PUC Approves Expansion of Gas Pipeline : Energy: The $1.2-billion project will bring much-needed Canadian natural gas to the Pacific Northwest and California.

The California Public Utilities Commission on Thursday approved a proposed $1.2-billion pipeline expansion project designed to bring much-needed natural gas into the state.

The conditional approval removes all but one regulatory obstacle to construction by a unit of Pacific Gas & Electric Co. of the proposed 900-mile pipeline expansion. The project will bring natural gas from Canada to utilities and industrial customers in the Pacific Northwest and Northern and Southern California.

“Today’s decision is a milestone in preparing for California’s energy future,” said PUC Commissioner John B. Ohanian.

The pipeline is one of a number of competing pipeline projects vying for customers who are willing to pay to have natural gas shipped into the state from Canada or the Rocky Mountains.

The chief rival is the Altamont pipeline, which would bring gas from Canada into Wyoming. From there it would be piped into California on another proposed system. Southern California Gas Co. favors that plan.

The PG&E; pipeline is designed to bring 755 million cubic feet of gas a day into California.

If completed as planned in late 1993, the pipeline will relieve a shortage of cleaner-burning natural gas for utilities that must now turn to dirtier fuel oil to generate electricity in winter months, said Malcolm McCay, Ohanian’s adviser at the PUC.

Because natural gas is cheaper than fuel oil, construction of the pipeline could also mean lower costs to generate electricity, McCay said.

Shortages of pipeline capacity caused curtailments of natural gas use by electrical utilities during the winter of 1986-87 and again in the winter of 1987-88.

The pipeline will also bring in natural gas that may be necessary to fill demand created by the lower-emission automobiles required under new state and federal clean-air regulations, McCay said.

The pipeline’s main customers will be Southern California Edison, San Diego Gas & Electric, the city of Long Beach and large private industries.