SoCal Finds Some Claimed Unmerited Rate Breaks

If Southern California Gas was caught with its pants down when it couldn’t deliver enough natural gas to meet demand and was forced to cut off more than 800 industrial customers last week, it appears that some of those customers were similarly exposed.

About 30 turned out to be lacking the backup fuel systems they claimed to have--a claim that entitles customers to lower rates from the gas company.

The utility, perhaps chastened by its own supply problems during the cold weather, wouldn’t identify any of the errant customers and was loath to criticize them.

“I wouldn’t call it misrepresentation,” said Robert Loch, senior vice president at the Los Angeles-based gas company. “But they will certainly be placed on a different rate schedule.”

Deliveries Cut Off

Many of the gas company’s larger customers, especially electric utilities, maintain alternative fuel systems to which they can readily switch in case of supply interruptions or more favorable market prices. Most of the backup systems use fuel oil.

Customers that keep such systems at the ready are entitled to lower rates for natural gas. That can add up to big monthly savings for large industrial users.

But the current shortfall of natural gas has forced the gas company to cut off deliveries to hundreds of firms that hadn’t had occasion to test their systems--or even to prove that they had them.

About 160 of the commercial and other large customers were still having trouble getting their backup fuel systems to operate properly as of Wednesday, Loch said. Of those, about 30 effectively had no system.

Many were medium-sized operators who, citing financial reasons, had failed to upgrade their standby fuel storage tanks or other equipment to meet new government standards over the years, Loch said.

As for the other customers, Loch said: “There have been a couple of angry ones but the rest have been remarkably cooperative.” He said the utility might be able to restore service to them after a couple of more weeks of “moderate” weather.

With warmer weather, the cutoff of deliveries to big customers and emergency shipments of gas from Pacific Gas & Electric in San Francisco, the company Wednesday received slightly more gas than it sent out and was able to put a small amount into storage.