California PUC wants substitute for Aliso Canyon storage
Excerpts from the DRAFT
PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Agenda ID 14895 ENERGY DIVISION RESOLUTION E-4791
May 26, 2016
Resolution E-4791. Authorizing expedited procurement of storage resources to ensure electric reliability in the Los Angeles Basin due to limited operations of Aliso Canyon Gas Storage Facility.
Requires Southern California Edison Company to hold an
expedited competitive energy storage procurement solicitation to help alleviate an outage risk during the upcoming summer and winter of 2016-2017.
Requires Southern California Edison Company to file one or more Tier 3 Advice Letters to seek approval of storage contracts selected in the solicitation.
This Resolution supports the Governor’s Emergency
Proclamation to protect public safety by ensuring the continued reliability of natural gas and electric supplies while there is a moratorium on gas injections at Aliso Canyon.
SCE shall ensure any contracts entered into provide that sellers shall operate the energy storage facilities in accordance with prudent and safe electrical practices.
This Resolution is expected to result in additional contracts
which could lead to increased ratepayer costs. Actual costs of the contracts are unknown at this time.
By Energy Division’s own motion. ______________________
This Resolution orders Southern California Edison Company (SCE) to hold a competitive solicitation for storage contracts to address electrical reliability risks in the Los Angeles (“LA”) Basin due the moratorium on injections into the Aliso Canyon Natural Gas Storage Facility (“Aliso Canyon”).
This Resolution also allows SCE to contract for storage that will count towards their overall storage mandate and meet their local capacity requirement needs.
The Aliso Canyon Well Failure threatens electric reliability in the LA Basin
On October 23, 2015, a massive leak at one of Southern California Gas Company’s (“SoCalGas”) natural gas storage wells was discovered by crews at the Aliso Canyon storage field. The well has since been permanently sealed. Currently, 15 billion cubic feet of working natural gas remains in the Aliso Canyon underground reservoir—less than one-fifth of the capacity of the facility. SoCalGas is prohibited from injecting additional natural gas into the facility until the completion of well safety tests that are currently underway.
Aliso Canyon is critical to help meet peak electrical demands during the summer months and peak gas usage demands in winter months. Aliso Canyon’s limited operational capabilities have put SoCalGas at risk of not being able to meet the gas supply needs of electric generators and its retail customers in the Greater Los Angeles area. This situation creates a distinct possibility of electricity service interruptions in the coming summer and winter months.
In accordance with the Governor’s State of Emergency Proclamation, the Commission is pursuing activities that could be quickly implemented to alleviate the electric reliability risks to the LA Basin. The Commission identified energy storage systems as one potential solution because they can be fast-responding, firm, and dispatchable. Energy storage resources can be potentially constructed, interconnected, and deployed on a short timeline. Under current conditions, energy storage systems may alleviate the reliability risks associated with the partial shutdown of the Alison Canyon.
Given the risk to electric reliability in the LA Basin, SCE shall execute an expedited competitive solicitation to procure energy storage that can help mitigate an outage risk in the coming months due to limited availability of gas supplies from Aliso Canyon.
The Aliso Canyon gas storage facility owned by Sempra Energy had a catastrophic and uncontrolled leak from October 2015 to February 2016 which forced the evacuation of thousands of people nearby and the closure of schools and commercial establishments. Reportedly, valve technology was available at the time of the field’s construction (decades ago) that would have enabled the company to close off the well that was leaking at a significant depth below ground, but regulations did not force that and the company chose not to install it. Though in different geographic and environmental regimes, the similarities to this gas leak and the Deepwater Horizon crude oil blowout in the Gulf of Mexico are striking.
The California Air Resources Board is still struggling to identify the fines that will be imposed for the leaked methane (which is over 80 times as potent a greenhouse gas as carbon dioxide). It is still unclear what portion of any penalties or fines will be paid by ratepayers or company investors.
The resolution excerpt above concerns a separate regulatory agency whose job it is to secure adequate electricity supply for the Los Angeles Basin. Since adding stored gas in excess of 20% of Aliso Canyon’s capacity has been prohibited, gas-fired electric generation in and near the basin could fall seriously short during air conditioning peak loads in the summer of 2016.
Exercising similar authority as it did following the abrupt closure of the San Onofre Nuclear Generating Station’s 5,400 Megawatts of capacity, the California PUC has ordered more electric grid storage so that peak power demand comes from gas power plants at reduced capacity, supplemented by electricity pulled from grid-scale battery storage. Southern California Edison is procuring significant grid storage to serve the summer load. Fortunately, this utility already has experience with this technology, having recently eliminated gas generation for battery storage (all prior to the Aliso Canyon storage reduction).
When PUC orders of this kind are made, they come with a rate filing mechanism to collect replacement revenue from ratepayers for the infrastructural improvements. Because of the power capacity emergency, these details have been expedited, and SCE is moving quickly to be ready for this summer.
Indulging perfect hindsight for a moment, if significant portions of the building stock in the LA Basin were Zero Net Energy via on-site solar PV and geothermal heat pumps, we would have dramatically reduced electrical demand and carbon dioxide production in one of the most sensitive air pollution districts in the nation.