3. Description of Current FAR System
D.06-12-031 established the FAR system as the new receipt point access structure for southern California. The FAR system allocates and prioritizes access to the SoCalGas gas backbone transmission system.7
Prior to the adoption of the current FAR system, customers shipping gas into southern California from the upstream pipelines had no assurance that their gas would flow through the receipt points on the SDG&E/SoCalGas system when desired. Because the delivery capacity of the upstream pipelines is greater than the takeaway capacity of the SDG&E/SoCalGas receipt points,8 it created a constraint in delivering gas into southern California. SDG&E/SoCalGas previously allocated the available receipt point capacity to upstream interstate pipelines on a daily basis. The interstate pipelines then allocated that capacity among their shippers on a pro rata basis, using the capacity allocation rules approved by the Federal Energy Regulatory Commission.
The current FAR system was adopted by D.06-12-031 to enable end-users, gas suppliers, and gas marketers in southern California to hold firm rights to receipt point capacity on the SDG&E/SoCalGas gas transmission system.9 This is intended to provide FAR holders greater certainty that capacity at receipt points will be available when needed to transport gas into California.
The current FAR system operates in three-year backbone transmission cycles, beginning with a three-step "open season" (Open Season) process to initially allocate to market participants FARs to the available capacity at existing and new receipt points. FARs acquired in the Open Season process give the FAR holders first priority in scheduling nominations to the receipt point during the remainder of the three-year backbone transmission cycle.10
After completion of the Open Season, FAR holders have two weeks to
re-contract (exchange) any part of their allocated capacity from any receipt point to a different receipt point to the extent capacity is available at the requested receipt point. After conclusion of the re-contracting period, any unsubscribed firm receipt point access capacity is available as short-term FARs on a first-come, first-served basis for a minimum term of one month and a maximum term up to the period remaining in the three-year backbone transmission cycle.11
Holders of firm FARs pay a monthly reservation charge for the FARs based on the number of decatherms (Dth) per day awarded (the volumetric rate for firm FARs has been set at $ 0.00). Interruptible FAR rates are based on a volumetric rate which has been set at the same rate as the firm reservation rate.
In addition to adopting a FAR system for allocating capacity on the SDG&E/SoCalGas intrastate natural gas transmission system, D.06-12-031 authorized establishment of a secondary market, using an electronic trading platform on the SoCalGas electronic bulletin board (EBB), where a FAR holder can release and sell all or a portion of its FARs, and where a creditworthy party may purchase FARs.12
7 The "backbone" is the portion of the gas transmission system from receipt points to the city-gate. The "local" transmission system is the portion of the gas transmission system from the city-gate to the meter.
8 5675 million cubic feet per day (MMcfd) delivery capacity versus 3875 MMcfd takeaway capacity.
9 The rules governing the FAR system are primarily found in the SoCalGas Receipt Point Access tariff that allows customers to obtain "firm" or "interruptible" rights to capacity. See Schedule No. G-RPA.
10 FAR holders may also exercise their FARs at another receipt point within the same transmission zone on an "alternate firm basis." FARs may also be exercised at out-of-zone receipt points. However, nominations at out-of-zone receipt points are scheduled after alternate firm nominations within a zone.
11 Unallocated receipt point capacity is also available on an interruptible basis.
12 D.06-04-033 in Phase 1 of A.04-12-004 authorized the integration of the SoCalGas and SDG&E gas transmission systems, with SoCalGas managing the two systems.
