City leaders hope to cash in on Edison departure
Paul Clinton
Southern California Edison’s decision to sell off four massive
oil-storage tanks and a network of pipelines in Huntington Beach has
prompted city officials to seek higher fees from the new operator.
Much of the pipeline Edison uses to run crude oil up to refineries in
Long Beach and Carson snakes under city streets and other public
right-of-ways from the tanks to the Seal Beach border. Any company buying
the lines would need to secure what is known as a “franchise agreement”
from the city.
Edison has held such an agreement with the city since 1958. The
company has paid the city little more than $6,000 per year for that
privilege, a situation city managers hope to change, said Senior
Accountant Arnold Ross.
“Hopefully, we’ll be able to get a better deal for the city,” Ross
said. “Maybe this will give us some flexibility and some leverage.”
However, it remains to be seen just how much input the city would have
in any renewal or transfer of the license fee. Transactions such as these
are usually approved by the California Public Utilities Commission.
On March 22, Edison announced it was selling off its entire
oil-delivery system in Southern California, which includes 120 miles of
pipeline and nine-million gallons of storage capacity.
Pacific Terminals LLC, a Long Beach pipeline operator, has stepped in
to purchase the pipes and tanks for $158.2 million. The company is owned
by Denver billionaire Philip Anshutz. Executives at Pacific Energy Group,
an Anshutz Corp. subsidiary that owns Pacific Terminals, signed an offer
sheet in February.
The deal must be approved by the state’s utilities commission, which
has scheduled public hearings for August.
The pipelines crisscrossing through Huntington Beach are at the
southern end of Edison’s system. Pipeline runs north on Newland Street,
heads west on Garfield Avenue, north on Edwards Street, west on Warner
Street and north on Bolsa Chica Street.
Three large tanks, which can store 450,000 barrels or 18.9-million
gallons each, sit on Edison land directly south of the Ascon/NESI toxic
waste dump. A smaller 26,000-gallon tank that sits across the flood
channel has also been included in the deal.
Historically, Edison has used the tanks as long-term storage for what
is known as “feed stock,” partially refined crude oil that can be sold
off-season if supplies ever dip.
That use won’t change, said Pacific Energy President and CEO Irvin
Tool Jr.
“Our plan is to continue to use the facility in essentiallythe same
fashion that Edison is using it now,” Tool said. “We’re going to have to
play some of this by ear. Our goal is to serve the market.”
Currently, one of the large tanks is mothballed because it needs
repairs.
City officials are hoping to up the ante on the franchise fee. Edison
paid the city $6,575 last year. For the franchise deal to deliver
electric power, Edison paid the city $702,000.
The timing of negotiations between the parties isn’t clear, but Deputy
City Atty. Scott Field said it’s up to Edison to initiate it.
Under deregulation, cities have had little power in energy
transactions that are regulated by the state’s utilities commission and
the Federal Energy Regulatory Commission.
The Edison consultant handling the sale of the pipeline said the
existing agreement would be transferred as it stands.
“The city would continue to have that arrangement with Pacific
Terminals,” said Peter Lersey of the Mera Group. “They have to approve
that transfer.”
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