Next energy crisis: North Bay could face natural gas cutoff

January 30, 2001

By CHRIS SMITH THE PRESS DEMOCRAT

PG&E warns a worsening of the energy crisis could force it to cut natural gas to entire regions, including the North Bay.

Sonoma County and points north are vulnerable because they are well off the two main PG&E gas pipelines that run up and down the center of the state like principal arteries.

As PG&E seeks the help of state officials in stabilizing the energy crisis, it warns that within weeks it may have to shut some of the gas delivery system's secondary pipelines if gas wholesalers leery of becoming entangled in the company's financial woes refuse to sell it any more gas.

Sonoma and Mendocino counties get natural gas via a secondary PG&E line that taps into one of the main trunks in the East Bay. Some or all of the North Bay gas pipeline could be shut down, perhaps along with other secondary or smaller lines through Central and Northern California, if PG&E can't get enough gas to keep the entire system operating.

It's a chilling scenario that could keep the gas off in some spots for weeks.

"I'm sure it's (PG&E's) dead last choice," Sonoma County Supervisor Tim Smith said Monday.

If some natural gas cuts do occur, Smith said, the county will look to diesel fuel to heat the administration center and jail and to keep at least some Sonoma County Transit buses on the road. Almost half of the county's buses run on natural gas, the supply of which could be curtailed or cut off entirely if the the state's energy woes deepen.

PG&E's gas crisis is a different breed of cat than its electricity troubles.

The problem with electricity is that demand on the West Coast is exceeding supply, and PG&E is facing the potential of bankruptcy because it is paying far more for electricity than it is allowed to charge consumers. The power crunch has produced occasional rolling blackouts.

The wholesale price of natural gas also has risen sharply, but gas prices aren't set by government regulation, so PG&E is legally able to pass that cost to its customers. The problem on the gas side is that wholesalers afraid that PG&E's financial troubles may keep it from paying its gas bills have moved to cut the utility off.

In a request for relief from the state Public Utilities Commission, PG&E said wholesalers that provide 71 percent of its natural gas have acted or threatened to stop deliveries.

"If they decide not to sell to us, we're in a world of hurt," said Lloyd Coker, PG&E's spokesman in Sonoma County.

A federal order requiring gas wholesalers to continue selling to PG&E expires at midnight next Tuesday, and the Bush administration has declared it will not continue the emergency order beyond that day.

PG&E officials are hoping the PUC will help the company avoid possibly widespread interruptions in gas service.

The PUC may act as soon as Wednesday on PG&E's requests that it require Southern California Gas Co. to buy gas for PG&E on an emergency basis and that the PUC allow PG&E to pay what it owes to gas wholesalers before it tries to pay other creditors.

"We need some solutions and we need them quick," Coker said.

Southern California Gas, fearing such an order would jeopardize its financial stability, said it will go to court if necessary to fight the PUC and PG&E.

If PG&E is not able to keep natural gas flowing at current levels into its two main pipelines -- one originating in Canada and the other in the Southwest -- a number of consequences are possible.

The most severe would be that the pipelines would go empty and all of PG&E's 3.8 million household, industrial and commercial customers would lose the gas they need for cooking, heating and production.

By all accounts, that would be disastrous to the state and its economy. PG&E's worst-case scenario notes that even a short-lived total cutoff could leave customers without gas for weeks because PG&E employees would have to go to every affected home and relight furnace and heater pilot lights once gas is restored.

In a less critical scenario, the loss of gas from wholesalers no longer willing to do business with debt-strapped PG&E could force the utility to cut gas use.

If cuts must be made, PG&E would order reductions from industrial plants, large bakeries and other sizable businesses that together burn about 45 percent of the gas the utility distributes.

In Sonoma County, those users include the county government, which runs 43 percent of its buses on natural gas and uses gas to heat the County Administration Center and jail.

Bryan Albee, manager of the transit system, said that as recently as Friday the county was told it might have to cut gas use by 25 percent. If the cut is not greater than that, he said, current bus schedules could be maintained by such measures as pulling some natural gas coaches out of service and replacing them with diesel-powered ones.

"If it goes beyond that (25 percent reduction), it would cut into service," Albee said.

County officials said they also are ready, if necessary, to switch two of the administration center's four heating boilers from natural gas to diesel. The state's power crisis prompted the officials to install the diesel system just last week.

PG&E said if the gas crisis worsens to where more severe measures are required, it may have to cut off those major users entirely and may have to begin shutting down communities served by the secondary pipelines.

Coker said it's impossible to say if the North Bay is any more or less vulnerable to gas reductions or cutoffs than other areas served by the secondary lines.

"We don't have any definitive answer because we've never had to do this," he said.

http://www.pressdemo.com/local/news/30gas_a1.html

You can reach Staff Writer Chris Smith at 521-5211 or e-mail csmith@pressdemocrat.com.

-- Martin Thompson (mthom1927@aol.com), January 30, 2001