5. Assignment of Proceeding
Timothy Alan Simon is the assigned Commissioner and John S. Wong is the assigned ALJ in this proceeding.
1. SDG&E and SoCalGas were authorized in D.06-12-031 to make OSD to PG&E at a rate of 5 cents per Dth for interruptible service, and to hold an open season to solicit interest in firm OSD to PG&E's system and to file an application for that firm service.
2. The applicants request that they be allowed to make OSD of gas to all pipeline interconnections on an interruptible basis, and that the offering of firm OSD service follow the process approved in D.06-12-031.
3. Interruptible OSD service is usually accomplished by the displacement of the gas supply that is normally received at the OSD interconnection point, or from another receipt point or gas storage on the applicants' transmission systems.
4. Firm OSD service is accomplished by the physical redelivery of gas supply from the applicants' transmission systems to the OSD point.
5. Allowing the applicants to offer OSD service to all of its pipeline interconnections will provide the applicants with the flexibility to readily respond to gas demand needs in east of California markets, give the applicants the same kind of authority that PG&E currently has, and increase the utilization of the applicants' transmission facilities.
6. Since the firm and interruptible OSD services are to be second in priority to all on-system demand and services, there will be no operational impact on the on-system customers, or on the applicants' ability to have available supplies of gas to meet their on-system customers' needs and services, or on the applicants' transmission facilities.
7. Since interruptible OSD service uses the displacement of flowing supplies, SoCalGas will incur negligible operational costs to provide this service.
8. D.06-12-031 rejected the argument that OSD services should be delayed because of possible impacts on gas storage.
9. The interruptible OSD rate is not tied to the level of the FAR charge.
10. Discounting of the interruptible OSD rate is to be done on a non-discriminatory basis.
11. Allowing the discounting of the interruptible OSD rate will encourage potential OSD shippers to use this service, which in turn will maximize the use of the transmission system.
12. The operating conditions on SoCalGas' Southern System requires that a certain minimum amount of gas flow through that part of the system in order to serve customers located in certain counties.
13. A gas imbalance could occur following the Cycle 4 gas nomination process due to a mismatch in the amount of gas coming from an interconnecting pipeline.
14. One of the benefits of expanding OSD service is that the applicants propose to use the incremental revenues to offset transmission costs for on-system customers.
15. Affiliate transaction rule III.F. requires that if a "discount, rebate, or other waiver of any charge or fee" is provided to an affiliate, then an affiliate discount report must be filed.
16. Affiliate transaction rule III.B.2. requires that if a discount is offered to the utility's affiliate, the utility is to contemporaneously make such discount or waiver available to all similarly situated market participants.
17. The request by DRA and SCGC that the applicants provide a quarterly report about their affiliate transactions is not needed because the affiliate discount report required by III.F. of the affiliate transaction rules will provide that same type of information.
18. The applicants and DRA propose two different approaches for how the terms and conditions for firm OSD service should be developed.
19. It is more efficient for the Commission to adopt the general terms and conditions of firm OSD service in this decision so that the applicants and potential firm OSD shippers have an idea of how much this service will cost.
20. SDG&E and SoCalGas are exempt from FERC's jurisdiction under the Hinshaw exemption and are considered Hinshaw pipelines, and hold Part 284 blanket transportation certificates issued by the FERC.
1. SCGC's request to deny the applicants' application is denied.
2. The applicants' request to eliminate the reference in SoCalGas' Rule No. 23 to SoCalGas' Schedule No. GIT, and to eliminate Schedule No. GIT is granted.
3. The applicants should be allowed to expand their interruptible OSD service to all of their interconnection points with interstate and international receipt points on the terms and conditions described in sections 3.3.2. and 3.4. of this decision.
4. The offering of interruptible OSD by the applicants shall not result in any increased costs being passed on to on-system customers.
5. SoCalGas shall revise its tariff to require that if system integrity cannot be maintained with the nominated level of interruptible OSD service, or if the level of nominations exceeds the capacity of the transmission line, the applicants shall be required to curtail or reduce the interruptible OSD nominations.
