San Diego Gas & Electric, which stopped buying fuel oil under long-term contracts in part because of the repercussions of an ill-advised 1978 fuel oil deal, has purchased 540,000 barrels of low-sulphur fuel on the spot market.
SDG&E has shied away from long-term fuel oil contracts for more than five years, according to Jim Nugent, SDG&E's fuel contracts supervisor. Higher fuel oil prices and the 1978 deal that eventually drew a $45-million fine from the state Public Utilities Commission combined to make oil unattractive to the utility.
However, SDG&E is turning to the spot market when cheaper oil prices make the fuel attractive, Nugent said. The spot market involves surplus oil that is often purchased at prices below those offered in long-term fuel contracts.
The fuel oil will be off-loaded from a ocean tanker and piped to the utility's Encina power plant in Carlsbad starting Wednesday. It will be used to supplement natural gas shipments during the coming winter months.