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An Administrative Law Judge (ALJ) issued ruling admitting into the record part 1 of staff’s white paper and seeks recommendations, corrections, and/or clarifications to the White Paper. 

Opening comments are due July 31, 2024, and reply comments due August 14, 2024.

Key takeaways from Staff’s White Paper:

1. prior to that winter, several events “altered natural gas supply and demand dynamics and impacted natural gas commodity prices”: (i) “U.S. liquified natural gas (LNG) exports increased due to a geopolitical shift caused by Russia’s invasion of Ukraine”; (ii) El Paso Natural Gas Line 2000 ruptured and was out of service 8/21 – 2/23; and (iii) “gas storage levels in the Pacific region were notably lower at the start of the winter than both the previous winter and the five-year average”; 
2. while utilities’ pre-winter core procurements met storage requirements, noncore customers’ unregulated storage “did not fill the inventory capacity available at Northern California’s independent storage fields” due to summer 2022 gas prices being significantly higher than forecasted winter prices; 
3. in 11/22, cold temperatures led to “high customer demand for natural gas and declines in storage inventory,” which in turn led to increased gas market volatility, and “In addition to there being less gas on hand, lower gas storage inventory results in reduced withdrawal capacity due to lower pressures, which in turn reduces the maximum amount of daily demand that can be served,” and the winter remained cold throughout, the coldest in 10 years in the PG&E and SoCalGas territories; 
4. a prolonged drought decreased hydroelectric imports in CAISO and other Western markets, increasing demand for gas-fired electric generation; 
5. “several force majeure events reduced capacity on El Paso’s North Mainline in December and January,” reducing its delivery capacity by ~33%, and there were few options for alternative delivery points due to “restrictions affecting both the northern and southern sections of the El Paso system”; 
6. a significant portion of PG&E and SoCalGas gas acquisition was made through long-term contracts “tied to monthly index prices before the market price for those months was known,” with the remainder of core customer demand “filled through monthly contracts or spot market purchases,” with SoCalGas primarily employing monthly contracts and making “several fixed-price purchases that were higher than the later-published bid week index”; 
7. “in a context of pro rata cuts to pipeline capacity caused by the outages on the El Paso interstate pipeline system,” both utilities imported most of their winter gas supply from out of state and less than 25% from their more costly city gate locations, though SoCalGas relied more on city gate.

As background, the CPUC has opened this proceeding to investigate natural gas prices during winter 2022-2023 and the resulting impacts to energy markets. The scope of the proceeding is defined as including: (1) the causes and impacts of the winter 2022-2023 gas price spikes and the potential for recurrence, (2) the impact of the 2022-2023 gas price spikes on gas and electric prices and gas and electric customer bills, (3) potential threats to gas and electric reliability and price volatility in summer 2023 and beyond; and (4) potential mitigations. The CPUC will also examine the utility communications to customers to determine whether they were sufficient or require modifications.

ALJ Ruling  (07/02/2024)
Staff White Paper (07/02/2024)
I2303008 (Opened 03/16/2023)
Order Instituting Investigation on the Commission’s Own Motion into Natural Gas Prices During Winter 2022-2023 and Resulting Impacts to Energy Markets.
I2303008 (Opened 03/16/2023)