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.”