:36.559
and maintenance. PG&E reclassified 50 MMcf

00:31:36.559 --> 00:31:40.240
of natural gas from working based, working gas to

00:31:40.240 --> 00:31:43.319
base gas. Base gas is used to keep pressure up in

00:31:43.319 --> 00:31:46.599
a storage fill and not used in injection withdrawal

00:31:46.599 --> 00:31:50.349
operations that is not available for use. Next slide please.

00:31:52.630 --> 00:31:56.150
So our observations for this Winter, our natural gas

00:31:56.150 --> 00:31:59.380
prices have been volatile in the West, notably in California

00:31:59.380 --> 00:32:02.299
in the past couple of months. The Eastern U.S. did not

00:32:02.299 --> 00:32:06.130
experience the same price volatility. Prices increased

00:32:06.130 --> 00:32:09.539
at the end of November and peaked on December 22nd,

00:32:09.549 --> 00:32:15.180
which was 7.6 times higher than Henry Hub. Prices seem

00:32:15.180 --> 00:32:17.640
to be trending lower in the past couple of weeks, but

00:32:17.640 --> 00:32:22.160
are still high compared to previous Winters. California

00:32:22.160 --> 00:32:28.720
gas prices are about to 2 times um, higher than Henry

00:32:28.720 --> 00:32:34.859
Hub as of uh, January 31, 2023, but still turning downwards.

00:32:36.359 --> 00:32:39.329
A combination of factors contributed to these higher

00:32:39.329 --> 00:32:42.210
Winter prices, including cold weather in the West,

00:32:42.220 --> 00:32:47.859
higher gas demand for heating was required. Um, interruptions

00:32:47.869 --> 00:32:50.779
to supply as I mentioned, the pipeline maintenance

00:32:50.789 --> 00:32:55.240
such as Line 2000, lower storage volumes in California.

00:32:55.250 --> 00:32:58.470
And uploaded earlier, the West also saw record high

00:32:58.470 --> 00:33:01.509
natural gas usage for electric generation due to the

00:33:01.509 --> 00:33:05.130
lack of alternative resources. These challenges highlight

00:33:05.140 --> 00:33:08.299
the importance of energy agencies examining the gas

00:33:08.299 --> 00:33:13.500
electric interconnections further. Next slide please.

00:33:13.500 --> 00:33:16.930
Uh, collaborative planning efforts provide a pathway

00:33:16.940 --> 00:33:20.380
for addressing challenges with, and reducing vulnerability

00:33:20.390 --> 00:33:24.559
to high gas prices. As part of the CEC 2023

00:33:24.559 --> 00:33:27.710
IEPR process, the CEC will hold public workshops to

00:33:27.710 --> 00:33:33.140
tee up gas planning issues, including prices and affordability.

00:33:33.150 --> 00:33:36.430
The CEC will also continue to work collaboratively

00:33:36.430 --> 00:33:39.960
with other energy agencies on both near term and long

00:33:39.960 --> 00:33:43.170
term strategies that will help manage overall system

00:33:43.170 --> 00:33:46.099
costs.

00:33:46.099 --> 00:33:49.170
And I believe that is it for me. I will now turn

00:33:49.170 --> 00:33:53.609
it back to Jean, to introduce the next speaker.

00:33:53.609 --> 00:33:57.299
Thank you Aleecia. Next up is Rodger Schwecke, who is the Senior

00:33:57.299 --> 00:33:59.759
Vice President and Chief infrastructure Officer for

00:33:59.769 --> 00:34:04.109
SoCalGas. Go ahead Rodger. Yeah, thanks Jean. Good

00:34:04.109 --> 00:34:07.490
morning everyone. Um, let's go to the next slide please.

00:34:07.500 --> 00:34:10.199
I kind of want to cover some some high level points

00:34:10.199 --> 00:34:14.090
and I'll dig a little deeper, uh into a few topics. You

00:34:14.090 --> 00:34:18.130
know, when we look at our investment in infrastructure,

00:34:18.139 --> 00:34:22.519
operations and maintenance. We strive to uphold several

00:34:22.530 --> 00:34:27.070
main principles safety, reliability, affordability,

00:34:27.070 --> 00:34:30.889
and efficiency for our customers. As a prudent operator,

00:34:30.900 --> 00:34:35.119
you try to plan for every reasonable eventuality. Our

00:34:35.130 --> 00:34:39.300
goal is to always uphold system integrity. Against this

00:34:39.300 --> 00:34:42.719
backdrop, as we go into a Winter. You know, we want

00:34:42.719 --> 00:34:44.909
to have certainty that our pipeline infrastructure

00:34:44.909 --> 00:34:49.289
and storage facilities are prepared for what the Winter

00:34:49.289 --> 00:34:52.789
might bring us. And this Winter, they were prepared.

00:34:52.800 --> 00:34:57.619
Uh, when I look at our pipeline system, our capacity

00:34:57.619 --> 00:35:01.199
to receive gas from the out-of-state, that was mentioned

00:35:01.199 --> 00:35:05.969
earlier. We get 95% of our gas, uh from out-of-state

00:35:06.860 --> 00:35:10.480
but we were at a five year high. Uh and, you know,

00:35:10.480 --> 00:35:13.570
I'm really proud of my team and what they've done. To

00:35:13.570 --> 00:35:15.949
bring that pipeline capacity and maintain that pipeline

00:35:15.949 --> 00:35:19.800
capacity to be able to do that. When you look at our

00:35:19.800 --> 00:35:23.840
storage inventories, uh they were at a 6-year high

00:35:23.849 --> 00:35:26.829
and I'll get a little more into that. You know, the

00:35:26.829 --> 00:35:29.530
level we had going into the Winter on November 1st,

00:35:29.530 --> 00:35:32.829
the start of the Winter season um we're at the highest

00:35:32.829 --> 00:35:37.409
level. You know, and with CPUC approval, you know,

00:35:37.409 --> 00:35:39.070
there's some other things that we might be able to

00:35:39.079 --> 00:35:43.030
do. Uh for example, and I'll go a little more. Increasing the authorization

00:35:43.030 --> 00:35:47.150
and use of Aliso Canyon, pipeline enhancements, compressor

00:35:47.150 --> 00:35:49.730
station modernization and ultimately on a longer term

00:35:49.730 --> 00:35:54.349
basis, Angeles Link. Now in the short term and near-

00:35:54.349 --> 00:35:56.829
term, we've been utilizing a wide variety of tools

00:35:56.840 --> 00:36:00.539
with the CPUC's assistance. You know, help customers

00:36:00.550 --> 00:36:04.570
navigate this unusual period with early and frequent

00:36:04.570 --> 00:36:07.010
communications. I mean our communications on Winter

00:36:07.010 --> 00:36:10.750
preparedness to start back in October. Uh, promoting energy

00:36:10.750 --> 00:36:14.050
efficiency, bill assistance through our payment plans,

00:36:14.050 --> 00:36:18.269
a gas assistance fund. And as was mentioned, the recently

00:36:18.269 --> 00:36:22.230
approved acceleration of the Climate Credit. From later

00:36:22.230 --> 00:36:25.489
in the year, to earlier in the year. To give customers

00:36:25.489 --> 00:36:30.760
immediate, uh relief. You know, while we procure gas

00:36:30.760 --> 00:36:34.559
for our core customers. For SoCalGas and San Diego

00:36:34.559 --> 00:36:38.130
Gas and Electric to support reliability and affordability.

00:36:38.730 --> 00:36:44.980
The longstanding policy of decoupling, um removes the

00:36:44.980 --> 00:36:47.050
connection, the direct connection between commodity

00:36:47.050 --> 00:36:51.190
sales and profits. Now, commodity sales are set on

00:36:51.190 --> 00:36:54.610
a regional and national level. And we don't mark up,

00:36:54.610 --> 00:36:57.090
SoCalGas does not mark up the cost of energy at

00:36:57.090 --> 00:37:00.960
purchase on behalf of its customers.

00:37:00.960 --> 00:37:04.090
I want to straight, stress one thing the importance

00:37:04.099 --> 00:37:09.630
of reliable and unrestricted gas infrastructure cannot

00:37:09.630 --> 00:37:13.380
be overstated. Building and maintaining infrastructure

00:37:13.380 --> 00:37:15.719
is critical to the reliability and affordability of

00:37:15.719 --> 00:37:20.320
energy. The assets infrastructure including pipelines,

00:37:20.320 --> 00:37:25.170
compressors, storage facilities need to be maintained

00:37:25.179 --> 00:37:28.000
to help gas and electric service reliability during

00:37:28.010 --> 00:37:31.679
peak periods of demands, and to mitigate price volatility.

00:37:33.019 --> 00:37:36.170
That's not only the Winter, but also it looks at Summer.

00:37:36.179 --> 00:37:40.860
So if we go to the next slide please.

00:37:40.860 --> 00:37:45.039
This, this shows basically depicts our system with

00:37:45.050 --> 00:37:48.340
what we like to call is our zones. And these are zones

00:37:48.340 --> 00:37:51.099
where we have certain received points and that's interconnections

00:37:51.099 --> 00:37:54.039
with interstate pipelines. And pipelines in our system

00:37:54.039 --> 00:37:57.199
that somewhat interact with each other. And you have

00:37:57.199 --> 00:38:01.219
capacity limitations for the entire zones. I want to

00:38:01.219 --> 00:38:04.400
point out one area, the Southern zone which is really

00:38:04.400 --> 00:38:08.269
critical. I get a little, little left on that. But again,

00:38:08.280 --> 00:38:14.500
natural gas storage and local reliability help mitigate

00:38:14.500 --> 00:38:19.519
prices and provide the reliability. Um, so as we go

00:38:19.519 --> 00:38:24.860
in, you know, we prioritize safety uh, first and foremost

00:38:24.869 --> 00:38:27.230
and we try to maintain capacity. And as I mentioned,

00:38:27.239 --> 00:38:29.980
our receipt capacity and that is best to bring guests

00:38:29.980 --> 00:38:33.719
in the interstate uh, at a 5-year high. You know,

00:38:33.719 --> 00:38:37.570
additional sources from Aliso Canyon and our storage

00:38:37.570 --> 00:38:42.280
fields, you know, help dampen effect on price volatility.

00:38:42.920 --> 00:38:47.019
Let's go to the next slide please.

00:38:47.019 --> 00:38:50.280
This slide will depict and how much gas that was actually

00:38:50.280 --> 00:38:52.510
being delivered into our system on an annual basis,

00:38:52.519 --> 00:38:55.139
on a daily basis through the month of December. You

00:38:55.139 --> 00:38:57.469
see it was fairly level, it did increase in some periods

00:38:57.469 --> 00:39:00.670
of time. Uh but yet, what I'd like to point out this

00:39:00.670 --> 00:39:03.659
actually showed that there was capacity still available,

00:39:03.670 --> 00:39:07.820
uh to bring gas in the system. Now SoCalGas, we

00:39:07.820 --> 00:39:10.670
rely heavily on the El Paso system. Especially that

00:39:10.679 --> 00:39:13.219
Southern system that I mentioned because that's the

00:39:13.219 --> 00:39:16.510
major pipeline is connected, that system. And we don't

00:39:16.510 --> 00:39:19.739
have storage fields located on our Southern system

00:39:19.750 --> 00:39:23.710
that we can, uh work with. So the restriction on the

00:39:23.710 --> 00:39:27.199
El Paso pipeline really exacerbated the already tight

00:39:27.199 --> 00:39:31.079
conditions in the  Southwest. Good news is El Paso completed

00:39:31.079 --> 00:39:34.889
the work and just recently posted that teams approved

00:39:34.889 --> 00:39:38.289
them. Placing Line 2000 back in service, as original

00:39:38.289 --> 00:39:43.349
pressure, which is targeted for February 15.

00:39:43.349 --> 00:39:47.360
Let's go on to the next slide.

00:39:47.360 --> 00:39:50.820
I wanna, I wanna highlight when I looked at this storage,

00:39:50.829 --> 00:39:56.449
uh we talked about the EIA report. Um and this

00:39:56.449 --> 00:40:00.269
really shows that were SoCalGas, where we started

00:40:00.269 --> 00:40:02.840
was above a 5-year average and above last year.

00:40:02.849 --> 00:40:05.460
But then you can see the drop that we had in the

00:40:05.460 --> 00:40:08.599
November and December timeframe flattening out, and

00:40:08.599 --> 00:40:13.599
they continue for the remaining part of January. You

00:40:13.599 --> 00:40:20.360
know, as we turn to uh price volatility, EIA analysis

00:40:20.369 --> 00:40:24.570
this is several factors. Lower than normal temperatures

00:40:24.570 --> 00:40:27.650
in the West, reduced natural gas flows from the interstate

00:40:27.650 --> 00:40:31.019
pipelines and below average storage levels. And this

00:40:31.019 --> 00:40:33.829
graph shows, that we were actually above our historical

00:40:33.829 --> 00:40:37.639
levels, but it does also show how the weather dependent

00:40:37.639 --> 00:40:41.360
and worked on storage. I would like to mention that

00:40:41.369 --> 00:40:44.389
there's also a purple line that you see there, which

00:40:44.389 --> 00:40:47.690
is a different potential maximum for Aliso Canyon.

00:40:47.690 --> 00:40:54.510
And I'll touch on that as we go forward. Um

00:40:54.510 --> 00:40:58.050
let's, let's go to the next slide, as time is short.

00:40:59.550 --> 00:41:03.260
You know, the West and the cold temperatures EIA mentioned

00:41:03.269 --> 00:41:06.519
and increased demand on the West. You know, 23% higher

00:41:06.519 --> 00:41:10.269
core and commercial demand, you know, higher demand

00:41:10.269 --> 00:41:15.239
for electric generation. In our service territory alone,

00:41:15.280 --> 00:41:19.849
the average demand for November, December and January

00:41:20.360 --> 00:41:23.530
averaged over 200 million cubic feet a day more than

00:41:23.530 --> 00:41:27.130
the 5-year average. This is a graph that shows just

00:41:27.130 --> 00:41:32.030
how high demand was during the November 2022 period.

00:41:32.039 --> 00:41:35.090
And that required the pull on storage that I showed

00:41:35.090 --> 00:41:37.889
on the storage graphs. So let's go to the next slide 

00:41:37.889 --> 00:41:40.650
please.

00:41:40.650 --> 00:41:44.340
This then shows the December profile. And the December

00:41:44.340 --> 00:41:47.800
profile was really acute during the middle, the 2nd

00:41:47.800 --> 00:41:50.409
and 3rd week of December, where we saw some very cold

00:41:50.409 --> 00:41:53.550
temperatures. And where at the withdrawals that we had

00:41:53.550 --> 00:41:56.829
from our storage filled almost equated to 8 BCF

00:41:56.829 --> 00:41:59.829
withdrawal. Just during that one week, one week and

00:41:59.829 --> 00:42:04.010
a half period. So you can see how going into the Winter,

00:42:04.010 --> 00:42:08.420
we were prepared. We were hit with colder than normal

00:42:08.429 --> 00:42:11.730
November weather, and then further colder than normal

00:42:11.739 --> 00:42:17.510
December weather. So let's go to the next slide. I'm

00:42:17.510 --> 00:42:21.219
sorry, stay there. I just wanna kind of touch on a

00:42:21.219 --> 00:42:23.429
couple things in looking forward. You know, in the

00:42:23.429 --> 00:42:25.659
near-term, I talked about what we've done as far as

00:42:25.659 --> 00:42:28.719
communication, bill assistant programs, gas assistance

00:42:28.730 --> 00:42:34.320
fund and the Climate Credit. Um, which is great for

00:42:34.320 --> 00:42:37.039
that moving April to February, the Climate Credit

00:42:37.039 --> 00:42:39.969
for gas customers. You know, we donated a million dollars

00:42:39.969 --> 00:42:42.260
for a gas assistance fund to help customers with their

00:42:42.260 --> 00:42:45.650
bills. Some of the other good news as was mentioned,

00:42:46.010 --> 00:42:50.019
gas rates for February had been reduced about $11

00:42:50.019 --> 00:42:52.690
a dekatherm, which is much more in line with December's

00:42:52.690 --> 00:42:56.579
numbers. So and, and when you look at a

00:42:56.590 --> 00:42:59.929
forward price basis. The prices are set to go down

00:42:59.929 --> 00:43:04.059
even further in the coming months in March and April.

00:43:04.070 --> 00:43:06.780
And I would say current daily prices are probably the

00:43:06.780 --> 00:43:10.730
lowest I've seen in a long time in the $4-$5 range,

00:43:10.739 --> 00:43:14.929
those are the spot prices. Uh, if we look at opportunities

00:43:14.929 --> 00:43:17.670
to improve and what we can do on both the short term,

00:43:17.670 --> 00:43:20.829
long term. Obviously, I already mentioned the El Paso

00:43:20.829 --> 00:43:24.639
Line 2000 coming back on February 15th. You know, will

00:43:24.639 --> 00:43:28.829
help us this Winter, but will help us for the coming

00:43:28.829 --> 00:43:33.789
Winter and Summer periods that we have for 2023. I think

00:43:33.789 --> 00:43:37.099
it's also appropriate that we look at some are constrained

00:43:37.099 --> 00:43:41.010
assets. Uh, one in particular is Aliso Canyon and we

00:43:41.010 --> 00:43:43.519
shouldn't reevaluate the appropriate inventory level of

00:43:43.519 --> 00:43:46.960
Aliso Canyon. Uh, we currently have an established limit

00:43:46.960 --> 00:43:51.630
that was at 41.6 BCF. In the decision that set that

00:43:51.639 --> 00:43:54.300
the Commission decision. It said it was an interim

00:43:54.300 --> 00:43:57.480
limit that should be evaluated in the future and maybe

00:43:57.480 --> 00:44:01.599
now is the time to look at that. Also simulations that

00:44:01.599 --> 00:44:04.309
have worked through some of the other proceedings has

00:44:04.309 --> 00:44:08.699
shown that. You know, limits up to the CalGem established

00:44:08.699 --> 00:44:14.630
limit of 68.6 BCF is necessary for, you know, reliability.

00:44:14.630 --> 00:44:17.360
The 1 and 10 scenario and can help further mitigate

00:44:17.360 --> 00:44:22.980
prices. Also recently updated in 2019 Aliso withdrawal

00:44:22.989 --> 00:44:27.260
protocol, for how we and when we can use Aliso Canyon.

00:44:27.460 --> 00:44:30.440
May be needed to look at it and consider not only

00:44:30.440 --> 00:44:33.670
just for reliability. Because the conditions that we

00:44:33.670 --> 00:44:36.460
have in the withdrawal protocol are based on when we're

00:44:36.469 --> 00:44:40.429
already in a constrained condition. Not looking forward

00:44:40.440 --> 00:44:44.469
for price suppression per se. So create flexibility

00:44:44.480 --> 00:44:49.719
and use, uh we're good. So I'll wrap it up there. Again, thank

00:44:49.719 --> 00:44:54.260
you for your time.

00:44:54.260 --> 00:44:57.429
Thank you Rodger. I'm going to announce the three PG&E,

00:44:57.440 --> 00:44:59.739
there's three speakers from PG&E. Uh, I think they

00:44:59.739 --> 00:45:02.230
wanted to each go to their area of expertise. So I'm going

00:45:02.230 --> 00:45:04.260
to announce them all at once, and then they can just

00:45:04.260 --> 00:45:08.030
announce the next person, um to save time. So the first

00:45:08.030 --> 00:45:11.090
person up is Gillian Clegg, who is the Vice President

00:45:11.090 --> 00:45:14.469
of Energy Policy and Procurement. Lucy Redmond will

00:45:14.469 --> 00:45:16.920
go second. She's the Director of Facilities and Storage

00:45:16.929 --> 00:45:19.949
Engineering. And Alfred Musgrove is the Director of

00:45:19.949 --> 00:45:26.530
Gas Control for PG&E. Um, so to Gillian please.

00:45:26.530 --> 00:45:28.599
Good morning. Thank you for your time this morning,

00:45:28.599 --> 00:45:33.449
and for the invitation to speak on the at the En Banc today. As my

00:45:33.449 --> 00:45:37.349
introduction indicated, um I oversee all gas procurement

00:45:37.360 --> 00:45:40.679
at PG&E. That includes gas procurement for two distinct

00:45:40.690 --> 00:45:43.880
teams. The Core Gas Supply Department that purchases

00:45:43.880 --> 00:45:47.380
gas on behalf of residential and small commercial customers.

00:45:47.389 --> 00:45:50.239
As well as our Electric Gas Supply Department that

00:45:50.239 --> 00:45:54.159
purchases gas to serve our utility owned and contracted

00:45:54.170 --> 00:45:57.860
gas fueled power plants. I want to point out, you will

00:45:57.860 --> 00:46:01.159
hear from other speakers from PG&E today. The Gas Procurement

00:46:01.159 --> 00:46:04.670
teams that I oversee are totally separate and independent

00:46:04.679 --> 00:46:08.190
from the PG&E Gas Operations and Engineering teams.

00:46:08.199 --> 00:46:11.989
That own, operate and maintain PG&E storage and pipeline

00:46:11.989 --> 00:46:15.599
assets. Today, I plan to talk about prices. You've

00:46:15.599 --> 00:46:17.579
heard a little bit about it already. I'll try not to

00:46:17.579 --> 00:46:20.880
duplicate what you've already seen. Um, and some drivers

00:46:20.880 --> 00:46:22.989
of those prices that we have observed this week, this

00:46:22.989 --> 00:46:25.340
Winter. And a little bit more on one in particular that

00:46:25.340 --> 00:46:28.869
hasn't been hit on much so far. So the next slide is

00:46:28.869 --> 00:46:31.400
gonna show a very familiar looking price chart to you

00:46:31.400 --> 00:46:36.679
by now. It's gonna show high and spiky prices. Thank

00:46:36.679 --> 00:46:40.219
you. Um, four of these lines they, and the point I wanted

00:46:40.219 --> 00:46:43.059
to make with this chart is roughly been made already.

00:46:43.059 --> 00:46:46.619
That it was really a West wide issue this Winter, not

00:46:46.619 --> 00:46:49.559
just a California issue. Though many of us here today

00:46:49.559 --> 00:46:52.510
focused on the California market. So these price points

00:46:52.510 --> 00:46:56.119
represent a point near the Canada-US border in Northern

00:46:56.119 --> 00:47:00.309
Washington, Wyoming, Colorado, New Mexico and of course

00:47:00.309 --> 00:47:03.409
Northern California. The brown line on the very bottom

00:47:03.409 --> 00:47:06.269
that's very flat and stable as the U. S. benchmark

00:47:06.269 --> 00:47:12.199
known as Henry Hub. And so again, it has been very wild

00:47:12.199 --> 00:47:16.460
in the West this winter. So as you may know and uh,

00:47:16.469 --> 00:47:19.199
the SoCalGas speaker mentioned it as well. But PG&E

00:47:19.199 --> 00:47:22.559
does not mark up the price of gas. We pass through

00:47:22.559 --> 00:47:25.260
the cost of gas to customers at the same price that

00:47:25.260 --> 00:47:29.400
we buy it in the market. We also started customer communications

00:47:29.409 --> 00:47:32.480
early this Winter, dating back to October. There

00:47:32.480 --> 00:47:36.440
have been several press releases. Uh, we've sent emails

00:47:36.449 --> 00:47:39.639
even mid-billing cycle. To indicate whether a customer

00:47:39.639 --> 00:47:43.650
was on track to have high usage that month, and I myself

00:47:43.659 --> 00:47:48.340
have received one of those. Next slide please.

00:47:48.340 --> 00:47:50.449
The slide is gonna talk a bit about the drivers that

00:47:50.449 --> 00:47:52.940
we've seen and we've heard some of this already. Cold and

00:47:52.949 --> 00:47:56.400
early start to Winter. That drove up the gas demand

00:47:57.389 --> 00:48:01.050
we had. Um, and one that hasn't been focused on quite

00:48:01.050 --> 00:48:04.500
as much is the prolonged drought that we've been in.

00:48:04.510 --> 00:48:08.119
And the last 45 days aside in California, where we've

00:48:08.130 --> 00:48:11.590
been left with a lot of precipitation. We have seen

00:48:11.590 --> 00:48:14.949
a really a drastically lower hydro electric generation

00:48:14.960 --> 00:48:18.489
output in the market, compared to last year. Um, that's

00:48:18.489 --> 00:48:21.139
been true in the CAISO market, and I believe as well

00:48:21.150 --> 00:48:23.960
in the BPA and the Pacific Northwest. What that

00:48:23.960 --> 00:48:27.579
has meant is that, that electricity has to be replaced,

00:48:27.590 --> 00:48:31.489
and it's been replaced by gas fire generation. Increasing

00:48:31.489 --> 00:48:35.170
the demand for gas to be used for electric generation.

00:48:35.179 --> 00:48:39.480
The table shows just the PG&E gas demands. And

00:48:39.480 --> 00:48:42.340
so if you look at this on a wider footprint, you would

00:48:42.349 --> 00:48:45.590
see probably larger numbers. But year over year, we've

00:48:45.599 --> 00:48:49.800
had a 19% increase in demand, that's our portfolio alone

00:48:49.809 --> 00:48:54.030
has needed to generate electricity. So the other items

00:48:54.030 --> 00:48:56.960
on here, lower Pacific region storage has been touched

00:48:56.960 --> 00:49:00.210
on. The El Paso pipeline delivery constraints been touched

00:49:00.210 --> 00:49:03.960
on. I don't know that any one of these in isolation

00:49:03.969 --> 00:49:06.900
would have caused the impact to prices that we've seen.

00:49:06.909 --> 00:49:10.500
But the accumulation of both increased demands and

00:49:10.500 --> 00:49:14.599
decreased supply. Like in any market, those factors

00:49:14.599 --> 00:49:17.320
combined would increase prices and we have seen that

00:49:17.320 --> 00:49:19.579
this Winter.

00:49:19.579 --> 00:49:23.420
I also just included in this table a cumulative change

00:49:23.429 --> 00:49:27.980
in BCF billion cubic feet. To try to show you the impact

00:49:27.989 --> 00:49:31.460
of each one of these drivers in scale, relative to each

00:49:31.460 --> 00:49:35.039
other. So obviously recognized for the gas generation

00:49:35.050 --> 00:49:38.010
that, that would uh sorry, gas demand lines would be

00:49:38.010 --> 00:49:40.429
larger if you looked at a larger footprint across the

00:49:40.429 --> 00:49:43.429
West. This is just the data we had easily accessible.

00:49:44.519 --> 00:49:46.739
So on the next slide. I thought I'd dive in a little bit

00:49:46.739 --> 00:49:50.210
more into the storage picture. And kind of talk about

00:49:50.210 --> 00:49:54.070
why we think there has been lower inventories in storage

00:49:54.079 --> 00:49:57.539
year over year, and also relative to the 5-year average.

00:49:57.829 --> 00:50:00.010
The first thing I would point out is that the two gas

00:50:00.010 --> 00:50:03.639
procurement groups that I oversee started out the Winter

00:50:03.639 --> 00:50:07.719
November 1st. More than 90% full in their contracted

00:50:07.719 --> 00:50:11.690
storage. And as of November 30, our Core Gas Supply team

00:50:11.690 --> 00:50:15.679
had 99% of their contracted storage capacity filled.

00:50:16.219 --> 00:50:20.269
That's because PG&E is highly focused on reliability. And

00:50:20.269 --> 00:50:24.079
in fact, the Core Gas Supply team has CPUC Winter reliability

00:50:24.079 --> 00:50:27.300
requirements that they must meet. Part of that is having

00:50:27.300 --> 00:50:30.650
gas storage at the beginning of Winter. Both of my

00:50:30.650 --> 00:50:34.349
team's contract for gas storage capacity with the independent

00:50:34.360 --> 00:50:37.860
storage providers in Northern California. Meaning those

00:50:37.869 --> 00:50:40.829
four storage providers that are not owned by PG&E,

00:50:40.840 --> 00:50:45.469
but that do connect to PG&E system. Then PG&E Core Gas

00:50:45.469 --> 00:50:49.750
Supply also holds storage capacity with the PG&E owned

00:50:49.760 --> 00:50:54.309
storage fields in our service territory. But this chart

00:50:54.309 --> 00:50:56.920
dives a little bit more into the independent storage

00:50:56.920 --> 00:51:00.829
providers. They specifically because they have such

00:51:00.829 --> 00:51:03.969
significant capacity available to the market to store

00:51:03.969 --> 00:51:07.969
gas. The slide on the right shows a year over year

00:51:07.980 --> 00:51:13.369
usage of gas. As well as the black bar at the top,

00:51:13.369 --> 00:51:17.230
shows you the top, the capacity of that field. Both

00:51:17.230 --> 00:51:20.690
of these lines you can see are below the capacity. And

00:51:20.690 --> 00:51:22.880
the starting point for the blue line, which is this

00:51:22.880 --> 00:51:27.039
winter was roughly 25 BCF below the capacity. Meaning

00:51:27.039 --> 00:51:30.039
there was empty space in the ground at the beginning

00:51:30.039 --> 00:51:34.300
of Winter, that could have held gas but didn't. Now

00:51:34.300 --> 00:51:37.880
the role of the storage provider is to sell that capacity.

00:51:37.889 --> 00:51:41.360
Sell the empty space to market participants like

00:51:41.369 --> 00:51:45.340
PG&E Gas Procurement teams. But also say independent

00:51:45.340 --> 00:51:48.860
merchants, gas fired power plants or marketers which

00:51:48.860 --> 00:51:52.559
are banks or others who play a middleman role. Buying

00:51:52.559 --> 00:51:56.210
and selling gas in the market to make money. Then it's

00:51:56.219 --> 00:51:58.900
those market participants who actually buy the gas

00:51:59.190 --> 00:52:02.940
and put it into the ground to later serve load or to

00:52:02.940 --> 00:52:06.219
sell. I mentioned that winter reliability is one of

00:52:06.219 --> 00:52:08.510
the reasons to use storage, but another reason is to

00:52:08.510 --> 00:52:12.539
provide price protection. Typically, gas market prices

00:52:12.550 --> 00:52:15.239
are lower in the Spring and Summer when gas demands

00:52:15.239 --> 00:52:18.340
are lower. And higher in the Winter, when gas demands

00:52:18.340 --> 00:52:21.239
are higher. So what market participants will do is

00:52:21.239 --> 00:52:24.329
buy gas in the Spring, inject it into storage and then

00:52:24.329 --> 00:52:26.860
pull it out in the Winter when its value has gone up.

00:52:27.099 --> 00:52:29.809
So that price spread between Spring and Winter is a

00:52:29.820 --> 00:52:33.190
very strong driver as to how much gas gets injected

00:52:33.190 --> 00:52:36.469
into storage. Especially by those market participants

00:52:36.480 --> 00:52:40.070
that are out there maximizing profits. But we didn't

00:52:40.070 --> 00:52:43.949
see that Spring-Winter price trend in 2022. The chart

00:52:43.949 --> 00:52:48.889
on the left shows a flat forward curve as of May 31, 2022.

00:52:49.369 --> 00:52:51.969
That basically tells you that last Spring, if you're

00:52:51.969 --> 00:52:54.409
looking, should I buy gas and put it in the ground

00:52:54.409 --> 00:52:56.940
to pull out later and make money. The market's telling

00:52:56.940 --> 00:52:59.199
you, don't do that. You can buy it later at the same

00:52:59.199 --> 00:53:02.219
price as the wind in the Winter or even maybe a slightly

00:53:02.219 --> 00:53:06.619
lower price. My teams are less motivated by that seasonal

00:53:06.630 --> 00:53:10.130
price, price spread because of our regulatory and reliability

00:53:10.130 --> 00:53:12.909
requirements. So I mentioned already that we had our

00:53:12.909 --> 00:53:15.869
storage filled at the beginning of Winter. And so I don't

00:53:15.869 --> 00:53:18.909
know for sure why others didn't. But this lack of economic

00:53:18.920 --> 00:53:21.079
price spread might have been one of the reasons that

00:53:21.079 --> 00:53:23.730
storage capacity was not filled by the other market

00:53:23.730 --> 00:53:27.369
participants. So that was my last slide and I will

00:53:27.369 --> 00:53:31.489
pass it over to my colleague Lucy Redmond.

00:53:31.489 --> 00:53:33.550
All right, good morning. Thank you Gillian and thank

00:53:33.550 --> 00:53:37.860
you, um CPUC for having me today. My name is Lucy Redmond

00:53:37.869 --> 00:53:40.650
and I am the Director of the Facilities and Storage

00:53:40.650 --> 00:53:43.780
Engineering at PG&E. And my team is responsible

00:53:43.780 --> 00:53:46.130
for managing the integrity of the well and reservoir

00:53:46.130 --> 00:53:49.400
assets at our storage facilities. As well as PG&E's

00:53:49.400 --> 00:53:52.309
gas transmission and distribution facilities. We can

00:53:52.309 --> 00:53:56.269
go ahead and advance to the next slide please.

00:53:56.269 --> 00:53:58.750
So today, I will be addressing the reclassification

00:53:58.760 --> 00:54:01.510
of base gap, of the gas to base gas. As well as

00:54:01.510 --> 00:54:04.050
how recent CalGEM regulations have impacted storage

00:54:04.050 --> 00:54:08.820
operations. As part of PG&E's 2019 Gas Transmission

00:54:08.820 --> 00:54:11.960
and Storage rate case. PG&E redefined its storage offerings,

00:54:11.960 --> 00:54:14.510
reducing what was allotted to firm, introduced reserve

00:54:14.510 --> 00:54:17.449
capacity and increased inventory management for system

00:54:17.449 --> 00:54:19.929
balancing as part of the natural gas storage strategy.

00:54:21.360 --> 00:54:24.690
Aligning to these new service offerings, 51 BCF is PG&E

00:54:24.690 --> 00:54:27.889
owned gas was reclassified from working to base.

00:54:28.170 --> 00:54:31.019
And this did not remove gas from inventory, rather

00:54:31.019 --> 00:54:33.530
it was an accounting adjustment. And had no impact on

00:54:33.530 --> 00:54:36.880
the total inventory, nor was there any to backfill or replace

00:54:36.889 --> 00:54:39.539
the supply as it has remained in inventory since 

00:54:39.539 --> 00:54:44.650
reclassification. The working natural gas inventory effectively

00:54:44.650 --> 00:54:47.980
has been acting as base gas. Even before the reclassification

00:54:47.980 --> 00:54:50.960
formalized this change. And over the last 10 year period

00:54:50.960 --> 00:54:53.929
there are only two times that any of the 51 BCF was

00:54:53.929 --> 00:54:57.389
utilized for as available service, prior to the reclassification.

00:54:58.809 --> 00:55:01.550
This reclassification effectively committed the gas

00:55:01.559 --> 00:55:04.219
for ongoing pressure support. And for those of you who

00:55:04.219 --> 00:55:07.190
are not familiar with reservoir dynamics or the term

00:55:07.190 --> 00:55:09.710
pressure support. The reservoir can be thought of as

00:55:09.710 --> 00:55:12.690
a balloon and so the more full it is, the more force

00:55:12.690 --> 00:55:16.409
there is pushing gas out of the well. And this is

00:55:16.409 --> 00:55:18.949
especially important to have this pressure support.

00:55:18.960 --> 00:55:22.400
When the well flow area is reduced or in turn reduces

00:55:22.409 --> 00:55:24.750
the amount of that well can deliver, as we've experienced

00:55:24.750 --> 00:55:28.940
implementing the CalGEM regulations. And this in fact,

00:55:28.949 --> 00:55:32.010
this reclassification of base gas has enabled PG&E

00:55:32.019 --> 00:55:35.119
meet its obligations. Despite the year over year capacity

00:55:35.119 --> 00:55:37.769
losses we've experienced. And we continue to expect

00:55:37.769 --> 00:55:40.409
to see those losses this year in '23. As we continue

00:55:40.409 --> 00:55:44.559
our work program and further in 2024. Next slide, please.

