California Energy Commission chief calls for winter conservation

Washington (Platts)--4Oct2005

The chairman of the California Energy Commission Tuesday urged consumers
to conserve natural gas and electricity this winter in response to high
natural gas prices, and said the state will work to diversify supply sources
and look to alternative fuels.
     In a news conference, CEC Chairman Joseph Desmond noted that California
imports about 87% of its natural gas, and that half of its usage goes to power
generation.
     At $5/MMBtu, all consumers pay $11-bil/year for just the natural gas
molecules, Desmond said. At $10/MMBtu that amount rises to $22-bil a year.
California gas demand is expected to increase 0.7% a year through 2016, less
than the 1% a year increase for the US as a whole, due in large part to
California's already aggressive energy efficiency programs, Desmond said.
     In terms of specific gas policies, Desmond said the state would continue
its emphasis on efficiency programs, diversify its sources of supply and look
at alternatives such as biogas, landfill gas, making more in-state stranded
gas available to the market, building new pipelines into the state and
importing more gas along the West Coast through liquefied natural gas import
facilities.
     Desmond said that in terms of broad policy priorities to keep energy
costs low, the state will first look to energy efficiency programs, then to
demand response and finally to renewable sources of energy. Only after those
avenues are exhausted would the state consider building new fossil fuel-fired
generation, he said.
     Desmond noted that the state's utilities are required to store a certain
amount of gas for core customers each winter, and that the companies had met
roughly 95% of their goals.
"We will have a sufficient amount of gas, but we will have to pay more," the
chairman concluded.
     The California Public Utilities Commission plans to hold a hearing Oct. 6
on the impact of high gas prices on low-income consumers in the state.	
                                  ---Stephanie Seay, stephanie_seay@platts.com

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