9. Comments on Draft Decision
The proposed decision of the Administrative Law Judge was mailed to the parties in accordance with Pub. Util. Code § 311(d) and Rule 77.1 of the Rules of Practice and Procedure. Comments were received and to the extent applicable were incorporated in this decision.
1. SoCalGas and SDG&E will operate more efficiently and economically when they consolidate the management of their currently separate gas acquisition departments, and consolidate their gas supply portfolios, including associated storage and interstate capacity.
2. Consolidating applicants' gas acquisition management functions and their gas portfolios will generate savings to be passed through to their gas customers through organizational efficiency.
3. SoCalGas and SDG&E combined have about 54 people dedicated to gas acquisition functions. By consolidating management, approximately 7 to 9 positions can be eliminated. This would produce an overhead savings (salaries, benefits, and associated support costs) of about one million dollars per year.
4. Consolidation will produce: 1) more efficient gas purchasing resulting in lower commodity costs because of the greater amount of natural gas being procured and greater diversity of demand being served, 2) more efficient use of storage and capacity assets, 3) greater efficiency in the cost of managing the utilities' gas procurement activities, 4) rate stability for core customers, and 5) regulatory efficiency.
5. The combined purchasing power of the two utilities might be sufficient to counteract market power of suppliers, which would benefit California customers.
6. Consolidation avoids speculation by SDG&E regarding the border price of gas.
7. On November 1, 2001, SoCalGas recovered 160 MMcfd of El Paso capacity; on January 1, 2002, it recovered an additional 50 MMcfd; on March 1, 2003, to comply with existing contracts, SoCalGas will transfer to third parties 100 MMcfd; on January 1, 2005, SoCalGas will recover 30 MMcfd of capacity. The amount of capacity that reverts to SoCalGas between November 1, 2001 and August 31, 2006 when the SoCalGas - El Paso contracts expire is never more than 210 MMcfd and after March 1, 2003, significantly less.
8. SoCalGas' and SDG&E's core customers should be allocated all unassigned El Paso capacity that becomes available until the end of the underlying contract in 2006, or until the Commission issues a decision in the next SoCalGas proceeding which considers capacity for the core, whichever comes first.
9. SoCalGas' current 1044 MMcfd core allocation is roughly equal to SoCalGas' average daily core load under average weather conditions. SDG&E will be adding about 125 MMcfd of core load to the consolidated portfolio, and will contribute about 25 MMcfd of firm interstate capacity from Canada and 10 MMcfd of firm capacity on El Paso (plus 3.6 MMcfd capacity recently obtained in an El Paso open season). SDG&E's interstate capacity rights are just under 90 MMcfd less than its annual average core demand. The core loads of Long Beach and Southwest Gas are less than 20 MMcfd combined. Thus, the addition to the consolidated portfolio of unassigned El Paso capacity that becomes available will ensure no dilution in the relative percentage of SoCalGas customer core load served by interstate capacity.
10. The core requires additional capacity at a price that enhances rate stability; the as-billed rate achieves this objective.
11. There is insufficient evidence on which to base a finding regarding a change in delivery points for gas.
12. It is appropriate to adopt uniform rules for election of core transportation and procurement service by noncore customers of each of the two utilities.
13. SoCalGas and SDG&E are not required to accept elections by noncore customers for core transportation service if existing utility intrastate capacity is not sufficient, to prevent service to traditional core customers becoming degraded.
14. Noncore customers who were already receiving core subscription service before January 1, 2001, are allowed to switch to bundled core transportation and utility procurement service on the effective date of this decision, if they are still on core subscription service as of that date, without having to pay the cross-over procurement rate.
15. Wholesale customers of SoCalGas may purchase gas from the consolidated gas portfolio on terms comparable to that which SDG&E will receive.
16. SDG&E's electric customers should be permitted to benefit from the expertise available in the consolidated gas acquisition group as a means of reducing costs and ameliorating electric rates.