00:55:48.070 --> 00:55:50.510
All right, to address the impact of the CalGEM regulations

00:55:50.510 --> 00:55:52.780
on storage really, there's two main areas to discuss.

00:55:52.789 --> 00:55:55.239
The first is the well construction requirement and

00:55:55.239 --> 00:55:58.809
the second's the mechanical integrity frequency. In late

00:55:58.809 --> 00:56:02.309
2018, CalGEM regulations became effective and required

00:56:02.309 --> 00:56:04.630
that all gas storage operators bring existing wells

00:56:04.630 --> 00:56:07.690
into conformance with a duel barrier construction. On

00:56:07.690 --> 00:56:10.659
the left, you can see example of historic construction

00:56:10.670 --> 00:56:13.389
of the wells that allows gas to flow in both the tubing

00:56:13.559 --> 00:56:16.619
and the casing flow areas. This is affected by the

00:56:16.619 --> 00:56:19.289
yellow highlight. Now, as you look to the figure on

00:56:19.289 --> 00:56:21.630
the right, you can see a converted well and it shows

00:56:21.639 --> 00:56:25.170
the restriction in the gas flow area. And is limited to

00:56:25.170 --> 00:56:27.650
only that interior tubing string, which is a dramatic

00:56:27.650 --> 00:56:31.880
reduction. PG&E on average has seen about a 40% decline in

00:56:31.880 --> 00:56:34.800
our well capacity with these changes. Um however,

00:56:34.800 --> 00:56:37.210
it's been step changes as the implementation has occurred

00:56:37.210 --> 00:56:39.699
year every year. But begins to maintain our deliverability

00:56:39.699 --> 00:56:46.409
obligations to date. Next slide please.

00:56:46.409 --> 00:56:49.550
The second area of regulation is the well mechanical

00:56:49.550 --> 00:56:52.260
integrity testing or more commonly known as well inspections.

00:56:53.010 --> 00:56:55.619
In performing these inspections has a great impact on

00:56:55.619 --> 00:56:58.199
well availability. As you can see in the picture on

00:56:58.199 --> 00:57:01.150
the right, this is a typical operation to perform the

00:57:01.150 --> 00:57:04.079
inspection. And the footprint is rather large and includes

00:57:04.090 --> 00:57:08.460
taking several wells out of service. PG&E is exacerbated

00:57:08.460 --> 00:57:11.460
due to our facility layout, where wells are spaced 25

00:57:11.460 --> 00:57:14.269
ft on center.

00:57:14.269 --> 00:57:16.949
Um again, we maintained our deliverability obligations

00:57:16.960 --> 00:57:19.590
each Winter while conducting the phase in of this construction

00:57:19.590 --> 00:57:22.440
requirements. And well inspections that started in 2019

00:57:22.440 --> 00:57:26.760
and continued through current day.

00:57:26.760 --> 00:57:28.750
The other part of the CalGEM regulations that we're

00:57:28.750 --> 00:57:31.559
still working through is a reoccurring frequency, that

00:57:31.559 --> 00:57:34.739
wells need to be inspected. CalGEM regulations allow

00:57:34.739 --> 00:57:36.969
for CalGEM to approve an alternate frequency. From

00:57:36.969 --> 00:57:40.099
the default and highly prescriptive, um infrequent

00:57:40.099 --> 00:57:44.389
cycle of 24 months. To be clear PG&E would not be able

00:57:44.389 --> 00:57:47.500
to provide a storage service if a 24 month inspection

00:57:47.510 --> 00:57:50.840
cycle was required. Just due to the magnitude of the

00:57:50.840 --> 00:57:54.059
outage impact, And we're currently awaiting a decision

00:57:54.070 --> 00:57:56.860
from CalGEM on the applied reinspection methodology

00:57:56.860 --> 00:58:00.139
that we've presented to them in 2019. And this approach

00:58:00.139 --> 00:58:03.530
balances while safety, gas system reliability and the

00:58:03.530 --> 00:58:06.079
costs associated with these major capital projects.

00:58:06.659 --> 00:58:08.630
This completes my presentation and I'm gonna turn it

00:58:08.630 --> 00:58:15.179
over to my colleague Alfred Musgrove. Thank you.

00:58:15.179 --> 00:58:18.030
Hi. And Alfred no pressure, but you only have a minute

00:58:18.030 --> 00:58:21.480
left. So if you can make it as quick as possible.

00:58:22.079 --> 00:58:28.000
Okay, let's go down two slides.

00:58:28.000 --> 00:58:31.329
So I'm the Director of Gas Control, Gas Control's responsible

00:58:31.329 --> 00:58:34.940
for remotely monitoring the transmission, transmission

00:58:34.940 --> 00:58:39.019
and distribution gas systems. As well as um, remote operations

00:58:39.019 --> 00:58:42.820
as required to 24/7 operation, 24/7 operation that I

00:58:42.820 --> 00:58:45.650
oversee. Um, I'm gonna address the two questions that

00:58:45.650 --> 00:58:48.739
were given to me. First question, what patterns have

00:58:48.739 --> 00:58:51.789
you seen in customers deliveries of gas to the system?

00:58:52.150 --> 00:58:55.090
Uh, generally market supplies are in alignment with

00:58:55.090 --> 00:58:57.139
our end use and we manage our system inventory with

00:58:57.139 --> 00:59:03.019
pipeline balancing. Um to define, to define that um

00:59:03.030 --> 00:59:06.579
system inventory is the volume of gas that holds transmission,

00:59:06.590 --> 00:59:09.130
holds are thousands of miles of transmission pipelines.

00:59:09.139 --> 00:59:12.400
Uh, it's continuously being updated through computations

00:59:12.400 --> 00:59:16.239
with our SCADA system. And PG&E storage is not considered

00:59:16.239 --> 00:59:20.329
part of system inventory. Um, the flexibility allows

00:59:20.329 --> 00:59:23.429
gas control to maintain system integrity and minimize

00:59:23.429 --> 00:59:25.619
calling what we call operational flow orders, which I

00:59:25.619 --> 00:59:28.659
can speak to shortly. With that being said, there are

00:59:28.659 --> 00:59:31.469
times when customer imbalances are large and pipeline

00:59:31.469 --> 00:59:33.789
balancing isn't sufficient. To prevent our forecasting

00:59:33.800 --> 00:59:37.210
system inventory levels from exceeding thresholds.

00:59:37.460 --> 00:59:39.889
The expected result of the action of an OFO is

00:59:39.889 --> 00:59:43.179
to bring the system back into balance. Uh, on this slide

00:59:43.179 --> 00:59:46.809
here, you can see that our OFO Winter activity at the

00:59:46.809 --> 00:59:49.829
topped November of 2022 through February 3rd of this

00:59:49.829 --> 00:59:53.829
year. Uh, next slide please.

00:59:53.829 --> 00:59:56.710
Uh, next question was have operational flow orders performed

00:59:56.710 --> 00:59:59.460
as expected to incentivize deliveries? I like this

00:59:59.460 --> 01:00:01.929
slide, because this shows the evidence of the effectiveness

01:00:01.929 --> 01:00:04.829
of calling an OFO. From our experience, OFO's

01:00:04.829 --> 01:00:07.529
To provide enough incentive to bring our system inventory

01:00:07.529 --> 01:00:11.789
within acceptable levels. Um, the upper red area is

01:00:11.789 --> 01:00:14.709
when the system inventory is too high and unsustainable.

01:00:14.719 --> 01:00:16.979
The red area below is when the system inventory is

01:00:16.989 --> 01:00:20.268
too low, inviting risk. On this instance here, you'll

01:00:20.268 --> 01:00:24.149
see on the left side, our plan for forecasting for

01:00:24.149 --> 01:00:29.129
the next day was showing 3.98 BCF. Um, and ultimately

01:00:29.129 --> 01:00:33.438
in calling the OFO, we were able to get the

01:00:33.449 --> 01:00:37.109
supplies to come in, bringing it back up to 4.265. So

01:00:37.109 --> 01:00:40.198
at that level, um the OFOs we fill in gas control

01:00:40.209 --> 01:00:45.488
are effective. And I'll turn it back over to, sorry Gillian.

01:00:55.508 --> 01:01:04.238
So that it for PG&E slides?

01:01:04.238 --> 01:01:07.149
I've turned it back over to Gillian. I believe there's

01:01:07.149 --> 01:01:09.609
one more slide, but many of the points on that slide

01:01:09.609 --> 01:01:12.339
have been addressed already. And so I'm happy to turn

01:01:12.339 --> 01:01:15.949
it back to you, moderator.

01:01:15.949 --> 01:01:19.119
Great, thank you. And thank you that was a lot to get

01:01:19.128 --> 01:01:23.119
through. So next up is Mark Pocta, who is the Program Manager

01:01:23.119 --> 01:01:26.309
with Public Advocate's Office. Which is part of the

01:01:26.318 --> 01:01:30.038
CPUC and his focus is on energy costs and natural gas.

01:01:30.048 --> 01:01:35.208
Mark? Thank you Jean and Good morning Commissioners.

01:01:35.219 --> 01:01:38.089
My name is Mark Pocta and I'm a Program Manager with the

01:01:38.089 --> 01:01:40.848
Public Advocate's Office. And I thank you for inviting

01:01:40.848 --> 01:01:45.169
me to hear to speak today. And I'll get uh, I know

01:01:45.169 --> 01:01:48.313
we're short on time. So uh, you've heard from the other

01:01:48.313 --> 01:01:51.994
speakers what these price run ups have been attributed.

01:01:51.994 --> 01:01:56.303
Due the El Paso situation, colder than normal temperatures,

01:01:56.313 --> 01:01:59.634
uh, all those factors impacting storage. Which was

01:01:59.634 --> 01:02:05.803
drawn down in November and December. Um, so what's

01:02:05.813 --> 01:02:08.583
different here, a little bit different observation

01:02:08.583 --> 01:02:11.643
here. Is we've seen some, you know, in the past we've seen

01:02:11.643 --> 01:02:16.419
price run ups at the border. Um, but we really never

01:02:16.428 --> 01:02:21.159
experienced them to the extent in the producing regions.

01:02:21.169 --> 01:02:26.998
And especially what happened this year, where there

01:02:26.998 --> 01:02:32.379
was a run up has already been noted of 8 times.

01:02:32.389 --> 01:02:39.178
Uh, the Henry Hub price, and that leaked over into bid week.

01:02:39.189 --> 01:02:42.909
So we've had, so we really haven't had these price

01:02:42.909 --> 01:02:46.738
run ups in the San Juan Basin, the Rocky Mountains. So

01:02:46.748 --> 01:02:50.218
in that respect, our division does support the request

01:02:50.218 --> 01:02:54.208
of Governor Newsom. Uh, for the Federal Energy

01:02:54.208 --> 01:02:56.928
Regulatory Commission investigate this matter. You

01:02:56.928 --> 01:03:03.169
know, because we saw such a huge run up. Uh, so we

01:03:03.169 --> 01:03:06.398
saw that observed the prices increasing through the

01:03:06.398 --> 01:03:10.409
early year. But it was on December 29 when SoCal and

01:03:10.409 --> 01:03:14.099
San Diego filed their monthly tariffs for January.

01:03:14.109 --> 01:03:18.708
That uh, you know, we saw these shockingly high

01:03:18.708 --> 01:03:24.768
prices. Uh, which were well beyond our pessimistic expectations

01:03:24.778 --> 01:03:29.558
for January. Already following uh, what we've seen in

01:03:29.569 --> 01:03:34.618
December daily prices. So we acted, we filed the motion.

01:03:34.618 --> 01:03:37.488
Which proposed to move the cap climate credits for

01:03:37.488 --> 01:03:41.479
gas customers to February. To mitigate the high gas

01:03:41.479 --> 01:03:45.208
prices that we expected. And we propose, made another

01:03:45.208 --> 01:03:47.768
proposal that each of (inaudible) customers and

01:03:47.778 --> 01:03:50.998
budget billing. That uh, spread the cost over a few

01:03:50.998 --> 01:03:57.289
months. Um so going beyond that, just a general observation

01:03:57.289 --> 01:04:01.919
is. It appears that setting everything else aside. There's

01:04:01.928 --> 01:04:07.868
um, more price volatility associated with weather. It's

01:04:07.868 --> 01:04:12.099
just an observation I, I hasn't been investigated in

01:04:12.099 --> 01:04:15.958
detail by us. But it's, it seems you see a lot more

01:04:15.968 --> 01:04:21.079
price movements and associated with the weather. Now

01:04:21.108 --> 01:04:25.398
with the sustained weather it just, um increased the

01:04:25.408 --> 01:04:31.958
volatility in the Western markets. So with that being said,

01:04:31.968 --> 01:04:35.939
what do you recommend that some consideration by the

01:04:35.939 --> 01:04:40.319
Commission? Well, the utilities have talked about storage

01:04:40.319 --> 01:04:45.299
and, and that is an asset within, uh the Commission's

01:04:45.299 --> 01:04:49.189
oversight. And it's important that these assets be

01:04:49.199 --> 01:04:54.088
optimized, because going forward with, you know, as

01:04:54.098 --> 01:04:58.588
the state decarbonizes. Um, actually storage assets

01:04:58.588 --> 01:05:02.908
are going to become more important to you as an asset.

01:05:02.918 --> 01:05:07.228
To utilize efficiently by the state and to mitigate,

01:05:07.239 --> 01:05:11.608
um these gas price movements. So a few matters for

01:05:11.608 --> 01:05:14.708
the Commission's consideration. I'm not trying to come

01:05:14.708 --> 01:05:17.889
here advocate, more for your consideration today. The

01:05:17.898 --> 01:05:22.038
first is Northern California, specifically. Um, there's

01:05:22.049 --> 01:05:27.389
the PG&E Los Medanos gas storage facility. Originally

01:05:27.389 --> 01:05:30.129
PG&E had proposed to close that a number of years

01:05:30.139 --> 01:05:34.018
back. Our division did not support that irrespective.

01:05:34.028 --> 01:05:38.999
Um they, they were authorized by the Commission to either

01:05:38.999 --> 01:05:41.799
sell the facility or decommission it. However, in the

01:05:41.799 --> 01:05:46.449
intervening years, um PG&E reconsidered that

01:05:46.458 --> 01:05:52.639
sale. And recently, uh I believe it's in the rate case

01:05:52.639 --> 01:05:56.528
proposed to continue the operation of that facility.

01:05:56.538 --> 01:06:00.908
So that's one issue for the Commission's consideration

01:06:00.908 --> 01:06:06.768
going forward. Uh, turning to Southern California. Uh,

01:06:06.778 --> 01:06:14.148
the Commission, uh set a range back in 2021 for

01:06:14.148 --> 01:06:19.059
Aliso Canyon. That they can operate between 0

01:06:19.069 --> 01:06:24.858
and 41 BCF. At that time, there was a concurrent proposed

01:06:24.869 --> 01:06:27.999
decision by Administrative Law Judge. That would have

01:06:27.999 --> 01:06:31.408
proposed that the interim range at a higher maximum

01:06:31.418 --> 01:06:37.369
from 0 to the 68.6 BCF. So you saw that on the

01:06:37.369 --> 01:06:41.588
SoCal charts, so that additional capacity would provide

01:06:41.598 --> 01:06:45.889
more storage capacity for the market. Um so again,

01:06:45.898 --> 01:06:49.809
the utilization of Aliso Canyon. Is a matter

01:06:49.809 --> 01:06:54.398
that the Commission will need to, um consider closely

01:06:54.408 --> 01:06:59.069
uh moving forward. So, um I'll just because of time

01:06:59.069 --> 01:07:02.259
I'll just go ahead and wrap it up here. Um, you know,

01:07:02.259 --> 01:07:05.069
when you conduct, just a few things. When you conduct

01:07:05.079 --> 01:07:10.658
dynamic modeling, it's hard to do any type of dynamic

01:07:10.658 --> 01:07:13.429
modeling. And I know the Commission's been looking

01:07:13.429 --> 01:07:17.189
at different types of modeling with regard to uh, the

01:07:17.189 --> 01:07:21.079
use of storage, storage facilities in Southern California.

01:07:21.088 --> 01:07:26.728
And uh, you know, you can model for, you know limited,

01:07:26.739 --> 01:07:30.668
limited situations. But it's hard to dynamically model

01:07:30.679 --> 01:07:37.288
over a number of months. For the whole a larger time

01:07:37.288 --> 01:07:41.439
frame and for all the caveats, uh situations that may

01:07:41.439 --> 01:07:44.358
occur. Such as limitations and capacity coming into

01:07:44.369 --> 01:07:48.228
state. So um, you know, you have to keep that in mind

01:07:48.228 --> 01:07:53.958
also. And so as I was saying earlier, I think moving

01:07:53.968 --> 01:08:00.108
forward as the state, uh does decarbonize. Um, that

01:08:00.108 --> 01:08:03.759
storage facilities are likely to be made to relied

01:08:03.759 --> 01:08:08.018
upon more for gas customers and electric generators

01:08:08.018 --> 01:08:12.838
at peak times. And that'll remain a valuable, important resource

01:08:12.848 --> 01:08:17.418
for the integrity of the gas system. Um, and to support

01:08:17.429 --> 01:08:21.788
the demand of customers in the State. And the Commission

01:08:21.799 --> 01:08:25.918
will need to, uh consider how to appropriately utilize

01:08:25.929 --> 01:08:31.018
the gas asset resources. And in closing, I just like

01:08:31.018 --> 01:08:35.728
to say, reiterate our divisions, uh support of the Governor's

01:08:35.728 --> 01:08:39.248
request. That the FERC investigate the matter of the

01:08:39.258 --> 01:08:44.049
significant price spikes that took place, um in the

01:08:44.049 --> 01:08:47.809
Western markets. And uh, those are my comments today.

01:08:47.809 --> 01:08:50.549
And I'd like to thank the Commission again for letting us

01:08:50.549 --> 01:08:54.079
speak. Thank you.

01:08:54.079 --> 01:08:57.238
Thank you Mark. The last person to speak on this panel

01:08:57.238 --> 01:09:00.348
will be Michael Williamson, who is the CEO of Williamson

01:09:00.358 --> 01:09:07.269
Energy, Inc. Michael? Good morning. Um, my perspective

01:09:07.269 --> 01:09:09.699
and comments today are going to come as a trader. That

01:09:09.708 --> 01:09:13.689
purchases natural gas at PG&E and SoCal Citygate

01:09:13.699 --> 01:09:16.878
on a daily basis. And that's what the job that I do

01:09:16.878 --> 01:09:20.738
for my clients. So I have to understand why prices

01:09:20.738 --> 01:09:24.228
are either falling, rising. It's just temporary. This

01:09:24.228 --> 01:09:27.949
is long term for me to get the most economical supply

01:09:27.958 --> 01:09:31.809
for my clients. Uh, we've already gone through all

01:09:31.809 --> 01:09:34.628
the industry publications and experts on, on all the

01:09:34.628 --> 01:09:38.549
reasons. I mean we hadn't had new pipeline capacity

01:09:38.549 --> 01:09:41.458
in the state for 10 years. I think the last was Kern

01:09:41.458 --> 01:09:45.669
River or GTN. You're scheduled and non-scheduled

01:09:45.679 --> 01:09:48.588
pipeline interruptions and curtailments are always

01:09:48.588 --> 01:09:52.279
going to continue. And that will always reduce existing

01:09:52.289 --> 01:09:56.909
pipeline capacity. Uh, and that even includes explosions

01:09:56.919 --> 01:10:01.738
like Enbridge in Canada years back. Uh, all of these

01:10:01.738 --> 01:10:05.978
issues, especially at the non-scheduled during peak

01:10:05.978 --> 01:10:11.939
demands are, are gonna affect prices. Uh, then you have

01:10:11.939 --> 01:10:15.708
of course the weather. We've all talked about it. November

01:10:15.718 --> 01:10:19.789
is uh, most of November, the first three weeks of December

01:10:19.799 --> 01:10:22.108
all the way from Western Canada, all the way down to

01:10:22.108 --> 01:10:28.029
California. Now the deal is it's not an excuse. You

01:10:28.029 --> 01:10:30.878
can't do anything about the weather. And that's why

01:10:30.878 --> 01:10:33.939
the U.S. has a national storage system that balances

01:10:33.949 --> 01:10:38.539
all this demand from the extreme temperatures. And we

01:10:38.539 --> 01:10:41.718
all know when we inject storage and we withdraw storage.

01:10:41.728 --> 01:10:45.248
And again, this is gonna bring me to the final contributing

01:10:45.248 --> 01:10:49.838
factor. Uh, that we can look as a group to try to

01:10:49.848 --> 01:10:54.779
make things better in the future for California. And

01:10:54.789 --> 01:11:01.108
let's pull up the first, uh sorry.

01:11:01.108 --> 01:11:04.519
The low storage levels in the Pacific region.

01:11:04.529 --> 01:11:07.848
All you have to do is look at a year ago and

01:11:07.848 --> 01:11:12.618
5-year average of the Pacific region. We're 34.3%

01:11:13.319 --> 01:11:19.279
below the 5-year average and 28.9% below last year.

01:11:21.069 --> 01:11:26.638
And most of all of that deficit belongs to PG&E.

01:11:27.649 --> 01:11:31.708
And we know about the summer of 2021 and the reclassification

01:11:31.708 --> 01:11:35.998
of 51 BCF a working gas. And I agree, the gas didn't

01:11:35.998 --> 01:11:38.478
go anywhere. It just got reclassified and it was in

01:11:38.478 --> 01:11:44.179
the county measure. However, the market as a whole especially

01:11:44.179 --> 01:11:48.868
the basis market, does not see it that way. And they

01:11:48.868 --> 01:11:53.338
were clearly expecting PG&E to inject more gas, which

01:11:53.338 --> 01:11:56.358
they did not. I mean you have publications, Natural

01:11:56.358 --> 01:12:01.899
Gas Intelligence, the EIA, RB Energy. Have all

01:12:01.909 --> 01:12:04.829
written articles about these extreme prices this Winter.

01:12:05.439 --> 01:12:10.608
And they have all spoken and written about this whole

01:12:10.608 --> 01:12:14.388
reclassification as a contributing factor in this

01:12:14.388 --> 01:12:20.429
whole current market scenario.

01:12:20.429 --> 01:12:22.738
What?

01:12:22.738 --> 01:12:27.208
Yes, while it was initiated back in the summer of 2021.

01:12:27.919 --> 01:12:33.118
Basis market the current surge, current storage levels

01:12:33.128 --> 01:12:38.929
were not adequate. And only by the fact that last Winter,

01:12:38.939 --> 01:12:42.809
especially November and parts of December were above

01:12:42.809 --> 01:12:47.039
normal temps. If we do not experience prices back above

01:12:47.049 --> 01:12:50.539
$10 a dekatherm.

01:12:50.539 --> 01:12:54.708
Now in my opinion, this whole situation and its effect

01:12:54.708 --> 01:12:58.949
on the basis market, which is the delivery points. Can

01:12:58.949 --> 01:13:03.949
also be compared to the explosion of Freeport LNG plant

01:13:05.409 --> 01:13:09.789
in Texas, and its effect on the NYMEX market. At the

01:13:09.789 --> 01:13:15.329
time, NYMEX this was June 8th. NYMEX was trading above

01:13:15.329 --> 01:13:19.998
$9. We had this explosion. The subsequent information

01:13:19.998 --> 01:13:23.218
suggested also that this LNG plant was offline until

01:13:23.228 --> 01:13:27.638
2022. It sent the NYMEX market down, as low as

01:13:27.649 --> 01:13:32.409
5.36 by the end of June. And because all of that

01:13:32.409 --> 01:13:36.478
gas then went into storage, instead of being shipped

01:13:36.488 --> 01:13:42.008
via LNG to Europe. Now the market is back to normal

01:13:42.008 --> 01:13:46.069
in California. Debut prices this morning were both below

01:13:46.079 --> 01:13:51.758
$5. But if we don't do something now, then this same

01:13:51.758 --> 01:13:55.049
thing will continue to happen again and again. And

01:13:55.059 --> 01:13:58.338
one of the solutions again, we have to look at this

01:13:58.338 --> 01:14:03.399
specific storage region. Whether PG&E reclassifies

01:14:03.399 --> 01:14:09.498
back some or all of that 51 BCF to working gas. Since

01:14:09.579 --> 01:14:14.848
it never left the storage system anyway or fills working

01:14:14.848 --> 01:14:19.029
gas storage back to prior 5-year averages. This

01:14:19.029 --> 01:14:22.199
extreme market is apt to play out again, especially

01:14:22.199 --> 01:14:26.299
with the below normal weather. And again, this is the

01:14:26.299 --> 01:14:32.059
market telling everyone. That something that's 30% below

01:14:32.059 --> 01:14:36.529
a 5-year average cannot be sustained.

01:14:36.529 --> 01:14:41.498
Yeah, I heard PG&E maintain the stance one. They don't

01:14:41.498 --> 01:14:44.248
make money on natural gas and of course they don't

01:14:44.248 --> 01:14:47.059
make the market. And, and both of those statements

01:14:47.059 --> 01:14:50.838
are true. But I'll add a third. They don't lose money

01:14:50.848 --> 01:14:54.108
on the natural gas either. And as I stated above on

01:14:54.108 --> 01:14:57.929
the Freeport LNG issue. Uh, they didn't make it, they

01:14:57.929 --> 01:15:00.779
don't make that market. But instead, it became a major

01:15:00.779 --> 01:15:03.659
contributing factor which caused the NYMEX to lose

01:15:03.659 --> 01:15:08.738
some $4 in less than a month. The reason I'm participating

01:15:08.738 --> 01:15:11.958
on this panel. Is to represent my clients and other

01:15:11.958 --> 01:15:16.748
end users and be the voice before this group. As these

01:15:16.748 --> 01:15:19.439
high natural gas prices have greatly affected their

01:15:19.439 --> 01:15:22.958
businesses and bottom lines.

01:15:22.958 --> 01:15:25.118
Thank you for allowing me to be part of this discussion.

01:15:30.659 --> 01:15:34.329
Thank you. Um, I have a couple of questions. That concludes

01:15:34.329 --> 01:15:36.348
our panel. I have a couple of questions for the panel

01:15:36.348 --> 01:15:39.659
and then I'll turn it over to the dais. I don't want

01:15:39.659 --> 01:15:41.439
to take too long, because I want to leave plenty of

01:15:41.439 --> 01:15:45.598
time for uh, Commission questions. My first question is

01:15:45.608 --> 01:15:49.669
directed towards, uh Mark Pocta. And I was hoping

01:15:49.669 --> 01:15:52.319
you could explain a little bit more something you said.

01:15:52.319 --> 01:15:56.309
You noted that the peak in the spot gas market coincided

01:15:56.309 --> 01:15:59.098
with bid week. And that, that led to it having a big

01:15:59.108 --> 01:16:01.708
big impact. And I was hoping you could explain a little

01:16:01.708 --> 01:16:05.338
bit more about what happened there? And, and how bid

01:16:05.338 --> 01:16:10.289
week prices impact customer bills. Thanks. I don't

01:16:10.289 --> 01:16:14.559
know how much I can add. Um it's all, you know, it's

01:16:14.559 --> 01:16:19.348
all, it's tough. Because I'm aware of information, because

01:16:19.348 --> 01:16:23.868
I get it confidentially, unfortunately. And so, um

01:16:24.738 --> 01:16:28.799
but basically if you look at the daily prices. If you

01:16:28.799 --> 01:16:33.128
go back to the gas daily and you look at the daily

01:16:33.128 --> 01:16:36.358
prices. If not one of the earlier speakers pointed to

01:16:36.358 --> 01:16:40.718
it. I think it might have been the CEC speaker. Um, about

01:16:40.718 --> 01:16:45.008
the 20th or 21st. You can see on the day market, I

01:16:45.008 --> 01:16:51.399
mean, prices were outlandish. They were like $40-$50.

01:16:51.409 --> 01:16:57.789
Um, and they were incredibly high. Not only at the border

01:16:57.789 --> 01:17:02.138
points but in the basin, back in basin uh, San Juan

01:17:02.149 --> 01:17:10.378
and uh Opal. And so that was coinciding with bid week

01:17:10.388 --> 01:17:19.309
and so I'm just assuming, and I've studied. Can you explain what bid week is, and the impact that it has Mark? I'm sorry to interrupt. So bid week

01:17:19.309 --> 01:17:22.999
is basically, you know, the utilities buy gas on a, on

01:17:22.999 --> 01:17:27.408
a monthly basis. And bid week is when, you know, the contract.

01:17:27.418 --> 01:17:33.069
It's a shortcut of the deals are being underbid too. Sometimes

01:17:33.069 --> 01:17:37.158
utilities have already have, um entered into contractual

01:17:37.158 --> 01:17:41.398
arrangements ahead of time. But the prices of those

01:17:41.398 --> 01:17:44.158
contractual arrangements a lot of times will be tied

01:17:44.168 --> 01:17:48.509
to the bid week prices. So you have the daily market,

01:17:48.519 --> 01:17:53.918
that's just moving along on a daily basis. So um, you

01:17:53.918 --> 01:17:56.628
have a lot of participants, participating in that daily

01:17:56.628 --> 01:18:00.309
market. But the utilities are typically in a monthly

01:18:00.309 --> 01:18:03.438
market. They're buying their gas a month ahead of time.

01:18:03.448 --> 01:18:08.338
And um so generally, generally speaking that, that

01:18:08.338 --> 01:18:11.999
doesn't mean they don't, buy gas in the daily market also.

01:18:12.009 --> 01:18:17.469
But prevent the bulk of the gas for the month is bought

01:18:17.479 --> 01:18:20.749
during bid week, purchased during bid week. Or it's

01:18:20.759 --> 01:18:28.479
based on the bid week prices. Uh and I, in the past

01:18:28.479 --> 01:18:32.309
I don't know. We just haven't seen that where the daily

01:18:32.309 --> 01:18:35.878
market was spiking, you know, in its coinciding with bid week.

01:18:36.398 --> 01:18:39.948
And you have another thing happening in December, that

01:18:39.948 --> 01:18:45.549
was a little bit. Uh, you did have cold weather, the

01:18:45.549 --> 01:18:49.509
national market, there was some cold weather also.

01:18:49.519 --> 01:18:53.838
Um, I believe in the Midwest, that's when they had

01:18:53.838 --> 01:18:59.198
their little cold snap go through. Which kind of moved

01:18:59.198 --> 01:19:03.269
into the, that was about that same time frame. It was

01:19:03.279 --> 01:19:06.888
actually ending I think at that time frame. And then

01:19:06.898 --> 01:19:09.969
and that's what I was talking about earlier with, with

01:19:09.979 --> 01:19:14.668
this volatility associated with the, with the, uh

01:19:14.668 --> 01:19:19.019
weather. I mean again the weather, the weather. Um,

01:19:19.029 --> 01:19:24.519
but just the amount of price movement that, that you

01:19:24.519 --> 01:19:27.378
see in the market. If you're following it on a daily

01:19:27.388 --> 01:19:31.138
basis is pretty significant. Whether you're looking

01:19:31.138 --> 01:19:35.279
at, you know, the Western United States or other markets

01:19:35.289 --> 01:19:42.348
throughout the United States. Um, so that, um. Yeah,

01:19:42.358 --> 01:19:45.509
so would you say a fair summary would be that. The price

01:19:45.519 --> 01:19:47.928
spike coincided with bid week. And then the bid week

01:19:47.928 --> 01:19:50.049
prices locked in those high prices for the month of

01:19:50.049 --> 01:19:53.299
January. I guess were influenced in some way, I'll

01:19:53.299 --> 01:19:56.428
just say influenced I guess. Because again, I'm not a trader.

01:19:56.438 --> 01:20:00.999
I'm just somewhat of an observer of these prices. And

01:20:01.009 --> 01:20:05.039
so I'm not in the market, I'm just like anyone else.

01:20:05.039 --> 01:20:08.648
I could read the periodicals, I could look at them.

01:20:08.658 --> 01:20:14.138
I can meet with the utilities, but not really, um

01:20:14.719 --> 01:20:18.229
you know, I'm not a trader. So just put it that way. Okay.

01:20:18.759 --> 01:20:21.539
Thank you for helping clarify that point. My second

01:20:21.539 --> 01:20:25.289
question is for Michael Williamson. And, and my question

01:20:25.299 --> 01:20:29.989
for you Michael is. Um, you do note that the, the change

01:20:29.989 --> 01:20:33.019
in the overall storage level seems to have really affected

01:20:33.019 --> 01:20:36.309
the market. Um, one question I have for you. If there

01:20:36.309 --> 01:20:39.039
was storage capacity available in, at the independent

01:20:39.039 --> 01:20:43.499
storage field that wasn't filled? Um, PG&E states

01:20:43.499 --> 01:20:45.928
that they mostly filled their fields. Um, and that their

01:20:45.928 --> 01:20:49.049
core customers had their, their contracts 99% full.

01:20:49.059 --> 01:20:51.979
So there was space for non-core customers to fill storage.

01:20:51.989 --> 01:20:55.729
Um, so I'm curious how you feel about how that

01:20:55.729 --> 01:20:59.479
interplays with the 51 BCF class. When there was more

01:20:59.479 --> 01:21:01.898
capacity available if people had chosen to fill it.

01:21:03.019 --> 01:21:07.279
Well, it's two different issues. The uh, the private

01:21:07.279 --> 01:21:12.618
storage is going to do exactly what uh, the lady at

01:21:12.618 --> 01:21:16.908
PG&E said. Uh, if the spreads don't work out, they're not

01:21:16.908 --> 01:21:20.789
gonna fill it because it's a business decision. Then

01:21:20.789 --> 01:21:24.999
you have PG&E which is a utility. Have to look at their,

01:21:24.999 --> 01:21:28.898
their storage system as a reliable, reliability issue,

01:21:28.908 --> 01:21:35.959
big time. And again your, your basis market had the

01:21:35.959 --> 01:21:41.509
perception that once the cold weather hit in November

01:21:41.519 --> 01:21:45.789
and continued into December. That there may or may not

01:21:45.799 --> 01:21:51.658
be ample storage period. And that's why the bids in

01:21:51.658 --> 01:21:55.509
the basis market continued to go up and up. And went

01:21:55.519 --> 01:22:00.868
from normal a $1 to $2 going into the PG&E Citygate.

01:22:00.878 --> 01:22:09.178
All the way up to as much as $20-30. And again, they're

01:22:09.188 --> 01:22:12.749
they're hitting those bids. And whether they're doing

01:22:12.749 --> 01:22:15.698
it on a speculation basis, it really doesn't matter.

01:22:15.709 --> 01:22:18.908
It still impacts the market and it makes prices go

01:22:18.908 --> 01:22:22.229
up.

01:22:22.229 --> 01:22:24.408
So it sounds like what you're suggesting then. Is that

01:22:24.408 --> 01:22:27.918
utility customers would need to have storage available

01:22:27.928 --> 01:22:30.848
in a way almost to subsidize the non-core customers.

01:22:30.858 --> 01:22:35.739
Who are making their decisions on a market base, you

01:22:35.739 --> 01:22:40.269
know, basis is only. Well. Is that correct? Still impacts,

01:22:40.279 --> 01:22:43.319
it still impacts the utility. Because inevitably, if

01:22:43.319 --> 01:22:46.539
you're making if, if the basis market continues to

01:22:46.539 --> 01:22:51.348
go up. Your, whether it be your core group or your

01:22:51.348 --> 01:22:55.279
group buying for electricity. The power demand is still

01:22:55.279 --> 01:22:57.769
going to be impacted. How would that be different?

