Bilas Agenda Dec.

II. Background

On January 21, 1998, the Commission issued an Order opening Rulemaking (R.) 98-01-011 to assess the market and regulatory framework of California's natural gas industry and to consider reforms that might foster competition and benefit all California natural gas consumers. In D.99-07-015, on July 8, 1999, the Commission identified the most promising options for changes to the regulatory and market structure of the natural gas industry. The Order Instituting Investigation herein issued the same day, designating this as a ratesetting case appropriate for hearing. That order asked parties to prepare more detailed analyses of the costs and benefits of the promising options,¹ but allowed a short hiatus for exploring the possibility of settlement before prepared testimony was due. At the first prehearing conference in this case, on September 1, 1999, an extension of time was granted for the submission of testimony in order to facilitate settlement.²

Meanwhile, the Legislature enacted Assembly Bill (AB) 1421 in 1999, repealing the former Pub. Util. Code § 328,³ which had arrested the Commission in its restructuring program until January 1, 2000. In its place the Legislature substituted statutes clarifying its intent that the utilities continue to serve the core with bundled services.⁴

This case proceeded on two tracks, one for the PG&E system, and one for the SoCalGas and SDG&E systems. All issues with regard to the PG&E system were resolved in two separate settlements, approved in D.00-02-050 and D.00-05-049, respectively. The southern California settlement discussions proved more difficult. On December 27, 1999, the IS, supported by SoCalGas and SDG&E as well as 20 other parties, was filed⁵. On January 28, 2000, three other proposed settlements and one proposal for consolidating settlements were filed. The parties were directed by the Assigned Commissioner to go back to the negotiating table to try to consolidate the proposals by April 3, 2000.

On that date, the three settlements filed on January 28 were withdrawn, but a new settlement was filed, the PI, to which SoCalGas and SDG&E were not parties. SoCalGas asked for, and received, more time to complete another settlement proposal. On April 17, 2000, SoCalGas, SDG&E and approximately 26 other parties filed the CS. At that point, three settlements were extant: the IS, the PI and the CS. Since each of these settlements was obviously contested, the case was set for hearing⁶. There were pre-hearing discovery motions aimed at clarifying whether SoCalGas still supported the IS; SoCalGas still supported the IS if the Commission did not find the CS acceptable.

There were eight days devoted to an evidentiary hearing⁷ from May 30 to June 8, 2000. The Assigned Commissioner was present on four days of the hearing. On July 10, 2000, late-filed exhibits were received into evidence or rejected and the evidentiary record was closed. Opening briefs were concurrently filed by 20 parties on July 10, 2000; reply briefs were concurrently filed on July 31, 2000⁸. The case was deemed submitted on August 1, 2000.

On September 20, 2000, SoCalGas petitioned to reopen in order to submit amendments to the CS necessitated by the refusal of a company, which was specifically named in the CS to provide the third-party trading platform, to enter into a contract. The record was reopened on October 6, 2000, the amendments and declaration in support thereof received into the record, and the evidentiary record was closed again and the matter resubmitted. The Administrative Law Judge (ALJ) mailed her proposed decision within the 90 days prescribed by law.

¹ We also incorporated the entire record from R.98-01-011 into the record for this proceeding. ² Since that time, two further extensions were granted regarding PG&E's system, and a third granted with regard to the natural gas industry in the southern part of the state. ³ All statutory references are to the Public Utilities Code, unless otherwise noted. ⁴ Section 328. Legislative Findings. The Legislature finds and declares both of the following:

(a) In order to ensure that all core customers of a gas corporation continue to receive safe basic gas service in a competitive market, each existing gas corporation should continue to provide this essential service.

(b) No customer should have to pay separate fees for utilizing services that protect public or customer safety.

Section 328.1. Definitions.

As used in this chapter, the following terms have the following meanings:

(a) "Basic gas service" includes transmission, storage for reliability of service, and distribution of natural gas, purchasing natural gas on behalf of a customer, revenue cycle services, and after-meter services.

(b) "Revenue cycle services" means metering services, billing the customer, collection, and related customer services.

(c) "After-meter services" includes, but is not limited to, leak investigation, inspecting customer piping and appliances, carbon monoxide investigation, pilot relighting, and high bill investigation.

(d) "Metering services" includes, but is not limited to, gas meter installation, meter maintenance, meter testing, collecting and processing consumption data, and all related services associated with the meter.

Section 328.2. Required Gas Service.

The commission shall require each gas corporation to provide bundled basic gas service to all core customers in its service territory unless the customer chooses or contracts to have natural gas purchased and supplied by another entity. A public utility gas corporation shall continue to be the exclusive provider of revenue cycle services to all customers in its service territory, except that an entity purchasing and supplying natural gas under the commission's existing core aggregation program may perform billing and collection services for its customers under the same terms as currently authorized by the commission, and except that a supplier of natural gas to noncore customers may perform billing and collection for natural gas supply for its customers. The gas corporation shall continue to calculate its charges for services provided by that corporation. If the commission establishes credits to be provided by the gas corporation to core aggregation or noncore customers who obtain billing or collection services from entities other than the gas corporation, the credit shall be equal to the billing and collection services costs actually avoided by the gas corporation. The commission shall require the distribution rate to continue to include after-meter services.

⁵ Along with the IS, attached as Appendix I, exemplary implementing tariffs were filed. ⁶ As mandated by § 1708, an opportunity to request a hearing must be afforded to the parties if the Commission plans to alter or amend a previous decision affecting them. Parties to a number of previous Commission decisions affecting SoCalGas were notified of the upcoming hearing. ⁷ There were seven days of prehearing or informational conferences, including those relating to PG&E. The Assigned Commissioner was present at three prehearing conferences. ⁸ Southwest Gas Corporation requested leave to late-file its reply brief, because it had changed its position on the CS, to support it. The permission to late file is granted.