1. It is reasonable that SoCalGas and SDG&E:
a. Consolidate their gas supply portfolios and related interstate pipeline and storage capacities, and charge the same cost of gas to utility procurement customers in their service territories.
b. Consolidate the management of their separate gas acquisition functions into a single management group.
c. Implement revised uniform rules for their noncore customers wishing to obtain core service from them.
d. Implement revised uniform rules for large core customers who wish to obtain utility procurement service after having first elected transportation-only service.
e. Allow non-affiliated wholesale customers to purchase gas from their combined portfolio on terms that are reasonable for all affected core gas consumers.
f. Reallocate unassigned SoCalGas capacity on the El Paso Natural Gas Company's pipeline to the two utilities' consolidated gas supply portfolio.
2. The combined gas acquisition organization must remain separate from the utilities' gas operations organizations, as required by SoCalGas/SDG&E merger conditions.
3. ORA's motion to receive into evidence Attachment A in its Reply Brief is denied.
4. Any cost reductions created by the consolidation should be reflected in the applicants next rate cases.
5. This decision is effective today in order to allow these changes to take place expeditiously.
IT IS ORDERED that:
1. Within 30 days after the effective date of this decision Southern California Gas Company (SoCalGas) and San Diego Gas & Electric Company (SDG&E) shall file revised tariff schedules, subject to the approval of the Energy Division, implementing the Findings of Fact and Conclusions of Law of this decision. The revised tariff schedules shall comply with General Order 96-A and shall apply to services rendered on or after their effective date.
2. The cost of all gas supplies and associated storage and interstate capacity currently held by SoCalGas and SDG&E shall be included in the combined portfolio.
3. All new gas supplies and assets shall be included in the combined portfolio.
4. Unassigned El Paso capacity held by SoCalGas shall be allocated to the consolidated portfolio to the extent that existing agreements for its brokering expire and it is not otherwise committed. This allocation shall be effective until the Commission issues a decision in the next SoCalGas proceeding which considers capacity for the core.
5. Customers receiving procurement service from SoCalGas or SDG&E shall pay the same rate for procurement service (including the cost of interstate capacity and storage).
6. Electric generation, refinery, and enhanced oil recovery (EOR) customers of either utility, any of whom consume over 250,000 therms per year, may not choose core transportation service or bundled core transportation and utility procurement service.
7. Other customers with noncore status, after expiration of any firm contracts they already have with their utility, have the option to switch to core transportation-only service or bundled core transportation and utility procurement service. Noncore firm service customers have a one-time option to cancel their existing firm service contract in order to elect core service, provided the election occurs within three months of the effective date of the new service.
8. Noncore customers switching to bundled core transportation service and utility procurement service are required to pay a cross-over procurement rate for the first 12 months. The cross-over rate is the higher of a) the posted monthly core procurement rate (which will include intrastate backbone costs) or, b) the GCIM monthly benchmark for California border purchases plus the per-unit cost of intrastate backbone costs included in the posted monthly procurement rate.
9. Noncore customers who elect bundled core transportation and utility procurement service, shall be required to pay the cross-over rate for a period not to exceed 12 months after they commenced core subscription service from SDG&E.
10. Noncore customers electing transportation-only service or bundled transportation and utility procurement service are required to make a five-year commitment to that service.
11. Core customers with annual consumption over 50,000 therms who want to switch from a CAT marketer to utility procurement service may do so. These customers are required for the first 12 months of utility procurement service to pay the cross-over rate. A core customer consuming over 50,000 therms per year who returns to utility procurement service because his CAT left California does not have to pay the cross-over rate. Such a customer has 90 days to find a different CAT marketer or be a committed to utility procurement service for a full 12 months. However, if the customer chose a different CAT marketer within 90 days, the customer will be charged the cross-over rate for the procurement service it received from the utility within those 90 days.
12. Core customers of the wholesale customers shall be treated as if they were SoCalGas/SDG&E core customers and noncore customers of the wholesale customers shall be treated as if they were SoCalGas/SDG&E noncore customers.
13. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
ATTACHMENT A
KEITH R. MCCREA MICHAEL BRIGGS
ATTORNEY AT LAW RELIANT ENERGY
SUTHERLAND, ASBILL & BRENNAN LLP 801 PENNSYLVANIA AVENUE, N.W.