01:23:01.069 --> 01:23:03.289
Thank you for your perspective. I think it's time to

01:23:03.289 --> 01:23:08.279
move to questions from the dais.

01:23:08.279 --> 01:23:11.428
President Reynolds, do you have a question? Thank you.

01:23:11.438 --> 01:23:14.178
Jean, maybe to start out. I think that last point you

01:23:14.178 --> 01:23:17.388
were making about storage and the impacts on the market.

01:23:17.398 --> 01:23:21.819
Of the PG&E changed from working gas to base gas, which

01:23:22.709 --> 01:23:25.438
to me was really a marketing mechanism. But did have an impact

01:23:25.448 --> 01:23:29.069
on market perception. I'm wondering if you could just

01:23:29.079 --> 01:23:33.348
explain briefly Jene. The difference between core customers

01:23:33.358 --> 01:23:36.229
and um, non-core customers. And the distinction that

01:23:36.229 --> 01:23:39.628
you were making about the independent storage facilities

01:23:39.638 --> 01:23:44.299
not being full and that those serve, uh non-core customers.

01:23:44.299 --> 01:23:46.819
Could you just explain that for folks who are listening?

01:23:49.079 --> 01:23:52.408
Sure. So in the in the gas utility world, there's core

01:23:52.408 --> 01:23:55.029
customers which are mostly residential and small business

01:23:55.029 --> 01:23:58.408
customers. And for those customers, the utility purchases

01:23:58.418 --> 01:24:01.868
gas for them, or they can purchase gas through a core

01:24:01.868 --> 01:24:04.999
transport agent. But someone else purchases gas for

01:24:04.999 --> 01:24:10.079
them. Non-core customers are large commercial, industrial

01:24:10.088 --> 01:24:13.969
and um electric generation customers. And they're generally

01:24:13.969 --> 01:24:16.928
considered to be sophisticated customers. Um, they make

01:24:16.928 --> 01:24:19.229
their own purchasing decisions, so they use the utility

01:24:19.229 --> 01:24:21.948
infrastructure to move their gas. But they purchase

01:24:21.948 --> 01:24:25.049
the commodity themselves or through marketers. Um and

01:24:25.049 --> 01:24:28.098
they can choose um for example, how much storage to

01:24:28.098 --> 01:24:32.438
hold. Whereas the CPUC requires, uh the utilities to

01:24:32.438 --> 01:24:35.829
hold certain amounts of storage, and pipe from pipeline capacity

01:24:35.829 --> 01:24:39.279
for core customers to ensure their reliability. Um,

01:24:40.079 --> 01:24:42.729
So that was the first part of the question and now

01:24:42.729 --> 01:24:45.148
I'm forgetting the second part. What, what did I forget?

01:24:45.158 --> 01:24:49.108
I just wanted to make sure that everyone gets that

01:24:49.108 --> 01:24:51.269
distinction between core and non-core, and the role

01:24:51.269 --> 01:24:55.388
of the utility. Um, and I guess now if I could turn

01:24:55.388 --> 01:25:01.309
to PG&E. Um, and thank you for explaining the, um the

01:25:01.309 --> 01:25:04.408
market. The accounting mechanism on working gas versus

01:25:04.418 --> 01:25:08.168
base gas. And we've heard about and Jean I think flushed

01:25:08.178 --> 01:25:11.878
this out a little bit. The fact that there was storage

01:25:11.878 --> 01:25:15.539
available, um at independent facilities. And I was wondering

01:25:15.539 --> 01:25:21.178
if, if PG&E had any ideas about how to incentivize independent,

01:25:21.188 --> 01:25:26.678
um storage facilities. To uh to, to increase their levels

01:25:26.678 --> 01:25:30.459
of storage. Um, rather than pushing it back on utility

01:25:30.459 --> 01:25:36.509
customers to, uh create that cushion for market. Um, to

01:25:36.509 --> 01:25:39.838
keep markets calm. Um so PG&E, I was wondering if you

01:25:39.838 --> 01:25:47.279
had any ideas about incentives?

01:25:47.279 --> 01:25:51.539
Gillian, here from PG&E. Um,

01:25:51.539 --> 01:25:56.608
I wish I had a great idea. The incentives are largely

01:25:56.608 --> 01:26:02.229
market driven and market price incentives. That given

01:26:02.229 --> 01:26:05.479
that we don't, and you don't regulate the natural gas

01:26:05.489 --> 01:26:08.858
price markets. That's a tricky one. And the second

01:26:08.858 --> 01:26:13.579
one is for reliability. So we fill ours for reliability.

01:26:13.588 --> 01:26:18.759
If other market participants built into their expectations

01:26:18.769 --> 01:26:23.188
that reliability is a higher priority. Then they might

01:26:23.198 --> 01:26:26.928
be incented to fill it. But unfortunately I don't have

01:26:27.549 --> 01:26:31.319
I don't have a very good answer for you.

01:26:31.319 --> 01:26:35.178
Okay, thank you. Um, and then I also have a question

01:26:35.188 --> 01:26:40.948
for SoCalGas. Um, was interested in the chart that you

01:26:40.948 --> 01:26:44.779
showed with the correlation between demand and temperatures.

01:26:45.009 --> 01:26:49.059
And I was wondering if um, and you made the point that

01:26:49.069 --> 01:26:53.428
we had high temperatures, especially early in the season

01:26:53.438 --> 01:26:58.628
this year. Um, is the demand increase uh, fully explained

01:26:58.638 --> 01:27:01.729
by the temperatures as far as you can tell? Or do you

01:27:01.729 --> 01:27:05.118
think there are any other factors that play on, uh that

01:27:05.118 --> 01:27:09.188
affected the increased demand that we saw? Uh, thanks for

01:27:09.188 --> 01:27:12.029
the question Commissioner. I think it was primarily

01:27:12.029 --> 01:27:15.259
driven by the colder weather we had in November and

01:27:15.259 --> 01:27:19.239
December. Uh, not only was it on the residential and

01:27:19.249 --> 01:27:21.838
small commercial customers. I mean that, that residential

01:27:21.838 --> 01:27:26.789
heating load. Um, but also there was some increasing

01:27:26.799 --> 01:27:29.209
associated electric generation load above the historical

01:27:29.209 --> 01:27:33.698
average. Uh what draws that may be more, you know,

01:27:33.698 --> 01:27:37.779
that's a question for CAISO than SoCalGas. But it was

01:27:37.779 --> 01:27:41.009
driven by weather. Uh, there wasn't anything else that

01:27:41.019 --> 01:27:45.459
really stood out as driving additional demand. Okay,

01:27:45.469 --> 01:27:49.698
thank you. And then another question for you. Um, you

01:27:49.698 --> 01:27:53.279
talked about storage and the limitations on storage,

01:27:53.279 --> 01:27:57.598
as well as of course the pipeline situations. Um, is

01:27:57.598 --> 01:28:00.438
there anything that could, could you explain a little

01:28:00.438 --> 01:28:04.499
bit more? Um so, you know, this situation occurs at

01:28:04.509 --> 01:28:07.579
because the prices increased when you have to buy gas

01:28:07.588 --> 01:28:11.128
on the market. So you can't pull from storage or storage

01:28:11.128 --> 01:28:14.759
facilities obviously weren't empty. Um, but so is there

01:28:14.769 --> 01:28:18.588
anything that you can do to mitigate. Uh for those the

01:28:18.598 --> 01:28:20.829
prices that you pay when you're forced to buy from

01:28:20.829 --> 01:28:23.039
the market? In other words, could you describe that

01:28:23.039 --> 01:28:25.059
a little bit more? It's not like you fill your storage

01:28:25.059 --> 01:28:28.128
facilities and then you just slowly pull from them.

01:28:28.128 --> 01:28:31.459
Which that we wouldn't have seen these price spikes,

01:28:31.459 --> 01:28:34.299
I assume. If they're your own storage facilities, you're

01:28:34.299 --> 01:28:36.469
buying on the spot market. And so is there anything

01:28:36.469 --> 01:28:39.398
that you can do to mitigate those prices, the times

01:28:39.398 --> 01:28:42.898
when you do have to buy? It's a very complicated question.

01:28:42.908 --> 01:28:46.239
Um, you know let me, let me start with. Um, the stories feel

01:28:46.239 --> 01:28:49.799
is that we have, were originally put in to mitigate

01:28:49.799 --> 01:28:53.079
Winter price swings. To inject gas during the Summer

01:28:53.079 --> 01:28:56.249
when prices are lower and withdraw when the prices

01:28:56.249 --> 01:29:00.789
are higher during the Winter time. Um, whether you

01:29:00.799 --> 01:29:05.178
can then have in today's environment, and I mentioned

01:29:05.188 --> 01:29:08.888
you know, Aliso Canyon. Having more storage, more gas

01:29:08.898 --> 01:29:12.009
in storage, that can be drawn upon. Because the critical

01:29:12.009 --> 01:29:16.178
nature of storage in today's environment has been driven

01:29:16.178 --> 01:29:21.309
by reliability. And that's why we have the Aliso withdrawal

01:29:21.309 --> 01:29:24.759
protocol that calls on almost at a constraint situation.

01:29:25.338 --> 01:29:29.138
If you had more gas in the ground, then you can draw on

01:29:29.148 --> 01:29:31.829
during those periods of cold weather. That could help

01:29:31.829 --> 01:29:37.398
avoid having to buy gas on the daily spot basis. Uh,

01:29:37.408 --> 01:29:39.918
because you can buy it during the summertime and be

01:29:39.918 --> 01:29:42.888
repaired. I would also like to add that when you look

01:29:42.888 --> 01:29:47.309
at the market. If it's held by uh, market participants

01:29:47.319 --> 01:29:50.719
other than the utility, they are driven by the economics.

01:29:51.908 --> 01:29:55.608
The utility holds storage we're also driven by reliability.

01:29:56.938 --> 01:29:59.719
So you can't necessarily fully deplete storage in one

01:29:59.719 --> 01:30:03.138
particular month. Because if it's November, you still

01:30:03.138 --> 01:30:06.428
have December, January, February and March to go. You

01:30:06.428 --> 01:30:08.928
can't fully pull down storage. But if you start at

01:30:08.928 --> 01:30:11.729
a higher starting level, you would have the ability

01:30:11.729 --> 01:30:14.698
to pull more down. Hopefully that answers your question

01:30:14.698 --> 01:30:17.588
Commissioner.

01:30:17.588 --> 01:30:22.979
And I'm sorry to note that we're out of time. Um, Commissioners

01:30:22.979 --> 01:30:25.509
I'm really sorry to have to cut you off. If you have

01:30:25.509 --> 01:30:29.459
more questions, um you can email them to Leuwam Tesfai. And

01:30:29.459 --> 01:30:31.678
she will work with Energy Division to get answers for

01:30:31.678 --> 01:30:38.519
you. I'm gonna turn it back to Christina.

01:30:38.519 --> 01:30:43.049
Thank you Jean and thank you panelists. Um, Francisco

01:30:43.049 --> 01:30:46.678
could you pull up the deck please? We are now turning

01:30:46.688 --> 01:30:51.198
to our second panel of the day. That is moderated by

01:30:51.209 --> 01:30:54.608
Bruce Kaneshiro, who is the program manager with CPUC's

01:30:54.618 --> 01:30:58.229
Energy Division. Bruce?

01:30:58.229 --> 01:31:01.999
Thank you, Christina. Can everyone hear me?

01:31:01.999 --> 01:31:05.608
Okay, great. Good morning all. Um, it's my pleasure

01:31:05.608 --> 01:31:09.509
to moderate the second panel. Uh, as discussed in our

01:31:09.509 --> 01:31:13.128
last panel. Pipeline constraints in, in West Texas

01:31:13.138 --> 01:31:16.658
was one of the factors for the high gas prices that

01:31:16.668 --> 01:31:21.519
we saw in California. And nearly 90% of California's

01:31:21.519 --> 01:31:25.918
gas is imported, uh from out of the state production

01:31:25.918 --> 01:31:30.059
facilities such as in Canada and New Mexico and Texas.

01:31:30.069 --> 01:31:34.428
So, given the importance of interstate pipelines to

01:31:34.428 --> 01:31:38.158
a gas supply. We have a panel that can provide more

01:31:38.158 --> 01:31:42.709
details as to what happened, uh to the El Paso pipeline.

01:31:42.719 --> 01:31:47.009
As well as provide us an overview of federal rules

01:31:47.019 --> 01:31:50.999
that ensure the safe operation of these interstate

01:31:50.999 --> 01:31:55.789
pipelines. So let me introduce our panel. First,

01:31:55.789 --> 01:32:00.069
we have Matt Epuna, who is a Supervisor in the Gas Safety

01:32:00.069 --> 01:32:04.039
and Reliability branch of the CPUC Safety and Enforcement

01:32:04.049 --> 01:32:07.618
division. And he will lead us off with a presentation

01:32:07.618 --> 01:32:12.209
on what happened with El Paso Line 2000. And that will

01:32:12.209 --> 01:32:15.698
be followed by Mr. Alan Mayberry, who is the Associate

01:32:15.709 --> 01:32:19.809
Administrator for Pipeline Safety. For the Pipeline

01:32:19.809 --> 01:32:23.588
and Hazardous Materials Safety Administration, also

01:32:23.588 --> 01:32:27.989
known as PHMSA, which is part of the U. S. Department of Transportation.

01:32:27.999 --> 01:32:31.009
And Alan will provide a presentation on stems of safety

01:32:31.009 --> 01:32:34.648
regulations. So thank you gentlemen for your participation

01:32:34.648 --> 01:32:38.469
in today's panel. And I will now turn it over to Matt.

01:32:56.269 --> 01:33:02.938
Matt, I see you, um speaking but we can't hear you. I am terribly sorry.

01:33:02.938 --> 01:33:08.209
Perfect, we can hear you know. Okay, great. Good morning everyone. Good

01:33:08.209 --> 01:33:12.579
morning Commissioner Reynolds and everyone else in

01:33:12.579 --> 01:33:17.608
attendance. And thank you Alan for attending. Anyway

01:33:17.618 --> 01:33:24.069
um, today I will talk a little bit about the rupture

01:33:24.069 --> 01:33:27.868
of Line 2000. And as well as talk about two things.

01:33:28.668 --> 01:33:32.388
Um, but I want to begin by giving you a brief uh

01:33:33.009 --> 01:33:38.388
explanation of what I learned about the Line 2000 outage

01:33:38.398 --> 01:33:46.088
rupture. Anyway, on August 15, 2021, pipeline 2000 a 30 inch

01:33:46.098 --> 01:33:49.759
diameter natural gas transmission pipeline. Owned and

01:33:49.759 --> 01:33:54.588
operated by Kinder Morgan Inc. Ruptured in Coolidge,

01:33:54.598 --> 01:34:00.418
Arizona. The rupture resulted in an explosion and fire.

01:34:00.428 --> 01:34:03.918
The fire destroyed a farmhouse near the site of the

01:34:03.918 --> 01:34:08.769
rupture. The fire resulted in two fatalities and one

01:34:08.779 --> 01:34:12.469
injury that required hospitalization to the family

01:34:12.469 --> 01:34:17.999
that lived in that farmhouse. Kinder Morgan's Line 2000,

01:34:18.568 --> 01:34:24.348
was installed in 1985. Um, this Line 2000 transported

01:34:24.359 --> 01:34:28.198
crude oil initially after it was installed or put into

01:34:28.198 --> 01:34:32.698
service. But was converted to transport natural gas

01:34:33.399 --> 01:34:39.928
about 20 years ago. Uh, NTSB records indicated the gas

01:34:39.928 --> 01:34:44.189
pressure just before the rupture was below the maximum

01:34:44.198 --> 01:34:47.448
allowable operating pressure. Which at least gave us

01:34:47.459 --> 01:34:52.229
uh information that this was in. The rupture was not

01:34:52.229 --> 01:34:56.758
caused by uh, you know, maximum allowable pressure,

01:34:56.769 --> 01:35:01.439
operating pressure exceedance. So that's one information

01:35:01.439 --> 01:35:05.698
that we can at least gleam from that. (inaudible)

01:35:05.698 --> 01:35:09.589
I'm gonna interrupt you. Can, I think we need to advance that slide.

01:35:09.598 --> 01:35:12.318
And can you just queue the operator to advance the slides

01:35:12.318 --> 01:35:16.638
for you? There you go. I'm sorry. Yes, go ahead. Uh

01:35:16.649 --> 01:35:22.718
okay, that's good. So this is just a picture of the

01:35:22.729 --> 01:35:27.519
Line 2000. It runs from McKinney, Texas all the way to

01:35:27.528 --> 01:35:33.379
Ehrenberg, Arizona where it terminates and then feeds into

01:35:33.388 --> 01:35:37.609
uh, Line 2000. That comes into California, well it goes into a header

01:35:37.609 --> 01:35:42.769
and that header uh, feeds part of Line 2000, SoCalGas

01:35:42.769 --> 01:35:47.948
Line 2000 that comes out of Blythe, California. Anyway,

01:35:47.959 --> 01:35:53.129
um this uh, this Line 2000 was originally owned by

01:35:53.138 --> 01:35:56.758
El Paso Natural Gas System, which was acquired by Kinder

01:35:56.758 --> 01:36:04.439
Morgan. The line is approximately about 745 miles in

01:36:04.439 --> 01:36:09.598
land. As I explained, it started from Texas, Mckinney,

01:36:09.609 --> 01:36:15.738
Texas to Ehrenberg, Arizona. The isolated segment of

01:36:15.749 --> 01:36:19.229
the pipeline that ruptured is approximately 19 miles.

01:36:19.238 --> 01:36:24.939
PHMSA Office of Pipeline Safety and the Arizona

01:36:24.948 --> 01:36:29.298
Corporation Commission, immediately initiated an investigation

01:36:29.298 --> 01:36:33.598
of the incident. The National Transportation Safety

01:36:33.598 --> 01:36:37.238
Board also began an investigation. In addition to what PHMSA

01:36:37.649 --> 01:36:42.138
and the other agent, the other partner was doing. And

01:36:42.149 --> 01:36:47.839
NTSB's investigation is still ongoing. PHMSA joining

01:36:47.839 --> 01:36:53.348
its investigation more typically, I'm sorry. PHMSA

01:36:53.348 --> 01:36:56.499
during its investigation will typically assess and

01:36:56.499 --> 01:37:00.379
determine whether a pipeline facility is or would be

01:37:00.379 --> 01:37:03.839
hazardous to life, property or the environment. And if

01:37:03.839 --> 01:37:08.329
there is a likelihood of serious harm to life, property,

01:37:08.339 --> 01:37:11.528
or the environment. PHMSA will issue an order to

01:37:11.528 --> 01:37:20.528
the operator to perform some corrective actions.

01:37:20.528 --> 01:37:27.098
Then, excuse me. So PHMSA did issue a corrective action

01:37:27.098 --> 01:37:30.559
in this case. Uh, the corrective action covered the

01:37:30.559 --> 01:37:36.258
isolated segment, and as well as uh, the affected pipeline

01:37:36.269 --> 01:37:39.829
which is the entire pipeline. The covered segment

01:37:39.829 --> 01:37:45.649
was shut down. The other segments were ordered to have

01:37:45.649 --> 01:37:49.598
a, what we call pressure reduction. To take a 20% pressure

01:37:49.598 --> 01:37:57.258
reduction from its um, normal operating pressure.

01:37:57.258 --> 01:38:02.189
Um, others haven't explained this. Other factors that

01:38:02.198 --> 01:38:09.348
may affect, may affect safety and cause pipeline outages.

01:38:09.348 --> 01:38:13.868
Are in addition to the force majeure in this case.

01:38:14.649 --> 01:38:20.048
There are other issues where operators are required

01:38:20.048 --> 01:38:23.689
to perform certain scheduled operation and maintenance

01:38:23.689 --> 01:38:28.968
activities. And those can also impact pipeline outages.

01:38:29.269 --> 01:38:33.329
And some of those activities are scheduled pipeline

01:38:33.329 --> 01:38:37.209
integrity assessment uh, scheduled operation and maintenance

01:38:37.209 --> 01:38:42.048
activities. Um, safety related conditions which may

01:38:42.048 --> 01:38:46.499
come as a result of the operation to performing the

01:38:46.508 --> 01:38:49.278
scheduled integrity assessment. In other words, if

01:38:49.278 --> 01:38:53.399
the operator discovers a hazardous condition during

01:38:53.399 --> 01:38:57.539
that assessment. They will have to take either pressure

01:38:57.539 --> 01:39:02.329
reduction or shut that line down, to perform required

01:39:02.339 --> 01:39:10.408
uh, remediation. And in addition to that um, there are

01:39:10.419 --> 01:39:16.589
recent federal rules requiring uh, things like a maximum

01:39:16.598 --> 01:39:20.988
operating pressure, reconfirmation and pipeline material

01:39:20.999 --> 01:39:26.508
properties verifications. So some of these safety related

01:39:26.519 --> 01:39:32.649
um, maintenance and assessment may result in or contribute

01:39:32.649 --> 01:39:39.749
to pipeline outages. Beyond besides the force majeure.

01:39:44.818 --> 01:39:49.818
Could you go to the next slide please? Um, Matt this is

01:39:49.818 --> 01:39:53.278
Bruce. I think we're almost out of time for your, your

01:39:53.278 --> 01:39:57.839
slot here. Can you wrap up your presentation? Yes, I

01:39:57.839 --> 01:40:00.778
will do that quickly. Anyway, this is just the timeline

01:40:00.789 --> 01:40:05.649
of the Line 2000 outage. And as I said, the

01:40:05.658 --> 01:40:11.368
event of the rupture occurred on August 15, 2021. And then

01:40:11.368 --> 01:40:15.689
after that, PHMSA issued a corrective action in August of

01:40:15.689 --> 01:40:21.218
19, and had a subsequent uh, amended uh, um corrective

01:40:21.218 --> 01:40:27.419
action. Then in September and NTSB opened a docket.

01:40:27.428 --> 01:40:32.028
Next slide please.

01:40:32.028 --> 01:40:37.298
Then in December 2nd of 2022, PHMSA approved restart

01:40:37.309 --> 01:40:42.318
of the isolated segment. And January of this year Kinder

01:40:42.318 --> 01:40:48.028
Morgan requested um or rather informed of its

01:40:48.039 --> 01:40:53.868
completion, completion of its required work. And then

01:40:53.879 --> 01:41:01.039
uh, requested the uh PHMSA to approve its request to

01:41:01.039 --> 01:41:04.789
lift the pressure restriction on the entire segment.

01:41:04.798 --> 01:41:10.868
Anyway, um one of the panelists on the prior panel indicated

01:41:10.868 --> 01:41:16.068
that uh PHMSA has approved that. My slide does show

01:41:16.079 --> 01:41:19.249
it's from public information I have. Alan can talk more about

01:41:19.249 --> 01:41:22.899
this. That PHMSA was reviewing it, but from what

01:41:22.899 --> 01:41:27.839
I heard this morning it's been approved. Anyway, that

01:41:27.839 --> 01:41:31.638
concludes my presentation. So I would like to hand

01:41:31.638 --> 01:41:37.298
over the virtual mic to Mr. Alan Mayberry.

01:41:37.298 --> 01:41:42.749
Oh I'm sorry to Bruce Kaneshiro.

01:41:42.749 --> 01:41:46.729
Thank you Matt. Uh, so I will hand it off to Alan

01:41:46.729 --> 01:41:50.559
who will represent PHMSA here. So go ahead Alan, mic is yours. Okay

01:41:50.559 --> 01:41:55.499
thanks, thank you Bruce and Matt. Can you hear me okay?

01:41:55.508 --> 01:42:00.329
You can, awesome. Well again I'm Alan Mayberry, it's a pleasure

01:42:00.329 --> 01:42:03.609
to join you today. To talk a bit about our role related

01:42:03.609 --> 01:42:07.109
to pipeline safety in the United States. And specifically

01:42:07.118 --> 01:42:11.928
um, how it impacts the topic here today related to gas

01:42:11.928 --> 01:42:15.249
prices. Might I add, I bring greetings, greetings from Tristan

01:42:15.249 --> 01:42:18.309
Brown, our Deputy Administrator. He's my boss here

01:42:18.309 --> 01:42:23.209
in Washington. You know um, our focus is pipeline safety

01:42:23.209 --> 01:42:25.459
and protecting the environment. Where we do see price

01:42:25.459 --> 01:42:29.008
impacts when a regulated entity fails to adhere to

01:42:29.008 --> 01:42:33.189
our regulations or if there's an unexpected failure.

01:42:33.198 --> 01:42:36.609
So strengthening and updating our regulations really

01:42:36.609 --> 01:42:40.079
reduces what we refer to as low probability at high

01:42:40.079 --> 01:42:44.789
consequence events. My goal here today is to give

01:42:44.789 --> 01:42:48.729
you a quick summary of the regulations involved. How

01:42:48.729 --> 01:42:52.809
we perform or conduct investigations at a very high

01:42:52.809 --> 01:42:57.198
level. Um, and then uh wrap it up with some Q&A

01:42:57.198 --> 01:43:00.609
at the end. But anyway, I hope you find this informative,

01:43:00.618 --> 01:43:04.528
but it will be quite quick. Um, if you can move on

01:43:04.528 --> 01:43:08.609
to the next slide. Just you know, who is DOT/

01:43:08.618 --> 01:43:10.868
PHMSA,

01:43:10.868 --> 01:43:13.908
is a mode of transportation within the USDOT,

01:43:13.908 --> 01:43:18.318
and you can see some of our sister agencies. Um, you

01:43:18.318 --> 01:43:20.649
know like that, say that you're familiar with Federal

01:43:20.649 --> 01:43:25.109
Highways, Federal Rail. Um again, our focus is safety.

01:43:25.118 --> 01:43:27.649
We were created out of the Natural Gas Pipeline Safety

01:43:27.649 --> 01:43:31.629
Act of 1968. And we were basically put in business to

01:43:31.629 --> 01:43:34.758
create a National Uniform Standards for Pipeline Safety.

01:43:34.758 --> 01:43:39.198
Which we uh, published in the form of 49 CFR, Part 192.

01:43:39.198 --> 01:43:43.318
Which is the federal minimum safety standards for

01:43:43.318 --> 01:43:48.089
gas pipeline safety. Uh, I might add that informing

01:43:48.098 --> 01:43:51.428
the pipeline safety. Congress directed that we partner

01:43:51.428 --> 01:43:55.028
with the States. I, we appreciate our partnership with

01:43:55.028 --> 01:43:58.339
California. Specifically the California Public Utilities

01:43:58.339 --> 01:44:01.129
Commission, as well as the California State Fire Marshall

01:44:01.129 --> 01:44:05.118
Office on the liquid site. But we value that relationship

01:44:05.118 --> 01:44:09.439
when we appreciate the uh, oversight that CPUC provides

01:44:09.439 --> 01:44:14.229
on our behalf for intrastate pipelines. You move on

01:44:14.229 --> 01:44:20.008
to the next slide. And by the way, before I get into

01:44:20.008 --> 01:44:23.818
our incident investigations. But the topic here relates

01:44:23.818 --> 01:44:28.138
to gas transmission, gas transmission pipelines or pipelines.

01:44:28.939 --> 01:44:34.249
And of the 3.3 million miles of uh, pipelines across

01:44:34.249 --> 01:44:38.758
the United States. About 300,000, little over 300,000

01:44:38.758 --> 01:44:43.289
miles of those or what are um considered transmission

01:44:43.289 --> 01:44:50.348
lines. And um similar to Line 2000. Um, so fairly small

01:44:50.348 --> 01:44:54.678
subset and those include intrastate and interstate

01:44:54.678 --> 01:44:59.098
pipelines. The intrastate tends to be regulated directly

01:44:59.098 --> 01:45:03.528
by the states, like CPUC. The interstate is under federal

01:45:03.528 --> 01:45:08.448
oversight, which we have about 300,000 federal oversight.

01:45:09.379 --> 01:45:14.169
Um, so based on this slide here really depicts um,

01:45:14.178 --> 01:45:18.568
key aspects of how we investigate an incident. So,

01:45:18.568 --> 01:45:21.979
and then this is how it happened, really how it unfolded

01:45:21.988 --> 01:45:26.149
for the incident in Coolidge, Arizona. Based sort of

01:45:26.149 --> 01:45:31.019
did you uh, really a premiere in how we do this at

01:45:31.019 --> 01:45:34.979
a very high level. First off, the reports of an incident

01:45:34.988 --> 01:45:37.669
are received by the National Response Center in Washington

01:45:37.669 --> 01:45:41.939
D. C. That's how we receive our notifications. Uh,

01:45:41.948 --> 01:45:45.068
we also share those with states. And in this case, the

01:45:45.068 --> 01:45:48.829
case of Line 2000, we share it with the uh, state of

01:45:48.829 --> 01:45:51.979
Arizona Corporation Commission. And they also responded

01:45:51.979 --> 01:45:56.589
as our interstate agent in Arizona. So we have a protocol

01:45:56.589 --> 01:46:01.468
which we use to respond and NTSB may also respond. And

01:46:01.468 --> 01:46:05.839
if NTSB responds, NTSB has premise primacy. And so

01:46:05.839 --> 01:46:08.678
we become a part of the, to the investigation

01:46:08.678 --> 01:46:13.968
much like the States, um as well. Um, there's a response

01:46:13.979 --> 01:46:17.169
phase very soon after the accident. Where we're anxious

01:46:17.169 --> 01:46:21.348
to really um, prevent the spread of that type of an

01:46:21.348 --> 01:46:25.758
issue that happens. So in response phase, we're looking

01:46:25.758 --> 01:46:30.249
at what kind of tools we might use to um, insert control

01:46:30.249 --> 01:46:33.579
over the action scene. I'll get into that in a minute.

01:46:33.589 --> 01:46:36.448
And then there's a recovery phase, the more long term phase.

01:46:36.448 --> 01:46:40.048
And certainly in the specific to say the line in question

01:46:40.048 --> 01:46:44.419
here, we're in the recovery phase. And um well into

01:46:44.419 --> 01:46:48.468
that. There is enforcement tools for use in the aftermath

01:46:49.079 --> 01:46:54.138
very quickly after an accident happens. We often issue

01:46:54.138 --> 01:46:56.348
what we call corrective action order. And Matt did a

01:46:56.348 --> 01:47:01.718
great job of describing that. And so I won't review

01:47:01.718 --> 01:47:05.138
that, because you know that uh where there's an imminent

01:47:05.138 --> 01:47:09.738
hazard um designated. We, we have to demonstrate that

01:47:09.749 --> 01:47:12.749
for that type of order. And so we issue this, but that's

01:47:12.749 --> 01:47:15.939
a very common order. We issue in the aftermath of an

01:47:15.939 --> 01:47:19.658
accident. Now there's a certain anatomy of those orders

01:47:19.658 --> 01:47:23.738
they follow a pattern. And they're listed there in the

01:47:23.749 --> 01:47:25.939
sub bullets, it's kind of high level aspect. There's a

01:47:25.939 --> 01:47:29.079
statement of facts like what happened, particulars

01:47:29.079 --> 01:47:33.169
of what failed. Uh and typically there's an associated

01:47:33.169 --> 01:47:37.729
restriction of operations until the issue is resolved.

01:47:37.738 --> 01:47:41.019
And typically that comes in and I know it's impactful

01:47:41.019 --> 01:47:44.979
here in the form of what we call a, a restricted operating

01:47:44.979 --> 01:47:50.048
pressure. At 80% of what pressure the pipeline operated

01:47:50.048 --> 01:47:53.298
at when the failure happened. Uh, and that is done as

01:47:53.298 --> 01:47:56.149
a factor of safety. Because we know what the failure

01:47:56.158 --> 01:48:00.158
the pressure was at the failure time. And we had a buffer

01:48:00.158 --> 01:48:03.589
that's equivalent basically to a hydrostatic test pressure,

01:48:03.598 --> 01:48:08.158
um to to add for for a margin of safety. And then

01:48:08.158 --> 01:48:10.908
we require, the operator had to have a remedial work

01:48:10.908 --> 01:48:15.158
plan that's presented to us. Uh, we think that over

01:48:15.158 --> 01:48:18.769
the last several months and probably the last bit of

01:48:18.769 --> 01:48:22.428
information. Specific to Line 2000 was given to us around

01:48:22.428 --> 01:48:27.318
January 25th. And as of yesterday we gave Kinder Morgan

01:48:27.318 --> 01:48:33.689
the go ahead to return Line 2002 to um, to their normal operating

01:48:33.689 --> 01:48:36.778
pressure. And then lastly I just want to indicate we

01:48:36.778 --> 01:48:40.269
do prepare a failure investigation report for accidents.

01:48:40.278 --> 01:48:44.809
And uh the one for Coolidge is still pending, but I

01:48:44.809 --> 01:48:48.448
expect that to be finished within the next, within this

01:48:48.448 --> 01:48:52.278
year. You can move on to the next slide. Let me give

01:48:52.278 --> 01:48:54.649
you a summary of some of the regulations that come

01:48:54.649 --> 01:48:59.348
into play here. Um, in particular that what was referred

01:48:59.348 --> 01:49:03.388
to in the agenda is the mega rule. And uh, I have

01:49:03.399 --> 01:49:06.158
three slides on this. It's very concise history of

01:49:06.158 --> 01:49:09.908
that rule. But you know, harkened back to September

01:49:09.908 --> 01:49:14.289
of 2010. That fateful day when the PG&E accident

01:49:14.298 --> 01:49:18.028
happened in San Bruno, California. In the aftermath,

01:49:18.039 --> 01:49:20.899
there was certainly a call for, for action for us to

01:49:20.899 --> 01:49:25.658
take action and update regulations. But um, very quickly

01:49:25.658 --> 01:49:29.548
we and later in 2011 we issue will be calling advanced

01:49:29.548 --> 01:49:33.738
notice of proposed rulemaking. Where we uh, basically

01:49:33.738 --> 01:49:36.678
it's asking questions and getting feedback for how

01:49:36.678 --> 01:49:40.238
we should develop certain policy. And the issue at the

01:49:40.238 --> 01:49:44.939
heart of that failure was uh, grandfather pipelines.

01:49:44.948 --> 01:49:47.368
Which I know the CPUC is dealt with in the

01:49:47.368 --> 01:49:50.348
aftermath of San Bruno. We worked together with you on

01:49:50.348 --> 01:49:55.769
that. So um, and it was an issue that wasn't addressed

01:49:55.778 --> 01:49:59.559
when we first issued our first code, back in 1970. But

01:49:59.568 --> 01:50:03.738
that's 4 to 2010. And the incident in San Bruno, we

01:50:03.738 --> 01:50:06.508
had to deal with these pipelines that were installed

01:50:06.508 --> 01:50:10.618
before the code. The federal code was promulgated.

01:50:11.479 --> 01:50:14.829
I'm trying to go quicker here just, because I know there's

01:50:14.839 --> 01:50:17.198
real value here. It's probably gonna be in the Q&A.

01:50:17.198 --> 01:50:20.579
This is really historical and it's here as a reference

01:50:20.589 --> 01:50:24.879
for you. Um you know, NTSB later issues a number of

01:50:24.879 --> 01:50:30.928
recommendations to uh, to us. Um and then, um we were

01:50:30.928 --> 01:50:33.859
also up for reauthorization our new Pipeline Safety

01:50:33.859 --> 01:50:39.048
Act of 2011. We have a number of um, mandates that told

01:50:39.048 --> 01:50:43.669
us to update our regulations. Related to dealing specifically

01:50:43.669 --> 01:50:46.789
with record keeping, with grandfather pipelines, with

01:50:46.798 --> 01:50:50.089
automatic and remote control shut off balance, and the like.

