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SoCalGas sues California Energy Commission to block 'anti-natural gas policy'

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SoCalGas sues California Energy Commission to block 'anti-natural gas policy'

Southern California Gas Co. sued the Golden State's top energy policy and planning agency in a bid to prevent it from carrying out a policy that would limit natural gas use and promote building electrification.

Lawyers for SoCalGas filed a complaint with the California Superior Court for the County of Orange alleging that the California Energy Commission, or CEC, failed to fulfill its legal requirement to report on the benefits of natural gas use. The Sempra Energy subsidiary also accused the CEC of improperly establishing an anti-gas policy that undermines lawmakers' intent to preserve the fuel's role in California's energy mix.

SoCalGas, which distributes gas to 21.8 million consumers, took the action as the CEC is poised to determine whether it will take up statewide building electrification standards in its latest update to California's energy code. As SoCalGas notes in the lawsuit, the CEC has already approved many of the building electrification ordinances passed by local governments over the past year, which the company opposes.

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The lawsuit also takes place against the backdrop of tightening state climate policy, enshrined in laws that require the state to draw 100% of retail electricity from renewable and zero-carbon sources by 2045 and reduce greenhouse gas emissions by 40% below 1990 levels by 2030. Many environmentalists argue that continued gas use is incompatible with these goals.

The CEC does not comment on ongoing litigation, commission spokesperson Michael Ward said.

Lawmakers intended a role for gas, SoCalGas argues

Despite the states's climate protection measures, the framework established by the law that created the CEC in 1974 requires the commission to "encourage the balanced use of natural gas" within a diverse energy portfolio, SoCalGas argued. The 2013 Natural Gas Act further requires the CEC to maximize the benefits of natural gas, the company added.

"In short, the California Legislature has made clear that natural gas is to play a significant role in the state's balanced energy policy, including as a facilitator of reducing greenhouse gas emissions and maintaining affordability and reliability, and has directed the CEC to develop specific policies in furtherance of those determinations," lawyers for SoCalGas said in the complaint filed on July 31.

Lawmakers did adopt a sunset clause in 2018 that repeals the Natural Gas Act in 2026. Still, the company accused the CEC of rejecting policies mandated by statute in pursuit of its own "extra-legal" policy preferences.

SoCalGas said this is evident in the CEC's failure to produce a distinct 2019 report to "identify strategies to maximize the benefits obtained from natural gas," as mandated by the Natural Gas Act. The CEC instead sought to fulfill the requirement by attaching an appendix to its Integrated Energy Policy Report, or IEPR. SoCalGas said the CEC's stakeholder engagement in this effort paled in comparison to the process it followed to create its 2015 Natural Gas Act report.

The IEPR would actually minimize the role of gas in defiance of state law, saying the state should "transition away from fossil natural gas," including through building electrification, SoCalGas said. The company asserted the CEC's position has "far-reaching consequences," because the law requires state agencies to rely on the commission's assessments when taking regulatory action.

SoCalGas asks court to block 'underground regulation'

SoCalGas alleged that the 2019 IEPR and appendix demonstrate that the CEC has adopted an "anti-natural gas policy" that seeks to phase out and eventually eliminate the state's natural gas system. The utility argued the CEC policy is an unenforceable "underground regulation" adopted outside the process established by the California Administrative Procedure Act. The policy itself is therefore unlawful, SoCalGas claimed.

The company asked the court to vacate the IEPR and appendix and force the CEC to issue a revised IEPR and a separate Natural Gas Act report. It also asked the court to vacate the overarching "anti-natural gas policy" and declare the CEC violated state law in adopting it, which would render it null and void.

SoCalGas is seeking a permanent injunction barring the CEC from "adopting or enforcing any policy to phase out and substantially eliminate natural gas" until it complies with state rulemaking laws. It requested a second injunction to prevent the CEC from implementing the IEPR or issuing any further reports until it complies with the Natural Gas Act and other state laws.

Three local branches of the Utility Workers Union of America representing more than 4,000 SoCalGas workers and renewable natural gas company Clean Energy Fuels Corp. are also listed as plaintiffs and petitioners.