PG&E proposes to limit any one shipper to no more than 500 Mdth/d of annual firm capacity for deliveries to PG&E Citygate. This limitation represents 15% of the total system capacity and 25% of the system capacity after subtracting the core holdings. PG&E designed this limitation to mitigate the risk that a single shipper acquires enough quantity of capacity so as to control the price of gas at PG&E's Citygate. However, PG&E did not make the market concentration smaller because large end-use electric generation customers would need to buy a portion of their needs from another shipper adding unnecessary costs to their cost of gas.
Calpine, an owner of multiple generation facilities, contends that this limitation is unworkable, unnecessary, and likely to increase the cost of gas to large end-users since Calpine would have to obtain secondary transportation from marketers or competing pipelines. Calpine opines that any bidding limitation can be easily avoided, or any bidder could arrange with a third party to bid on behalf of itself. Calpine instead suggests that market concentration can be better controlled by the development of competitive pipelines. The only market limitation Calpine approves is for PG&E affiliates.
The Indicated Producers support the 25% limitation on any backbone transmission path, but also support the opportunity for customers7 to acquire capacity in a "customer first" open season with at least 50% of all available capacity made available to existing customers. Capacity that is unsubscribed after this round can be combined with the remaining 50% for release in a second round of open season in which customers and other shippers may participate. The Indicated Producers also suggest that the Commission should modify the definition of "affiliate" as it applies to shipper and shipper affiliates.
ORA is concerned with PG&E's proposed market concentration limits because there is no evidence or testimony to support these limits, there are no market limitations on the secondary market, and no provisions to address the scenario that could develop between bidders utilizing both the open season and the secondary market.
Coral is concerned that the proposed market concentration limits are not part of the current Gas Accord and therefore PG&E should not be allowed to impose such limitations before the Commission has an opportunity in the Post 2002 proceeding to address this issue.
7 The Indicated Producers do not define "customers."