01:50:50.098 --> 01:50:54.709
Which we uh, started working on it after that. So

01:50:54.709 --> 01:50:58.079
the next slide we um. As you can see these things take

01:50:58.079 --> 01:51:03.118
some time as you'll see the history of the rulemaking

01:51:03.118 --> 01:51:06.589
process. But we also were dealing with another accident

01:51:06.598 --> 01:51:12.598
in West Virginia. Um, uh resulted in um fortunately

01:51:12.598 --> 01:51:17.229
no fatalities, but property damage. We had a number of recommendations

01:51:17.229 --> 01:51:23.718
that NTSB came out with after that. Um, and then that

01:51:23.729 --> 01:51:27.618
and I bring that up only because in the so called mega

01:51:27.618 --> 01:51:32.098
rule. We also included aspects of those recommendations.

01:51:32.109 --> 01:51:36.479
In the mega rule had specifically to do with pipelines that

01:51:36.479 --> 01:51:39.658
across major highways. Um, and the concern that they

01:51:39.658 --> 01:51:43.019
were outside of the realm of integrity management.

01:51:44.008 --> 01:51:47.258
But we finally issued a proposed rule making 6 years

01:51:47.269 --> 01:51:53.729
after San Bruno April 2016. It was one big rule. Um,

01:51:53.738 --> 01:51:57.098
obviously by the comments you can see we had a lot

01:51:57.098 --> 01:52:00.118
of interest in that rule. Again, we were making big

01:52:00.118 --> 01:52:02.718
changes. It was the biggest change to the gas code

01:52:02.729 --> 01:52:05.848
since the original gas code was promulgated back in

01:52:05.848 --> 01:52:11.738
1970. Can move on to the next slide.

01:52:11.738 --> 01:52:18.258
Um in 2018, because the uh we had so many moving parts.

01:52:18.258 --> 01:52:22.059
We divided it up into three and what we call, it's

01:52:22.068 --> 01:52:27.198
just jargon. Well rulemaking jargon, RIN-1, RIN-2, RIN-3. That stands for

01:52:27.198 --> 01:52:30.059
Rule ID number. Those you may know and the federal government

01:52:30.059 --> 01:52:34.129
we love acronyms. But RIN-1 was the first branch

01:52:34.129 --> 01:52:36.738
if you will and that dealt with Congressional mandates.

01:52:36.749 --> 01:52:40.789
Um, that were specifically responsive to accidents including

01:52:40.789 --> 01:52:46.229
San Bruno. Um, and then RIN-2 basically covered number

01:52:46.229 --> 01:52:51.459
number of NTSB recommendations. But um so again,

01:52:51.459 --> 01:52:56.419
RIN-1 dealt with uh, say the grandfather clause issue.

01:52:57.098 --> 01:53:01.309
It established a new type of moderate consequence area.

01:53:01.309 --> 01:53:03.718
We already established high consequence areas. This

01:53:03.718 --> 01:53:08.568
was a new classification for pipelines. Um, but then and

01:53:08.568 --> 01:53:11.948
then RIN-2 NTSB recommendations. You can see what

01:53:11.948 --> 01:53:16.238
that covered there. And then RIN-3 was gas gathering.

01:53:16.249 --> 01:53:19.109
But I don't think that's a topic of discussion for

01:53:19.109 --> 01:53:22.329
today. But anyway, if you move on to the next slide.

01:53:22.329 --> 01:53:26.609
My apologies for going fast. But

01:53:26.609 --> 01:53:29.609
wait, this is somewhat clear. But be glad to clarify

01:53:29.609 --> 01:53:34.129
anything going forward. This really just talks about

01:53:34.129 --> 01:53:39.999
how we revised 192. Uh, the key aspects of the new final

01:53:39.999 --> 01:53:44.488
rule that we developed. Um, one was to require operators

01:53:44.488 --> 01:53:47.879
to confirm MAOP. And that was a particular interest

01:53:47.879 --> 01:53:50.919
for grandfather pipelines, some of which didn't have

01:53:50.928 --> 01:53:54.289
good records. There was also a record keeping aspects

01:53:54.289 --> 01:54:00.589
of rule, consider seismicity. Um, we codified grace

01:54:00.589 --> 01:54:03.129
period for integrity assessments. I won't go through

01:54:03.129 --> 01:54:06.899
all these. Let me see uh, some of interests related

01:54:06.908 --> 01:54:11.149
to this. Um, item seven, there required operators

01:54:11.149 --> 01:54:14.348
to access certain non-HCA lines at least once every

01:54:14.348 --> 01:54:17.169
10 years. The concern there was before this was put

01:54:17.169 --> 01:54:20.218
in place. That some of the assessment periods were really

01:54:20.229 --> 01:54:24.238
getting um, way out there in time, years and years.

01:54:24.249 --> 01:54:28.068
Um, and there was a need to kind of control that. Um,

01:54:28.868 --> 01:54:32.519
and if you could uh, and the 8 is a really big one.

01:54:32.519 --> 01:54:35.209
I've already mentioned it, but record keeping was a huge

01:54:35.209 --> 01:54:39.698
aspect of, of the gas transmission. Moving on to

01:54:39.698 --> 01:54:42.778
the next slide.

01:54:42.778 --> 01:54:46.709
Um, this is really a summary. So there, there you had

01:54:46.709 --> 01:54:51.198
a nutshell of the regulation and this is my last slide

01:54:51.198 --> 01:54:55.048
with content. But this is just a summary of enforcement

01:54:55.048 --> 01:54:59.039
that we've taken on the federal level over the last

01:54:59.048 --> 01:55:04.079
year. Um in 2022, we had a record year of issuing civil

01:55:04.079 --> 01:55:12.318
penalties, $11.6 million. Um we uh, issued notices a

01:55:12.318 --> 01:55:15.499
probable violation. And that's the typical enforcement

01:55:15.499 --> 01:55:20.249
action we issue in the aftermath or in many times in

01:55:20.249 --> 01:55:22.908
the aftermath of the failure. But typically that's

01:55:22.919 --> 01:55:26.669
also um, after we've inspected an operator and found

01:55:26.669 --> 01:55:30.829
compliance issues. There's typically our enforcement

01:55:30.829 --> 01:55:34.879
action that we will, will issue. But again it was uh,

01:55:34.888 --> 01:55:38.658
high number that was tied with 2021, which was a high

01:55:38.669 --> 01:55:43.568
previous high. We've also worked to make our enforcement

01:55:43.579 --> 01:55:47.598
more timely. So there's some statistics on how we work

01:55:47.598 --> 01:55:52.499
to do that. Um, timely enforcement is critical to ensuring

01:55:52.499 --> 01:55:57.118
safety. And then the last item there consent agreements

01:55:57.118 --> 01:56:03.048
or orders. Um, in response to our most recent reauthorization.

01:56:03.059 --> 01:56:07.198
Um, we have been encouraged by Congress to consider

01:56:07.209 --> 01:56:11.859
various avenues for settling cases. So we've entered

01:56:11.859 --> 01:56:18.548
into a number of consent orders or which so with their

01:56:18.548 --> 01:56:23.178
agreements that I signed into order. Um, and that's

01:56:23.979 --> 01:56:28.028
one way that we resolve cases. And probably during in

01:56:28.028 --> 01:56:31.589
response to the pipe sector 2020, doing many more of those

01:56:31.598 --> 01:56:38.948
these days. Um anyway with that, I would like to just

01:56:38.948 --> 01:56:42.178
close. And say you know again, I appreciate the opportunity

01:56:42.189 --> 01:56:44.548
and I look forward to answering any questions you may

01:56:44.548 --> 01:56:46.758
have. Again, my apologies for running through that

01:56:46.758 --> 01:56:50.609
so quickly. But I'm gonna probably have a few questions.

01:56:50.618 --> 01:56:55.678
Anyway, back to you Bruce. Thank you Alan and thank

01:56:55.678 --> 01:56:58.278
you Alan for that confirmation. That seems that has

01:56:58.278 --> 01:57:02.899
approved the restoration of that pressure on Line 2000.

01:57:02.899 --> 01:57:06.539
That was of great interest here. Um, so I'm going to

01:57:06.539 --> 01:57:09.368
open it up for questions from the dais. Um, but I thought

01:57:09.368 --> 01:57:13.968
I'd just ask one. And that goes back to, it's really

01:57:13.968 --> 01:57:17.039
more for Matt. Matt, you know, you mentioned there's

01:57:17.048 --> 01:57:22.548
um PUC safety rules that we put in place um, years ago.

01:57:22.548 --> 01:57:25.818
Actually quite a long time ago, and then since then

01:57:26.359 --> 01:57:29.999
has approved its federal rules. Can you speak a little

01:57:29.999 --> 01:57:34.818
bit to how these rules interplay with each other? Um,

01:57:34.829 --> 01:57:38.098
Are there places where there they duplicate? Where

01:57:38.109 --> 01:57:41.939
are there gaps and how they cover our safety? Um,

01:57:41.948 --> 01:57:45.079
and any thoughts on how we can better align them?

01:57:45.079 --> 01:57:47.868
Our PSC. And I think they're referred to as Pipeline Safety

01:57:47.868 --> 01:57:51.789
Enhancement Plans or PSCP. And can you keep that

01:57:51.789 --> 01:57:54.039
to maybe a minute and then we'll get time for the Commissioners

01:57:54.039 --> 01:57:59.129
to ask.

01:57:59.129 --> 01:58:02.459
That for me or for Matt?

01:58:02.459 --> 01:58:07.158
Well, I was gonna ask Matt. Uh since he does, is familar with the PSCP. Um.

01:58:08.589 --> 01:58:15.539
Okay. Thank you very much Bruce. Um PSCP as you said

01:58:15.539 --> 01:58:19.579
is the California PUC Pipeline Safety Enhancement.

01:58:19.579 --> 01:58:25.068
That was started immediately after the San Bruno incident.

01:58:25.999 --> 01:58:30.019
Essentially this, the Commission began a rulemaking

01:58:30.178 --> 01:58:33.539
and had multiple decisions that came out of that rulemaking.

01:58:33.539 --> 01:58:39.678
And in addition to that California Legislators uh, proceeded

01:58:39.689 --> 01:58:42.269
to

01:58:42.269 --> 01:58:47.829
and that then build a bill. But now it's a statue we call

01:58:47.829 --> 01:58:52.928
PU. It's in the PU Code section 958. That section

01:58:52.928 --> 01:58:59.109
958 sort of it's part of our governing law. So um,

01:58:59.789 --> 01:59:04.519
we use the PU Code section 958, in addition to

01:59:04.519 --> 01:59:08.238
the decisions that came out of the rulemaking. Plus

01:59:08.249 --> 01:59:13.238
our general order 112-F. So these three combined sort

01:59:13.238 --> 01:59:17.988
of guide PSEP program, Pipeline Safety Enhancement

01:59:17.988 --> 01:59:24.629
Program. So we used that. The PC Code, Section 958 is

01:59:24.638 --> 01:59:27.829
that each gas corporation shall prepare and submit

01:59:27.829 --> 01:59:31.079
to the Commission. A proposed comprehensive pressure

01:59:31.079 --> 01:59:35.698
testing implementation plan for all interesting transmission

01:59:35.709 --> 01:59:40.129
lines. To either pressure test those lines or to replace

01:59:40.138 --> 01:59:45.658
all segments of that transmission line. That lack what

01:59:45.658 --> 01:59:48.488
we call post construction hydro test. So if it does

01:59:48.499 --> 01:59:52.559
not have the post construction hydro test record. Then

01:59:52.559 --> 01:59:57.729
it's considered to be either pressure tested or replaced.

01:59:57.738 --> 02:00:02.689
For Aquazone 2, two options. Pressure tests are replaced.

02:00:02.729 --> 02:00:05.818
However, the PHMSA

02:00:05.818 --> 02:00:08.269
rule that Alan talked about

02:00:08.269 --> 02:00:14.759
Under win one. Uh, it's related to the uh issue of the

02:00:14.769 --> 02:00:18.569
pipelines that lack post construction hydro test record.

02:00:18.579 --> 02:00:24.339
So that rule PHMSA's rule, gave more options than

02:00:24.348 --> 02:00:30.418
the to the PU Code has. In addition to the pressure

02:00:30.418 --> 02:00:35.108
test or replace PHMSA's rule that, that an operator can use

02:00:35.108 --> 02:00:39.679
what we call engineering critical assessment method.

02:00:39.689 --> 02:00:44.698
To, uh to address this issue.

02:00:44.698 --> 02:00:49.329
Uh, perhaps(inaudible). To interrupt, it sounds like there's a more

02:00:49.329 --> 02:00:53.138
flexibility on the federal side than our original California

02:00:53.138 --> 02:00:57.028
rules initially established them.

02:00:57.028 --> 02:01:01.278
Yes, there is an a symmetric fact. We identified a

02:01:01.289 --> 02:01:07.479
gap, particularly in regulated stations. That are impractical

02:01:07.479 --> 02:01:11.289
to either pressure test. The only option for those

02:01:11.289 --> 02:01:16.109
will be to replace it and the cost and the, um other

02:01:16.118 --> 02:01:21.318
issues. It's what we are looking into, um the gas safety

02:01:21.318 --> 02:01:24.549
and reliability branch. We are currently deliberating

02:01:24.549 --> 02:01:29.538
on how to align this gap with the, uh meaning aligned

02:01:29.538 --> 02:01:34.949
the PU Code, Section 958 Gap from the 49 CFR

02:01:34.949 --> 02:01:39.049
Part 192, the Federal Codes.

02:01:39.049 --> 02:01:43.449
Thank you, Matt. Uh, I'm going to with our remaining time. Just open

02:01:43.449 --> 02:01:55.609
it up for questions from the from the dais.

02:01:55.609 --> 02:02:00.598
I see Commissioner Shiroma. So go ahead Commissioner. Thank

02:02:00.598 --> 02:02:03.059
you. I raised my hand.

02:02:03.059 --> 02:02:08.159
Okay, so from our representative from PHMSA. Thank you so

02:02:08.159 --> 02:02:13.049
much Alan. On your slide, Outlining Revision to Part

02:02:13.049 --> 02:02:19.289
192. Can you back from lay person requiring operators

02:02:19.299 --> 02:02:24.539
install safety features on ILI launchers and receivers.

02:02:24.549 --> 02:02:32.118
What is that? Okay, that is um, we've had a number

02:02:32.118 --> 02:02:37.049
of incidents. Where um, the lack of safety devices on

02:02:37.058 --> 02:02:44.988
launcher and receiver enclosures. Um, and uh led to

02:02:44.988 --> 02:02:50.599
a sudden opening of those closures and related fatalities.

02:02:50.609 --> 02:02:54.588
If it swings open under, you know, such high pressure.

02:02:54.588 --> 02:02:58.838
It's it's um, very catastrophic to the person who's

02:02:58.838 --> 02:03:02.509
on the other end. And so that was just to ensure that

02:03:02.509 --> 02:03:11.769
safety measure um, was put in place. (inaudible) Is it

02:03:11.769 --> 02:03:15.799
equipment?

02:03:15.799 --> 02:03:19.629
It's a, it's a device to ensure that the pressure is

02:03:19.629 --> 02:03:23.849
not in the, in the barrel, if you will. The receiver

02:03:23.849 --> 02:03:29.408
itself, um, to make sure there's a positive means of

02:03:29.419 --> 02:03:35.329
knowing that there's no pressure. Uh, within um, within

02:03:35.338 --> 02:03:39.629
that device that's receiving or launching a peg. Typically

02:03:39.629 --> 02:03:42.808
it's happened as seen on say where it's been received.

02:03:44.028 --> 02:03:47.248
It is very quickly for that. Did I understand correctly

02:03:47.248 --> 02:03:54.819
that for the um El Paso Pipeline. That the maximum allowable

02:03:54.829 --> 02:03:59.998
operating pressure was not is not the cause?

02:03:59.998 --> 02:04:04.648
Of the? Well, the cause is actually still under investigation.

02:04:04.648 --> 02:04:09.718
But I would not uh, you know, the condition with, we're

02:04:09.718 --> 02:04:12.519
dealing with. That I wouldn't attribute to the, the

02:04:12.519 --> 02:04:17.368
MAOP. Um, it was probably more related to methods

02:04:17.368 --> 02:04:21.299
of assessment.

02:04:21.299 --> 02:04:27.259
For the condition and making sure that um, you know,

02:04:27.259 --> 02:04:30.999
we're looking for the right threat, with the right tool

02:04:32.148 --> 02:04:36.408
or method. But other than that, I really can't comment.

02:04:36.408 --> 02:04:43.098
on the. Because we have pending enforcement in that area as well.

02:04:43.098 --> 02:04:49.668
Commissioner, uh Vice Chair Gunda had his hand raised. Thank you. Welcome. Thank

02:04:49.668 --> 02:04:53.898
you, Commissioner Shiroma. Thank you Mr. Mayberry, and

02:04:53.908 --> 02:04:58.999
uh for your comments. Just wanted to ask one question

02:04:58.999 --> 02:05:03.098
given uh, the reliance of California gas system on the

02:05:03.108 --> 02:05:08.319
imports and transmission uh, pipeline safety. Do we

02:05:08.319 --> 02:05:12.658
currently do uh not just, not looking at, you know, the

02:05:12.658 --> 02:05:15.468
current pipelines were working on. But in terms of

02:05:15.478 --> 02:05:19.759
mid to long term reliability risk, especially given

02:05:19.769 --> 02:05:24.569
that some of these rules do not apply to Mr. Mayberry.

02:05:24.569 --> 02:05:27.358
I think you said about the some of the grandfathered

02:05:27.369 --> 02:05:30.848
older pipeline systems. Just wanted to understand is

02:05:30.858 --> 02:05:36.679
their report or general update work that we do on.

02:05:36.689 --> 02:05:40.338
Just the risk assessment, specific geographical areas

02:05:40.348 --> 02:05:44.778
/California.

02:05:44.778 --> 02:05:48.108
Generally a big aspect of the gas transmission will

02:05:48.108 --> 02:05:50.939
rent one in particular was to deal with the grandfathered

02:05:50.939 --> 02:05:55.239
pipelines. Which were installed pre-code or pre-1970,

02:05:55.239 --> 02:05:58.819
which was when the first gas code was published. That

02:05:58.819 --> 02:06:02.749
required, um being service hydrostatic test pressure

02:06:02.759 --> 02:06:08.398
test, test on pipelines. Um, that said there are other

02:06:08.408 --> 02:06:12.338
um. Yes, we learned more as technologies evolved, you know,

02:06:12.338 --> 02:06:15.689
we're leveraging that. And that's contained also contained

02:06:15.689 --> 02:06:19.918
in the rule. I would say more so perhaps and RIN-2

02:06:19.929 --> 02:06:24.739
the second tranche of the rule. That provides other

02:06:24.739 --> 02:06:28.379
alternatives for assessing the integrity of the pipeline

02:06:28.389 --> 02:06:31.778
such as engineering critical assessment, that Matt referred

02:06:31.778 --> 02:06:38.228
to. Um the other incidentally, the lining question

02:06:38.228 --> 02:06:44.199
was, was a postcode pipe. Um, it was a 1985 vintage pipe.

02:06:47.968 --> 02:06:53.119
Hopefully that answers your question.

02:06:53.119 --> 02:06:56.348
Thank you Alan and thank you Matt. I think we are out

02:06:56.348 --> 02:06:59.908
of time. So appreciate your participation again on

02:06:59.908 --> 02:07:03.619
our panel. And I will turn it now to, back to Christina.

02:07:05.139 --> 02:07:09.098
Thank you Bruce. Thank you Alan and Matt. Um, so we

02:07:09.098 --> 02:07:13.629
have time for about a 6-minute stretch break. So

02:07:13.629 --> 02:07:17.629
please be back at 11:20, for our 3rd and final panel

02:07:17.629 --> 02:07:33.778
of the day. Thank you everyone.

02:07:33.778 --> 02:07:37.259
Time to get back to our 3rd and final panel of the

02:07:37.269 --> 02:07:42.588
day. Uh, Francisco next slide please.

02:07:42.588 --> 02:07:46.489
So this last panel is moderated by Molly Sterkel, who

02:07:46.489 --> 02:07:50.809
is a Program Manager with the CPUC's Energy Division. Molly?

02:07:54.259 --> 02:07:57.788
Hi, good morning everyone. Um, good morning Commissioners,

02:07:57.798 --> 02:08:00.689
members of the public. Uh, thank you again for joining

02:08:00.689 --> 02:08:04.639
us at today's En Banc. Um, my name is Molly Sterkel, and

02:08:04.639 --> 02:08:07.848
I'm a program manager in the CPUC's Energy Division. Where

02:08:07.848 --> 02:08:10.978
I oversee Electric Planning and Market Design. I'll

02:08:10.978 --> 02:08:14.559
be your moderator uh, with the help of our third panel

02:08:14.559 --> 02:08:18.028
of experts. Now we are going to shift our focus, um

02:08:18.038 --> 02:08:21.119
to discuss the impact of the recent high natural gas

02:08:21.119 --> 02:08:25.749
prices and what the prices are um, doing to California

02:08:25.759 --> 02:08:28.898
electricity market. I just wanted to set the stage

02:08:28.898 --> 02:08:34.398
a little bit. Um, our electricity markets are heavily

02:08:34.569 --> 02:08:38.329
uh, interdependent on the gas market. Our natural gas

02:08:38.338 --> 02:08:41.339
generators still provide about half of our electricity

02:08:41.339 --> 02:08:43.999
generation. And it's still quite common for natural

02:08:43.999 --> 02:08:47.308
gas generators to be the marginal resource in the electric

02:08:47.308 --> 02:08:50.739
markets. What that means is that the natural gas generators

02:08:50.749 --> 02:08:53.489
frequently act as price setters. Electricity prices

02:08:53.489 --> 02:08:56.318
are commonly just a simple multiplication of the average

02:08:56.318 --> 02:09:00.418
heat rate of gas plants at the time and the price of

02:09:00.418 --> 02:09:04.389
natural gas. So as you've already heard, we had record

02:09:04.389 --> 02:09:08.178
natural gas prices in December. And so it follows, uh

02:09:08.188 --> 02:09:11.178
that we also had record wholesale electricity costs

02:09:11.188 --> 02:09:14.599
in December. Unfortunately, as you'll hear in more

02:09:14.599 --> 02:09:17.389
detail, the month of December was the single highest

02:09:17.389 --> 02:09:20.688
month of wholesale electric costs that we've observed

02:09:20.688 --> 02:09:24.599
in the past 5 years. The CAISO report, released a report

02:09:24.599 --> 02:09:27.879
yesterday that showed that markets both saw additional

02:09:27.879 --> 02:09:32.918
costs of $3 billion in December. Um, that would be $3 billion

02:09:32.918 --> 02:09:36.249
dollars above what uh, they would have otherwise normally

02:09:36.259 --> 02:09:40.849
seen. We do not yet know how these wholesale costs

02:09:40.849 --> 02:09:43.278
will flow through to consumers. Because different market

02:09:43.278 --> 02:09:46.578
participants, like the investor-owned utilities and

02:09:46.578 --> 02:09:48.889
community choice aggregators have different hedging

02:09:48.889 --> 02:09:52.609
strategies for their electricity portfolios. For example

02:09:52.609 --> 02:09:56.278
earlier, you heard from Ms. Clegg from PG&E. And she

02:09:56.278 --> 02:09:58.808
expressed that she oversees the gas hedging conducted

02:09:58.808 --> 02:10:02.379
by PG&E on behalf of PG&E bundled electric

02:10:02.389 --> 02:10:06.239
customers. So those hedges may help mitigate some of

02:10:06.239 --> 02:10:09.828
the impact of these prices on electric customer bills,

02:10:09.839 --> 02:10:12.999
in the coming months. We will hear on this panel from

02:10:12.999 --> 02:10:15.859
Bill Walsh at Southern California Edison. And he can

02:10:15.859 --> 02:10:18.019
go into more detail to explain the factors that will

02:10:18.019 --> 02:10:21.879
determine the ultimate impact of wholesale energy costs

02:10:21.889 --> 02:10:25.548
to consumers. So I asked each of our five panelists,

02:10:25.558 --> 02:10:29.808
um all of whom are experts to offer their observations

02:10:29.808 --> 02:10:32.648
on how the recent gas prices. As well as, you know, the

02:10:32.648 --> 02:10:35.589
patterns and weather, gas operations, gas regulations.

02:10:35.599 --> 02:10:38.089
How have those all impacted the electric markets in

02:10:38.089 --> 02:10:41.389
the past two months? Quick answer is a lot, but the

02:10:41.389 --> 02:10:43.948
details are much more interesting. So we're gonna get

02:10:43.948 --> 02:10:48.698
a good bit of insight from this panel. Um these experts

02:10:48.709 --> 02:10:53.489
as I said, they're going to touch on the costs, um and

02:10:53.499 --> 02:10:56.249
and how and when these prices might flow through electric

02:10:56.249 --> 02:11:01.298
consumers. So um, and I've also asked each panelist

02:11:01.298 --> 02:11:03.869
to share their ideas, their suggestions about what

02:11:03.869 --> 02:11:06.379
we should be considering in light of the current situation.

02:11:06.389 --> 02:11:09.769
So without further ado, our first panelist is Amelia Blanke.

02:11:09.778 --> 02:11:13.198
A Manager of Monitoring and Reporting in the Department

02:11:13.198 --> 02:11:16.438
of Market Monitoring. Uh, the DMM is an independent

02:11:16.438 --> 02:11:19.193
entity within the CAISO. Amelia's been at the

02:11:19.193 --> 02:11:21.844
DMM for a decade. And together with her colleagues

02:11:21.854 --> 02:11:24.313
she produces a number of annual and quarterly reports

02:11:24.313 --> 02:11:26.703
that I along with many of my colleagues find incredibly

02:11:26.703 --> 02:11:29.604
useful, and insightful. So Amelia, please take

02:11:29.604 --> 02:11:33.474
it away. Um and uh and, and then turn it back to

02:11:33.474 --> 02:11:37.308
me and I'll introduce Bill. Thank you Amelia.

02:11:37.308 --> 02:11:41.759
Okay, thank you Molly. The purpose of this panel today

02:11:41.769 --> 02:11:44.948
is to discuss the record high natural gas prices and

02:11:44.948 --> 02:11:48.318
the impact of those prices in the electricity market.

02:11:48.328 --> 02:11:51.849
I'll present a set of metrics today that highlight

02:11:51.849 --> 02:11:55.528
the mechanism. That allows those gas prices to influence

02:11:55.528 --> 02:11:59.188
electricity prices. But there are many, many more available

02:11:59.188 --> 02:12:01.519
on our website and I suggest that if you're interested

02:12:01.519 --> 02:12:08.499
you go check that out there. Next slide please.

02:12:08.499 --> 02:12:12.509
This slide shows monthly average natural gas prices.

02:12:12.519 --> 02:12:15.658
This is the same data that you've seen throughout the

02:12:15.658 --> 02:12:18.209
panel today, except that it's going all the way back

02:12:18.209 --> 02:12:23.989
to 2019. In addition to the very high, uh prices in

02:12:23.989 --> 02:12:26.979
the last two months. I'd like to point out two things.

02:12:26.989 --> 02:12:31.818
The first is the difference between the Henry Hub,

02:12:31.828 --> 02:12:35.479
which was as explained earlier. The national, uh sort

02:12:35.479 --> 02:12:39.428
of national benchmark and West Coast prices. You can

02:12:39.428 --> 02:12:43.538
see SoCal Citygate there in red in Southern California,

02:12:43.548 --> 02:12:48.769
and PG&E Citygate in yellow.

02:12:48.769 --> 02:12:52.048
The second thing I would like to point out is the relative

02:12:52.048 --> 02:12:56.719
stability of especially the PG&E Citygate price.

02:12:57.349 --> 02:13:01.379
Um, if you extend this kind of graph, if you look at

02:13:01.379 --> 02:13:05.048
the data, even going back a decade. PG&E is notable,

02:13:05.058 --> 02:13:09.759
PG&E Citygate price is notably more stable than other

02:13:09.759 --> 02:13:13.859
national indices. And, and that in large part has to

02:13:13.859 --> 02:13:18.778
do with historically the use of storage resources. To

02:13:18.778 --> 02:13:23.269
mitigate price spikes in the national natural gas market.

02:13:23.788 --> 02:13:26.359
Um, and you can really see that, for example, in Winter

02:13:26.359 --> 02:13:31.278
Storm Uri, back in February of 2021. When prices went

02:13:31.288 --> 02:13:34.089
up in Southern California, they did not go up in Northern

02:13:34.089 --> 02:13:41.379
California. One, one example there. Next slide please.

02:13:41.379 --> 02:13:45.928
This chart shows the daily spot prices from December

02:13:45.928 --> 02:13:49.798
1st through the end of January. Um again, two points.

02:13:49.808 --> 02:13:55.639
Um, one is the deviation between prices in SoCal

02:13:55.639 --> 02:13:59.648
Citygate and PG&E, particularly and the Henry Hub.

02:13:59.658 --> 02:14:02.908
Um, but as has been mentioned before, prices also rose

02:14:02.918 --> 02:14:05.979
in other parts of the West. And you can see that in

02:14:05.979 --> 02:14:09.209
some of the same hubs that have been mentioned by other

02:14:09.209 --> 02:14:13.259
speakers today. The second point is that this was an

02:14:13.259 --> 02:14:19.629
extended period of high prices. Um, if you look at

02:14:19.639 --> 02:14:22.729
for instance the, the East Coast over the last weekend.

02:14:22.729 --> 02:14:26.418
When they have very, very cold weather. Very high demand

02:14:26.418 --> 02:14:30.438
for natural gas, they had a price spike up to about

02:14:30.438 --> 02:14:36.568
$135. But today that price is back down, the same kind

02:14:36.568 --> 02:14:41.769
of pattern occurred with Winter Storm Uri. This was

02:14:41.769 --> 02:14:46.019
different um, partially because those high gas prices

02:14:46.019 --> 02:14:51.389
persisted throughout two months. Next slide please.

02:14:54.889 --> 02:15:00.969
This slide shows the correlation between gas prices.

02:15:00.979 --> 02:15:03.879
This is showing the SoCal Citygate gas price,

02:15:03.879 --> 02:15:07.418
again a monthly average in the dash line. Compared

02:15:07.418 --> 02:15:11.168
to electricity prices in the wholesale energy market.

02:15:12.589 --> 02:15:16.318
As Molly mentioned in the kickoff for this panel. Uh,

02:15:16.328 --> 02:15:21.489
there's an estimate published in the ISO's recent gas-market

02:15:21.489 --> 02:15:24.769
report, which was published I think yesterday. That

02:15:24.778 --> 02:15:30.428
the wholesale energy cost in December alone is $3 billion

02:15:30.428 --> 02:15:34.589
dollars higher than it would have been. If natural

02:15:34.589 --> 02:15:37.578
gas prices had been lower. So that's a comparison

02:15:37.589 --> 02:15:41.489
essentially of December's wholesale energy cost estimate.

02:15:41.499 --> 02:15:47.648
To the estimate of December a year, in the year previous.

02:15:48.359 --> 02:15:54.558
This chart is set at a relatively efficient gas resource

02:15:54.568 --> 02:15:59.959
implied heat rate. The axis on the left hand side shows

02:15:59.969 --> 02:16:03.089
the energy price. And the axis on the right hand side

02:16:03.099 --> 02:16:05.749
shows the gas price. You'll note that one is about

02:16:05.759 --> 02:16:09.089
10 times the other, so that's about a 10 heat rate.

02:16:09.398 --> 02:16:12.928
That implied heat rate is a very standard measure of

02:16:12.938 --> 02:16:16.818
market efficiency. That I think is telling because

02:16:16.818 --> 02:16:20.259
what it shows you is that it's very typical for gas

02:16:20.259 --> 02:16:23.739
prices to be one of the primary determinants, determinants

02:16:23.749 --> 02:16:26.778
of energy prices. And obviously that's something we're

02:16:26.778 --> 02:16:31.928
seeing in the California ISO market. Even as more renewables

02:16:31.938 --> 02:16:35.818
are integrated into that market. Um, I'll note a couple

02:16:35.818 --> 02:16:38.898
other things on this chart while, while it's on the

02:16:38.908 --> 02:16:43.678
screen. But first is that there are instances when

02:16:43.678 --> 02:16:47.528
implied heat rates do rise. When prices are higher than

02:16:47.528 --> 02:16:51.229
you would predict based on gas price alone. For example,

02:16:51.229 --> 02:16:55.048
in August and September of this year, during the extended

02:16:55.048 --> 02:17:00.778
heatwave. Or in August of 2020, during that extended

02:17:00.788 --> 02:17:04.568
heatwave. There are other months when the average price

02:17:04.568 --> 02:17:08.038
is lower than you would predict based on gas prices

02:17:08.038 --> 02:17:10.918
alone. For instance, in December and January of this

02:17:10.918 --> 02:17:19.459
year. Next slide please.

02:17:19.459 --> 02:17:23.399
This chart really I think highlights some of the

02:17:23.409 --> 02:17:28.499
mechanism. By which gas prices end up being reflected

02:17:28.509 --> 02:17:33.739
in energy prices. The panel on the left shows the day

02:17:33.739 --> 02:17:39.308
ahead supply bids in the California ISO market. On

02:17:39.308 --> 02:17:45.949
December 22, 2022, in red that as a reminder of the

02:17:45.949 --> 02:17:49.249
day we have the highest spot prices, in the gas market.

02:17:49.259 --> 02:17:54.929
So prices on that day were above $45 at all of the,

02:17:54.939 --> 02:18:01.568
all of the CAISO Hubs, gas hubs. The blue line shows the supply

02:18:01.578 --> 02:18:08.659
in the bid into the market on December 22, December

02:18:08.659 --> 02:18:14.798
22, 2021, um in the same hour. Which is uh, the hour

02:18:14.798 --> 02:18:18.669
between 5 and 6pm. So obviously you see the

02:18:18.679 --> 02:18:23.669
supply code shifting up. As supply bids are increased,

02:18:23.669 --> 02:18:28.108
reflecting those higher marginal costs. One other note

02:18:28.108 --> 02:18:31.179
is that there was actually less supply offered in the

02:18:31.179 --> 02:18:38.028
market, um on in 2022 compared to 2021. The chart on

02:18:38.028 --> 02:18:41.769
the right shows is a subset that just shows the gas

02:18:41.769 --> 02:18:46.098
resources. So these obviously are showing that there

02:18:46.098 --> 02:18:50.249
is an increased fitting reflecting those higher marginal

02:18:50.249 --> 02:18:55.499
costs, that those resources are are facing. Next slide

02:18:55.509 --> 02:18:58.038
please.

02:18:58.038 --> 02:19:03.439
This shows the same data again showing December 22,

02:19:04.358 --> 02:19:09.618
2022, on the left December 22, 2021, on the right. Same

02:19:09.618 --> 02:19:14.659
supply curves showing the resource fuel type

02:19:14.669 --> 02:19:18.269
of those resources offered in the market, 1-year compared

02:19:18.269 --> 02:19:21.929
to the other. Um, the red is and I realized the font is

02:19:21.939 --> 02:19:26.858
small on this. The red is gas and the green are financial

02:19:26.858 --> 02:19:32.969
only bids Some of the blue is showing other generations.

02:19:32.979 --> 02:19:37.128
So that includes renewables, wind and solar. Many of

02:19:37.128 --> 02:19:41.288
whom are are offered in the market as price taking

02:19:41.298 --> 02:19:46.138
very low, low bid resources shown in blue there. We

02:19:46.138 --> 02:19:49.019
are also showing separately storage resources, which

02:19:49.019 --> 02:19:53.209
are here shown in, in purple. Um, in this particular

02:19:53.209 --> 02:20:01.679
hour in 2022. Um, we saw prices at about $600. So the

02:20:01.679 --> 02:20:05.519
demand bit into the market was then intersecting with

02:20:05.519 --> 02:20:11.019
the supply curve. At roughly the place where the, where

02:20:11.019 --> 02:20:19.588
the gas resources and. Next slide please.

