"Pacific Gas and Electric Bargains with Wary Gas Suppliers".
By Carolyn Said
Chronicle Staff Writer
The stakes are high. If suppliers cut off gas, Northern California could face a doomsday scenario that would leave hundreds of thousands of homes and small businesses without heat or hot water. Lack of natural gas also could disrupt generation of electricity and production of gasoline, diesel and jet fuel.
PG&E will spend the weekend locked in marathon negotiating sessions with natural gas suppliers, armed with a new order from the State Public Utilities Commission that it hopes will bolster its credit and persuade reluctant suppliers to continue deliveries. The suppliers earlier this month threatened to stop selling to PG&E unless it paid up front - something the cash-strapped utility can't do.
The PUC on Wednesday passed an emergency measure allowing PG&E to offer the gas suppliers collateral: customers' future gas payments and PG&E's limited gas reserves.
Sources said some gas suppliers had responded positively to the offer, but so far the major companies that threatened to cut off PG&E's supply have not said publicly if they will keep the gas flowing.
"We're still reviewing the situation and the (PUC) order," said Alex Hemerick, a spokeswoman for Sempra Energy Trading of Stamford, Conn., one of PG&E's two largest gas suppliers.
The other of the largest gas suppliers, J. Aron & Co., the trading arm of Goldman Sachs in New York, was more tight-lipped. "We are selling (PG&E) natural gas in accordance with our contract and the emergency order," said Kathleen Baum, a spokeswoman.
Sempra, J. Aron and four other firms, which collectively account for 36 percent of PG&E's daily gas supply, had previously threatened to cease deliveries by Jan. 23, according to PG&E. That's when out-going Energy Secretary Bill Richardson's emergency order forcing gas suppliers to keep selling was set to expire.
Richardson's successor, Energy Secretary Spencer Abraham, extended that order for two weeks, but is adamant about not renewing it."
1. "Export of Natural Gas from California to Mexico".
2. "Export of Electric Power from California to Mexico".