Changes to operational flow order noncompliance rates were instituted to help better match natural gas supply and demand, especially across Southern California; based on the latest reliability report from Southern California Gas Co., it appears this policy might not be working.
SoCalGas' Twelfth Annual Report of System Reliability Issues 2021 Customer Forum Post-Forum Report, posted by the utility May 28 on ENVOY, details some of the issues mentioned during the utility's April 23 customer forum.
The annual customer forum recapped issues that occurred during the April 1, 2020, through March 31 report period, which includes the number and timing of OFO events.
The utility reported that 71 high OFOs were called in the reporting period, an increase of 65 percent compared with 43 in the previous reporting period. The greatest number were called in September and October. High-OFO events are triggered when the forecast storage addition amounts for system balancing exceeds the allocated injection capacity.
During the same period, there were 84 low OFOs, an increase of 25 percent compared with the 67 low OFOs called during the previous report period. Fifteen or more low OFOs were called in four different months. The greatest number—a total of 17—were called in both November 2020 and March.
No emergency flow orders were triggered during the report period.
For comparison, from April 1, 2018, through March 31, 2019, a total of 75 high-OFO events were called, which SoCalGas stated was a 33-percent decrease compared with the 112 called in the prior reporting period. In that same period, 139 low OFOs were called, 35 percent more than the 103 low OFOs called in the prior reporting period.
Operational flow orders are used to correct and manage natural gas inventories when they are either too high or too low. Noncompliance penalties are assessed by SoCalGas and San Diego Gas & Electric to natural gas shippers that deviate from scheduled deliveries, meant to provide an incentive to ensure shippers properly match deliveries to demand. Constraints based on Aliso Canyon storage limitations and key natural gas pipeline outages had been blamed for continuing to trigger OFOs. Noncompliance fees assessed were said to have pushed regional natural gas prices and wholesale and retail power prices higher (see CEM No. 1537).
To address these issues, the OFO noncompliance rates changed Oct. 1, 2020. The number of noncompliance stages expanded from five to eight. The noncompliance penalties were no longer subject to a $5/Dth cap for any stage greater than Stage 3. The changes were spelled out in a May 2019 California Public Utilities Commission decision [D19-05-030], which remains in effect through Oct. 31. It could be extended (see CEM No. 1609).
That effort and a wholesale revision of the Aliso Canyon Withdrawal Protocol, which the CPUC also instituted in 2019, were two of 50 different measures proposed or instituted by the CPUC that year to address natural gas pipeline outages and capacity reductions on the SoCalGas system.
Despite this, SoCalGas actually said each of the changes were "possible contributing factors to the OFO events called during the Report period." The company also pointed to "a change in the allocation of injection and withdrawal capacity reserved for system balancing adopted in the 2020 [triennial cost allocation proceeding] [D.20-02-045]; the wider use of Scheduled Quantity trading to mitigate exposure to noncompliance charges on both OFO and non-OFO days"; as well as the continued 34-Bcf inventory cap for Aliso Canyon storage, which it said contributes "to conditions conducive to High OFO events."
The utility did note that one condition has "significantly reduced the number and severity" of low OFOs since it was implemented: allowing withdrawals from Aliso Canyon to be made if a preliminary low-OFO calculation for any cycle results in a Stage 2 low OFO or higher for a given gas day. In the report, SoCalGas said the withdrawal protocol "probably helped SoCalGas and SDG&E customers avoid Low OFOs on 44 out of the 89 gas days when a condition was met."
It added that there were 45 "AWCP event days" on which calling a low OFO could not be avoided. For 17 of those events, a low OFO had already been called; on the other 28, "customer imbalances were too high to be fully mitigated by the availability of Aliso Canyon's withdrawal capacity."
The report includes 38 pages of detailed calculations for the high OFOs and another 44 pages for the low-OFO calculations. It also addresses issues related to the Feb. 13 through Feb. 18 polar vortex events that crimped natural gas supplies in the Midwest and Texas. Natural gas deliveries into the SoCal Gas system were "severely impacted" when natural gas flows from the Permian Basin were shut in because of well freeze-offs at interconnecting pipelines.
Summer reliability was also covered in the document. The utility said it had "a question concerning compressor station reliability during power outages." It said that mainline compressor stations "where loss of power would impact system integrity primarily rely on onsite generated power. Where these mainline compressor stations can utilize utility power, they also possess back-up generation for their facility."
SoCalGas added that it intends to use OFOs and storage withdrawals to maintain summer energy reliability and will employ curtailments to make certain higher priority customers have service. It intends to schedule maintenance in low demand periods save for those projects that must be addressed for safety or to meet regulatory requirements.
The utility requested that any comments on the report be submitted by June 9. A revised draft will be posted on ENVOY by June 11.
SoCalGas intends to file a final report as an advice letter with the CPUC by July 6.