02:20:19.588 --> 02:20:24.949
This chart shows the change in generation dispatched

02:20:24.959 --> 02:20:29.969
by the market. In, on average in December 2022, dependent

02:20:29.979 --> 02:20:35.659
compared to 2021. What this is showing is, and the

02:20:35.669 --> 02:20:40.318
uh what this is showing is that we had fewer imports.

02:20:41.818 --> 02:20:46.499
And those imports were substituted with gas shown in

02:20:46.499 --> 02:20:50.509
blue. As well as storage into some degree, uh solar

02:20:50.509 --> 02:20:54.729
and other other resources.

02:20:54.729 --> 02:20:58.489
That to me highlights the impact that some of these

02:20:58.499 --> 02:21:02.209
high gas prices and other, other factors may be having

02:21:02.219 --> 02:21:06.269
outside of the California ISO market. Next slide.

02:21:09.138 --> 02:21:12.919
This shows the same data for January. Obviously a very,

02:21:12.919 --> 02:21:15.608
very different story in January. What we saw was lower

02:21:15.608 --> 02:21:20.088
demand and in fact lower levels of dispatch for gas

02:21:20.098 --> 02:21:23.298
imports and solar, that had to do with the weather. And

02:21:23.298 --> 02:21:27.378
with that, I think my time is up. I'll pass the mic

02:21:27.388 --> 02:21:33.118
back to Molly. Okay. Uh, thanks very much Amelia for

02:21:33.118 --> 02:21:37.368
showing us what was actually happening in the market.

02:21:37.378 --> 02:21:40.838
Um, our next panelist is William Walsh. Uh, Bill Walsh

02:21:40.848 --> 02:21:43.868
is the Vice President of Energy and Procurement and

02:21:43.868 --> 02:21:47.308
Management Organization at Southern California Edison.

02:21:47.318 --> 02:21:50.939
Bill is responsible for Edison's Wholesale Energy Contracting

02:21:50.939 --> 02:21:54.578
and Management. And he is of course one of the first

02:21:54.588 --> 02:21:57.459
people I wanted to hear from when I saw these high

02:21:57.459 --> 02:22:02.229
prices. Um, since he is responsible for procurement

02:22:02.229 --> 02:22:06.058
there. So take it away Bill.

02:22:06.058 --> 02:22:08.588
Thanks Molly. Also thank you to the Commission for

02:22:08.588 --> 02:22:11.449
allowing me to be here and talk on this important subject.

02:22:11.459 --> 02:22:15.209
Real quick safety moment, you can see my face. Had a

02:22:15.209 --> 02:22:17.459
biking accident, make sure you wear a helmet out there.

02:22:17.469 --> 02:22:20.078
Um, if I had not been wearing it have been much worse, so.

02:22:20.088 --> 02:22:23.479
Everybody stay safe out there. Um, wouldn't mind moving

02:22:23.479 --> 02:22:26.098
to the next slide.

02:22:26.098 --> 02:22:29.229
So this is just an overlay of the SoCalGas system.

02:22:29.229 --> 02:22:32.538
With the red dots being the resources that we owned

02:22:32.548 --> 02:22:36.679
or control through contracts. Um, it's roughly 12 gas

02:22:36.679 --> 02:22:41.108
fired units are resources uh, totaling roughly 5,100

02:22:41.108 --> 02:22:44.108
megawatts. Um, just started demonstrating our exposure

02:22:44.108 --> 02:22:47.838
to the gas market from an electricity standpoint. We have these resources

02:22:47.848 --> 02:22:50.088
as well as the number of contracts are settled on the

02:22:50.088 --> 02:22:53.459
gas price. Under what are called qualifying facility

02:22:53.459 --> 02:22:56.729
contracts. And then of course, whatever we pick up an

02:22:56.729 --> 02:22:59.979
unspecified energy in the market where typically, as

02:22:59.979 --> 02:23:03.269
was said by the CAISO earlier. Uh, the market clearing

02:23:03.269 --> 02:23:06.788
price comes from a from a gas unit. Next slide please.

02:23:09.538 --> 02:23:12.199
So there's a lot of discussion around some of the fundamentals

02:23:12.199 --> 02:23:15.058
that drove all the high prices through December and

02:23:15.058 --> 02:23:18.028
January. Um, I'm not gonna go over them again. They've

02:23:18.028 --> 02:23:20.378
been sort of all been discussed. But I do want to mention

02:23:20.378 --> 02:23:23.399
a few things that, you know, we just find a little unusual

02:23:23.399 --> 02:23:27.638
during this period. One is the uh length of the, of the

02:23:27.638 --> 02:23:31.899
period. So you have nearly a two months time, timeline

02:23:31.899 --> 02:23:34.548
where prices are very elevated. You see here about

02:23:34.548 --> 02:23:39.078
300%. During that time, Henry Hub, which is the national

02:23:39.078 --> 02:23:41.638
benchmark was trading between 3 and 7, the entire

02:23:41.638 --> 02:23:45.449
time. So you're not seeing gas being flowed or transported

02:23:45.449 --> 02:23:48.578
over from, uh the Eastern half of the country into the

02:23:48.578 --> 02:23:52.149
West. Um, so one thing you would expect or would hope

02:23:52.149 --> 02:23:54.989
is that prices would eventually balance out, especially

02:23:54.989 --> 02:23:58.048
at the time, timeline becomes longer and longer. There

02:23:58.048 --> 02:24:00.548
was also talk about storage levels being particularly

02:24:00.548 --> 02:24:03.818
low, that that is true. Um, another thing that we saw

02:24:03.828 --> 02:24:07.269
was uh, (inaudible) that we did not have any market liquidity

02:24:07.269 --> 02:24:10.628
issues. And so all this pricing kind of points towards

02:24:10.638 --> 02:24:13.578
scarcity pricing, but for the most part, we did not

02:24:13.588 --> 02:24:17.429
have any issues around market liquidity. Um, a lot of

02:24:17.429 --> 02:24:20.278
discussion on some of the pipeline explosions and some

02:24:20.278 --> 02:24:23.868
of the issues there. Um again, no liquidity issues as

02:24:23.868 --> 02:24:27.038
well as uh, production levels across the U.S. were

02:24:27.038 --> 02:24:29.888
high. I will note, um it's worth pointing out. That

02:24:29.888 --> 02:24:34.199
the pipeline uh, explosion at (inaudible) on El Paso occurred

02:24:34.199 --> 02:24:38.098
in August of last year. Um, so it has been in that

02:24:38.098 --> 02:24:41.028
state for quite a while. In fact it was in that reduced

02:24:41.028 --> 02:24:44.108
state during the heatwave event in September, over those

02:24:44.108 --> 02:24:48.338
10 days. Um, there were tighter balancing requirements.

02:24:48.348 --> 02:24:53.038
So on a daily basis, as non-core customers, uh for our

02:24:53.038 --> 02:24:54.949
generating units. We need to balance out the amount

02:24:54.949 --> 02:24:57.759
of gas that we nominate for, for burns on the next day

02:24:57.759 --> 02:25:00.959
for electricity use. Um, they were tighter requirements

02:25:00.959 --> 02:25:03.989
but we never got into emergency situations. Um, and

02:25:03.989 --> 02:25:06.509
then we're still seeing elevated levels, but definitely

02:25:06.519 --> 02:25:09.729
uh towards the end of the month, in January. But certainly

02:25:09.739 --> 02:25:12.328
today and I think it's been sustained for roughly a

02:25:12.328 --> 02:25:15.368
week. Um, they've really come down significantly to

02:25:15.368 --> 02:25:19.229
more normal and even below normal levels. Next slide

02:25:19.229 --> 02:25:23.469
please.

02:25:23.469 --> 02:25:26.469
So we've seen this multiple times, you know, on the

02:25:26.469 --> 02:25:31.679
top is SoCal and PG&E. On the bottom are Henry Hub and

02:25:31.679 --> 02:25:34.519
then we've also added here the Permian Basin. Um,

02:25:34.528 --> 02:25:36.548
one thing that just find interesting that I wanted

02:25:36.548 --> 02:25:40.419
to point out. You know, in this first box here to the

02:25:40.419 --> 02:25:45.439
left in December 9th. There's a cold weather front

02:25:45.449 --> 02:25:48.409
predicted for most of California in the West, really

02:25:48.409 --> 02:25:52.169
low temperatures. You can see how prices spike up uh,

02:25:52.179 --> 02:25:55.239
and stay elevated during that time. Sort of interestingly

02:25:55.239 --> 02:25:59.729
in December 21st, um there was really high, really.

02:25:59.729 --> 02:26:01.969
Excuse me. Really low temperatures predicted in the

02:26:01.969 --> 02:26:05.528
weather in the Midwest down the Permian Basin, as well

02:26:05.528 --> 02:26:08.219
as Texas. There was risk of what's called freeze offs

02:26:08.229 --> 02:26:11.118
on the wells. Um however, you did not see much price

02:26:11.118 --> 02:26:13.759
response during that period. Um their, their

02:26:13.759 --> 02:26:16.088
gas prices not gonna go up significantly. It's one

02:26:16.088 --> 02:26:21.719
of the (inaudible) two situations between the different areas. Next

02:26:21.729 --> 02:26:24.628
slide please.

02:26:24.628 --> 02:26:27.249
So you know what's the impact at least on our electric

02:26:27.249 --> 02:26:30.709
customers. The other IRUs will be positioned differently

02:26:30.719 --> 02:26:33.959
based on where they sit. But we recently filed what's

02:26:33.959 --> 02:26:37.169
called an era trigger application. And what that requires

02:26:37.169 --> 02:26:39.858
is our, we forecast what our energy costs are gonna

02:26:39.858 --> 02:26:42.868
be. You know, moving forward. We then have a revenue

02:26:42.868 --> 02:26:46.259
that (inaudible) cover those costs. However, if the market it's

02:26:46.259 --> 02:26:49.108
all in the forecast. If the market moves too much, um

02:26:49.108 --> 02:26:52.729
we're required to file an application to request additional

02:26:52.739 --> 02:26:56.449
rate increases. To hand, to take care of those expected

02:26:56.449 --> 02:26:58.838
costs that are supposed to increase. Uh, we made that

02:26:58.848 --> 02:27:02.528
filing here at the end, of the end of January. Requesting

02:27:02.538 --> 02:27:08.618
close to $600 million, and a rate increase that would be effective June 1st. Now that's about a 4.4%

02:27:08.618 --> 02:27:11.118
increase for our bumble customer and generation rates.

02:27:11.338 --> 02:27:14.679
However what we did, because we're expecting those

02:27:14.689 --> 02:27:17.019
the trigger rates to happen within 100 and 20 days.

02:27:17.028 --> 02:27:19.989
We're also seeing the possibility that prices are coming

02:27:19.989 --> 02:27:22.828
off, as I mentioned earlier. That we may self-correct

02:27:22.838 --> 02:27:26.419
after that period. So what our intention is given the

02:27:26.419 --> 02:27:30.028
volatility around prices in this sort of unique situation

02:27:30.028 --> 02:27:33.288
we have. Where we have this extreme price increase and

02:27:33.288 --> 02:27:38.128
then, um (inaudible) later on and have a self-correction. That we

02:27:38.128 --> 02:27:43.388
will update our filing um April or May. And May determined

02:27:43.399 --> 02:27:46.989
based off of our forecast that we will not need the

02:27:46.999 --> 02:27:49.828
price increase. Excuse me. The rate increase come June

02:27:49.828 --> 02:27:53.788
1st. Um, that's that's my hope. Um, we're hoping to provide

02:27:53.788 --> 02:27:55.378
that relief to our customers. So they don't have to

02:27:55.378 --> 02:27:58.189
see another rate increase. Uh, based off of what happened

02:27:58.189 --> 02:28:01.108
here in the December-January timeframe. So but we'll

02:28:01.108 --> 02:28:03.509
keep our eye on that and certainly keep, (inaudible)

02:28:03.519 --> 02:28:06.318
um up to speed on that. As we get closer to be

02:28:06.318 --> 02:28:09.239
able to make that call. Um I do know, you know, we

02:28:09.239 --> 02:28:11.558
do, do hedging activities all throughout December and

02:28:11.558 --> 02:28:14.449
January. That is our standard practice. Um, and it does

02:28:14.449 --> 02:28:18.048
provide some protection from price volatility and obviously

02:28:18.048 --> 02:28:20.509
many of our hedges during that period we're in the

02:28:20.509 --> 02:28:22.399
money. However, it's very important. I think there's

02:28:22.399 --> 02:28:25.568
two important aspects of it. One um, we can never fully

02:28:25.568 --> 02:28:29.009
hedge against long sustained premiums. Um, it can't

02:28:29.019 --> 02:28:31.479
be a full protection and there comes a cost with hedging.

02:28:31.608 --> 02:28:34.699
Um, in a vacuum on a long run. Hedging will always be

02:28:34.699 --> 02:28:37.808
more expensive than being, um just exposed to the

02:28:37.818 --> 02:28:40.798
daily price. Uh, it's been pointed out the Climate

02:28:40.798 --> 02:28:43.009
Credits will be going back to customers, to help provide

02:28:43.009 --> 02:28:45.378
some relief. And then from a communication standpoint

02:28:45.378 --> 02:28:47.509
we reach out to our customers and all, all types of

02:28:47.509 --> 02:28:50.288
channels. Given the diversity that, that those customer

02:28:50.288 --> 02:28:53.699
types. But we did send out a number of notices about

02:28:53.709 --> 02:28:56.278
the rate impacts that we're about to occur. As well

02:28:56.278 --> 02:28:58.679
as customer assistance programs that our customers

02:28:58.679 --> 02:29:01.459
could avail themselves to. During this, this very tough

02:29:01.469 --> 02:29:06.568
period. Um with that, I will move on from there. My hope

02:29:06.568 --> 02:29:09.288
is ultimately, you know, the self-correction will make

02:29:09.288 --> 02:29:12.798
it. So that's possible that we won't have to be too

02:29:12.798 --> 02:29:15.229
much of an impact in the future on, on our customers.

02:29:15.489 --> 02:29:18.348
So, so what are some of the mitigations we can do to

02:29:18.348 --> 02:29:21.638
avoid this, uh in the future? Absolutely, number one

02:29:21.649 --> 02:29:24.338
is reducing our reliance on natural gas in California.

02:29:24.338 --> 02:29:27.689
And advancing those policies that will support California's

02:29:27.699 --> 02:29:31.078
GHD emission goals. Especially around the building

02:29:31.088 --> 02:29:33.759
transportation electrification. Making, making sure

02:29:33.759 --> 02:29:36.588
we're on the path to get those reductions come 2030

02:29:36.588 --> 02:29:39.459
and ultimately 2045. Or we can be net neutral in the

02:29:39.459 --> 02:29:43.098
state. As part of that, that's on the demand

02:29:43.098 --> 02:29:45.138
side, on the supply side. And I think the Commission

02:29:45.138 --> 02:29:48.259
has taken a lot of really good efforts around shoring

02:29:48.259 --> 02:29:51.338
up capacity. From a energy storage standpoint, we're

02:29:51.338 --> 02:29:53.429
seeing a lot of that being built. But that needs to

02:29:53.429 --> 02:29:56.679
be continued out, not just on the storage (inaudible). But as well

02:29:56.679 --> 02:29:59.209
as the energy piece. I think as we get towards the

02:29:59.219 --> 02:30:01.499
end of 2030, you're going to start to see the need

02:30:01.499 --> 02:30:04.298
for more and more energy to fill these battery storage

02:30:04.298 --> 02:30:06.828
devices or energy storage devices. And we want to do

02:30:06.828 --> 02:30:10.479
that with clean energy, which would be more renewables

02:30:10.479 --> 02:30:13.989
on the system. Um, I discussed hedging as being an important

02:30:13.989 --> 02:30:17.969
part of our portfolio. Um, the other thing to consider

02:30:17.969 --> 02:30:24.149
is uh, CCAs uh have their own, uh potential

02:30:24.149 --> 02:30:27.308
hedging programs. So, but watching their financial

02:30:27.308 --> 02:30:29.459
health as well as those activities could help reduce

02:30:29.459 --> 02:30:31.509
the impact on their customers. Now, it doesn't impact

02:30:31.509 --> 02:30:33.558
ours, but when I think about this from a California

02:30:33.558 --> 02:30:36.169
perspective, um that's important. Something important,

02:30:36.179 --> 02:30:39.068
something important to look at. Um I will note, that

02:30:39.068 --> 02:30:41.749
the CPUC is looking at these issues in the provider

02:30:41.749 --> 02:30:43.858
of last resort proceedings. So they are being actively

02:30:43.858 --> 02:30:46.538
discussed but is another area that can help provide

02:30:46.538 --> 02:30:49.278
protection for customers. Um, one question that was

02:30:49.288 --> 02:30:52.999
keyed up to me is. You know, what about requiring gas

02:30:53.108 --> 02:30:57.098
generators to be hedged to help mitigate prices. Um,

02:30:57.108 --> 02:30:59.909
I would say, you know, if. One, I think it's probably

02:30:59.909 --> 02:31:02.759
beyond the jurisdiction. However, um a lot of physical

02:31:02.759 --> 02:31:05.459
generation out there that the owners of that are hedging

02:31:05.459 --> 02:31:08.179
their positions. But again, this comes at a certain

02:31:08.179 --> 02:31:11.739
cost and also limitations. I don't know, I don't think

02:31:11.739 --> 02:31:15.618
the CAISO presentation got into it. But we did a reduction

02:31:15.618 --> 02:31:18.259
in imports during the Wintertime, and an increase in

02:31:18.259 --> 02:31:22.709
gas burns of in, in-state resources. And so net, net

02:31:22.719 --> 02:31:25.578
even to the same amount. We're burning more in-state.

02:31:25.588 --> 02:31:28.288
And I think that the forecast that we have and others

02:31:28.288 --> 02:31:31.249
would have. Is not to have as many gas burns expected

02:31:31.249 --> 02:31:33.409
to occur. So even if there was a requirement to be

02:31:33.409 --> 02:31:37.169
hedged. Um, then we would not have missed, we would

02:31:37.169 --> 02:31:38.909
miss that forecast. Because the burns would have been

02:31:38.909 --> 02:31:41.169
much higher within the State of California. And we still

02:31:41.169 --> 02:31:43.288
would have had quite a lot of exposure from that, from

02:31:43.288 --> 02:31:46.259
that perspective. So it's a long way of saying that

02:31:46.259 --> 02:31:48.628
I think it's, it's not the end all be all to solve

02:31:48.628 --> 02:31:51.479
our issues. In terms of what can provide price protection

02:31:51.479 --> 02:31:54.669
for customers. It does provide some against volatility,

02:31:54.669 --> 02:31:57.929
but major market moves um, can be very difficult to

02:31:57.939 --> 02:32:01.449
to deal with. Um I will say, you know, gas storage

02:32:01.449 --> 02:32:04.939
is an important part of gas infrastructure. Assuming

02:32:04.939 --> 02:32:08.919
it's safe. Aliso Canyon does help provide uh, manage

02:32:08.919 --> 02:32:11.798
some of the price volatility that occurs in these markets.

02:32:11.808 --> 02:32:15.219
Um a while back, there was real issues with operational

02:32:15.219 --> 02:32:17.628
flow order penalties. And those structures, they've

02:32:17.628 --> 02:32:20.249
been corrected by the Commission. I would encourage

02:32:20.249 --> 02:32:22.878
that to remain in place and, and not be changed based

02:32:22.878 --> 02:32:25.128
off of a lot of things that have happened recently.

02:32:25.138 --> 02:32:28.949
Um, I think about additional areas. I will want to

02:32:28.949 --> 02:32:31.828
say, I do want to say that. I applaud Governor Newsom

02:32:31.828 --> 02:32:36.058
for requesting FERC to uh, request that they investigate

02:32:36.058 --> 02:32:39.419
what has happened out here. I just pointed out some

02:32:39.419 --> 02:32:41.479
of the unusual things that we were seeing. I have

02:32:41.489 --> 02:32:45.368
um, no evidence or indication of something specific

02:32:45.368 --> 02:32:47.088
happening. But I do think there's enough, there that's

02:32:47.088 --> 02:32:50.259
worth looking into. Um, there are some other things

02:32:50.259 --> 02:32:52.459
around the edges. You know, some something that has

02:32:52.459 --> 02:32:56.128
to do with when we nominate gas for our units. And then

02:32:56.128 --> 02:32:59.679
when the CAISO market clears, uh the timing doesn't match

02:32:59.679 --> 02:33:02.308
up. So we have to nominate before we know what the

02:33:02.308 --> 02:33:05.499
CAISO is gonna tell us what we have to do the next day. And sometimes

02:33:05.499 --> 02:33:08.649
that stuff can be misaligned resulting in inefficient

02:33:08.649 --> 02:33:10.999
outcomes, at least on the pricing side for electricity.

02:33:11.308 --> 02:33:13.368
And then finally just thinking about what else could

02:33:13.368 --> 02:33:15.828
be looked at. Um, just consider scrutiny around the

02:33:15.828 --> 02:33:19.388
actions that, that are within the Commission's jurisdiction.

02:33:19.399 --> 02:33:21.788
Um, that could have an impact on the market to make

02:33:21.788 --> 02:33:26.469
sure. Um, everything was performed on a clean manner. So with

02:33:26.469 --> 02:33:29.719
that, I will hand it back to Molly. And uh, look forward to hearing

02:33:29.719 --> 02:33:32.999
your questions. Thank you.

02:33:32.999 --> 02:33:37.499
Thanks very much Bill. Um, that was really helpful

02:33:37.499 --> 02:33:42.138
perspective. Um, next up. We're gonna hear from another

02:33:42.138 --> 02:33:46.159
utility. When I do not um, ordinarily call upon as a

02:33:46.169 --> 02:33:50.888
CPUC Regulator. Um, but I am grateful that Marlon Santa

02:33:50.888 --> 02:33:54.259
Cruz from Los Angeles Department of Water and Power

02:33:54.269 --> 02:33:58.229
um, agreed to join us today. He's the Manager of Fuel

02:33:58.229 --> 02:34:00.649
and Purchase Power, for Los Angeles Department of Water

02:34:00.649 --> 02:34:04.118
and Power. Um, which is the country's largest municipally

02:34:04.118 --> 02:34:08.519
owned utility. Um, Marlon oversees the economic acquisition

02:34:08.519 --> 02:34:11.739
and reliable of delivery of fuel, and electric generation

02:34:11.739 --> 02:34:15.509
to be LADWP's loads. So he is the Bill counterpart

02:34:15.519 --> 02:34:19.598
at LADWP. Similarly um, observing and experiencing

02:34:19.598 --> 02:34:23.169
these situations. So um, while he is not a jurisdictional

02:34:23.169 --> 02:34:26.749
utility for the CPUC. Again, thank you. Warm, welcome

02:34:26.749 --> 02:34:30.749
to Marlon. Um, please uh, take it away and I'm looking

02:34:30.749 --> 02:34:34.098
forward to your perspective. Of course. Thank you Molly,

02:34:34.098 --> 02:34:35.828
and thank you Commissioners for the invitation to be

02:34:35.828 --> 02:34:40.029
here today. Let's go onto the next slide please. So

02:34:40.029 --> 02:34:41.468
we're going to cover a little bit of background just

02:34:41.468 --> 02:34:43.359
as to who we are, as you mentioned, Molly. That we are

02:34:43.359 --> 02:34:47.629
not a CPUC overseen municipality or facility. So I'll

02:34:47.638 --> 02:34:49.928
just talk a little bit about DWP background. And then

02:34:49.939 --> 02:34:54.508
jump into the actual topics. Next slide please. So

02:34:54.508 --> 02:34:57.839
we are the largest municipally owned utility in the

02:34:57.839 --> 02:35:00.959
Nation. And as such, that comes with certain responsibilities

02:35:00.959 --> 02:35:03.799
including that we are a load serving entity. We do

02:35:03.799 --> 02:35:06.609
serve the load that is the City Los Angeles Proper.

02:35:06.618 --> 02:35:10.019
And that also comes with the responsibility of balancing

02:35:10.019 --> 02:35:13.249
a grid. So voltage and frequency regulation. As well

02:35:13.249 --> 02:35:17.629
as making sure that we have economic access to power

02:35:17.638 --> 02:35:20.819
for the Los Angeles ratepayer. To that effect, we have

02:35:20.819 --> 02:35:23.549
structured ourselves vertically. Meaning that not only

02:35:23.549 --> 02:35:25.729
do we have our own load that we have to serve. But

02:35:25.729 --> 02:35:28.999
we also have our own assets, our portfolio of generation

02:35:29.008 --> 02:35:32.288
assets for the sake of meeting that load. And then also

02:35:32.288 --> 02:35:35.288
having some market participation. So yes, we do have

02:35:35.288 --> 02:35:38.689
enough generation capacity, so to speak. To serve our

02:35:38.689 --> 02:35:42.859
entire load. The majority of which is actually served

02:35:42.859 --> 02:35:45.649
currently by renewable energy. But historically that

02:35:45.649 --> 02:35:47.888
has been served by natural gas and there's still a

02:35:47.888 --> 02:35:50.908
very large component of natural gas within our portfolio.

02:35:51.089 --> 02:35:55.678
In addition to nuclear, a bit of coal, and hydro. In addition

02:35:55.678 --> 02:35:58.979
to solar, wind and geothermal that is coming onto the

02:35:58.979 --> 02:36:02.218
grid. And it's because of these environmental goals

02:36:02.218 --> 02:36:04.959
that we have set out for ourselves. That we continue

02:36:04.959 --> 02:36:08.339
to bring more renewable energy onto the system. That

02:36:08.348 --> 02:36:12.879
we need to balance that intermittent energy with reliable

02:36:12.879 --> 02:36:16.828
base load, dispatchable energy. Usually in the form

02:36:16.828 --> 02:36:20.749
of natural gas. So these environmental goals kind of

02:36:20.749 --> 02:36:24.388
also put us in a precarious position of inadvertent

02:36:24.388 --> 02:36:28.508
risk exposure. And I say that only because renewable

02:36:28.508 --> 02:36:32.428
energy gets the first right of refusal, it flows first.

02:36:32.879 --> 02:36:36.379
So we have to plan on a certain amount of energy coming

02:36:36.379 --> 02:36:38.988
from these assets on any given day. But if the sun

02:36:38.988 --> 02:36:41.928
doesn't shine, if the wind doesn't blow. If they don't

02:36:41.939 --> 02:36:45.198
behave the way that we had forecasted them too. We

02:36:45.198 --> 02:36:48.749
now how to make up the energy to serve the load with

02:36:48.758 --> 02:36:51.169
dispatchable generation. And that's why we're here talking

02:36:51.169 --> 02:36:54.529
to you today. Because a good chunk of what we do is

02:36:54.538 --> 02:36:57.828
still based on natural gas. So let's go to next slide, and

02:36:57.828 --> 02:37:00.848
we'll talk a little bit about how this event has affected

02:37:00.848 --> 02:37:05.609
us. So just for solidarity, there is a map of the Western

02:37:05.618 --> 02:37:09.209
North American Natural Gas Pipelines. And Los Angeles

02:37:09.209 --> 02:37:13.019
has capacity rights on two of them, No. 7. Which

02:37:13.019 --> 02:37:16.549
is the Kern River Gas Transmission Company. And

02:37:16.558 --> 02:37:20.479
sorry. If you could go back to the map, switch slides

02:37:20.479 --> 02:37:26.499
on me. And also No. 18, which is Southern California

02:37:26.499 --> 02:37:29.658
Gas Company. So we have access to the markets out in

02:37:29.658 --> 02:37:33.218
the Northwest Pockies, primarily Opal. Which is the

02:37:33.229 --> 02:37:36.678
large market hub out in that area. And I just want

02:37:36.678 --> 02:37:40.689
to point out also Pipeline No. 20, TransCanada-GTN

02:37:40.689 --> 02:37:42.979
System. Because we're going to be talking about

02:37:42.979 --> 02:37:45.508
that a little bit further in the presentation. It is the

02:37:45.508 --> 02:37:48.459
red line that connects from the border with Canada

02:37:48.468 --> 02:37:52.258
down to the Northern border of California. More on

02:37:52.258 --> 02:38:01.308
that later. Next slide please.

02:38:01.308 --> 02:38:02.828
I guess it was a little bit of a delay with the

02:38:02.828 --> 02:38:06.279
highlighting of pipelines. So current gas market conditions

02:38:06.288 --> 02:38:08.258
obviously we've been talking about it all morning.

02:38:08.258 --> 02:38:11.488
So I'll try not to delay or be too repetitive on what

02:38:11.488 --> 02:38:15.618
has already been mentioned. Next slide, please.

02:38:15.618 --> 02:38:19.218
Historical natural, natural gas prices. So in front

02:38:19.218 --> 02:38:22.328
of you is a instagram that cuts off at January one

02:38:22.328 --> 02:38:26.788
of 2020. The world before things got particularly crazy.

02:38:26.799 --> 02:38:30.359
So you see that there's some volatility and we're used

02:38:30.359 --> 02:38:33.589
to there being price spikes. This is a market that

02:38:33.589 --> 02:38:37.209
responds to events, that responds to news. That whenever

02:38:37.218 --> 02:38:41.769
either supply is diminished or demand is suddenly increased.

02:38:41.928 --> 02:38:44.499
We're used to seeing a spike that will last maybe a

02:38:44.499 --> 02:38:47.848
day or so, especially in the last few years since the

02:38:47.848 --> 02:38:50.388
shale revolution. You see the polar vortex that happened

02:38:50.388 --> 02:38:53.049
in 2014 was really just a couple of days event. And

02:38:53.049 --> 02:38:54.919
also the Northwest pipeline outage that happened in

02:38:54.919 --> 02:38:58.519
2019. But now let's go into the world that we live

02:38:58.519 --> 02:39:02.448
in today. Next slide please.

02:39:02.448 --> 02:39:05.928
Recent natural gas prices now the histogram covers

02:39:05.928 --> 02:39:10.459
up to 2023 January. And you realize that this scale

02:39:10.459 --> 02:39:13.269
had to change in its entirety. The polar vortex that

02:39:13.269 --> 02:39:17.609
we saw in 2021 shot prices up beyond $160 in

02:39:17.609 --> 02:39:19.868
the Rockies. I'm not talking about the highest price

02:39:19.868 --> 02:39:22.479
that was seen in the Nation. And we see now the Western

02:39:22.479 --> 02:39:25.459
crisis is, I didn't exactly know what to call it. So

02:39:25.468 --> 02:39:28.308
we can call it whatever we want to and putting this

02:39:28.308 --> 02:39:31.919
name out there for vote. But you see that several sustained

02:39:31.928 --> 02:39:35.049
days of high prices. This is no longer a spike, this

02:39:35.049 --> 02:39:38.359
is an event. All right, let's go on to the next slide.

02:39:39.669 --> 02:39:42.939
So what caused this? The impacts of gas prices on electric

02:39:42.939 --> 02:39:46.359
generation markets. Let's see how one thing led to

02:39:46.359 --> 02:39:49.968
another. Next slide please. So this is not the normal

02:39:49.968 --> 02:39:53.069
spike as I've been trying to highlight. Previously at

02:39:53.069 --> 02:39:56.238
the end of November, right after thanksgiving. It became

02:39:56.249 --> 02:39:59.308
dichotomy of East versus West. Boston was having cold

02:39:59.308 --> 02:40:01.678
weather and the West Coast simply had to pay a little

02:40:01.678 --> 02:40:04.308
bit more to get the gas to come over to us. But

02:40:04.308 --> 02:40:06.799
then they settled, even Henry Hub normalized in the

02:40:06.799 --> 02:40:10.359
$5 range. And we saw for the first time in several

02:40:10.359 --> 02:40:13.149
years after being blessed with mild weather, the first

02:40:13.158 --> 02:40:17.269
actual cold Fall, leading into a cold Winter. We had

02:40:17.269 --> 02:40:19.419
sustained below average overnight temperatures in the

02:40:19.419 --> 02:40:21.928
30s and 40s throughout the entire West Coast.

02:40:21.939 --> 02:40:25.609
So everything West of the Rockies, all of a sudden had increased

02:40:25.618 --> 02:40:30.868
demand. But what about supply? So one of the events

02:40:30.868 --> 02:40:32.758
that has not been highlighted today. Everyone's been

02:40:32.758 --> 02:40:35.238
talking about El Paso and we've known about that ever

02:40:35.238 --> 02:40:37.718
since the event happened. But there was a force majeure

02:40:37.718 --> 02:40:41.029
event on TransCanada-GTN Pipeline at Kingsgate. That

02:40:41.038 --> 02:40:46.158
caused limited market access. Now yes, there was chatter

02:40:46.158 --> 02:40:49.058
amongst the counter parties and amongst the marketers.

02:40:49.069 --> 02:40:51.249
Which is very sophisticated way of simply saying that

02:40:51.258 --> 02:40:54.118
this is hearsay. But I'd like to quote an article that

02:40:54.118 --> 02:40:57.279
was published in NGI on December 8th. The day after

02:40:57.279 --> 02:41:02.229
prices literally jumped, "Amid reports of a curtailment

02:41:02.229 --> 02:41:04.669
and volumes flowing through grass, gas transmission

02:41:04.669 --> 02:41:07.709
Northwest Kingsgate location along the US-Canadian

02:41:07.709 --> 02:41:10.729
border. Pacific Northwest prices raced higher during

02:41:10.729 --> 02:41:15.149
the period. Northwest Sumas, fixed prices jumped $5.99

02:41:15.738 --> 02:41:23.399
to $20.57. While Mullen surged from $6.12 to $18.91."

02:41:24.078 --> 02:41:28.729
So we saw that overnight prices didn't just

02:41:28.738 --> 02:41:32.549
increase. They tripled or even quadrupled in some places

02:41:32.549 --> 02:41:35.379
that we had market access to. And this was because

02:41:35.388 --> 02:41:38.229
the forecast for cold weather was already there. But

02:41:38.229 --> 02:41:41.399
this force measure was a bit of news that the market

02:41:41.479 --> 02:41:45.859
took into consideration. Another bit of news, low storage

02:41:45.859 --> 02:41:48.319
inventory. The same article and others were saying at

02:41:48.319 --> 02:41:52.669
the time. That historically, compared to historical values

02:41:52.879 --> 02:41:57.149
the Pacific stockpiles ready 23.6 deficit versus

02:41:57.149 --> 02:42:00.209
the 5 year average. So I can't speak for PG&E.

02:42:00.209 --> 02:42:03.939
I can't speak for SoCalGas. Everything indicates

02:42:03.948 --> 02:42:06.379
that they did the right thing for the customers at

02:42:06.379 --> 02:42:09.189
the time. How they responded to this deficit, whether

02:42:09.189 --> 02:42:11.658
it be drawing from storage or going out to the market.

02:42:11.718 --> 02:42:13.658
They did what they had to do. They did the right thing.

02:42:14.348 --> 02:42:17.879
It was the markets that were selling to these large

02:42:17.879 --> 02:42:21.419
buyers and other electric generators, us included. That

02:42:21.428 --> 02:42:24.738
took this news and increased the price. Because all

02:42:24.738 --> 02:42:28.249
of a sudden there was more demand for it. And to add

02:42:28.249 --> 02:42:30.529
insult to injury. We were already aware of the ongoing

02:42:30.529 --> 02:42:32.788
pipeline restrictions such as that happening on the

02:42:32.788 --> 02:42:36.779
Southwest Pipeline. Excuse me. El Paso Pipeline. So

02:42:36.779 --> 02:42:41.118
we saw that again, the market responded to news. It

02:42:41.118 --> 02:42:43.988
was not the pipelines that were causing this. It was

02:42:43.988 --> 02:42:46.988
not OFOs that were causing marketers to tack

02:42:46.988 --> 02:42:49.758
on the penalty prices. This is simply the commodity

02:42:49.758 --> 02:42:54.238
cost at the primary markets suddenly jumping. Next slide

02:42:54.238 --> 02:42:56.788
please.