6. The applicants shall be required to define in their interruptible OSD service tariff that a "similarly situated" shipper means those shippers using a given receipt point on a given day, and to post on a daily basis all interruptible OSD discounts and to offer the same discount to other similarly situated shippers using such service.
7. A floor rate for interruptible OSD service shall be established to ensure that the interruptible OSD rate is not lower than the cost of providing such service and those existing on-system customers are not subsidizing OSD services.
8. The base rate for interruptible OSD service shall be set at 5 cents per Dth, allowed to be increased to a maximum of 15 cents per Dth, and allowed to be discounted down to as low as 1.5 cents per Dth.
9. Interruptible and firm OSD service on SoCalGas' Southern System is to be curtailed if it creates or worsens a minimum flow condition or it imposes other operational costs to on-system customers.
10. To prevent on-system customers from having to pay for gas purchases to maintain system integrity on the Southern System as a result of interruptible or firm OSD, SoCalGas shall reflect in its tariff that the revenues from OSD from the Southern System first go to pay for the fixed deliveries for the day to offset the SRMA costs, and any excess revenues above the day's SRMA costs then be credited to the ITBA for sharing purposes.
11. For interruptible and firm OSD, all OSD shippers shall be required to resolve their imbalances within three business days, and if the imbalance is not resolved within that time period, then the imbalance is to be resolved in accordance with the terms of SoCalGas' Schedule G-IMB tariff.
12. SoCalGas shall revise its Schedule G-RPA tariff so that a G-RPA customer will be required to nominate to a pool account or storage account before the customer can nominate to an OSD account.
13. The applicants' proposal to allocate the net savings from the interruptible OSD service to on-system customers shall be adopted.
14. Any discounting of the interruptible OSD rate shall comply with III.F. and III.B.2. of the affiliate transaction rules.
15. The applicants' process of holding an open season, entering into a contractual commitment with a prospective firm OSD shipper, and filing an application to seek approval of the new facilities and the rate to be charged for firm OSD service, shall be adopted using the terms and conditions of firm OSD service as described in this decision.
16. The applicants should be allowed to expand their firm OSD service to all of their interconnection points with interstate and international receipt points on the terms and conditions described in sections 3.3.3. and 3.4. of this decision.
17. The offering of firm OSD service shall comply with the five following terms and conditions described in section 3.3.3.3. of this decision: first, the application for firm OSD service shall provide a description of the open season process; second, the firm OSD rate shall consist of the two charges described in this decision; third, to ensure that on-system customers receive a benefit from firm OSD service, no discounting will be allowed; fourth, the application for firm OSD service shall address how any unused firm OSD capacity a firm shipper may want to release will be traded or sold, and discuss the residual rights, if any, that the firm shipper might have upon the expiration of the contract for firm OSD service; and fifth, under appropriate circumstances, the applicants may propose in the application for firm OSD service that the firm OSD rate be rolled into the overall transmission system rate, but the test for determining whether a roll-in should be permitted is to be addressed in that new proceeding.
18. Under the FERC regulations, a blanket certificate holder is allowed to engage in the transportation of natural gas on behalf of an interstate pipeline or a local distribution company served by an interstate pipeline, or the sale of natural gas to an interstate pipeline or to a local distribution company served by an interstate pipeline, without impairing its Hinshaw exemption.
19. Authorizing the expansion of interruptible and firm OSD service to other interconnections will not impact the Hinshaw exemptions of SDG&E and SoCalGas, or the ability of this Commission to regulate their activities.
20. Should the FERC or any court of competent jurisdiction issue a decision or a preliminary determination that the OSD service adversely impacts the Hinshaw exemption of either SDG&E or SoCalGas, SDG&E and SoCalGas should be required to take steps to immediately terminate all OSD services, and to reflect that condition in their tariffs and contracts for OSD services.
