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Thursday, Feb 22, 2024

Builders Fear State Gas Ban

Business owners with construction projects in the works dodged a bullet this month when the California Public Utilities Commission postponed a vote on imposing a temporary moratorium on new natural gas hookups. Even if the commission votes Feb. 8 to order Southern California Gas Co. to put the emergency moratorium in place, it would only last until March 31 – although some lobbyists believe the moratorium is the first step in a campaign to shut down the Aliso Canyon facility, where natural gas for the San Fernando Valley and surrounding markets is stored. The moratorium would mean that no new construction projects could use natural gas – making them all but useless for immediate use. Take, for example, a new health clinic in Santa Clarita being built by Northeast Valley Health Corp., operator of a chain of clinics serving low-income populations in the San Fernando and Santa Clarita valleys. The $1.2 million Newhall Health Center at 23413 Lyons Ave. is scheduled to open in mid-February. Nonprofit Northeast Valley was notified of the proposed moratorium when it applied for a new meter installation, which remains pending. Missy Nitescu, chief operations officer for Northeast Valley, said that staff is currently being hired but that would be postponed if the moratorium is approved. “If we cannot open as scheduled, we run the risk of losing highly qualified employees who need to work and receive paychecks in order to cover their living and family expenses,” Nitescu wrote in an email to the Business Journal. The center will employ 19 workers in its first year, and expects to increase to 31 by the second year. If the moratorium goes through, it would impact the nonprofit economically and from a patient service/access perspective, Nitescu said. “We would have to delay care to patients with appointments in need of medical attention for issues such as diabetes, cardiovascular disease management and specialty care services,” she added in her email. Supply constraints The logic behind the moratorium is that the supply of natural gas in Southern California is constrained by problems at the Aliso Canyon facility. So limiting new draws on the existing supply of natural gas, especially during the peak winter months, ensures service for current customers. A report prepared by staff of the Public Utilities Commission, the California Energy Commission, the California Independent System Operator, and the Los Angeles Department of Water and Power discusses challenges in delivering energy to Southern California consumers this winter. Specifically, the Aliso Canyon Winter Risk Assessment Technical Report 2017-18 Supplement cautions that disruptions in service caused by pipelines that are damaged could pose distribution problems. Additionally, the Department of Water and Power will upgrade a key transmission line starting in February requiring additional gas‐fired generation in the Los Angeles Basin to meet electric system reliability requirements. “The largest risk to the system is not from a single day with high gas demand, and instead is from multiple days of higher demand that will draw down storage inventories to a point where storage could not be used to meet gas demand later in the winter,” the report stated. The report outlined mitigating factors that could reduce natural gas demand this winter, including an emergency moratorium. “The (public utilities commission) is investigating its ability to impose an emergency moratorium in the event the county is unwilling to act,” according to the report. Business lobby response Business organizations have come out against the measure, claiming it will negatively affect employment and harm business operations. Sarah Wiltfong, policy manager with the Los Angeles County Business Federation, or BizFed, said that according to the gas company there would be about 700 businesses in L.A. County impacted by the moratorium. And the stoppage would have little to no impact on energy reliability, Wiltfong said. “There was no reason why the (commission) should impose this moratorium on Southern California Gas Company as it was clear it would only hurt businesses,” she added. Valley Industry & Commerce Association, in Van Nuys, has also come out against the moratorium on behalf of its members. In a letter to commission Executive Director Timothy Sullivan, association President Stuart Waldman and Chairwoman Lisa Gritzner said the moratorium will jeopardize projects throughout the county that are under construction or near completion. “The proposal poses an economic hardship by delaying projects scheduled for operation this winter,” the pair wrote in the letter. In an interview with the Business Journal, Waldman said it was ridiculous the commission would want to stop an energy source that is reliable and cheap. “In many cases, people want gas in their homes not only for the dryers and washers, but they want it for their ovens and stoves,” Waldman said. “It is much more efficient.” The Los Angeles County Economic Development Corp.’s Institute for Applied Economics did an analysis of a “hard moratorium” – that is, one in which an alternative utility connection was not offered to offset or mitigate the loss in natural gas connections. It concluded that 5,160 jobs would not be created. L.A. County would lose out on $13.3 million in tax dollars while cities would lose $5.8 million. The institute’s preliminary study, however, takes in a time period of Jan. 11 to March 31, and was done before the commission delayed the vote. The moratorium proposal was made just before the Christmas holiday. BizFed responded with an advocacy game plan that included a petition at its website that brought in about 500 signatures, mostly from individual business owners, Wiltfong said. Roger Seaver, chief executive of Henry Mayo Newhall Hospital, in Valencia, opposes the moratorium because of its potential impact on the construction of the Northeast Valley clinic. “This is an unelected body proposing to tell every user in Los Angeles County that in spite of getting all your permits and filing all your plans and developing everything under the regulations, they still have a right to say no, you are not going to operate,” Seaver said. Aliso Canyon legacy The Aliso Canyon facility was the site of the largest methane gas leak in U.S. history beginning in October 2015, which led to the evacuation of more than 15,000 residents of Porter Ranch. The leak was capped in February 2016 after an estimated 106,000 tons of methane had been released into the air. Last month, a leak was found at the site caused by a gasket that failed during a routine operation to pressurize equipment after maintenance. SoCal Gas stated the leak did not pose any health risk. Los Angeles County has made multiple attempts to halt operations at the site since it reopened, and the public utilities commission has not made it a secret that they do not like Aliso Canyon or the use of natural gas, said Wiltfong of BizFed. “It was more of a political ploy to get the county or somebody to shut down Aliso Canyon but nobody has said that out loud,” she added. “We are not sure, but that is our guess.” Waldman, of VICA, was more pointed in his belief of what may be behind the proposed moratorium. “This was a targeted proposal by (commission) staff in response to Aliso Canyon,” he said. As for the February meeting, BizFed and VICA will be keeping the pressure on the commission and elected officials to avoid a moratorium. Wiltfong believes that BizFed’s efforts paid off with the postponement as some commissioners expressed concerns because of the input of the business community. “We are pushing full speed ahead until they take the resolution off the table,” Wiltfong said.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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