1275 PENNSYLVANIA AVENUE, NW WASHINGTON, DC 20004-2604
WASHINGTON, DC 20004-2415
ALEX GOLDBERG KIRBY BOSLEY
WILLIAMS COMPANIES, INC. RELIANT ENERGY
MD 41-3 1050 17TH STREET, SUITE 1450
ONE WILLIAMS CENTER, SUITE 4100 DENVER, CO 80265-1450
TULSA, OK 74172
GILLIAN WRIGHT R. VAN DER LEEDEN
SEMPRA ENERGY ATTORNEY AT LAW
555 W. FIFTH STREET; M.L. GT14-D6 SEMPRA ENERGY
LOS ANGELES, CA 90013 555 W. FIFTH STREET
LOS ANGELES, CA 90013
NORMAN A. PEDERSEN ROBERT L. PETTINATO
ATTORNEY AT LAW LOS ANGELES DEPARTMENT OF WATER & POWER
JONES DAY REAVIS & POGUE NATURAL GAS GROUP ENERGY CONTROL CENTER
555 W. FIFTH STREET, SUITE 4600 PO BOX 51111, ROOM 1148
LOS ANGELES, CA 90013-1025 LOS ANGELES, CA 90051-0100
SCOTT EDWARDS ERIC KLINKNER
PRESIDENT CITY OF PASADENA
ASSOCIATION OF TEXTILE DYERS 150 LOS ROBLES AVENUE, SUITE 200
2833 LEONIS BLVD., SUITE 316 PASADENA, CA 91101-2437
LOS ANGELES, CA 90058
STEVEN G. LINS BRUNO JEIDER
OFFICE OF THE CITY ATTORNEY CITY OF BURBANK
CITY OF GLENDALE 164 WEST MAGNOLIA BOULEVARD
613 EAST BROADWAY, STE 220 BURBANK, CA 91502
GLENDALE, CA 91206-4394
ROGER T. PELOTE JOHN BURKHOLDER
WILLIAMS ENERGY SERVICES BETA CONSULTING
12731 CALIFA STREET 2023 TUDOR LANE
VALLEY VILLAGE, CA 91602 FALLBROOK, CA 92028
FREDERICK ORTLIEB JOHN W. LESLIE
DEPUTY CITY ATTORNEY ATTORNEY AT LAW
CITY OF SAN DIEGO LUCE FORWARD HAMILTON & SCRIPPS, LLP
1200 THIRD AVENUE, 11TH FLOOR 600 WEST BROADWAY, SUITE 2600
SAN DIEGO, CA 92101 SAN DIEGO, CA 92101-3391
MARCEL HAWIGER MARION PELEO
ATTORNEY AT LAW ATTORNEY AT LAW
THE UTILITY REFORM NETWORK CALIFORNIA PUBLIC UTILITIES COMMISSION
711 VAN NESS AVENUE, SUITE 350 505 VAN NESS AVENUE, ROOM 5027
SAN FRANCISCO, CA 94102 SAN FRANCISCO, CA 94102
ROBERT M. POCTA EVELYN KAHL
CALIF PUBLIC UTILITIES COMMISSION ATTORNEY AT LAW
MARKET DEVELOPMENT BRANCH ALCANTAR & KAHL, LLP
ROOM 4101 120 MONTGOMERY STREET, SUITE 2200
505 VAN NESS AVENUE SAN FRANCISCO, CA 94104
SAN FRANCISCO, CA 94102-3214
FRANK R. LINDH BRIAN CRAGG
ATTORNEY AT LAW ATTORNEY AT LAW
PACIFIC GAS AND ELECTRIC COMPANY GOODIN MACBRIDE SQUERI RITCHIE & DAY LLP
77 BEALE STREET 505 SANSOME ST., 9TH FLOOR
SAN FRANCISCO, CA 94105 SAN FRANCISCO, CA 94111
CHRISTOPHER A. HILEN EDWARD W. O'NEILL
ATTORNEY AT LAW ATTORNEY AT LAW
LEBOEUF LAMB GREENE & MACRAE LLP DAVIS WRIGHT TREMAINE, LLP
ONE EMBARCADERO CENTER, SUITE 400 ONE EMBARCADERO CENTER, SUITE 600
SAN FRANCISCO, CA 94111 SAN FRANCISCO, CA 94111-3834
SARA STECK MYERS MICHAEL ROCHMAN
ATTORNEY AT LAW MANAGING DIRECTOR
122 28TH AVENUE CALIFORNIA UTILITY BUYERS JPA
SAN FRANCISCO, CA 94121 1430 WILLOW PASS ROAD, SUITE 240
CONCORD, CA 94520
CATHERINE E. YAP PATRICK J. POWER
BARKOVICH AND YAP ATTORNEY AT LAW
POST OFFICE BOX 11031 1300 CLAY STREET, SUITE 600
OAKLAND, CA 94611 OAKLAND, CA 94612
TOM BEACH WILLIAM B. MARCUS
CROSSBORDER ENERGY JBS ENERGY, INC.
