Scope of Issues
Two issues were identified at the prehearing conference. The first issue is whether SoCalGas should be awarded the $6.3 million it is requesting in its Year 9 GCIM application.1 The second issue is whether the GCIM created perverse incentives for SoCalGas and San Diego Gas & Electric Company to manipulate gas prices, and if so, whether the GCIM should be modified or eliminated.
SCE's contention that the GCIM created perverse incentives is being litigated in I.02-11-040. If the Commission determines in that investigation that the GCIM should be modified or eliminated on a retroactive basis, that may affect the Year 9 GCIM amount that SoCalGas is requesting in this application, and a hearing may be needed to examine the effect on the Year 9 GCIM amount.
SCE raised the same contention in SoCalGas' Year 7 and Year 8 GCIM applications, A.01-06-027 and A.02-06-035, about SoCalGas' GCIM. In D.03-08-065 and D.03-08-064, the Commission found that SoCalGas reasonably managed its gas acquisitions and operations for Year 7 and Year 8, respectively, within the context of the GCIM that existed at the time. The Commission concluded in those two decisions that SoCalGas should be awarded the shareholder awards that it was seeking, subject to refund or adjustment as may be determined in I.02-11-040.
No hearings are needed in this proceeding at this point in time because no one contests SoCalGas' calculation of the GCIM award or its operations under the GCIM that existed at the time. Depending on the outcome in I.02-11-040, a hearing may be needed in this proceeding in the future if the Commission decides in I.02-11-040 that the GCIM should be modified or eliminated on a retroactive basis. No one raised any other issues in this proceeding which require a hearing. Accordingly, no evidentiary hearings are needed in this GCIM application unless a decision in I.02-11-040 determines that the GCIM that SoCalGas was operating under in Year 9 should be modified or eliminated.
The preferred course of action is to proceed with issuance of a draft decision on SoCalGas' Year 9 GCIM application, and make any award that may be granted in such a decision subject to refund or adjustment as may be determined in I.02-11-040. The same course of action was taken with respect to SoCalGas' Year 7 and Year 8 applications, and the same procedural course of action should be followed here.
This application was preliminarily categorized as ratesetting in Resolution ALJ 176-3116 on July 10, 2003. Today's ruling confirms that categorization. Anyone who disagrees with this categorization must file an appeal of the categorization no later than ten days after the date of this ruling. (See Rule 6.4.) As a ratesetting proceeding, the ex parte rules contained in Rule 7(c) of the Commission's Rules of Practice and Procedure apply to this proceeding.
The principal hearing officer for this proceeding shall be ALJ Wong.
It is expected that this proceeding will be completed within 18 months from the filing of SoCalGas' application.
1 SoCalGas reports in Attachment A of its application that its average cost of gas was $3.55 per MMBtu, or $0.10 per MMBtu below the benchmark price of $3.65 per MMBtu. Total shared savings were $39 million, of which $32.686 million is the ratepayers' share, and $6.319 million is the shareholders' share.
