2. Issues Considered
D.06-12-031 requires the Commission to review how the system of FAR has operated, the impact the FAR system has had on end-use customers, market participants, and the gas market in southern California, and whether any changes or modifications to the FAR system are needed.3 In addition to assessing the FAR system's performance, the Application, and parties' protests and responses to the Application identified several operational and rate-related issues that should be included in the scope of the proceeding.4
Thus, this proceeding considers the following issues:
1. An assessment of how the FAR system is working and whether any changes or modifications to the FAR system are needed;
2. The impact on FARs during operational flow orders (OFOs), including the sale of additional FARs by SoCalGas following the declaration of an OFO on that flow day, and whether any proposed change to the FAR program will, on a prospective basis only, affect the frequency of OFOs;5
3. Whether the Commission should authorize a change in the amount of FARs that SoCalGas may offer for sale in the next FAR cycle, including the sale of FARs after noticed maintenance events;
4. Whether compensation or other relief should be provided to FAR holders who are unable to schedule their firm primary rights;6
5. Whether Applicants' FAR cost allocation, rate design, and cost recovery proposals are reasonable, including the reasonableness of the proposed separation of costs between local and backbone transmission, the reasonableness of the proposal to collect an in-kind fuel charge rather than collecting a charge in end-use rates for compressor fuel, the reasonableness of the proposal to fully unbundle backbone transmission costs from rates, and the reasonableness of the other proposals set forth in the Application;
6. Whether the structure and operation of the Open Season process are reasonable, including eligibility of upstream arrangements to serve core loads for Pre-Open Season Step 1, and the proposal to eliminate recontracting and interruptible sales from the Open Season process;
7. Whether the System Operator should pay FAR charges similar to those paid by other SoCalGas customers when purchasing and selling gas supplies for system reliability purposes; and
8. Whether SoCalGas and SDG&E should be required to establish receipt point pools at each SoCalGas and SDG&E receipt point.
We first describe and assess how the FAR system is working, and then consider the issues above in determining what modifications, if any, should be made.
3 Ordering Paragraph No. 7.
4 During the July 22, 2010 PHC, parties were granted additional time to continue their ongoing settlement discussions, including discussions concerning the issues to be included in the scope of the proceeding, and to submit a status report. On July 28, 2010, SDG&E/SoCalGas, DRA, SCGC, SCE, Southwest Gas, Shell, and Long Beach submitted a joint status report (Joint Status Report) identifying the issues that parties recommended be included in the scope of the proceeding. No party objected to the recommended list of issues, and, except for minor changes, the Scoping Memo adopted the Joint Status Report's recommendations.
5 An OFO is issued to avoid over pressurization of the transmission system if forecasted system capacity is less than scheduled quantities. SoCalGas Rule No. 41, Sheet 2.
6 Firm "primary" and "alternate" rights are described in D.06-12-031, at 12-13, 78, 81.