02:42:56.788 --> 02:42:59.198
And just a little bit to show we all experience it,

02:42:59.198 --> 02:43:02.209
especially those of us that live on the West Coast.

02:43:02.218 --> 02:43:05.738
We were expecting mild temperatures as the first forecast

02:43:05.738 --> 02:43:08.279
shows in the image above. And then the second image

02:43:08.279 --> 02:43:12.198
kicked in and showed that well, everything got a lot

02:43:12.198 --> 02:43:15.589
colder than we were expecting down here. And that appears

02:43:15.589 --> 02:43:18.069
that the same image was copied twice. So I'm just gonna

02:43:18.069 --> 02:43:22.118
say, I apologize for the error on this slide. Um, forecast

02:43:22.118 --> 02:43:23.988
temperatures were showing cold weather on the East

02:43:23.988 --> 02:43:28.198
Coast. And then it ended up being this atmospheric river

02:43:28.209 --> 02:43:31.669
that brought cold weather to the West Coast. Next slide

02:43:31.669 --> 02:43:34.388
please.

02:43:34.388 --> 02:43:37.879
So we're a little bit remiss to publish our own generation

02:43:37.879 --> 02:43:41.868
cost data for obvious, confidential, proprietary reasons.

02:43:41.879 --> 02:43:45.399
But this is publicly available prices posted by the

02:43:45.399 --> 02:43:48.928
CAISO. This is a cellmar LMP prices through December

02:43:48.928 --> 02:43:54.609
of 2022 and January of 2023. Just to show that a $5

02:43:54.609 --> 02:43:58.238
increase alone in natural gas prices more than doubled

02:43:58.249 --> 02:44:02.578
the cost of energy in the region. So that is the relationship

02:44:02.578 --> 02:44:05.058
that we'd like to highlight. It is not linear. That

02:44:05.069 --> 02:44:09.669
as natural gas prices increase, it's almost exponential

02:44:09.669 --> 02:44:13.049
how energy prices then continue to increase. And of

02:44:13.049 --> 02:44:15.729
course as we saw, December was the worst month, but

02:44:15.729 --> 02:44:18.348
January was still a lot higher than we would have anticipated.

02:44:18.999 --> 02:44:29.589
Let's go to the next slide please.

02:44:29.589 --> 02:44:33.819
Can we jump to the next slide, please. Thank you. So

02:44:33.819 --> 02:44:36.399
also publicly available information as posted on the

02:44:36.399 --> 02:44:41.089
EIA website. This just as a benchmark showing other

02:44:41.089 --> 02:44:44.229
markets in the Nation. And namely how the Northwest

02:44:44.238 --> 02:44:49.109
and CAISO skyrocketed past the relatively stable markets

02:44:49.149 --> 02:44:53.549
elsewhere in the other ISOs. So next slide please.

02:44:55.698 --> 02:44:58.629
All right, so the last one was simply about questions.

02:44:58.638 --> 02:45:02.368
All this to show that suggestions as to what should

02:45:02.368 --> 02:45:05.788
we do to actually fix the problem? Well, as my counterpart

02:45:05.788 --> 02:45:09.529
at Edison noticed. The electric generators in California

02:45:09.529 --> 02:45:13.189
specifically are already in a race to try to reduce

02:45:13.189 --> 02:45:16.879
the reliance on natural gas and other fossil fuels.

02:45:16.888 --> 02:45:19.888
So that is simply happening. Which is why I don't think

02:45:19.888 --> 02:45:22.178
there's a lot that we could do from a regulatory standpoint

02:45:22.178 --> 02:45:25.149
to try to cap prices on the market. It's just that

02:45:25.158 --> 02:45:28.959
not only are the electric generators on for a ride.

02:45:28.968 --> 02:45:32.299
But so are the pipelines and the LDCs, PG&E and SoCalGas.

02:45:32.299 --> 02:45:34.819
We're all in this together, simply trying to serve

02:45:34.819 --> 02:45:40.029
our core based customers. And it shows that there's

02:45:40.029 --> 02:45:41.968
just interesting things going on in the market. Why

02:45:41.968 --> 02:45:44.799
is it that the day after Senator Bradford sent a letter

02:45:44.799 --> 02:45:47.738
to the CPUC calling for an investigation. Prices were

02:45:47.738 --> 02:45:50.408
slashed in half from the $20 mark to the $10 mark.

02:45:50.419 --> 02:45:54.218
And as news was then brought on about Governor Newsom's

02:45:54.229 --> 02:45:57.669
letter being made public. Now, we stabilized at $5

02:45:57.678 --> 02:46:01.508
as of yesterday. It's just a little convenient to show

02:46:01.508 --> 02:46:04.939
that the market is responding, responding to news and

02:46:04.948 --> 02:46:08.138
putting premiums on the commodity because of it. So

02:46:08.149 --> 02:46:10.589
that's my two cents. And that concludes my presentation.

02:46:14.839 --> 02:46:18.848
Thank you very much Marlon. Um, and sorry for the confusion

02:46:18.848 --> 02:46:21.359
about missing your, your closing slide there.

02:46:21.359 --> 02:46:25.928
But you, you handled that great. Um, our next panelist

02:46:25.928 --> 02:46:30.629
is Fred Heutte. Um, and continuing with this sort of

02:46:30.638 --> 02:46:35.029
outside um, outside the CAISO perspective. He's a senior

02:46:35.029 --> 02:46:38.129
Policy Analyst with the Northwest Energy Coalition.

02:46:38.129 --> 02:46:40.919
He has four decades of involvement with Western Clean

02:46:40.919 --> 02:46:43.078
Energy Development. And he's going to share with us

02:46:43.089 --> 02:46:45.828
his perspectives on the what's been happening with

02:46:45.828 --> 02:46:49.439
the Northwest Electric and Gas Markets. So take it away,

02:46:49.448 --> 02:46:54.058
um Fred. Thank you for joining us today. Thank you. Uh, good afternoon.

02:46:54.058 --> 02:46:58.209
Because we just changed over here. Fred Heutte in Portland

02:46:58.209 --> 02:47:00.448
with Northwest Energy Coalition. Thanks very much to

02:47:00.448 --> 02:47:03.718
the Commission for inviting me to speak on our Northwest

02:47:03.718 --> 02:47:08.089
perspective. The coalition has over 100 organizational

02:47:08.089 --> 02:47:10.828
members. We also have individual members. Our members

02:47:10.828 --> 02:47:13.808
include environmental groups, community groups, labor

02:47:14.098 --> 02:47:18.538
uh, some local agencies and some utilities. We have

02:47:18.538 --> 02:47:21.078
Portland General Electric, Northwest Natural, our

02:47:21.089 --> 02:47:25.158
gas company here in Portland and Seattle City Light.

02:47:25.169 --> 02:47:29.609
Our mission is to promote reliable, clean and affordable

02:47:29.609 --> 02:47:33.419
and equitable energy system for the Northwest. Uh,

02:47:33.419 --> 02:47:35.269
and if you can go to the next slide, I can start

02:47:35.279 --> 02:47:38.999
the discussion. I'm not going to go into this in detail.

02:47:38.999 --> 02:47:42.178
But just to know, we saw many of the same features

02:47:42.189 --> 02:47:45.098
on the landscape over the last 3 months. We had

02:47:45.098 --> 02:47:47.578
lower than average temperatures on the West side here.

02:47:47.589 --> 02:47:50.919
Even lower, much lower average is actually on the East

02:47:50.919 --> 02:47:56.249
side. Um and then uh, gas prices of course that surged.

02:47:56.299 --> 02:48:00.359
That's showing the Sumas prices there. Uh, Northwest demand

02:48:00.368 --> 02:48:03.538
was up. Northwest Hydro production because we had a

02:48:03.538 --> 02:48:08.718
not great hydro here last year was down. Uh, and gas

02:48:08.718 --> 02:48:11.839
generation therefore was up. Because those two are operating

02:48:11.839 --> 02:48:15.549
more or less uh balance, you know, counter to each

02:48:15.549 --> 02:48:19.658
other. And uh, notably because we had high demand in

02:48:19.658 --> 02:48:23.618
the Northwest. The amount of available energy exports

02:48:23.629 --> 02:48:27.149
some hydro, some gas from the Northwest to California

02:48:27.158 --> 02:48:30.919
declined dramatically in all 3 of the last months.

02:48:30.928 --> 02:48:34.368
You can go to the next slide.

02:48:34.368 --> 02:48:36.649
Just to give a little bit more of a close up on

02:48:36.649 --> 02:48:39.828
the Northwest gas system. We have 3 major pricing

02:48:39.828 --> 02:48:43.678
points. You can see here assume as Kingsgate and AECO.

02:48:43.678 --> 02:48:46.698
AECO is kind of in the core area of Alberta. Kingsgate

02:48:46.698 --> 02:48:49.609
also comes down from Alberta, and Sumas comes from

02:48:49.609 --> 02:48:53.319
British Columbia. And you can see the basic map there.

02:48:53.328 --> 02:48:56.408
We have two main storage fields, ones in the Oregon

02:48:56.419 --> 02:48:59.529
shown over there above Portland. Ones on the Oregon

02:48:59.529 --> 02:49:03.709
side that's called mist. It's about 16 BCF and one

02:49:03.709 --> 02:49:06.879
on the Washington side uh, it's called Jackson Prairie

02:49:06.879 --> 02:49:12.258
is about 46 BCF. You can go to the next slide. So

02:49:12.258 --> 02:49:14.678
again, everybody has to show a pricing chart. This

02:49:14.678 --> 02:49:18.249
is ours, notable features of the last couple of months.

02:49:18.258 --> 02:49:21.178
Our price separation for the West, especially West

02:49:21.178 --> 02:49:24.709
of the Rockies. And even within the various zones of

02:49:24.709 --> 02:49:28.578
the West. For example, here's the Northwest, the low

02:49:28.578 --> 02:49:32.058
price, there is AECO up in Alberta, which was completely

02:49:32.069 --> 02:49:36.868
independent of all this. The high price there assumes

02:49:36.879 --> 02:49:40.888
that price surge started in mid-November and went

02:49:40.888 --> 02:49:45.038
up after Thanksgiving. Uh, and then the Kingsgate

02:49:45.049 --> 02:49:48.468
the GTN Pipeline coming down through Idaho from

02:49:48.468 --> 02:49:53.919
Alberta, that surged in early December. Uh, may have

02:49:53.919 --> 02:49:56.078
had something to do with force majeure. But we think

02:49:56.078 --> 02:49:59.799
that pricing effects were actually happening already

02:49:59.799 --> 02:50:02.468
even by that point. But you can see the kind of separation

02:50:02.479 --> 02:50:06.868
from East to West in this, in this chart. Next slide

02:50:06.868 --> 02:50:09.459
please.

02:50:09.459 --> 02:50:12.169
Uh, this is a chart from Portland General Electric, showing

02:50:12.169 --> 02:50:16.519
the tight correlation between gas prices and mid-C

02:50:16.529 --> 02:50:21.118
uh, unorganized market power, market trading hub. You

02:50:21.118 --> 02:50:24.538
can see very tight correlation there. Next slide please.

02:50:26.468 --> 02:50:29.828
So a number of factors that we've already seen and

02:50:29.828 --> 02:50:33.118
discussed here. Certainly the convergence of multiple

02:50:33.118 --> 02:50:36.959
factors that caused the scarcity pricing uh, to go

02:50:36.968 --> 02:50:40.769
dramatically upward, especially on the gas side. But

02:50:40.769 --> 02:50:43.448
also on the electric side. This is going to result

02:50:43.459 --> 02:50:47.089
in probably the most consequential price event for

02:50:47.089 --> 02:50:51.189
customers since the power crisis two decades ago. Hundreds

02:50:51.189 --> 02:50:54.729
of millions to billions of dollars of an unanticipated

02:50:54.729 --> 02:50:56.888
costs. It's very difficult yet to say where that's

02:50:56.888 --> 02:51:00.649
going to go. Because we don't yet know how successful

02:51:00.658 --> 02:51:04.899
the hedging strategies were. But this is not an unprecedented

02:51:04.899 --> 02:51:07.999
event. We've had previous scarcity pricing episodes

02:51:07.999 --> 02:51:11.749
for example uh, 4 years ago in February-March of

02:51:11.749 --> 02:51:16.008
2019. Uh, we published a report on that, which is referenced

02:51:16.008 --> 02:51:19.598
at the end of our slides. We have an elevated risk of

02:51:19.598 --> 02:51:22.749
this going forward. The Winter and Summer conditions

02:51:22.749 --> 02:51:25.988
are quite different, but we feel that there's significant

02:51:25.988 --> 02:51:29.999
elevated risk now in both seasons, that require action.

02:51:30.008 --> 02:51:33.419
And we really do have to take action now to deal with

02:51:33.419 --> 02:51:36.758
some structural issues both in the markets and in the

02:51:36.758 --> 02:51:40.029
resource mix on the power side. Next slide please.

02:51:41.408 --> 02:51:45.279
Uh, most of the time power markets are price-takers,

02:51:45.288 --> 02:51:48.779
and that's going to continue. So, we have to be aware

02:51:48.779 --> 02:51:52.519
of the issues there. Electric prices are regional gas

02:51:52.519 --> 02:51:56.249
prices are national, continental and increasingly prone

02:51:56.249 --> 02:51:59.848
to market forces. Global market forces because of the

02:51:59.848 --> 02:52:03.788
rapid increase in LNG exports. When the Freeport LNG

02:52:03.788 --> 02:52:07.848
Terminal had their, uh explosion outage last Summer.

02:52:07.859 --> 02:52:10.049
The price of Henry Hub, which was fairly high at the

02:52:10.049 --> 02:52:14.658
time, $8 or $9 went down by $2. Just because that

02:52:14.669 --> 02:52:18.698
in that inventory was now uh feeding back to the domestic

02:52:18.698 --> 02:52:22.328
market. When Freeport goes back online probably in about

02:52:22.339 --> 02:52:26.109
a month or so. I expect the Henry Hub price to go

02:52:26.109 --> 02:52:29.229
back up maybe a dollar. So we're definitely more prone

02:52:29.229 --> 02:52:34.928
now to these international uh price uh, context. Um,

02:52:34.939 --> 02:52:37.919
electricity power pricing as discussed before by the

02:52:37.919 --> 02:52:42.249
ISO. Is highly dependent on gas prices. That's

02:52:42.249 --> 02:52:46.538
a key issue here. And as mentioned by Edison, there

02:52:46.538 --> 02:52:50.209
are longstanding misalignments between the gas nomination

02:52:50.209 --> 02:52:53.819
cycle and the electric commitment. And dispatch cycle

02:52:53.828 --> 02:52:57.598
that really create problems, ongoing structural problems.

02:52:57.609 --> 02:52:59.868
That are now something we ought to take another look

02:52:59.868 --> 02:53:03.649
at. Next slide please.

02:53:03.649 --> 02:53:05.689
So I won't read through all these, but I do want to

02:53:05.689 --> 02:53:08.678
make a couple of comments. The California ISO issued

02:53:08.678 --> 02:53:11.279
a new report yesterday, which I've gone through already.

02:53:11.288 --> 02:53:14.198
And found, I really hope everybody takes a look at

02:53:14.198 --> 02:53:16.848
this is very important findings there. It's called

02:53:16.848 --> 02:53:20.158
the Gas Conditions in CAISO Markets Report. Uh, the

02:53:20.169 --> 02:53:22.959
first conclusion that I reached from looking at that

02:53:22.959 --> 02:53:26.138
was. The kind of self-sustaining nature of the gas price

02:53:26.138 --> 02:53:30.649
bottle, especially from Thanksgiving to past the holiday

02:53:30.649 --> 02:53:34.038
season. At the end of December, we have a thin market

02:53:34.038 --> 02:53:37.589
less than 150 trades a day. PG&E uh,

02:53:37.598 --> 02:53:40.678
it's easy for a handful of trades to move that market.

02:53:40.689 --> 02:53:43.519
There's tight correlation of spot prices and forward

02:53:43.529 --> 02:53:47.169
and, uh forward strip. As noted by Mark Pack to the

02:53:47.169 --> 02:53:50.769
bid week phenomenon is a factor here. Everybody on

02:53:50.769 --> 02:53:53.879
the sell side knows that the buy side is going to be

02:53:53.879 --> 02:53:55.859
in the market at the end, you know, last week of the

02:53:55.859 --> 02:53:59.249
month for the following month. And so the interaction

02:53:59.249 --> 02:54:02.558
between the very tight correlation of current prices

02:54:02.569 --> 02:54:06.328
and prompt month prices, the next month prices. Is a

02:54:06.328 --> 02:54:08.439
really serious problem now. Because if we're in one

02:54:08.439 --> 02:54:11.069
of these price surges. What are the utilities and power

02:54:11.069 --> 02:54:14.629
plants going to do? Are they going to buy an over inflated

02:54:14.638 --> 02:54:17.999
prompt month or are they gonna expose themselves to

02:54:17.999 --> 02:54:20.598
more direct spot price risk? This is a really serious

02:54:20.598 --> 02:54:25.279
problem now. Uh, the second big conclusion I've reached

02:54:25.288 --> 02:54:28.569
uh that the ISO report reached. That I'm, you

02:54:28.569 --> 02:54:31.698
know, has a lot of detail in the report. The massive

02:54:31.698 --> 02:54:35.419
impact on power markets, $4 billion plus dollar impact

02:54:35.428 --> 02:54:39.669
on the notional value of the CAISO market uh in November

02:54:39.669 --> 02:54:43.019
through January. Uh you know, a lesser amount in the

02:54:43.019 --> 02:54:45.499
Northwest, but a significant, very significant amount.

02:54:45.508 --> 02:54:48.459
How much of that will be washed out by hedging? We don't

02:54:48.459 --> 02:54:52.499
know yet, but it's very significant. The and, the figure

02:54:52.499 --> 02:54:56.218
16 on the report on page 26 shows that the dangerous

02:54:56.218 --> 02:54:59.288
signs were in place months before, especially in August

02:54:59.288 --> 02:55:02.419
and September were very, very high market prices occurred.

02:55:02.999 --> 02:55:05.908
These effects are similar if somewhat unless magnitude

02:55:05.908 --> 02:55:08.928
in the Northwest. So finally concluded, just want to

02:55:08.939 --> 02:55:12.729
give a couple of thoughts here about potential response.

02:55:12.738 --> 02:55:14.238
And I'm not going to go through all these different

02:55:14.238 --> 02:55:17.979
issues. First of all, this is a regional problem. It's

02:55:17.979 --> 02:55:22.589
a Pacific and Western states, regional problem. We have

02:55:22.598 --> 02:55:25.609
multi billion dollar impacts. It could happen again.

02:55:26.149 --> 02:55:28.839
We agree with Southern Cal Edison and the root causes

02:55:28.839 --> 02:55:31.629
not markets though they have problems. But rather over

02:55:31.629 --> 02:55:35.439
dependence on gas. Uh, we have a double bind of scarcity

02:55:35.439 --> 02:55:38.468
pricing in both the gas and power markets. But because

02:55:38.468 --> 02:55:41.448
power is a gas price-taker, it puts us in a very

02:55:41.448 --> 02:55:45.368
tight spot during these market price breaks. Very high

02:55:45.368 --> 02:55:48.569
priority for us in the Northwest Energy Coalition is

02:55:48.578 --> 02:55:52.019
to provide customer information during these kinds

02:55:52.019 --> 02:55:54.799
of events. To avoid the kind of total price shock we're

02:55:54.799 --> 02:55:57.879
seeing. Its very important for the Commission to continue

02:55:57.879 --> 02:56:01.658
doing prudence review. We need to look at reform of

02:56:01.658 --> 02:56:04.948
hedging and fuel cost adjustment policies. We need

02:56:04.948 --> 02:56:07.868
forward looking policy to address the structural issues.

02:56:07.879 --> 02:56:11.078
Certainly demand side load management should be dramatically

02:56:11.078 --> 02:56:13.799
accelerated on both the gas and electric side. And I

02:56:13.799 --> 02:56:17.669
want to commend California PUC, and the utilities for

02:56:17.678 --> 02:56:20.988
really pioneering on gas demand response. But we need

02:56:20.988 --> 02:56:24.428
a lot more attention to that. We need to look at supply

02:56:24.428 --> 02:56:28.319
alternatives and reserves. Um potentially and extend

02:56:28.319 --> 02:56:31.569
extending the dependence on gas for reserves on the

02:56:31.569 --> 02:56:34.549
power side is really not going to be the answer. We

02:56:34.558 --> 02:56:37.508
can certainly look at more batteries, maybe some use

02:56:37.508 --> 02:56:41.819
of hydro storage that's available. Um and, and very

02:56:41.819 --> 02:56:44.899
important longer term point. Enlisting load and resource

02:56:44.899 --> 02:56:47.578
diversity across the widest Western footprint

02:56:47.578 --> 02:56:51.098
possible. Which is why we and many others are supporting

02:56:51.269 --> 02:56:56.269
the development and the uh, on the activation of the

02:56:56.269 --> 02:57:00.049
energy demand, the extended day ahead market. That the

02:57:00.049 --> 02:57:03.408
CAISO is putting together. Finally we really support

02:57:03.408 --> 02:57:07.218
coordination of the Pacific Coast and Western regulators

02:57:07.218 --> 02:57:10.448
and state agencies through existing organizations like

02:57:10.448 --> 02:57:13.808
prepc, as well as separate efforts we'll encourage the

02:57:13.819 --> 02:57:16.658
Commissions and agencies here in the Northwest. To join

02:57:16.658 --> 02:57:22.328
together with you. Thank you very much.

02:57:22.328 --> 02:57:27.138
Thanks Fred um and uh, and thanks for all those insights.

02:57:27.138 --> 02:57:30.649
And I see you've um you've got a paper up here, um

02:57:30.658 --> 02:57:33.368
from a prior incident. I did take a look at that. It

02:57:33.368 --> 02:57:38.138
was very insightful as well. Um, next up um I think

02:57:38.149 --> 02:57:41.868
we can go to the next slide. Uh, we have Becky Robinson

02:57:41.879 --> 02:57:47.218
from the California ISO. As I mentioned, um earlier

02:57:47.218 --> 02:57:50.078
our first speaker Amelia is from the independent entity

02:57:50.078 --> 02:57:52.178
within the ISO so called the Department of Market

02:57:52.178 --> 02:57:55.538
Monitoring. Becky Robinson is from the ISO itself.

02:57:55.538 --> 02:57:58.269
She's a Principal Economist, where she focuses on market

02:57:58.269 --> 02:58:01.468
policy and performance. Um, prior to joining ISO.

02:58:01.468 --> 02:58:05.339
She held roles at and FERC and she was an advisor

02:58:05.339 --> 02:58:10.129
to Commissioner Cheryl Lafleur. Becky, um if I can

02:58:10.138 --> 02:58:13.538
ask you to take the mic and then I'll come back and

02:58:13.549 --> 02:58:18.149
do some Q&A. Thanks. All right, thank you. Good

02:58:18.149 --> 02:58:20.979
afternoon everyone. We appreciate the opportunity to

02:58:20.988 --> 02:58:24.799
be part of this discussion today. I wanted to start

02:58:24.808 --> 02:58:28.749
with what will be background for some of you. Um, before

02:58:28.749 --> 02:58:31.899
we get into some of our observations, um over the events

02:58:31.899 --> 02:58:34.379
of the last couple of months. But wanted to, to level

02:58:34.379 --> 02:58:37.339
set first on some of the fundamentals of the ISO

02:58:37.339 --> 02:58:42.189
market structure. So uh, the California ISO

02:58:42.189 --> 02:58:45.428
market supports three notable objectives. It dispatches

02:58:45.428 --> 02:58:48.828
generation at least cost. It reliably balances demand

02:58:48.828 --> 02:58:51.988
and supply moment to moment throughout the day. And

02:58:51.999 --> 02:58:54.808
it has made great strides in facilitating the transition

02:58:54.808 --> 02:58:58.868
to a decarbonized grid. In the market optimization

02:58:58.868 --> 02:59:02.729
process used, uh in the California ISO market is to

02:59:02.729 --> 02:59:06.029
clear the market every five minutes. Uh uses locational

02:59:06.029 --> 02:59:09.198
marginal pricing. And this marginal cost pricing is

02:59:09.198 --> 02:59:13.718
critical again for three purposes at least. It number

02:59:13.718 --> 02:59:15.979
one, it disciplines suppliers to offer at their marginal

02:59:15.979 --> 02:59:20.848
cost. And two, provide transparent signals for resources

02:59:20.859 --> 02:59:24.288
to provide power when and where needed. Both within

02:59:24.288 --> 02:59:27.399
the California ISO balancing area and in the neighboring

02:59:27.399 --> 02:59:29.819
balancing areas throughout the West, through the Western

02:59:29.819 --> 02:59:33.399
energy imbalance market. And then third, it provides

02:59:33.399 --> 02:59:36.258
signals for long term contracting. And this, you know,

02:59:36.258 --> 02:59:38.178
it's both with respect to resource adequacy, which

02:59:38.178 --> 02:59:41.988
is a very important piece puzzle. As well as for hedging

02:59:41.988 --> 02:59:45.149
transactions, which other panelists have discussed

02:59:45.149 --> 02:59:47.508
a bit. But that's where, you know, buyers and sellers

02:59:47.519 --> 02:59:50.488
may voluntarily transact for electricity prices agreed

02:59:50.488 --> 02:59:53.779
to ahead of time. Um, those are informed by the ISO

02:59:53.779 --> 02:59:56.808
market signals. And, and consistent with the, you

02:59:56.808 --> 03:00:02.598
know, competitive wholesale electricity markets.

03:00:02.598 --> 03:00:06.089
So the California ISO markets and the resources that participate

03:00:06.089 --> 03:00:08.749
in them. Reflect the cost to produce electricity. So

03:00:08.749 --> 03:00:11.698
gas prices are an input to the electric markets and

03:00:11.698 --> 03:00:14.339
can flow into the resulting electricity prices. As

03:00:14.339 --> 03:00:15.589
Amelia's charts showed.

03:00:16.069 --> 03:00:19.028
Um, if and when gas resources are on the margin, which

03:00:19.039 --> 03:00:23.348
they often are. Which is all, which is to say these

03:00:23.348 --> 03:00:26.219
gas prices aren't input. So, you know, the prior panels

03:00:26.229 --> 03:00:28.799
today discussed, you know, potential reforms to gas

03:00:28.799 --> 03:00:31.599
pricing, gas operations. Things you can do in the gas

03:00:31.599 --> 03:00:36.259
market itself. And so if such reforms put, put downward

03:00:36.259 --> 03:00:40.308
pressure on natural gas prices, then uh, that will

03:00:40.308 --> 03:00:43.398
just sort of flow into, through suppliers offers into

03:00:43.398 --> 03:00:48.018
the electric markets. Um, flow into the business of

03:00:48.018 --> 03:00:50.369
the CAISO market and put downward pressure on the

03:00:50.378 --> 03:00:53.909
electricity prices as a result. Um, so to put another

03:00:53.909 --> 03:00:56.418
way kind of, the most direct way of addressing the

03:00:56.418 --> 03:01:00.899
concerns raised here today. Um, is if you can do something

03:01:00.899 --> 03:01:03.778
in the gas market itself. Um and then, you know, if

03:01:03.778 --> 03:01:06.818
that if that can be successful, then you don't necessarily

03:01:06.818 --> 03:01:10.329
need to do anything incremental on top of that. To get

03:01:10.339 --> 03:01:13.168
to address any concerns about high electricity market

03:01:13.168 --> 03:01:16.948
prices. Because it just flows through, um lower gas prices

03:01:16.958 --> 03:01:19.789
would just flow through into the electricity market

03:01:19.798 --> 03:01:23.668
for resource offers.

03:01:23.668 --> 03:01:27.899
And so now some observations on the events of the last

03:01:27.899 --> 03:01:30.289
couple of months. That we've seen with high gas prices.

03:01:30.298 --> 03:01:35.319
Um, other panelists have done a great job of um, of

03:01:35.319 --> 03:01:39.479
identifying many of the drivers for, for what is putting

03:01:39.489 --> 03:01:42.089
upward.

03:01:42.089 --> 03:01:46.099
Um and I won't go through all of those, but to mention

03:01:46.099 --> 03:01:50.619
one that hasn't perhaps got uh as much air time. Um,

03:01:51.239 --> 03:01:55.839
that I just wanted to mention is um, generation retirement

03:01:55.849 --> 03:01:59.599
throughout the Western region. Um, just meaning that

03:01:59.599 --> 03:02:02.009
there are a few other supply sources to switch to and

03:02:02.009 --> 03:02:05.308
gas costs rise. Um, ordinarily, you would sort of expect

03:02:05.319 --> 03:02:07.688
across the electricity market to see well, you know,

03:02:07.688 --> 03:02:10.729
different resources or economic or more or less economic

03:02:10.729 --> 03:02:12.589
at different points in time. And if you become less

03:02:12.589 --> 03:02:15.748
economic, than the market will dispatch other resources.

03:02:15.759 --> 03:02:18.558
Um, and not, you know, tell resources not to buy that

03:02:18.558 --> 03:02:20.408
expensive gas, right? Because we can run something

03:02:20.408 --> 03:02:24.158
else instead. And um as we've seen, for instance,

03:02:24.169 --> 03:02:27.049
um some cold, you know, continuing coal retirements

03:02:27.049 --> 03:02:29.899
throughout the rest of the West. Um, there's just sort

03:02:29.899 --> 03:02:34.489
of a little less uh, switching available for the market

03:02:34.489 --> 03:02:37.538
to do. Um and, and I mentioned this because I think

03:02:37.538 --> 03:02:40.478
this underscores the interrelatedness of the gas market

03:02:40.489 --> 03:02:44.239
and the electricity market. And I think in terms of

03:02:44.248 --> 03:02:50.728
some of the potential um, uh, I don't want to say perform.

03:02:50.728 --> 03:02:53.718
But, but potential things to consider going forward.

03:02:53.728 --> 03:02:58.169
Um, thinking about coordinating, coordinated planning

03:02:58.179 --> 03:03:01.558
between and across the gas and electricity space. Um,

03:03:01.558 --> 03:03:06.209
could be very important um, as given that interrelatedness

03:03:06.209 --> 03:03:11.619
and that interdependence.

03:03:11.619 --> 03:03:16.019
And then uh on, on the issue of reliability. Um, we

03:03:16.019 --> 03:03:18.248
did want to note that while, you know, gas prices have

03:03:18.258 --> 03:03:21.669
been unprecedented in magnitude and duration. That we've

03:03:21.679 --> 03:03:24.248
seen over the last couple of months. Um thus far, the

03:03:24.248 --> 03:03:27.679
higher gas prices have not affected the actual reliable

03:03:27.679 --> 03:03:30.568
operation of the electric system. We haven't heard

03:03:30.579 --> 03:03:34.019
um, through the outreach we've done. We have not heard

03:03:34.028 --> 03:03:37.399
that there have been actual threats to gas um, curtailment

03:03:37.408 --> 03:03:42.149
for, um for resources or anything like that. So it's

03:03:42.149 --> 03:03:44.008
not been a question of whether you can get the gas,

03:03:44.008 --> 03:03:48.199
it's just been a question of at what price. Um, but

03:03:48.209 --> 03:03:52.369
we will continue to monitor the ISO markets. To address

03:03:52.369 --> 03:03:55.649
an unusual market results. And as others have mentioned

03:03:55.649 --> 03:03:58.998
already, yesterday we published a report on the recent

03:03:58.998 --> 03:04:04.239
impacts in the gas and electric markets. Um uh so

03:04:04.248 --> 03:04:06.709
with that, we look forward to the discussion on this

03:04:06.718 --> 03:04:11.188
panel. And um, ISO is ready to work with California

03:04:11.188 --> 03:04:13.528
entities and entities throughout the West. On the path

03:04:13.528 --> 03:04:19.378
forward. Um, and thank you very much, again.

03:04:19.378 --> 03:04:23.609
Thank you. Thank you Becky. Um I am, uh as your

03:04:23.609 --> 03:04:26.478
moderator. I'm gonna go ahead and ask one question,

03:04:26.478 --> 03:04:29.468
and then I'm gonna turn it over to um, President Reynolds.

03:04:29.478 --> 03:04:33.848
To see if she wants to ask a question. And, and

03:04:33.848 --> 03:04:37.139
then we'll go to the rest of the dais. Um, so my

03:04:37.139 --> 03:04:42.189
question, um is uh and, and you know. Maybe my panelists

03:04:42.189 --> 03:04:44.999
can raise their hands and see who's most eager to answer.

03:04:44.999 --> 03:04:48.759
Otherwise, I'll pick on one of you. Um uh, my question

03:04:48.759 --> 03:04:52.829
is about, um, what we do to sort of mitigate price

03:04:52.829 --> 03:04:56.209
spikes. So the US has a strategic petroleum reserve.

03:04:56.209 --> 03:04:59.355
We recently used it in an effort to address gasoline

03:04:59.355 --> 03:05:02.985
price spikes, which flow through to consumers. Um,

03:05:02.985 --> 03:05:07.944
when this, the CPUC adopted the core, non-core uh policy

03:05:07.944 --> 03:05:10.475
in the 80s. It did so because electric generators

03:05:10.475 --> 03:05:14.404
had the ability to fuel switch from natural gas to

03:05:14.415 --> 03:05:20.495
oil in times of high prices. Um since that time, almost

03:05:20.504 --> 03:05:24.451
all electric generators that run on natural gas.

03:05:24.451 --> 03:05:26.870
Have removed their oil tanks, they can no longer fuel

03:05:26.870 --> 03:05:30.701
switch. Um, and yet they remain non-core. So do you

03:05:30.701 --> 03:05:33.980
think California should consider something like a strategic

03:05:33.990 --> 03:05:38.011
reserve for natural gas. For electric generation bill,

03:05:38.021 --> 03:05:42.040
you know, definitely, you know, explained how hedging

03:05:42.040 --> 03:05:45.831
comes at a cost. Um but uh, what would the benefit

03:05:45.841 --> 03:05:49.379
be and what would the obstacles to that approach be?

03:05:49.559 --> 03:05:52.959
Um, and I'll let you raise your hand bravely any of

03:05:52.968 --> 03:05:56.709
my panelists. Who want to talk about electric generator

03:05:56.709 --> 03:06:00.548
hedging requirements.

03:06:00.548 --> 03:06:03.639
All right, Bill and Fred. And then say I'll let the

03:06:03.639 --> 03:06:07.189
two of you go and then I'll turn it to uh, President

03:06:07.189 --> 03:06:10.249
Alice Reynolds. Thank you.

03:06:10.249 --> 03:06:14.459
Sure. I mean, I think essentially that, that's what

03:06:14.459 --> 03:06:17.668
the storage facilities that currently exists provide

03:06:17.678 --> 03:06:22.488
for us. Um, that they are that uh, sort of reserve

03:06:22.488 --> 03:06:27.228
that helps prevent the price volatility around. Um

03:06:27.238 --> 03:06:30.449
those price spikes that, that may occur. And that's kind

03:06:30.449 --> 03:06:33.379
of my point around and being an important feature of

03:06:33.389 --> 03:06:38.778
the gas infrastructure. Um and again I, the gas utilities

03:06:38.788 --> 03:06:42.379
were describing it correctly. As a combination of reliability

03:06:42.379 --> 03:06:45.788
from, from gas standpoint. So for, for um, you know,

03:06:45.798 --> 03:06:49.389
core customers as well as providing that price protection.

