El Paso Firm Will Resume Gas Shipments
El Paso Natural Gas said Monday that it will resume shipments of low-priced natural gas today. The company, a unit of Burlington Northern, halted shipments Oct. 31, an action that forced California’s two largest natural gas utilities to buy more expensive gas.
El Paso said the Federal Energy Regulatory Commission ruled that El Paso could resume the shipments without becoming an “open access” shipper. Under the new commission rules, a pipeline that ships cheap gas to one customer must agree to offer that service to all customers.
However, the commission said late Friday that El Paso’s agreement with Southern California Gas and Pacific Gas & Electric was exempt from the new rule. The federal commission said that contractual agreements that existed before its new rules were issued Oct. 9 could continue.
Both utilities purchase significant amounts of “spot,” or non-contract, gas at reduced prices. Los Angeles-based Southern California Gas said that, when El Paso curtailed the shipments, it had to spend an additional $2.64 million over the last 11 days to buy more expensive gas from other sources. San Francisco-based PG&E; said it spent $825,000 more for gas since El Paso curtailed the spot gas shipments.
Southern California Gas said it expected to compensate for the expense by buying greater than normal amounts of spot gas. Spot gas currently accounts for 20% of its supply. A PG&E; spokesman said its costs would be passed on to its customers.