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SoCal Gas posts higher earnings despite gas leak costs of $330 million
File: The entrance to the SoCal Gas facility where a gas leak that started in October began and forced thousands of residents to flee from Los Angeles suburb Porter Ranch, pictured on Jan. 22, 2016.
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SoCal Gas posts higher earnings despite gas leak costs of $330 million
Coping with what some scientists are calling the nation's worst-ever methane gas leak hasn't marred Southern California Gas Company's bottom line, as the utility increased its earnings by 25 percent in 2015.
SoCal Gas earned about $87 million dollars more than the previous year, even though the bill for responding to a massive natural gas leak at its Aliso Canyon natural gas storage facility is at $330 million and counting.
"Of this amount approximately 90 percent is for the temporary relocation program, cost to address the leak and attempts to stop the emission," said Debra Reed, CEO of Sempra Energy, parent company of SoCal Gas.
Reed said the remaining ten percent of the cost, about $33 million, represents the value of the lost natural gas and the cost of offsetting the damage the greenhouse gas methane has done to the atmosphere.
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The financial toll of the environmental disaster is expected to rise as litigation from some 67 lawsuits and fines and penalties from government enforcement kick in.
In an earnings conference call Friday with investors, Reed said the company's insurance policies worth more than $1 billion should cover those leak-related costs.
SoCal Gas earnings rose on favorable tax rulings and on a decision from state Public Utilities Commission to let SoCalGas collect higher profits from customers on top of its authorized operating expenses.
The company still faces significant new expenses as it updates aging wells in underground gas fields to comply with new regulations that were enacted as emergency measures after the leak was discovered. However, the company had been budgeting for those upgrades and expenses in a rate increase request it submitted to CPUC in 2014. The rate increase could be approved next month.
Earnings at parent company Sempra grew 11 percent in 2015. The company netted $1.35 billion and plans to pay out an 8 percent dividend to shareholders, Reed said.
The company says it had already proposed an extensive series of inspections and repairs for its underground gas fields in the 2014 request for a rate increase.
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