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SoCal Gas issues curtailment order for generators, citing demand

Washington — Southern California Gas on Wednesday issued a system-wide curtailment order for electric generators starting at 3 pm, using procedures that could allow it to dip into Aliso Canyon if the reliability of the gas and electric system is threatened.

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The move comes as the region continues to suffer scorching temperatures. At press time the California Independent System Operator forecasted that demand on Wednesday would peak at 48,610 MW, shy of the historical peak of 50,270 MW. Ongoing restrictions at the Topock and Needles interconnects are limiting gas supply into southern California by more than 1 Bcf/d.

In southern California, SP15 spot power prices were peeling back. SP15 on-peak day-ahead prices came in at $167.92/MWh for July 26, down from $301.17/MWh for July 25 and also down from recent high of $377.32/MWh for July 24. On the gas side, SoCal Gas city-gate price was $18.37/MMBtu for July 25 flows, down from a record high of $39.52/MMBtu for July 24 flows. Cal-ISO on July 23 issued a flex alert for July 23 and July 24. The flex alert called on customers to reduce electricity use from 5 pm to 9 pm due to high temperatures, reduced electricity imports, tight gas supplies in Southern California and high wildfire risk.

In its curtailment notice, SoCal Gas noted that high temperatures across the region had significantly increased demand for natural gas electric generation. "SoCal Gas is coordinating with the balancing authorities to limit and/or reduce demand in order to effectuate the curtailment," the notice said. The order will be in place until further notice, SoCal Gas said.

SoCal Gas asked Cal-ISO to voluntarily reduce generation levels from 3pm to 10 pm on Wednesday, but the ISO is unable to reduce generation levels for those hours without risking electric system reliability, said Cal-ISO spokesman Steven Greenlee. Cal-ISO will have to wait to decide next steps until generators receive instructions from SoCal Gas on how much to curtail, Greenlee explained. ALISO CANYON

SoCal Gas issued the notice in accordance with the Aliso Canyon Withdrawal Protocol, which could open the door for the utility to withdraw gas from the storage facility. The protocol, which was finalized by the California Public Utilities Commission in November, found that Aliso Canyon should be used as the asset of last resort after all other alternatives have been exhausted.

Such alternatives include: operational and emergency flow orders, coordination with balancing authorities to limit demand, and activation of emergency plans by Cal-ISO and/or the Los Angeles Department of Water and Power.

SoCal Gas can also dip into the storage facility if "there is an imminent and identifiable risk of gas curtailments created by an emergency condition that would impact public health and safety or result in curtailments of electric load that could be mitigated by withdrawals from Aliso Canyon," the protocol said.

The utility last used the protocol in late February and early March during a period of extended cold weather. During that period, about 1.14 Bcf of gas was pulled out of Aliso Canyon. If the withdrawals had not occurred, SoCal Gas estimated that the same level of demand would have needed to be curtailed, the utility said in an April report to regulators.

SoCal Gas issued curtailments for certain generators in June 2016 and February 2018, Cal-ISO's Greenlee noted. The grid operator was able to maintain reliability in the affected areas during those periods, he explained.

SoCal Gas and LADWP did not respond to requests for comment. -- Kate Winston, kate.winston@spglobal.com

-- Eric Wieser, eric.wieser@spglobal.com

-- Edited by Matt Eversman, newsdesk@spglobal.com