California Utilities Commission Rejects $639M SDG&E Pipeline Proposal

This week the California Public Utilities Commission rejected a proposal to spend more than $600 million to build a new bigger natural gas pipeline under parts of San Diego County. It marks a significant step in the transition from relying on fossil fuels like natural gas, to power our future versus investing in sustainable energy sources such as solar. San Diego Tribune reporter has covered this story. Thank you for joining us. >> So they really wanted this project. They've been lobbying for it for years in fact. They've argued the safety was their main concern. What was the argument the commissioners used to rejected? >> The commissioners did not make a whole lot of arguments yesterday. Physically deferred to what the administrative law judge from the CPUC recommended. Back and made that they reject it. She said, it was not needed. As well as as the state is trying to move to rely less on fossil fuels, that possibly they don't need this pipeline. Also, that this pipeline, the pipelining question they want to replace. Only provides about 10% of the natural gas. The natural gas that San Diego uses. >> There has been some concern in the past that the CPUC was too friendly with utilities that they were are regulating. Where they surprised that they went that long with the recommendation? >> No, a lot of times they will defer to the administrative law judge. This is the second time, second big case in a row that San Diego gas and electric has lost. Back in November they wanted to recover $379 million in payer money from the 2007 while fire. They wanted $379 million and the CPC would see -- lost. >> What does this mean? why they really wanted this help us realize why? >> You have to go back to a more macro looked. A number of years ago there was a terrible natural gas pipeline explosion in Saint Renaud. It killed eight people. Right after that happened, the legislature, governor, regulators told all the owners of natural gas pipelines, you have to do 1 of 2 things. You even have to replace those pipelines that are under your area or you have to Hydro test them. High water brush them. What San Diego gas and electric did on this particular line, line 1600, they said, line 1600 was built in 1949. We think it is better, and a better use of payer dollars to build a new pipeline. This is what the CPUC rejected yesterday. The new pipeline, they suggested would've been 36 inches wide. Yes it would have cost $639 million but they say they would have been able to complete it in a year and a half and it would have had animal impacts on residents. Now, line 1600 is still going to be used. But, they have to since the replacement has been rejected, they have to Hydro tested. >> Should we be concerned about safety of the old-line? it's running under densely populated areas? >> Yes, it's a Catch-22. On the one hand, SDG&E has always sidelined 1600 has been safe. On the other hand, they were saying okay we need a replacement line. So now, they have to test the line. And SDG&E said that in order to test the line, it's going to take four years to test that. It sounds like an awful long time because they said they could build a new pipeline in 18 months. They said for years and the reason why, is because they cannot just shut the line down and test it continuously. They have to do it in segments. They have to do it during what they call shoulder months. In the spring and fall. When there is lust -- less demand for gas in the pipeline. They said it will cost $200 million to test this line. That was a reason why they were saying, they thought it was a better use of taxpayer money or repair money, to have a brand-new pipeline. Rather than spending $200 million. At least one environmental organization said $200 million is over exaggerating in their opinion. That's where the two sides tan. >> Might there have been in other more important reason why SDG&E wanted to spend the extra money on the new pipeline? >> They say it's because of safety, and greater reliability. >> What do the credits -- critics say that SDG&E motivation might be behind -- beyond safety? >> To protect our community foundation which is an environmental group based in San Diego. They have accused SDG&E to wanting to have this pipeline, project approved because that way, the 36 inch wide pipeline would be wider, they could eventually send that down to Mexico. Because SDG&E parent company, has a liquefied natural gas facility down in Mexico, and they are thinking about expanding that natural gas facility to include shipments to Asia. They are saying oh, this way, they can send down natural gas into Mexico, and it can go from that facility in Mexico and send it out to cargoes across Asia and across the Pacific. SDG&E has denied that a lot, but that's of the speculation is. >> Lastly, it is is a significant decision at all in terms of the CPC in -- their attitude and whether it can support us in the future? >> I think so, but I would not want to overstate it though. Earlier this week. Their energy division, said that, they recommended an increase in the volume of natural gas at the Alethea Canyon facility saying that they need that, that is because of greater demand during the summertime when people use more air conditioning when it's hotter and also if we have a very cold winter. So, it's a mixed bag. >> Well thank you. He is the energy report he -- reporter for the San Diego Union Tribune. Thank you for being here.