03:06:49.389 --> 03:06:51.598
So in a way it kind of exists. One thing that I

03:06:51.598 --> 03:06:54.899
didn't get to one of my bullet points was. Um, Southern

03:06:54.899 --> 03:06:59.358
California, they, that uh access to storage or being

03:06:59.358 --> 03:07:03.819
able to use it from a electric generator standpoint,

03:07:03.829 --> 03:07:05.928
does not exist anymore. That may be something worth

03:07:05.939 --> 03:07:07.999
looking at to see if that could be made available. To

03:07:07.999 --> 03:07:11.749
provide more tools to prevent spike, price volatility.

03:07:11.749 --> 03:07:14.759
On the electric side for, for that class of customer.

03:07:17.189 --> 03:07:20.209
So this is Fred. Uh, I think we should be looking at lots

03:07:20.209 --> 03:07:22.728
of things. You know, not all of them may be feasible.

03:07:22.738 --> 03:07:26.769
Uh, the point about, you know, having a physical gas

03:07:26.769 --> 03:07:30.478
reserve would be similar I guess to a strategic petroleum

03:07:30.478 --> 03:07:33.488
reserve. But there are lots and lots of policy issues

03:07:33.488 --> 03:07:36.168
with how to do that. There's a responsible, when do

03:07:36.168 --> 03:07:39.509
you use it? Uh, James Bushnell wrote some interesting

03:07:39.509 --> 03:07:43.829
comments on this whole topic. Around the time of the

03:07:43.839 --> 03:07:47.439
Energy Reserve Bill discussion last Summer. And he also

03:07:47.439 --> 03:07:49.728
testified in that bill. You know, it's something we

03:07:49.728 --> 03:07:52.329
might want to look at on the gas side. Could we find

03:07:52.329 --> 03:07:54.468
a way for the states and I think this would be a

03:07:54.468 --> 03:07:59.368
Western uh, multistate effort ideally. You know, reserve

03:07:59.368 --> 03:08:02.098
some space that could be used. Well I don't know,

03:08:02.108 --> 03:08:04.949
but we should look at that. On the power side, I think

03:08:04.949 --> 03:08:08.668
we have more options. Um, batteries provide kind of

03:08:08.678 --> 03:08:14.468
intraday storage and I commend you to the new chart

03:08:14.468 --> 03:08:18.158
on the CAISO website. Showing now the hybrid performance

03:08:18.168 --> 03:08:21.329
which for yesterday for example, clearly showed the

03:08:21.329 --> 03:08:24.608
ability to move energy from the day to the evening

03:08:24.608 --> 03:08:28.199
ramp. And also into the morning ramp by using the same

03:08:28.199 --> 03:08:32.408
hybrid facilities. In both, in California and in the

03:08:32.408 --> 03:08:35.413
Northwest California has a fair bit of hydro storage.

03:08:35.413 --> 03:08:38.124
Especially in low hydro conditions that could be used

03:08:38.254 --> 03:08:40.504
in that way. And in the Northwest of course, we have

03:08:40.504 --> 03:08:43.764
a gigantic resource. There are lots and lots and lots

03:08:43.764 --> 03:08:46.694
of constraints to doing this with hydro. But, you know,

03:08:46.694 --> 03:08:49.253
how many billions of dollars do we have to hand off

03:08:49.263 --> 03:08:51.753
to the markets? Before we decide to change the way we're

03:08:51.753 --> 03:08:55.064
doing supply side. The supply side of course, then we can

03:08:55.064 --> 03:08:58.523
get into this. Is only one, only one half the equation.

03:08:58.804 --> 03:09:01.334
We have lots of things we should be doing on the demand

03:09:01.334 --> 03:09:07.839
side as well.

03:09:07.839 --> 03:09:10.919
Okay um, President Reynolds. We have until about 12:35.

03:09:10.919 --> 03:09:13.209
I did see Becky put her hand up. Do you have

03:09:13.209 --> 03:09:16.549
a quick addition? And then I think Elliott is gonna,

03:09:16.559 --> 03:09:19.368
has got his hand up. But I'm, I'm gonna like Becky

03:09:19.368 --> 03:09:22.358
go real quick and then turn it to President Reynolds.

03:09:23.319 --> 03:09:27.388
Unless you didn't mean to. No, no thanks. Just, just

03:09:27.388 --> 03:09:30.049
quickly. I think it's a great question. Um, certainly

03:09:30.049 --> 03:09:34.169
gas storage seems like it is a, is a prominent driver,

03:09:34.169 --> 03:09:36.659
right? Even as wearing sort of this perfect storm of

03:09:36.659 --> 03:09:39.978
lots of different drivers. It feels like gas storage

03:09:39.978 --> 03:09:44.258
is, is a big. Um, is a thing that feels like it

03:09:44.258 --> 03:09:46.728
wants to be tackled in this um, in trying to figure

03:09:46.728 --> 03:09:48.679
out how to move forward from here. You know, I would

03:09:48.679 --> 03:09:51.598
just advise, I think it's important to kind of think

03:09:51.598 --> 03:09:54.819
through. Um

03:09:54.819 --> 03:09:59.268
how, who to put that, what entities put that on and

03:09:59.268 --> 03:10:03.018
how that syncs up with market dynamics? So for gas

03:10:03.018 --> 03:10:06.498
generators, for instance, if um, uh, from some of

03:10:06.498 --> 03:10:08.419
the outreach we've done. We understand that they, you

03:10:08.419 --> 03:10:13.199
know, do sell power forward. Um and, and that those

03:10:13.199 --> 03:10:16.209
hedging transactions that, that is settled. You know,

03:10:16.218 --> 03:10:19.768
not at the, not at the, you know, they had in real

03:10:19.768 --> 03:10:23.329
time prices um, that are shown on those charts. But

03:10:23.329 --> 03:10:25.478
those are settled at prices agreed to ahead of time.

03:10:25.488 --> 03:10:29.699
And so um, my thoughts from the outreach we've done is

03:10:29.709 --> 03:10:32.898
that when that happens. Um, you know, you place

03:10:32.909 --> 03:10:37.108
the uh, the risk of the price of the, on the gas

03:10:37.108 --> 03:10:39.909
generator for instance. Um, and so you take that risk

03:10:39.909 --> 03:10:45.809
off of customers, these customers. And, and so um,

03:10:45.819 --> 03:10:49.179
I think if you are asking should gas generators be

03:10:49.179 --> 03:10:52.228
required to put gas in storage. You know, separate

03:10:52.228 --> 03:10:54.659
apart from those hedging transactions. You know, I

03:10:54.659 --> 03:10:58.118
might expect that they would price the risk that the

03:10:58.128 --> 03:11:01.378
forward gas purchase may become uneconomic. You know,

03:11:01.388 --> 03:11:03.659
by the time it comes around to actually produce the

03:11:03.659 --> 03:11:07.868
electricity. And so that, there might be a premium that

03:11:07.868 --> 03:11:10.419
shows up somewhere in terms of, you know, covering

03:11:10.419 --> 03:11:14.518
that risk on their side. Um, basically it seems like

03:11:14.518 --> 03:11:17.388
there are ways to think through. I'm not offering sort

03:11:17.388 --> 03:11:19.758
of specifically to structure it, but I think it's important

03:11:19.758 --> 03:11:22.069
to think through different entities, the different

03:11:22.069 --> 03:11:28.299
incentives and, and where those lie. Thanks.

03:11:28.299 --> 03:11:31.799
President Reynolds. Thanks Molly. I'm not gonna take

03:11:31.809 --> 03:11:34.309
too much time. I want to give my fellow members of

03:11:34.309 --> 03:11:36.518
the dais, time to ask questions. But I had a quick

03:11:36.518 --> 03:11:41.329
question for Bill. Um and um, it's about the difference

03:11:41.339 --> 03:11:43.659
between the Southern system and the Northern system.

03:11:43.659 --> 03:11:47.709
And so we saw prices at um, PG&E Citygate to be

03:11:47.718 --> 03:11:51.748
similar um, to prices in the Southern system. But

03:11:51.758 --> 03:11:55.268
there was a significant difference in I think the procurement

03:11:55.268 --> 03:11:59.148
prices and certainly the prices that um, core gas customers

03:11:59.148 --> 03:12:01.608
saw. So this might be more, you know, more of a direct

03:12:01.608 --> 03:12:05.779
question for SoCalGas. But given your visibility into

03:12:05.779 --> 03:12:08.628
the situation and your experience, do you have thoughts

03:12:08.628 --> 03:12:14.089
on why we might have seen that difference? Yeah. The

03:12:14.089 --> 03:12:17.069
way I understand it and I'm getting a little out in

03:12:17.069 --> 03:12:20.898
front of my skis. Is that um, you know, we have on

03:12:20.898 --> 03:12:23.728
the power side. We have our era account, forecasting

03:12:23.728 --> 03:12:26.449
balancing account. That it was, it had something to

03:12:26.449 --> 03:12:30.008
do also with the timing of the gas balancing accounts.

03:12:30.008 --> 03:12:33.329
For the two service territories on the gas side. But

03:12:33.329 --> 03:12:35.878
that's about the extent of my knowledge on that. Where

03:12:35.888 --> 03:12:38.228
the prices were the same. But when you're forecasting

03:12:38.228 --> 03:12:41.628
your rates and you need to rebalance it. You may see

03:12:41.638 --> 03:12:43.888
that they're not completely lined up. In terms of when

03:12:43.888 --> 03:12:46.429
SoCalGas is doing it. When PG&E is doing it. You may

03:12:46.429 --> 03:12:48.848
just see when those rate increases are coming at different

03:12:48.848 --> 03:12:51.069
times. But that's, that's about as far as I can tell

03:12:51.069 --> 03:12:53.309
from, from an actual rate impact on customers at the

03:12:53.309 --> 03:12:57.388
end of the day.

03:12:57.388 --> 03:13:02.008
Okay. Um anyway, does the LADWP have any

03:13:02.008 --> 03:13:04.689
thoughts on that? Or maybe it's something to save for

03:13:04.689 --> 03:13:07.429
later? I want to see if anyone else had any thoughts.

03:13:09.839 --> 03:13:13.069
Likely something that's safe for later. As we continue

03:13:13.069 --> 03:13:15.809
to bring more renewables onto the system. It's just

03:13:15.848 --> 03:13:18.718
the way that we're set up, it's a little bit of a

03:13:18.718 --> 03:13:21.258
different paradigm. Particularly uh, participating

03:13:21.258 --> 03:13:24.799
in the Kaiser EIM Market also. Um, it's difficult

03:13:24.799 --> 03:13:26.789
to forecast what our natural gas spring is going to

03:13:26.789 --> 03:13:29.069
be from one day to the next. So there's a bit of

03:13:29.069 --> 03:13:31.878
a compounding problem here. When it comes to figuring

03:13:31.878 --> 03:13:34.339
out what our gasper is going to be. And then subsequently

03:13:34.339 --> 03:13:37.138
responding to the market.

03:13:37.138 --> 03:13:42.008
Okay, great Molly. I'll turn it back to you.

03:13:42.008 --> 03:13:44.998
Thanks. I'll just go in the order I saw them. Um,

03:13:45.008 --> 03:13:49.339
uh, I'd like to turn to the CEO of CAISO, Elliot Mainzer. Do you have

03:13:49.339 --> 03:13:53.628
a question? Thanks Molly, yeah. Um really, really outstanding conversation

03:13:53.628 --> 03:13:56.549
here. And there's been a lot of talk today about the

03:13:56.559 --> 03:13:59.238
dependencies between the gas market and the power market.

03:13:59.238 --> 03:14:02.589
And gasping a key input into electricity prices. Build something

03:14:02.598 --> 03:14:05.179
of something you said, others may also have a perspective.

03:14:05.179 --> 03:14:08.699
But I know for a long time, I've heard discussions about

03:14:08.709 --> 03:14:12.549
the need. Maybe some potential to better align uh,

03:14:12.559 --> 03:14:15.268
the power market scheduling windows and gas nomination

03:14:15.268 --> 03:14:17.868
processes just for visibility, transparency. Is there

03:14:17.868 --> 03:14:20.579
anything that, you know, you see that would be, you

03:14:20.579 --> 03:14:24.608
know, fairly actionable in that realm. That would maybe

03:14:24.608 --> 03:14:26.779
better harmonize both inside, inside of California.

03:14:26.779 --> 03:14:29.059
Maybe also across the broader West, which has also

03:14:29.059 --> 03:14:33.648
been experiencing these phenomenon. Yeah, I can tackle

03:14:33.648 --> 03:14:37.459
it, Elliot. Yeah. Um we, we did introduce this concept

03:14:37.468 --> 03:14:41.049
a number of years ago. Where um, you know, we're making

03:14:41.049 --> 03:14:43.549
our gas nominations essentially after we get our

03:14:43.549 --> 03:14:46.748
IFM Awards. So I'll go back up, not get so wonky.

03:14:46.748 --> 03:14:50.069
I'm looking at Elliot, that's what I did. But essentially

03:14:50.079 --> 03:14:52.939
when we say how much gas we're gonna use. We don't

03:14:52.949 --> 03:14:56.128
that amount in until we find out how much power our

03:14:56.128 --> 03:14:59.419
generators have to give. Because they are directly correlated.

03:14:59.579 --> 03:15:03.699
Um, I want to be clear here though. I think that inefficiency

03:15:03.699 --> 03:15:06.909
is not what's causing the price spikes through this two

03:15:06.909 --> 03:15:09.799
month period. Um, it just makes it a little more difficult

03:15:09.799 --> 03:15:12.439
for us to balance. And I think ultimately it does increase

03:15:12.439 --> 03:15:14.789
costs, um, at the end of the day. But certainly not

03:15:14.789 --> 03:15:17.169
what we've seen throughout the couple of months. So

03:15:17.169 --> 03:15:21.248
when we look at it um, Elliott. That I think the challenge

03:15:21.248 --> 03:15:24.008
is, there's so many market dynamics. You're basically

03:15:24.008 --> 03:15:28.978
moving to even just say just the CAISO. Moving the CAISO market

03:15:29.228 --> 03:15:34.049
um, runs and calculations. And then moving the gas

03:15:34.049 --> 03:15:36.598
market simultaneously on when they have to nominate,

03:15:36.608 --> 03:15:39.138
that it became a bridge too far. Because the amount

03:15:39.138 --> 03:15:41.218
of market changes have that, that had to occurred, and

03:15:41.218 --> 03:15:43.459
then impact across the West. Forget, you know, I'm

03:15:43.459 --> 03:15:46.079
not even bringing in those secondary facts. So, you know,

03:15:46.079 --> 03:15:47.718
it is, I think it's something to work out. To see

03:15:47.718 --> 03:15:50.419
if there's a value there, that that could be worked

03:15:50.419 --> 03:15:53.858
out. But I don't, I am well aware of the sort of

03:15:53.858 --> 03:15:57.258
practical implications that would occur on, um, changing

03:15:57.258 --> 03:16:04.468
those market dynamics. Thank you.

03:16:04.468 --> 03:16:08.368
Okay. Um, I'm seeing no one else chiming in. I'm gonna

03:16:08.368 --> 03:16:11.039
go to Commissioner Gunda next, and then Commissioner Douglas.

03:16:11.039 --> 03:16:13.858
And if the other members of the dais, um just saw Commissioner

03:16:13.858 --> 03:16:16.829
Shiroma. Um, if you can raise your hand. I'll call you,

03:16:16.839 --> 03:16:21.829
call on you. Thanks. Yeah, thanks Molly. Um, Bill

03:16:21.829 --> 03:16:24.459
I think maybe this is a question to you. And first of

03:16:24.459 --> 03:16:28.339
all, thank you. It was super helpful panel, um also

03:16:28.348 --> 03:16:31.199
specifically. And really, I think some, some things

03:16:31.199 --> 03:16:34.398
that was really helpful for me. Uh, 30,000 ft level

03:16:34.398 --> 03:16:37.368
I just wanted to um, kind of build on what Elliot

03:16:37.368 --> 03:16:42.409
was just asking. Are we talking about a true scarcity

03:16:42.419 --> 03:16:47.679
here in the market? Or kind of a, you know, structural proxy of

03:16:47.679 --> 03:16:50.669
scarcity given the misalignment of timing or both,

03:16:50.679 --> 03:16:53.339
right? Um it seemed, it seemed that we're talking

03:16:53.339 --> 03:16:56.289
about both elements um, and wanted to understand.

03:16:56.669 --> 03:16:59.848
Um, you know, what is really happening in terms of

03:16:59.858 --> 03:17:04.138
you know, the scarcity. And how those prices are, are

03:17:04.138 --> 03:17:07.079
being misaligned in time. That, that kind of

03:17:07.089 --> 03:17:10.169
goes through the entire process. Anybody can comment

03:17:10.169 --> 03:17:14.758
on that. Let's go to Amelia first. Um, and then I saw

03:17:14.768 --> 03:17:18.468
Fred's hand up.

03:17:18.468 --> 03:17:21.378
I repeat something that was just said. I don't think

03:17:21.388 --> 03:17:24.749
this is an issue that has to do with the alignment

03:17:24.759 --> 03:17:29.428
between the gas and the electric market. Part of the

03:17:29.428 --> 03:17:31.999
reason that you can see that is the extended period

03:17:31.999 --> 03:17:37.519
of high prices. What we did see changing in the gas

03:17:37.519 --> 03:17:42.339
market. Was the expectation of the use of gas and storage

03:17:43.059 --> 03:17:46.829
to mitigate price spikes. If you go back to some of

03:17:46.829 --> 03:17:49.108
the notes that were made in the first panel. And put

03:17:49.108 --> 03:17:51.918
them together with things said in the 2nd and 3rd panel.

03:17:51.928 --> 03:17:54.958
You'll see that's a pretty consistent uh, finding

03:17:54.958 --> 03:18:00.698
throughout this, this En Banc. Thanks.

03:18:00.698 --> 03:18:04.948
My opinion is that the price spikes, especially the

03:18:04.948 --> 03:18:07.469
weather driven ones that we get both Summer and Winter.

03:18:07.479 --> 03:18:10.118
You can kind of understand why that's happening. It

03:18:10.128 --> 03:18:13.539
does, there is a real scarcity aspect to it. But the

03:18:13.539 --> 03:18:16.198
long tail, especially after those price spikes that

03:18:16.198 --> 03:18:20.489
we saw over the last month. When weather conditions

03:18:20.489 --> 03:18:24.329
are clearly abated and we're back to, you know, maybe

03:18:24.329 --> 03:18:27.009
a little cooler or maybe a little warmer overall. But

03:18:27.009 --> 03:18:30.948
those, those very high gas market prices persisted.

03:18:30.958 --> 03:18:33.489
Indicates something is happening structurally in the

03:18:33.489 --> 03:18:36.438
gas markets. That enables that to occur and we really

03:18:36.438 --> 03:18:39.789
got to look at that. It's not a matter of gaming necessarily,

03:18:39.789 --> 03:18:44.559
it may just be market structure.

03:18:44.559 --> 03:18:49.809
Okay. Um, Commissioner Douglas, you're up. All right.

03:18:49.819 --> 03:18:54.529
Thank you. Um, and I don't know if this is too speculative

03:18:54.539 --> 03:18:59.579
to answer or not. But do you foresee the potential

03:18:59.589 --> 03:19:04.858
for the gas issues and the actions parties have taken.

03:19:04.858 --> 03:19:09.938
To mitigate their exposure by say to these high costs

03:19:09.948 --> 03:19:13.789
by say, running more hydro or something like that.

03:19:13.799 --> 03:19:16.789
Is this something that could affect summer reliability

03:19:16.789 --> 03:19:21.368
or, or do you think? Um, or how could it potentially

03:19:21.368 --> 03:19:26.799
affect summer reliability? If at all.

03:19:26.799 --> 03:19:30.529
I can tackle this one at least, at least from the California

03:19:30.539 --> 03:19:35.398
perspective. Um, yeah. Even going back to the last

03:19:35.398 --> 03:19:39.229
question about scarcity. We did not experience liquidity

03:19:39.229 --> 03:19:42.398
issues in the, in the gas market. Now, let me compare

03:19:42.398 --> 03:19:45.299
this to the polar vortex from a couple of years ago.

03:19:45.309 --> 03:19:48.529
We were having trouble getting gas um, there was true

03:19:48.529 --> 03:19:52.168
scarcity and getting the actual physical molecules.

03:19:52.178 --> 03:19:54.868
Now in the Summertime I think for the most part, what

03:19:54.868 --> 03:19:57.759
we've seen is that. Um, one will have more reasons

03:19:57.759 --> 03:20:02.628
are available. Solar's um, solar's uh, able to produce

03:20:02.628 --> 03:20:05.368
a lot more electricity, life storage, additional storage

03:20:05.368 --> 03:20:08.098
resources. Certainly anytime we're short gas, it could

03:20:08.098 --> 03:20:10.569
be bringing a reliability issue. But even over the

03:20:10.569 --> 03:20:13.799
last couple of heatwaves, we've had these last three

03:20:13.799 --> 03:20:16.368
years. While gas was at an elevated level, you know

03:20:16.368 --> 03:20:19.979
in the $16 range. Um, we were never in a position where

03:20:19.979 --> 03:20:23.259
we had difficulty in getting gas to the gas units is

03:20:23.259 --> 03:20:25.458
more about having the gas units to actually burn it.

03:20:25.469 --> 03:20:27.598
Um, so that has not been an issue. Even some of the

03:20:27.598 --> 03:20:32.118
most uh straining um, circumstances. Um, I think the

03:20:32.118 --> 03:20:34.789
Commission has also done well to allow some loosening

03:20:34.789 --> 03:20:37.148
of Aliso Canyon withdrawals, during those periods. To

03:20:37.148 --> 03:20:39.819
make sure that we do maintain electric liability. But

03:20:39.829 --> 03:20:41.519
obviously, it's not an endless pool at the end of the

03:20:41.519 --> 03:20:45.719
day. But I think for Summertime um, you know, my main

03:20:45.719 --> 03:20:48.309
concern has probably been more around the amount of

03:20:48.309 --> 03:20:50.688
capacity on the system. Being able to meet the system

03:20:50.719 --> 03:20:56.739
at the end of the day.

03:20:56.739 --> 03:20:59.378
Okay, looks like Fred wanted to jump in and then I'll

03:20:59.378 --> 03:21:02.729
go to Commissioner Shiroma. Thanks very quickly just

03:21:02.729 --> 03:21:05.009
to say. I think if we unpack this a little bit more.

03:21:05.009 --> 03:21:07.448
I think we'll, you know, we will, we know we will

03:21:07.458 --> 03:21:11.618
find structural differences in demand between Winter

03:21:11.618 --> 03:21:16.279
and Summer and also by region. Northwest Winter gas

03:21:16.279 --> 03:21:19.039
demand is very different. Because we have so much more

03:21:19.039 --> 03:21:22.549
heating here. Uh, Summer demand is more aligned between

03:21:22.549 --> 03:21:26.029
the regions. But the, but the resource side also is different

03:21:26.029 --> 03:21:28.648
between Winter and Summer. I think that when we start

03:21:28.648 --> 03:21:30.668
looking at that more structurally. We'll find some

03:21:30.668 --> 03:21:33.658
important clues about the right ways to come up with

03:21:33.668 --> 03:21:36.719
responses.

03:21:36.719 --> 03:21:41.979
Okay. And then I saw Marlon's hand. Sorry, Commissioner Shiroma. Marlon, you want to jump in on

03:21:41.979 --> 03:21:44.668
at this point. Sure, I'm just going to echo

03:21:44.668 --> 03:21:48.279
what Bill was saying. That during the Summer, I'm going

03:21:48.279 --> 03:21:50.259
to speculate if I had to presume. This isn't going to

03:21:50.259 --> 03:21:51.878
be the same issue during Summer. Because during the

03:21:51.878 --> 03:21:54.319
Summer at least in Southern California. The issue has

03:21:54.319 --> 03:21:57.069
never been the volume of supply load to meet load. It's simply been

03:21:57.069 --> 03:22:00.309
the instantaneous or the hourly load. That the pressure

03:22:00.309 --> 03:22:02.519
in the pipeline may be diminishing. Because all of a

03:22:02.519 --> 03:22:04.989
sudden you have electric generators sucking everything

03:22:04.989 --> 03:22:08.138
out of there, really quickly as we ramp up. And the

03:22:08.138 --> 03:22:11.128
fact that it is the injection season, generally supply

03:22:11.128 --> 03:22:13.289
is not that big of an issue in the Summer, as it

03:22:13.289 --> 03:22:18.158
is during the Winter.

03:22:18.158 --> 03:22:20.698
And then Commissioner, thank you for that. And Commissioner

03:22:20.698 --> 03:22:27.628
Shiroma. Thank you. Uh, you know, if I was paralyzed

03:22:27.789 --> 03:22:32.819
almost. I really think that a lot of what we're experiencing

03:22:32.819 --> 03:22:37.039
today is the result of deregulation from 20 years ago.

03:22:37.049 --> 03:22:40.969
And the uncoupling of power generation from our investor

03:22:40.969 --> 03:22:44.009
owned utilities. But having said that, I have a granular

03:22:44.009 --> 03:22:47.098
question. And that is, you know, on our CPUC

03:22:47.098 --> 03:22:53.509
website. We indicate that 65% of our gas use is

03:22:53.519 --> 03:22:56.428
a non-core customers. That would be power generation,

03:22:56.438 --> 03:23:01.178
and industrial uh, manufacturing what have you. Use

03:23:01.178 --> 03:23:06.408
is 35% for core, which is residential. And I think

03:23:06.418 --> 03:23:09.388
you know, I always look for indicators. And I would

03:23:09.398 --> 03:23:13.059
say that, that tells us you know, during the Summer

03:23:13.059 --> 03:23:16.339
we've got air conditioning needs more and more air

03:23:16.339 --> 03:23:24.509
conditioning needs. And so um, um, it so far as, but

03:23:24.519 --> 03:23:29.729
we have to very much pay attention to the year round

03:23:29.739 --> 03:23:34.178
impact. On what's happening with the gas prices. Uh,

03:23:34.928 --> 03:23:39.608
in that same set of indicators metrics. It talks about

03:23:39.618 --> 03:23:42.239
in California, and by the way, I do think this is additional

03:23:42.239 --> 03:23:45.269
problems that we've got to figure out traditionally.

03:23:45.279 --> 03:23:49.829
We've got a Western conference coming up in May. There's

03:23:49.829 --> 03:23:54.309
19% of customers who receive gas directly. My question

03:23:54.309 --> 03:23:57.878
is, does anybody know. Uh, did they experience

03:23:57.878 --> 03:24:02.958
the same impact? I mean these 19% received directly from interstate

03:24:02.958 --> 03:24:06.749
pipelines or directly from California producers. Does

03:24:06.749 --> 03:24:11.378
anybody know if they experience the same price rushers?

03:24:12.678 --> 03:24:19.749
As the core and non-core overall.

03:24:19.749 --> 03:24:24.759
Do they have a (inaudible). I'm sorry Commissioner, which

03:24:24.759 --> 03:24:26.868
which customers are you referring to? I, I think I missed

03:24:26.868 --> 03:24:34.079
it in the audio. Well, they're evidently are 19% of

03:24:34.089 --> 03:24:40.529
100%, received gas directly from pipelines and from

03:24:40.529 --> 03:24:45.198
California producer. They go through a third-party

03:24:45.198 --> 03:24:52.079
or their, you know. Um not um, going through our

03:24:52.079 --> 03:24:55.118
investor owned utilities or what have you. Do you

03:24:55.118 --> 03:25:00.198
know, if they experience the same price spikes? And the

03:25:00.198 --> 03:25:05.598
answer is, we don't know that, that's okay.

03:25:05.598 --> 03:25:08.029
Yeah, I think it would depend on whether they, if they're

03:25:08.029 --> 03:25:11.438
buying that spot market. Then, you know, actually the

03:25:11.448 --> 03:25:14.938
question would become, did they hedge their position

03:25:14.948 --> 03:25:18.378
um, uh to accomplish what they're, what they're trying

03:25:18.378 --> 03:25:20.158
to accomplish. And I think, you know, whether they

03:25:20.158 --> 03:25:22.519
have or not. Will probably depend on what exactly

03:25:22.519 --> 03:25:24.648
the industry and whether it makes sense for them. I

03:25:24.648 --> 03:25:27.958
think typically if your physical operator of some sort

03:25:27.958 --> 03:25:31.188
of mechanical or generation type unit. Um, some level

03:25:31.188 --> 03:25:32.999
of hedging, it's just prudent from a risk management

03:25:32.999 --> 03:25:35.878
standpoint. But, you know, if they're unhedged then.

03:25:35.878 --> 03:25:38.208
Yeah absolutely, they're feeling the price spikes.

03:25:40.638 --> 03:25:47.108
(inaudible) O go ahead. Sorry, Commissioner. Did

03:25:47.108 --> 03:25:50.559
you have a further question? No, further questions.

03:25:50.569 --> 03:25:53.579
Thank you. Thank you very much for this excellent

03:25:54.138 --> 03:25:57.918
morning and afternoon. Uh, may have a few

03:25:57.918 --> 03:26:02.319
closing remarks. Thank you. Thank you for that. And

03:26:02.329 --> 03:26:05.219
Amelia, you looked like you were gonna jump in shaking

03:26:05.219 --> 03:26:08.819
your head. No, you're good. Okay. So um, I think I'm

03:26:08.819 --> 03:26:13.128
going to at this point. Um, turn it back over my, my

03:26:13.128 --> 03:26:19.698
colleague um, Christina Aborigine. Um, uh and um thank you

03:26:19.708 --> 03:26:23.029
very much to my panelists. And thank you to the dais for

03:26:23.029 --> 03:26:27.638
these excellent questions and your attention.

03:26:27.638 --> 03:26:30.868
Thank you Molly. Um, that concludes all three panel

03:26:30.868 --> 03:26:34.039
discussions for today. I want to thank all of our panelists

03:26:34.039 --> 03:26:37.549
and moderators for the excellent, insightful discussions.

03:26:37.559 --> 03:26:41.148
Uh, Francisco can you pull up the deck please? Thank

03:26:41.148 --> 03:26:45.559
you. So it is now time for public comment. As a reminder,

03:26:45.559 --> 03:26:48.569
if you would like to make verbal comments today, please

03:26:48.579 --> 03:26:59.479
dial 800-857-1917. The access code is 1767567#. Um, you

03:26:59.479 --> 03:27:02.948
may also email your comments to us at gaspolicy@

03:27:02.958 --> 03:27:07.819
cpuc.ca.gov

03:27:07.819 --> 03:27:11.208
Um, to make comments today over the phone. Please go

03:27:11.208 --> 03:27:14.868
ahead and unmute your phone, press *1. Record

03:27:14.868 --> 03:27:18.019
your first and last name slowly and clearly, when prompted.

03:27:18.029 --> 03:27:21.039
You will then be placed into a queue in the order that

03:27:21.039 --> 03:27:24.309
you have identified yourself. If you wish to cancel,

03:27:24.319 --> 03:27:28.289
please press *2.

03:27:28.289 --> 03:27:31.519
And please note, we are only able to accept public comment

03:27:31.529 --> 03:27:34.549
at this time. Please do not pose any questions to the

03:27:34.549 --> 03:27:38.408
dais or panelists. Um again, you may also email us

03:27:38.418 --> 03:27:42.958
your questions.

03:27:42.958 --> 03:27:46.348
Operator, will you please announce the first speaker?

03:27:48.168 --> 03:27:50.898
The public comment line is now open. Our first speaker

03:27:50.898 --> 03:27:56.608
is Lionel Morris.

03:27:56.608 --> 03:28:00.039
Hello. All right. Uh, sorry Lionel apologies. I just wanted

03:28:00.039 --> 03:28:03.039
to note that, at this point you have two minutes for

03:28:03.039 --> 03:28:05.769
your comments. You will hear a chime when your time

03:28:05.769 --> 03:28:08.479
is up. Thank you.

03:28:08.479 --> 03:28:11.779
Hello.

03:28:11.779 --> 03:28:15.259
Yes, can you hear me? Yes, can you hear me?

03:28:15.259 --> 03:28:19.079
Yes, please go ahead with your comment. Okay, thank

03:28:19.079 --> 03:28:23.398
you. Thank you. Hi, my name is Lionel Morris. I am a City Six

03:28:23.398 --> 03:28:26.918
resident of the San Fernando Valley. I'm also a board

03:28:26.918 --> 03:28:28.848
member with the Sun Valley Area Neighborhood Council,

03:28:28.848 --> 03:28:34.329
but I am speaking in my own capacity. I am very disappointed

03:28:34.329 --> 03:28:38.848
with the gas prices from SoCalGas. Um, the cost

03:28:38.848 --> 03:28:45.219
per firm has skyrocketed, um significantly. And many

03:28:45.219 --> 03:28:48.289
of us are low-income working class families, myself

03:28:48.289 --> 03:28:52.348
included. And I'm low-income I cannot afford to pay

03:28:52.348 --> 03:28:57.309
more in utility costs such as gas, water or power.

03:28:57.319 --> 03:29:01.829
And I strongly believe that the California Public Utilities

03:29:01.829 --> 03:29:05.289
Commission and State Legislators. Should look into the

03:29:05.299 --> 03:29:09.729
gas price increase from SoCalGas. Because um, we

03:29:09.729 --> 03:29:14.779
feel that SoCalGas unfairly is price gouging.

03:29:14.789 --> 03:29:19.708
To take advantage of the market situation with, you

03:29:19.708 --> 03:29:23.729
know, due to climate change and, and the cold weather.

03:29:23.739 --> 03:29:26.989
Uh, impacting the whole country. And we believe that

03:29:26.989 --> 03:29:31.898
SoCalGas is just keeps raising its rates per firm.

03:29:31.908 --> 03:29:36.408
And it's unfairly hurting working class families, myself

03:29:36.408 --> 03:29:40.969
included. And many people have posted this under on

03:29:40.979 --> 03:29:44.779
Nextdoor, a social media account and on Twitter expressing

03:29:44.779 --> 03:29:50.579
their concerns. And I've taken action by sharing resources

03:29:50.589 --> 03:29:53.858
and information to my neighbors in my community. To

03:29:53.868 --> 03:29:57.589
to inform them how to make public comments. And, and

03:29:57.598 --> 03:30:00.158
I've also read the consumer watchdog, that's looking

03:30:00.158 --> 03:30:03.809
into this. And we feel that the California Public Utilities

03:30:03.809 --> 03:30:07.128
Commission should investigate SoCalGas and its

03:30:07.128 --> 03:30:10.839
parent company Sempra, I think. And why their price

03:30:10.839 --> 03:30:14.749
gouging and they should not be price gouging. Because

03:30:14.749 --> 03:30:17.878
they keep raising the rates every single time. Um, they

03:30:17.888 --> 03:30:20.569
request a rate increase and it's not fair for working

03:30:20.569 --> 03:30:24.128
class families. Uh please take, please investigate this.

03:30:24.138 --> 03:30:29.848
Thank you. I yield my time.

03:30:29.848 --> 03:30:33.878
Thank you. Um I apologize. I actually meant to say

03:30:33.878 --> 03:30:37.138
that we will allow one minute comment. Because of the

03:30:37.138 --> 03:30:40.589
number of callers we have in the queue. So apologies

03:30:40.598 --> 03:30:43.388
for that Operator, will you please announce the next

03:30:43.388 --> 03:30:51.698
speaker? Our next speaker is Noemi Luna.

03:30:51.698 --> 03:30:55.259
Hello?

03:30:55.259 --> 03:30:58.428
Hello? Yes, we can hear you. Okay, wonderful. Thank

03:30:58.428 --> 03:31:01.759
you. I'm so sorry about that. Well thank you very much

03:31:01.759 --> 03:31:05.418
for hosting this information or discussion session.

