COM/RB1/acb REVISED DRAFT H-5
from 10/10/01
Decision REVISED PROPOSED DECISION OF COMR. BILAS (Mailed 10/11/01)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Investigation on the Commission's Own Motion to Consider the Costs and Benefits of Various Promising Revisions to the Regulatory and Market Structure Governing California's Natural Gas Industry and to Report to the California Legislature on the Commission's Findings.
Investigation 99-07-003
(Filed July 8, 1999)
(See List of Appearances in Attachment A)
FINAL OPINION
APPROVAL WITH MODIFICATIONS OF THE COMPREHENSIVE GAS OII SETTLEMENT AGREEMENT FORSOUTHERN CALIFORNIA GAS COMPANY AND
SAN DIEGO GAS AND ELECTRIC COMPANY
Table of Content
Title Page
FINAL OPINION APPROVAL WITH MODIFICATIONS OF THE COMPREHENSIVE GAS OII SETTLEMENT AGREEMENT FOR 1
SOUTHERN CALIFORNIA GAS COMPANY AND 1
SAN DIEGO GAS AND ELECTRIC COMPANY 1
I. Summary 2
II. Background 3
III. Discussion 7
A. Precedent 7
B. Current Situation 9
C. Summary of Each Proposed Settlement 10
1. Summary of Interim Settlement 10
2. Summary of Post-Interim Settlement 13
3. Summary of Comprehensive Settlement 16
4. Summary of Long Beach Proposal 28
D. The Legal Standard for Considering Settlements 29
1. Public Interest 30
a) The PI and the Public Interest 30
b) The Long Beach Proposal and the Public Interest 32
c) The IS and the Public Interest 33
d) The CS and the Public Interest/ Modifications to the CS 38
(1) Intrastate Transmission 39
(2) Storage Unbundling 54
(3) Balancing, Imbalance Trading, Information about OFOs, and Pooling 60
(4) Reducing Core Aggregation Program Thresholds and Eliminating the Cap 65
(5) Core Interstate Transportation Capacity Unbundling and Eliminating Core Contribution to Noncore ITCS 68
(6) Brokerage Fee 85
(7) Elimination of Core Subscription 87
(8) Data Access for Customers and their ESPs 90
(9) Consumer Protection 91
(10) Metering and Consolidated Billing 97
(11) Avoided Billing Cost Credit, the Information-only Bill, and Bill Inserts 99
(12) Consistency with Pub. Util. Code Section 328.2 102
(13) Implementation Costs 103
2. Reasonable In Light Of The Whole Record 113
3. Consistent with the Law 116
IV. CONCLUSION 120
V. Comments On Draft Decision 122
VI. Findings of Fact 122
VII. Conclusions of Law 133
ORDER 138
APPENDIX I - Comprehensive Settlement
APPENDIX II - Comparison of Comprehensive, Interim, and Post Interim
SettlementsAPPENDIX III - List of Acronyms
I. Summary
In this opinion, we consider three contested settlement proposals addressing the promising options raised in Decision (D.) 99-07-015 as applied to the Southern California Gas Company (SoCalGas) natural gas system, and to a lesser extent, the San Diego Gas and Electric Company (SDG&E) gas system. The three settlements are known as the Interim Settlement Agreement (IS) filed in December 1999, the Post-Interim Settlement Agreement (PI) filed in February 2000 and the Comprehensive Gas OII Settlement Agreement (CS) filed in April 2000. At the time of submission, all three settlements still had supporters.
Based on the record developed regarding costs and benefits, we choose to adopt the CS, with certain modifications. We believe that the CS will provide significant benefits to all utility customers by allowing customers access to firm tradable transmission rights on SoCalGas' system. The costs associated with intrastate backbone transmission will be unbundled for noncore customers. Noncore customers will be able to acquire intrastate backbone transmission capacity through an open season or purchase gas at the citygate. The utilities' retail core procurement department will continue to reserve interstate capacity, intrastate backbone transmission, and storage to meet the requirements of retail core procurement customers. These changes will provide SoCalGas (and SDG&E) customers with numerous new service choices, and the opportunity to reduce costs by avoiding services that they do not need. The availability of firm, tradable transmission rights will allow customers to place an increased reliance on longer-term firm contracts. We anticipate that this increased reliance on longer-term contracts will bring with it badly needed price stability and rate certainty to all gas customers.
The CS, in pertinent part,: 1) creates firm tradable intrastate transmission rights on the SoCalGas system; 2) establishes a secondary market for intrastate transmission capacity; 3) places the utility at risk for the recovery of backbone transmission costs; 4) establishes Hector Road as a formal receipt point on SoCalGas' system at which nominations may be made; 5) creates firm tradable storage rights together with a secondary market for the trading of those rights; 6) provides for the core and noncore classes to be balanced separately thereby eliminating any potential for cross-subsidization; 7) provides for anonymous monthly imbalance trading; 8) provides for trading OFO imbalance rights; 9) reduces the minimum size requirement and eliminates the core market share restriction for the CAT program; and 10) eliminates core subscription service.
In response to concerns that certain provisions of the CS would invite market manipulation or would increase costs to the core, we adopt several modifications to the CS. The major modifications include a revision to the market concentration limits; the rejection of CS' reduction in the amount of intrastate capacity and storage reserved for the core, and the adoption of a price cap for secondary market transactions. We also emphasize that any unutilized firm capacity held by other parties must be made available daily by SoCalGas on an interruptible basis. The CS, and its appendices, is attached as Appendix I to this opinion.
Additionally, following adoption of this decision, we propose to open a rulemaking to adopt consumer protection rules to protect those ratepayers served by core aggregators and other marketers.