2560 NINTH ST., SUITE 316 311 D STREET, SUITE A
BERKELEY, CA 94710 WEST SACRAMENTO, CA 95605
JAMES WEIL MICHAEL P. ALCANTAR
AGLET CONSUMER ALLIANCE ATTORNEY AT LAW
PO BOX 1599 ALCANTAR & KAHL, LLP
FORESTHILL, CA 95631 1300 SW FIFTH AVENUE, SUITE 1750
PORTLAND, OR 97201
ANDREW W. BETTWY JACK MCNAMARA
ATTORNEY AT LAW MACK ENERGY COMPANY
SOUTHWEST GAS CORPORATION PO BOX 1380
PO BOX 98510 AGOURA HILLS, CA 91376-1380
LAS VEGAS, NV 89193-8510
NORMAN J. FURUTA BRUCE FOSTER
ATTORNEY AT LAW REGULATORY AFFAIRS
DEPARTMENT OF THE NAVY SOUTHERN CALIFORNIA EDISON COMPANY
2001 JUNIPERO SERRA BLVD., SUITE 600 601 VAN NESS AVENUE, SUITE 2040
DALY CITY, CA 94014-1976 SAN FRANCISCO, CA 94102
CLAUDINE SWARTZ EDWARD G. POOLE
SEMPRA ENERGY ATTORNEY AT LAW
601 VAN NESS AVENUE, SUITE 2060 ANDERSON & POOLE
SAN FRANCISCO, CA 94102 601 CALIFORNIA STREET, SUITE 1300
SAN FRANCISCO, CA 94108
LULU WEINZIMER ROBERT B. WEISENMILLER, PH.D.
CALIFORNIA ENERGY MARKETS MRW & ASSOCIATES, INC.
9 ROSCOE STREET 1999 HARRISON STREET, SUITE 1440
SAN FRANCISCO, CA 94110-5921 OAKLAND, CA 94612-3517
ANN T. DONNELLY
CONSULTANT
POWER RESOURCE MANAGERS, LLP
1610 C STREET, SUITE 102
VANCOUVER, WA 98663
MARIA E. STEVENS JACQUELINE GREIG
CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION
EXECUTIVE DIVISION MARKET DEVELOPMENT BRANCH
320 WEST 4TH STREET SUITE 500 ROOM 4205
LOS ANGELES, CA 90013 505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3214
ROBERT A. BARNETT SARITA SARVATE
CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION
DIVISION OF ADMINISTRATIVE LAW JUDGES DECISION-MAKING SUPPORT BRANCH
ROOM 5008 AREA 4-A
505 VAN NESS AVENUE 505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3214 SAN FRANCISCO, CA 94102-3214
FERNANDO DE LEON
ATTORNEY AT LAW
CALIFORNIA ENERGY COMMISSION
1516 9TH STREET, MS-14
SACRAMENTO, CA 95814-5512
(END OF ATTACHMENT A)