03:31:05.428 --> 03:31:10.279
There's a lot really going on, um from a residential

03:31:10.289 --> 03:31:13.499
customer perspective. There's a lot of big words and

03:31:13.499 --> 03:31:17.289
jargon and um processes that are really not privy to

03:31:17.289 --> 03:31:19.969
the public. And I think that this is a great, a great

03:31:19.969 --> 03:31:24.678
forum to hear all of this out. Um, but it is a

03:31:24.678 --> 03:31:29.418
big concern. Um, when we as, as a residential customer

03:31:29.428 --> 03:31:35.269
that we went from $50-$80 a month to um, double. And

03:31:35.269 --> 03:31:40.239
then it seems like it went to um four times that cost.

03:31:40.249 --> 03:31:45.499
Um I as a residential customer, my house is about 3000

03:31:45.499 --> 03:31:50.918
square feet. I was paying $50 on a monthly basis and

03:31:50.918 --> 03:31:55.358
then it skyrocketed $118. And now this month, it went

03:31:55.358 --> 03:32:01.198
up to almost $400. Um which I,

03:32:01.198 --> 03:32:05.809
I could say that as, as a resident it's obscene.

03:32:05.819 --> 03:32:09.378
Especially when we're trying to catch up with expenses.

03:32:13.569 --> 03:32:16.519
Hello?

03:32:16.519 --> 03:32:19.128
Yes, thank you for your comment. I just wanted to note

03:32:19.128 --> 03:32:23.029
that your time is up. Okay. How can I get back on

03:32:23.029 --> 03:32:25.898
the queue?

03:32:25.898 --> 03:32:30.388
Um, at this point um we have a full queue. And we

03:32:30.388 --> 03:32:33.219
have a limited time. But please feel free to email us

03:32:33.229 --> 03:32:37.089
additional comments to gaspolicy@cpuc.ca.gov

03:32:37.089 --> 03:32:41.608
Thank you. Perfect, thank you very much.

03:32:41.608 --> 03:32:45.108
And our next speaker is Carl DeMaio, your line is open.

03:32:45.928 --> 03:32:49.158
Thank you as all of you know, as CPUC Commissioners.

03:32:49.168 --> 03:32:51.779
California utility rates are not set by the utilities.

03:32:51.789 --> 03:32:55.249
They're set by you as appointees of state politicians.

03:32:55.259 --> 03:32:57.569
If you or Governor Gavin Newsom really want to find

03:32:57.569 --> 03:33:00.329
the root cause of our high utility costs. Look in the

03:33:00.329 --> 03:33:03.509
mirror. You and the Governor are the ones forcing California

03:33:03.509 --> 03:33:06.658
ratepayers to pay the costs of your extreme fixation

03:33:06.668 --> 03:33:09.829
on climate change. This Friday, the Transparency Foundation

03:33:09.829 --> 03:33:12.178
will release a study of utility rate cases approved

03:33:12.178 --> 03:33:15.519
by your Commission. The study shows that you're charging

03:33:15.529 --> 03:33:19.569
Californians, 67% higher rates for electricity and

03:33:19.569 --> 03:33:22.259
30% higher rates for natural gas than the national

03:33:22.269 --> 03:33:25.618
average. You've also imposed hidden state taxes through

03:33:25.618 --> 03:33:28.708
unnecessary charges. Including public purpose programs,

03:33:28.719 --> 03:33:32.188
various climate change regulations. Resulting in a hidden

03:33:32.188 --> 03:33:36.779
tax rate on each ratepayers bill of 26% to 30% for electricity,

03:33:36.779 --> 03:33:42.098
and 17% to 28% for gas. In PG&E's, 2023

03:33:42.098 --> 03:33:45.438
rate case submitted last month. They actually admit

03:33:45.448 --> 03:33:48.848
that the rates are driven quote by the impact of the

03:33:48.858 --> 03:33:52.749
state's decarbonization strategy. Some of you mentioned

03:33:52.749 --> 03:33:55.858
gas storage. Well, that's ironic given the fact that

03:33:55.858 --> 03:34:00.299
your policies have discouraged electricity or utility

03:34:00.299 --> 03:34:06.469
companies from storing gas. Uh, including PG&E's

03:34:06.479 --> 03:34:11.789
decision to abandon gas storage investments in June

03:34:11.789 --> 03:34:15.469
of 2021. In closing, you expected these high rates.

03:34:15.479 --> 03:34:18.269
The rates will only get higher because of your force

03:34:18.269 --> 03:34:22.479
transition. To virtue signaling, energy sources versus

03:34:22.479 --> 03:34:27.009
cost, efficient energy sources. Thank you.

03:34:27.009 --> 03:34:31.099
Thank you.

03:34:31.099 --> 03:34:34.978
Our next speaker is Michael Aguirre.

03:34:34.978 --> 03:34:39.998
Good morning. Um, this was not a hearing. There was

03:34:39.998 --> 03:34:44.578
no evidence, no sworn testimony. The utility sat on

03:34:44.578 --> 03:34:49.529
the same side of the desk as the regulators.

03:34:49.529 --> 03:34:53.128
What we need is an OII to allow the customers to

03:34:53.128 --> 03:34:56.708
participate in a real investigation. To find out facts

03:34:56.708 --> 03:35:00.969
such as does SoCalGas mark up, the prices for natural

03:35:00.969 --> 03:35:06.179
gas before it sells that natural gas to SDG&E? Third, and

03:35:06.179 --> 03:35:09.239
finally, the fact that the electricity prices are still

03:35:09.239 --> 03:35:14.748
so vulnerable to the natural gas prices. Show that the

03:35:14.748 --> 03:35:21.029
climate change progress has been way overstated. We

03:35:21.029 --> 03:35:23.179
don't know exactly. I do agree with one thing that

03:35:23.188 --> 03:35:25.679
one of the Commissioners said. And that is, this goes

03:35:25.679 --> 03:35:28.458
back to the deregulation of the markets. We need to

03:35:28.458 --> 03:35:31.099
tackle that. Please. Please please think about the

03:35:31.108 --> 03:35:38.489
public interest. Thank you.

03:35:38.489 --> 03:35:42.248
Our next speaker is John Smith.

03:35:42.248 --> 03:35:47.799
Okay. So on um, slide 25. SoCalGas casually showed they

03:35:47.799 --> 03:35:50.659
stopped injecting gas from the storage system for four

03:35:50.659 --> 03:35:57.179
weeks, smack in the middle of the price spike. Um, they

03:35:57.188 --> 03:36:02.418
stopped December 21 and resumed on January 16. Then

03:36:02.429 --> 03:36:06.728
after the injections were resumed. Um, the spot market

03:36:06.728 --> 03:36:11.279
imploded. Now, we're back to competitive rates. So

03:36:11.989 --> 03:36:13.918
a question that needs to be answered right now, we

03:36:13.918 --> 03:36:18.188
cannot address panelists directly. But why did SoCalGas

03:36:18.188 --> 03:36:21.808
do this for the four weeks in the middle of the

03:36:21.808 --> 03:36:25.628
price uh, spike? And then secondly, everybody else

03:36:25.628 --> 03:36:28.978
is kind of alluded to this. On the counter party side,

03:36:28.989 --> 03:36:34.268
on the spot market where any Sempra subsidiary, subsidiaries

03:36:34.268 --> 03:36:38.529
involved. Perhaps one's not, not regulated by the CPUC.

03:36:38.538 --> 03:36:42.549
Or even the bilateral contracts indexed the spot market.

03:36:42.558 --> 03:36:45.719
So I'll shoot an email to and hope this gets answered

03:36:45.719 --> 03:36:50.529
by somebody. Thank you.

03:36:50.529 --> 03:36:55.739
Our next speaker is Troy Jackson. Yes, good afternoon

03:36:55.739 --> 03:37:01.949
or morning, whichever it is. Uh, just wanted to say

03:37:01.949 --> 03:37:06.509
thank you for allowing me to speak on this. Uh, I'll

03:37:06.509 --> 03:37:10.858
be turning 67 in a couple of months. I'm on the CARE

03:37:10.858 --> 03:37:18.239
program. And I know a lot of seniors are. And I don't

03:37:18.239 --> 03:37:22.458
understand how some of these people are saying that

03:37:22.469 --> 03:37:27.478
their uh, utilities or gas utilities have went from

03:37:27.489 --> 03:37:34.498
$50 a month to $400 a month. And how seniors and people

03:37:34.509 --> 03:37:44.128
on limited income uh, can afford to stay warm. And

03:37:44.139 --> 03:37:52.748
I, it's like California doesn't really care. Uh, the

03:37:52.748 --> 03:37:58.069
Commission that you guys are on, Governor Newsom. Uh,

03:37:58.078 --> 03:38:04.058
you know, he's cutting back on, on oil. He's cutting

03:38:04.058 --> 03:38:10.728
back on oil production and making all our prices are

03:38:10.728 --> 03:38:21.009
costs of gasoline, uh food, electricity and gas, power.

03:38:21.018 --> 03:38:27.869
To warm our whole our homes, and I don't understand.

03:38:27.878 --> 03:38:31.139
I'm just a simple man. I just, I worked on a farm

03:38:31.148 --> 03:38:38.009
all my life. And I can figure this out. And I don't

03:38:38.009 --> 03:38:42.909
understand why you guys still want to raise all of

03:38:42.909 --> 03:38:45.558
these prices. There's gonna be a lot of people that's

03:38:45.558 --> 03:38:50.078
gonna, you know, they're going hungry and they're cold.

03:38:50.089 --> 03:38:53.719
And they're gonna be hot in the summer. Thank you.

03:38:54.869 --> 03:38:59.409
Thank you. Um Operator, I think we have time for one

03:38:59.409 --> 03:39:02.349
more caller. And then unfortunately, we do need to move

03:39:02.349 --> 03:39:06.799
on to closing remarks. But again, please feel free to

03:39:06.808 --> 03:39:10.799
email your comments to us, gaspolicy@cpuc.

03:39:10.799 --> 03:39:13.418
ca.gov

03:39:13.418 --> 03:39:21.938
Thank you. Our last speaker is Charles Langley.

03:39:21.938 --> 03:39:35.739
Charles, your line is open.

03:39:35.739 --> 03:39:40.648
All right, our last speaker is Steve Hicks. Thank you.

03:39:40.659 --> 03:39:45.078
Um, my name is Steve Hicks. I'm a lifelong San Diegan. My

03:39:45.078 --> 03:39:49.889
mother is 90 years old. She recently installed all

03:39:49.889 --> 03:39:52.719
new gas furnaces and she keeps her house nice and cozy.

03:39:53.349 --> 03:39:58.558
Her bill was $500 just for the gas portion. This is

03:39:58.558 --> 03:40:03.828
insane. The CPUC event, this CPUC event brings the

03:40:03.828 --> 03:40:08.328
term gaslighting to a whole new level. With all of the

03:40:08.328 --> 03:40:12.159
data and presentations and I'm a data analyst. You

03:40:12.159 --> 03:40:16.578
failed to observe that the CPUC sets the rates and

03:40:16.578 --> 03:40:19.759
forces the providers to charge what they do. We are

03:40:19.768 --> 03:40:23.429
onto you and it's a political solution that's required

03:40:23.429 --> 03:40:28.018
to get rid of all of this green new steel.

03:40:28.018 --> 03:40:32.569
Thank you. Thank you. Operator, I was just advised that

03:40:32.578 --> 03:40:35.378
we actually do have time to go through the rest of

03:40:35.378 --> 03:40:38.168
the callers in the queue. Um, if that's not too late.

03:40:38.179 --> 03:40:41.989
So please go ahead with the next caller. Sure, our next

03:40:41.998 --> 03:40:46.599
speaker is Janet Hall.

03:40:46.599 --> 03:40:50.569
Thank you. Good afternoon. Um, as a resident of San

03:40:50.569 --> 03:40:54.958
Diego. What I'm experiencing like so many others are.

03:40:55.489 --> 03:40:59.389
Outrageously high gas to the point that I entirely

03:40:59.398 --> 03:41:03.358
shut my heater off. I keep all my lights off. I don't

03:41:03.358 --> 03:41:06.878
even try to put lights on. And I still notice I get

03:41:06.889 --> 03:41:10.748
charges where the electric delivery which confuses

03:41:10.748 --> 03:41:16.599
me to death is between 67% to 90% of my entire bill.

03:41:16.608 --> 03:41:19.898
I've been told that, that has something to do with helping

03:41:19.909 --> 03:41:24.978
with the infrastructure cost. I, I truly believe that

03:41:24.989 --> 03:41:28.668
CPUC, if you really are the true regulating body

03:41:28.679 --> 03:41:33.438
of these utility companies. Needs to do much greater

03:41:33.449 --> 03:41:38.978
in depth work, accounting wise. And looking into exactly

03:41:38.978 --> 03:41:42.628
what is going on when we get these bills. That we can't

03:41:42.639 --> 03:41:47.858
understand. We get all these little, you know, rewards

03:41:47.869 --> 03:41:51.728
telling us. Oh you did good, you suffered to the nth degree.

03:41:51.739 --> 03:41:56.628
So now we're gonna a chance to cut back. So I think the CPUC

03:41:56.628 --> 03:41:59.938
needs to really step up and really do regulating. And

03:41:59.938 --> 03:42:04.819
do investigating. Thank you.

03:42:04.819 --> 03:42:10.668
Our next speaker is

03:42:10.668 --> 03:42:14.878
Patricia Baines.

03:42:14.878 --> 03:42:20.078
Hi. Um, my name is Patricia Baines. I'm a SDG&E customer.

03:42:20.089 --> 03:42:23.148
And I'm reaching out with the ludicrous national rates

03:42:23.148 --> 03:42:26.418
of gas charges. I would like to know how the CPUC or

03:42:26.429 --> 03:42:29.958
the CPUC believe these increased rates are affordable.

03:42:29.969 --> 03:42:33.679
Are unacceptable for California to absorb, their families

03:42:33.688 --> 03:42:35.759
and where families are gonna find the funds. And they're

03:42:35.759 --> 03:42:39.489
already tight budgets.

03:42:39.489 --> 03:42:41.679
The cost of living in California for middle class,

03:42:41.688 --> 03:42:43.498
which makes up more than half the residents of the

03:42:43.498 --> 03:42:46.808
state is out of control and unsustainable. Every consumer

03:42:46.808 --> 03:42:49.578
categories see all time high inflation rates. All at the

03:42:49.578 --> 03:42:52.089
same time and now natural gas is added to the list.

03:42:53.239 --> 03:42:55.619
When each category is looked at in silos, the impacts

03:42:55.619 --> 03:42:58.569
manageable however. But this all compounded simultaneously.

03:42:58.569 --> 03:43:01.739
As the true effect is magnified to an unsustainable

03:43:01.739 --> 03:43:04.699
level for families to survive. I broke down when I

03:43:04.699 --> 03:43:06.639
saw the increase in the natural gas charge from the

03:43:06.688 --> 03:43:09.849
on my last bill. Where gas rate went from, went

03:43:09.849 --> 03:43:17.179
up 228% from 1.06 in December to 3.45 in January 2023.

03:43:19.009 --> 03:43:24.099
This year, over year increase from January 2022, rate of .84.

03:43:24.108 --> 03:43:26.128
This came right after the holidays during a cooler

03:43:26.128 --> 03:43:28.208
than normal month. With little to no time prepared,

03:43:28.208 --> 03:43:30.518
no alternative, and not even knowing what our final bill.

03:43:32.159 --> 03:43:36.489
just released the gas energy rate. I will need you to quickly wrap up, so that everyone has a chance to speak. Okay.

03:43:36.489 --> 03:43:40.578
Thank you so much. Um, okay. Well, I'll start with this.

03:43:40.589 --> 03:43:44.739
Um, I have small children at home. I'm holding their

03:43:44.739 --> 03:43:47.639
little cold hands. It breaks my heart. No one should

03:43:47.639 --> 03:43:49.398
have to hear their kids say they're cold. But what

03:43:49.398 --> 03:43:51.378
makes it worse is reaching out and being told you don't

03:43:51.378 --> 03:43:53.639
need help, as part of the middle class. I've spoken

03:43:53.639 --> 03:43:55.458
with so many different groups and organizations SDG&E

03:43:55.469 --> 03:43:57.608
is promoted to help with the rising gas prices.

03:43:57.619 --> 03:44:00.779
However, I qualify for none of them. To get help, I was

03:44:00.788 --> 03:44:03.358
told I need to leave the state. I recently learned

03:44:03.358 --> 03:44:05.589
about a program that SDG&E is offering called neighbor

03:44:05.589 --> 03:44:09.688
to neighbor. Where, where San Diego residents hand out

03:44:09.688 --> 03:44:11.889
money to those who can't afford their bills, from their

03:44:11.898 --> 03:44:15.168
own paychecks. This is great, but why can't our state

03:44:15.179 --> 03:44:18.599
do anything to help us. Thank you. Thank you. Thank

03:44:18.599 --> 03:44:22.478
you. Operator, next caller please. Our next speaker is

03:44:22.478 --> 03:44:25.918
Andreas Malik, your line is open.

03:44:25.918 --> 03:44:28.409
Thank you. My name is Andreas Malik. I live in San

03:44:28.409 --> 03:44:31.159
Elizabeth County and I work as a District Director

03:44:31.159 --> 03:44:34.119
for Assemblymember Dawn Addis. Whose district includes

03:44:34.119 --> 03:44:36.438
parts of San Luis Obispo, Monterey and Santa Cruz

03:44:36.438 --> 03:44:39.418
counties. The number one issue that our constituents

03:44:39.418 --> 03:44:42.029
are calling us about is the drastic increase in their

03:44:42.029 --> 03:44:44.978
utility bills. Someone at the beginning of this meeting

03:44:44.978 --> 03:44:47.858
today refer to it as a sticker shock, but it is much

03:44:47.858 --> 03:44:50.659
more than that. For many of our constituents, it's true

03:44:50.659 --> 03:44:53.228
hardship. As they simply can't afford to pay a bill

03:44:53.228 --> 03:44:55.458
that is three times higher than what they budgeted

03:44:55.469 --> 03:45:00.119
for. We've had constituents with bills as high as $800.

03:45:00.128 --> 03:45:03.078
A four time increase from the previous one. Even as

03:45:03.078 --> 03:45:06.219
they lowered their usage. Our residents are left with

03:45:06.219 --> 03:45:08.918
few options on how to navigate the situation and they

03:45:08.918 --> 03:45:11.898
are quickly losing trust in the agencies. They allow

03:45:11.898 --> 03:45:14.589
this to happen without proper planning and mitigation.

03:45:14.898 --> 03:45:17.719
I appreciate everyone's input today and I hope that

03:45:17.719 --> 03:45:20.078
you can not only plan for the future. To prevent this

03:45:20.078 --> 03:45:23.358
kind of situation from happening again. But to provide

03:45:23.369 --> 03:45:26.699
adequate relief that is desperately needed today. Thank

03:45:26.699 --> 03:45:30.739
you.

03:45:30.739 --> 03:45:36.569
Our next speaker is Marca O'connell.

03:45:36.569 --> 03:45:39.878
Hello, is the line open?

03:45:39.878 --> 03:45:44.038
Your line is open. Okay. I got an email from an Assembly

03:45:44.038 --> 03:45:47.619
person asking me to come today. I've waited hours and

03:45:47.619 --> 03:45:50.058
you're giving me one minute. We are the most important

03:45:50.058 --> 03:45:53.619
people, not the panel. And you need to give these people

03:45:53.628 --> 03:45:57.078
more time than one minute. I'm really confused as a

03:45:57.089 --> 03:46:00.219
senior, who wears three layers of clothes to bed. And

03:46:00.219 --> 03:46:03.349
doesn't turn on my heat, because I can't afford it. All

03:46:03.349 --> 03:46:06.089
I heard you guys whining about was you don't make any

03:46:06.089 --> 03:46:10.708
money. But I went online and it says you make $20.64

03:46:10.719 --> 03:46:17.688
billion in 2021. And your total assets are $103.33

03:46:17.688 --> 03:46:21.458
billion. This is PG&E. Okay. As far as the PUC

03:46:21.458 --> 03:46:24.799
goes, I'm sorry guys, you are a joke. I agree with

03:46:24.808 --> 03:46:27.599
the guy that said you're sitting up there with the

03:46:27.599 --> 03:46:30.699
utilities. Where are the people that you're supposed

03:46:30.699 --> 03:46:33.788
to be representing. And the advocate, I've never heard

03:46:33.788 --> 03:46:39.119
anybody make such a weak speech. You need to be replaced.

03:46:39.128 --> 03:46:42.358
Because you're not doing your jobs and you are in bed

03:46:42.358 --> 03:46:46.328
with the utilities. And you are hurting the citizens.

03:46:48.389 --> 03:46:54.998
Bad job guys, as usual.

03:46:54.998 --> 03:46:59.308
Our next speaker is Marcel.

03:46:59.308 --> 03:47:04.469
Good afternoon. My name is Marcel Kopparberg. I am an attorney

03:47:04.469 --> 03:47:08.389
with the Utility Reform Network. Um, I really just

03:47:08.389 --> 03:47:12.639
wanted to comment on one issue. I appreciate the data

03:47:12.648 --> 03:47:17.259
concerning gas prices. That emphasized West wide increase

03:47:17.259 --> 03:47:23.279
in gas prices. But the reality is that for January the

03:47:23.288 --> 03:47:27.688
gas prices charged by Southern California Gas Company.

03:47:28.299 --> 03:47:34.998
Were 2 1/2 times the price for PG&E. I think President Reynolds

03:47:35.009 --> 03:47:38.989
asked an excellent question as to why was that? And I

03:47:38.989 --> 03:47:43.339
did not really see in the presentation concerning gas

03:47:43.349 --> 03:47:49.469
demand, and weather and prices, and transportation lines

03:47:49.469 --> 03:47:54.648
and storage. Any discussion of what was the difference

03:47:54.659 --> 03:47:58.768
between PG&E and Southern California Gas Company.

03:47:58.779 --> 03:48:02.808
That accounted for a 2 1/2 times price difference. And

03:48:02.808 --> 03:48:06.958
I certainly hope that PUC will follow up and investigate.

03:48:06.969 --> 03:48:10.589
To determine whether there is something in the activities

03:48:10.589 --> 03:48:13.199
of these two utilities. That should be addressed by

03:48:13.199 --> 03:48:18.518
the Commission. Thank you very much.

03:48:18.518 --> 03:48:21.049
Christina, there are no more speakers on the public

03:48:21.049 --> 03:48:25.018
comment filling.

03:48:25.018 --> 03:48:28.739
Thank you operator. Um okay, well that concludes our

03:48:28.739 --> 03:48:32.089
public comment session for today. Again, as a reminder

03:48:32.099 --> 03:48:35.779
if you have comments you'd like to submit to us. Please

03:48:35.779 --> 03:48:40.089
email them directly to gaspolicy@cpuc.ca.gov

03:48:40.089 --> 03:48:43.339
Um with that, I would like to turn it over to

03:48:43.339 --> 03:48:48.099
President Reynolds for her closing remarks. Thank you

03:48:48.099 --> 03:48:52.248
Christina. Um, I did want to thank everyone for attending

03:48:52.248 --> 03:48:55.429
today. Um, and as well as thank all of the members

03:48:55.438 --> 03:48:59.038
of the dais for participating. And I wanted to also

03:48:59.038 --> 03:49:03.498
extend a special thanks to all the panelists. Um, for

03:49:03.498 --> 03:49:06.369
taking the time to prepare and present information

03:49:06.369 --> 03:49:09.828
in such a clear way. Um, I really appreciated all of

03:49:09.828 --> 03:49:12.458
the discussions and I also appreciated hearing from

03:49:12.458 --> 03:49:15.438
the members of the public who called in. Um, to tell

03:49:15.438 --> 03:49:18.509
us about their experiences. I think that, you know,

03:49:18.509 --> 03:49:22.199
it shows the reason to do meetings like this. Where

03:49:22.199 --> 03:49:26.819
we really um, get sunlight. Uh, the reasons for the

03:49:26.819 --> 03:49:30.578
drivers behind the gas price spike that we saw. Which

03:49:30.578 --> 03:49:34.608
of course is beyond the normal increase um, in gas

03:49:34.608 --> 03:49:37.808
bills. That, that folks see as we transition from Summer

03:49:37.808 --> 03:49:43.058
to Winter. Um, I also wanted to remind everyone that

03:49:43.058 --> 03:49:46.518
they should be seeing the Climate Credit show up on

03:49:46.529 --> 03:49:49.668
their bills. Um, we hope it will be in the next bill

03:49:49.668 --> 03:49:53.119
cycle. The utilities have all been instructed to provide

03:49:53.119 --> 03:49:56.009
the credit as soon as possible. And that's between

03:49:56.009 --> 03:50:00.279
$90-$122. Some will see a combined electricity and

03:50:00.279 --> 03:50:03.978
gas bill credit um, to get to those amounts. To provide

03:50:03.989 --> 03:50:07.389
some relief during this time of the recent price spike.

03:50:07.639 --> 03:50:12.049
Um, I also was encouraged to hear from the PHMSA representative.

03:50:12.058 --> 03:50:17.148
That the El Paso Line will be back um, in service on

03:50:17.148 --> 03:50:22.998
February 15. That's great news um, and really a will

03:50:23.009 --> 03:50:26.208
will be a great improvement to the current situation.

03:50:26.208 --> 03:50:29.018
When that, where that gasoline has been down for quite

03:50:29.018 --> 03:50:34.589
some time. Um, and I also want to note that we'll be

03:50:34.589 --> 03:50:38.339
following the next steps. Following the Governor's letter

03:50:38.339 --> 03:50:43.748
to the FERC. And whether there's a need to examine the situation

03:50:43.759 --> 03:50:47.639
any more closely from an investigatory perspective.

03:50:47.648 --> 03:50:51.518
Um, and we have met with FERC Staff and will continue to

03:50:51.529 --> 03:50:56.659
uh to do so. Um, with those steps though, I do believe

03:50:56.668 --> 03:50:59.228
that we need to have follow up on this question. And

03:50:59.228 --> 03:51:02.389
I understand our Staff will be taking the materials

03:51:02.389 --> 03:51:05.918
that will be presenting, presented today and assessing

03:51:05.918 --> 03:51:09.139
next steps. So, I very much look forward to continuing

03:51:09.139 --> 03:51:14.168
to examine the causes that we saw. For the, for the

03:51:14.179 --> 03:51:18.089
situation that we saw to look for, um ways to mitigate

03:51:18.799 --> 03:51:22.009
similar situations in the future. So with that, thanks

03:51:22.009 --> 03:51:25.469
again. Um, and I'll turn to other members of the dais

03:51:25.478 --> 03:51:32.108
for closing remarks.

03:51:32.108 --> 03:51:34.509
Commissioner Shiroma?

03:51:34.509 --> 03:51:37.418
Thank you President Reynolds and for convening this

03:51:37.619 --> 03:51:44.828
EN Banc. I felt that the speakers, uh were excellent with

03:51:44.839 --> 03:51:48.659
the knowledge. Uh thank you to the folks who phoned

03:51:48.668 --> 03:51:55.108
in with very, very impassioned messages to us. I want

03:51:55.108 --> 03:51:59.319
to assure the speakers or the folks who called in.

03:51:59.328 --> 03:52:03.608
Maybe didn't speak, but I have listened to the conversation

03:52:03.608 --> 03:52:06.898
through this morning, this afternoon. Uh, I want to assure

03:52:06.898 --> 03:52:12.038
them that the team at the CPUC is

03:52:12.049 --> 03:52:16.639
working very hard. They are very experienced. They

03:52:16.648 --> 03:52:19.378
they've got a lot of knowledge towards troubleshooting,

03:52:19.378 --> 03:52:23.628
towards problem solving. I mentioned before my comments

03:52:23.628 --> 03:52:25.898
and I think many of the ills that we are experiencing

03:52:25.898 --> 03:52:31.199
today uh is is an artifact of deregulation. Now having

03:52:31.208 --> 03:52:37.418
said that, doesn't mean that we um, uh not problem solve.

03:52:37.429 --> 03:52:40.188
We must probably solve. I heard loud and clear the

03:52:40.188 --> 03:52:46.938
message that uh, the cost of inaction uh is increasing

03:52:46.938 --> 03:52:51.369
rapidly. And that cost is put on the customers both

03:52:51.369 --> 03:52:55.828
industrial and customers. Residential customers, the

03:52:55.839 --> 03:52:59.739
power generation. I think it's unconscionable that

03:52:59.748 --> 03:53:04.389
consumers don't have more protections against the win

03:53:04.398 --> 03:53:08.648
of news. You know that there's this news can have such

03:53:08.648 --> 03:53:14.788
an impact on the cost of gas. I think the further investigations

03:53:14.799 --> 03:53:19.808
by uh, the uh the FERC is going to be important. As

03:53:19.808 --> 03:53:22.628
well as in activities that we are doing at the CPUC.

03:53:22.628 --> 03:53:29.768
(inaudible) the CAISO. I know that it is a complex uh, it

03:53:29.768 --> 03:53:35.248
is a landscape of looking at the equilibrium of storage

03:53:35.259 --> 03:53:41.139
of hedging, of anticipating weather and drought, of

03:53:41.148 --> 03:53:45.808
a safety of the pipeline, the maintenance of the pipeline,

03:53:45.819 --> 03:53:48.949
we do a lot here in California. What about the rest

03:53:48.949 --> 03:53:53.819
of the, the information? I think there is a has, has

03:53:53.828 --> 03:53:56.969
adopted new requirements that are very important. But

03:53:56.969 --> 03:53:59.918
we must be on a constant quest to see if there's more

03:53:59.929 --> 03:54:02.628
that can be done. To maintain the integrity, because

03:54:02.639 --> 03:54:05.569
even as we are looking to be decarbonize. We are heavily

03:54:05.569 --> 03:54:09.909
reliant upon this infrastructure and on natural gas.

03:54:09.918 --> 03:54:14.159
So I do look forward to working with my colleagues.

03:54:14.168 --> 03:54:18.589
To problem solve and towards looking at how do we provide

03:54:18.599 --> 03:54:22.869
for greater protections. For the other customers in

03:54:22.869 --> 03:54:26.398
California and across the region. Thank you. And back

03:54:26.398 --> 03:54:29.949
to President Reynolds. Thank you, Commissioner Reynolds.

03:54:31.339 --> 03:54:33.219
Thank you, President Reynolds. I will try to be brief

03:54:33.228 --> 03:54:35.418
given that we're a little over time. I'll echo the

03:54:35.429 --> 03:54:39.148
thanks of everyone to the panelists, the public and

03:54:39.159 --> 03:54:43.319
the Staff who, who supported the En Banc. And our response

03:54:43.319 --> 03:54:46.409
to high gas prices. I really want to just focus in

03:54:46.418 --> 03:54:49.969
on one of the factors that we talked about. In despite

03:54:49.969 --> 03:54:54.569
the prices, that's the demand side. I think um, we've

03:54:54.578 --> 03:54:58.619
heard discussion of how increasing demand due to cold

03:54:58.619 --> 03:55:01.929
weather contributes to price spikes. I really wanted

03:55:01.929 --> 03:55:04.259
to continue hearing from utilities about how they can

03:55:04.259 --> 03:55:08.648
empower their customers. With information that up prices

03:55:08.659 --> 03:55:12.389
are anticipated. So that customers can respond in advance

03:55:12.389 --> 03:55:16.148
of events. Hopefully both to mitigate um, mitigate

03:55:16.148 --> 03:55:19.788
price spikes in the market as a whole. But also to

03:55:19.788 --> 03:55:22.349
save on their own bills, in advance of those bills coming

03:55:22.349 --> 03:55:27.659
to them in January. Thank you.

03:55:27.659 --> 03:55:31.779
Commissioner Houck? Just briefly, I just want to thank everyone.

03:55:31.779 --> 03:55:34.998
The Staff, the panelists that was on the dais and the public

03:55:35.009 --> 03:55:37.748
for their participation in today's events. This is

03:55:37.748 --> 03:55:41.378
a critical issue that we are all taking seriously.

03:55:41.389 --> 03:55:44.228
Um, this is just the beginning of, of what we're looking

03:55:44.228 --> 03:55:47.918
at. And then just to follow up on Commissioner Reynolds

03:55:47.929 --> 03:55:51.779
comment. As I've said before, I think we need to also

03:55:51.788 --> 03:55:55.319
really double down on looking at demand side um, solutions.

03:55:55.328 --> 03:55:58.279
To some of the bill issues with flexibility and demand

03:55:58.279 --> 03:56:02.418
response um, issues. And with that, just again, want

03:56:02.418 --> 03:56:07.619
to thank everyone for joining us today.

03:56:07.619 --> 03:56:10.808
Great, Commissioner Douglas?

03:56:10.808 --> 03:56:13.608
Thank you. And just very briefly, I'll just join in

03:56:13.608 --> 03:56:17.869
the thanks to Staff, panelists and the public. Who took

03:56:17.869 --> 03:56:21.619
the time to call in and participate today. And um, I'm

03:56:21.628 --> 03:56:24.299
very much looking forward to next steps here. Thank

03:56:24.299 --> 03:56:30.009
you. Great. Now, I'll go to Vice Chair Gunda.

03:56:30.009 --> 03:56:33.839
Thank you President Reynolds. I'm having difficulty

03:56:33.839 --> 03:56:35.949
turning on my camera. But I just wanted to say thank

03:56:35.949 --> 03:56:39.409
you so much for convening this important conversation.

03:56:39.418 --> 03:56:42.929
Um from the public comments as well as just the panelists.

03:56:42.929 --> 03:56:46.228
I understand how important of an issue this is for

03:56:46.228 --> 03:56:49.228
a number of people in California. And, and look forward

03:56:49.228 --> 03:56:53.078
to the next steps on continuing to unpack and, and figure

03:56:53.078 --> 03:56:55.478
out solutions to manage this price spikes, in

03:56:55.478 --> 03:56:58.029
in the future. So thank you. President Reynolds to you and

03:56:58.029 --> 03:57:00.259
the Commission Staff. For both, including us and your

03:57:00.259 --> 03:57:02.199
leadership on moving this conversation forward. Thank

03:57:02.199 --> 03:57:04.239
you.

03:57:04.239 --> 03:57:08.179
Great, thank you. Um I'm assuming that Chair Hochschild. I know

03:57:08.179 --> 03:57:10.358
he had to go to another appointment. Okay, I don't

03:57:10.369 --> 03:57:18.148
see him on. Um, so let's now go to um Elliot Mainzer.

03:57:18.148 --> 03:57:22.128
Elliott?

03:57:22.128 --> 03:57:24.188
I wanted just to express my appreciation, President

03:57:24.188 --> 03:57:26.849
Reynolds for the panelists. I think this is an extremely

03:57:26.849 --> 03:57:31.349
important conversation today and also just really hearing

03:57:31.349 --> 03:57:33.659
the voices of California as well. And so we look forward

03:57:33.659 --> 03:57:36.358
to working with all of you. To continue to our work

03:57:36.358 --> 03:57:38.878
together, developing infrastructure, supporting reliability

03:57:38.878 --> 03:57:42.358
and also affordability, during this important transition.

03:57:42.358 --> 03:57:44.799
So thank you again for including us in the CAISO today. Appreciate

03:57:44.799 --> 03:57:48.619
it. Great, thank you for joining. That concludes comments

03:57:48.619 --> 03:57:50.949
from the dais. So I'll turn it back to you, Christina.

03:57:52.989 --> 03:57:55.619
Thank you President Reynolds and members of the dais.

03:57:55.628 --> 03:58:00.128
Um, that concludes our En Banc today. I appreciate everyone

03:58:00.128 --> 03:58:01.199
that tuned in.