The Aliso Canyon Proposed Decision: Ensuring Reliability and Setting a Course for Decommissioning

 

The California Public Utilities Commission’s (CPUC) recent proposed decision (PD) on the Aliso Canyon Natural Gas Storage Facility strikes a careful balance between ensuring reliability, controlling energy costs, and progressing toward California’s clean energy goals. The Public Advocates Office supports this PD as it sets a clear path for the eventual decommissioning of Aliso Canyon, while maintaining the reliability of both electric and natural gas services and helping to protect ratepayers from sudden price spikes or increased energy costs. This PD lays the foundation for a reliable, affordable, and sustainable energy transition.

Protecting Reliability and Preventing Price Volatility

The PD finds that Aliso Canyon’s current maximum storage inventory—68.6 billion cubic feet (bcf)—is critical for maintaining the reliability of California’s natural gas system and electric grid, as well as protecting consumers from natural gas and electricity price spikes and volatility.

The facility has demonstrated its value in providing resilience during extreme weather events, such as severe summer heat waves and winter cold spells like the 2021 Winter Storm Uri. These capabilities are increasingly important as California faces more frequent and intense climate-driven weather extremes.

Addressing Today’s Gas Demand While Planning for the Future

While California is transitioning to cleaner energy, with policies like the planned prohibition of gas furnaces and water heaters by 2030, many households still rely on natural gas for heating, cooking, and other essential uses.

Given this reality, natural gas demand has not declined to the extent that would allow facilities like Aliso Canyon to be decommissioned without risking reliability and price stability. The PD acknowledges this dynamic by ensuring Aliso Canyon remains available to meet current needs while laying the groundwork for a cleaner energy future.

Setting the Stage for a Clean Energy Transition

While Aliso Canyon plays an important role today, the PD outlines a long-term plan to replace its services with cleaner alternatives, including investments in renewable energy, energy storage, building electrification, and energy efficiency to phase out reliance on Aliso Canyon.

The CPUC’s implementation of these clean energy solutions will occur through separate proceedings, such as the Integrated Resource Planning (IRP), building electrification, energy efficiency, and long-term gas planning efforts. This coordinated approach ensures a strategic and comprehensive transition to cleaner energy systems while safeguarding reliability.

Introducing a Biennial Review Process

The PD establishes a biennial review process to assess Aliso Canyon’s ongoing necessity. Every two years, the CPUC will conduct a detailed reliability analysis of the gas system, incorporating updated demand forecasts and other key factors. Based on this review, the CPUC can recommend increasing, decreasing, or maintaining Aliso Canyon’s maximum storage capacity in increments of 10 bcf.

If changes are proposed, SoCalGas will have 90 days to file a formal application responding to the review. This iterative process ensures that decisions about Aliso Canyon are based on the latest data and California's evolving energy landscape.

Establishing a Measurable Path to Closure

The PD sets a clear and measurable pathway for considering Aliso Canyon’s closure, balancing the need for a gradual transition with maintaining reliability and safety.

When forecasts predict that peak natural gas demand during a particularly cold winter day (an event expected to occur once every 10 years) will fall below 4,121 million cubic feet per day for two consecutive years, the CPUC will reevaluate whether it is time to close Aliso Canyon permanently. At that point, the CPUC will launch an investigation to determine the feasibility of decommissioning the facility, provided the biennial review also finds that decommissioning would not compromise reliability or just and reasonable rates.

Shaping California’s Energy Future

The proposed decision ensures that the transition away from Aliso Canyon is both systematic and responsive to California's evolving energy needs. By implementing regular assessments, setting clear demand thresholds, and providing a framework for renewable energy integration, the PD demonstrates a thoughtful and practical approach.