Article City Forum Tony Ferrara

Preparing for a Worst Case Scenario: California Energy Commission Offers a Set-Aside Program for Petroleum Fuels

Tony Ferrara is mayor of the City of Arroyo Grande and chief of State Agency Training and Support for the California Specialized Training Institute, Governor’s Office of Emergency Services. He can be reached at

What would your city do if fuel was not available — at any price? Imagine that your contract supplier tells you that your regular fuel delivery will be delayed “indefinitely” due to a market disruption, refinery shutdown or the occurrence of a major disaster. Given the volatile nature of today’s petroleum markets, local government emergency plans must address potential fuel shortages.

Many cities have developed energy annexes as an element of their emergency plan. These annexes typically provide information as to how their jurisdiction can access “set-aside” fuel to ensure that public safety agencies can continue to operate.

In the event of an energy emergency, California’s Petroleum Fuels Set-Aside Program helps to mitigate regional fuel shortages and hardships for certain categories of end-users that are unable to acquire fuel at any price. The set-aside program is implemented only after the governor proclaims an energy emergency and when market forces, voluntary conservation or other mandatory programs are unable to maintain an adequate and equitable distribution of fuel.

The program is not intended to reduce or inhibit the market price of fuel. All fuel delivered through the set-aside program will be purchased at the market price and whenever possible, delivered through a city’s usual contract supplier.

How Is the Program Administered?

When the governor proclaims an energy emergency for the state, Emergency Stand-by Order #6 activates the set-aside program and provides for the appointment of a fuels allocation officer (FAO).

The FAO administers the set-aside program from the Fuels Allocation Office at the California Energy Commission (CEC) Headquarters in Sacramento.

The program terminates when the governor rescinds the energy emergency proclamation or otherwise determines that the set-aside program should be deactivated.

Who Is Eligible to Apply?

The set-aside program identifies certain “fuel use categories” as eligible to receive set-aside fuel. At the top of the list of priority users is emergency services, a category that includes police, fire, ambulance services or emergency medical operations, dispatch centers, emergency operations centers and emergency shelters.

In major disasters, virtually all city personnel become emergency responders. Set-aside fuel may be used for any city vehicle that is involved in the disaster response, including those from Building and Safety as well as Public Works departments.

The following categories are also eligible to apply for set-aside fuel:

  • Health Care Services - Including hospitals, clinics, nursing homes and other critical care facilities;
  • Utility Services - Electricity generation, natural gas production and distribution, water, sanitation and communications;
  • Critical Government Activity - Services such as snow removal, debris removal and repair of critical facilities;
  • Public Conveyance - Regional transit systems, light rail systems, school buses and senior shuttle services;
  • Agriculture - Food production, harvesting, transportation and other related activity;
  • Marine Industry/Transportation - Cargo vessels, commercial cruise lines and commercial fishing industry;
  • Trucking - Interstate freight and mail; and
  • Other services and agencies determined by the FAO to beeligible for the program.

Coordination with the Governor’s Office of Emergency Services

It is important to note the difference between an energy shortage that is caused by a market disruption or refinery shutdown and shortages caused by natural or man-made disasters, because two different lead agencies coordinate the responses.

When the fuel supplies are disrupted due to a major disaster, the Governor’s Office of Emergency Services (OES) is the lead agency. The CEC provides support for disaster operations along with other state agencies. This may include implementation of the set-aside program to ensure adequate supplies are available for the disaster response.

When the fuel shortage is caused by a market disruption or refinery shutdown, the CEC is the lead agency. As a key support agency, OES coordinates all local government emergency fuel requests with the CEC’s Fuel Allocations Office.

Applying for the Set-Aside Program

In all cases, regardless of the cause of the supply disruption, cities should utilize the “levels of government” protocol defined in the Standardized Emergency Management System. For example, the city should make its initial request through the operational area. Short-term relief may be available through the county or other neighboring jurisdictions within the operational area. In the event of a protracted disruption, the operational area will request emergency fuel for the county and any jurisdiction in need within the county’s geographical boundaries. This request will be directed to the appropriate OES region. If the shortage is confined to that region, then the OES Regional Office will coordinate directly with the CEC’s Fuels Allocations Office. In many instances, localized shortages can be mitigated through an informal allocation procedure facilitated by the fuels office.

However, if the shortage is statewide, requests from each of the three OES regions should be channeled to the state Operations Center at OES headquarters. Statewide public safety and emergency services priorities will be determined by OES and appropriate requests forwarded to the CEC Fuels Office.

Plan Ahead Now

Cities should not wait for a crisis to occur. The time for developing plans and training your personnel is now, before the event occurs. City emergency management coordinators should work in conjunction with their operational areas to ensure that area-wide plans are coordinated and lines of communication are well established.

Additional information on the Petroleum Fuels Set-Aside Program can be obtained by contacting: Special Projects Office, California Energy Commission, 1516 9th Street, MS 23, Sacramento, CA 95814-5512; e-mail:  

This article appears in the October 2006 issue of Western City
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