IT IS ORDERED that:
1. San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas) are authorized to expand their interruptible off-system delivery (OSD) service to all of their other interconnection points with interstate and international receipt points on the terms and conditions described more fully in section 3.3.2. of this decision and summarized as follows: first, the offering of interruptible OSD shall not result in any adverse operational impacts to on-system customers; second, the base rate for interruptible OSD service is 5 cents per decatherm (Dth), and can range up to the rate cap of 15 cents per Dth, and can be discounted on a non-discriminatory basis to as low as 1.5 cents per Dth; third, the OSD tariff shall reflect that the revenues from OSD from the Southern System first go to pay for the fixed deliveries for the day to offset the System Reliability Memorandum Account (SRMA) costs, and any revenues over and above the day's SRMA costs then be credited to the Interstate Transportation Balancing Account for sharing purposes; fourth, all OSD shippers shall resolve their imbalances within three business days, and if not, the imbalance is to be resolved in accordance with the terms of SoCalGas' Schedule G-IMB; fifth, SoCalGas' Schedule G-RPA shall be revised; sixth, the net savings from the interruptible OSD service is to be allocated to on-system customers; and seventh, any discounting of the OSD charge is to comply with sections III.B.2. and III.F. of the affiliate transaction rules.
2. San Diego Gas & Electric Company and Southern California Gas Company are authorized to expand their firm off-system delivery (OSD) service to all of their other interconnection points with interstate and international receipt points on the terms and conditions described more fully in sections 3.3.2. and 3.3.3. of this decision and summarized as follows: first, the OSD tariff shall reflect that the revenues from OSD from the Southern System first go to pay for the fixed deliveries for the day to offset the System Reliability Memorandum Account (SRMA) costs, and any revenues over and above the day's SRMA costs then be credited to the Interstate Transportation Balancing Account for sharing purposes; second, all OSD shippers shall resolve their imbalances within three business days, and if not, the imbalance is to be resolved in accordance with the terms of SoCalGas' Schedule G-IMB; third, the application for firm OSD service shall provide a description of the open season process; fourth, the firm OSD rate shall consist of the two charges described in this decision; fifth, no discounting will be allowed; sixth, the application for firm OSD service shall address how any unused firm OSD capacity a firm shipper may want to release will be traded or sold, and discuss the residual rights, if any, that the firm shipper might have upon the expiration of the contract for firm OSD service; and seventh, under appropriate circumstances, the applicants may propose in the application for firm OSD service that the firm OSD rate be rolled into the overall transmission system rate, but the test for determining whether a roll-in should be permitted is to be addressed in that new proceeding.
3. San Diego Gas & Electric Company and Southern California Gas Company are authorized to file appropriate Tier 1 advice letters for the offering of interruptible off-system delivery services, and firm off-system delivery services, and which reflect the terms and conditions of such services as described and set forth in sections 3.3. and 3.4. and Ordering Paragraphs 1 and 2 of this decision.
4. Should the Federal Energy Regulatory Commission or any court of competent jurisdiction issue a decision or a preliminary determination that the off-system delivery (OSD) service adversely impacts the Hinshaw exemption of either San Diego Gas & Electric Company (SDG&E) or Southern California Gas Company (SoCalGas), SDG&E and SoCalGas shall take steps immediately to terminate all OSD services. SDG&E and SoCalGas shall reflect this condition in their tariffs and contracts for off-system delivery services.
This proceeding is closed.
Dated March 10, 2011, at San Francisco, California.
MICHAEL R. PEEVEY
President
TIMOTHY ALAN SIMON
MICHEL PETER FLORIO
CATHERINE J.K. SANDOVAL
Commissioners
************** PARTIES ************** |
Jeanne B. Armstrong |
Diana L. Lee |
********** STATE EMPLOYEE *********** |
Seema Srinivasan |
George Dehart |
W. Wayne Tomlinson |
Michael E. Campbell |
Taryn Ciardella |
William Tobin |
Jeffrey L. Salazar |
(END OF APPENDIX A)
