Motion
Specifically, SCE's emergency motion requests the Commission to:
1. direct SCE to suspend its avoided cost posting until December 7, 2000 or advise QFs and other interested parties that the modifications to Transition Formula pricing requested by SCE, if adopted by the Commission on December 7 (or such later date as may be necessary), shall be applied retroactively to all QF deliveries commencing December 1, 2000;
2. expedite its consideration of proposed modifications to the Transition Formula and decide on the merits at the Commission's next regularly scheduled meeting on December 7, 2000; and
3. issue a decision modifying D.96-12-028 to adopt SCE's proposed revision of the "factor" and to replace the simple average of the three published Topock border indices currently used in the SCE Transition Formula with an index consisting of (i) 10% of the simple average of three border indices at Topock (as published in Btu Daily Gas Wire, Natural Gas Intelligence, and Natural Gas Week) and (ii) 90% of Southern California Gas Company's ("SoCalGas") monthly published Schedule G-CS Cost of Gas ("WACOG").2
According to SCE's motion, Natural Gas Week posted a November 27, 2000 price of $15.49/MMBtu for gas delivered at Topock. Daily Gas Wire posted a November 27, 2000 price of $15.50/MMBtu for gas delivered at Topock. This price represents a significant increase over the posted November gas price. SCE projects that this increased price would increase avoided cost payments to SCE's qualifying facilities by approximately $115 million over the preceding month.
According to SCE, the Topock border price has soared from approximately $6.50/MMBtu to over $17.00/MMBtu in the last two months. The Malin border indices have also reached unprecedented levels, but remain approximately $1.00/MMBtu lower than the Topock prices. Wellhead prices in the San Juan and Permian basins have also reached over $6.00/MMBtu during the same period, but SCE argues that the border prices observed in recent days cannot be explained solely with reference to the rise of gas prices in the producing basins. The basis differential3 at Topock during the most recent trading days has exceeded $10.00/MMBtu.
SCE argues that the posted California border indices no longer reasonably serve as an appropriate proxy for what SCE's gas procurement costs would be today absent industry restructuring. SCE argues that it never exclusively purchased its natural gas at the Topock spot price, but rather used a diversified portfolio approach to fuel procurement. SCE states that while it may have been reasonable for the Commission to find in 1996 that the historically stable Topock indices were a fair proxy for SCE's portfolio approach, it is clear that they no longer remain a good proxy.
2 SCE notes that this is a new proposal for how to resolve the merits of its underlying petition which it had not previously set forth. 3 The basis differential is the difference between prices in the producing basins and at the border and usually bears some relationship to transportation costs from the basin to the border.
