DISCUSSION
It is clear from D.90-09-089 and D.90-07-065 that the fulfillment of the noncore customer's contract commitment in taking service on G-CS is not only a reasonable trade-off for the high level of priority and the convenience that customers receive under core subscription service, but also impacts the utility's financial and operational planning. The contractual obligation provides the utility an amount of certainty of planned load under the service in maintaining these functions. D.91-11-025 expanded on this point, discussing how core subscription load may affect stranded interstate capacity costs.
AAA Glass and HF Coors entered into contracts with the knowledge they were accepting the contract term requirements in exchange for the core subscription service they expected to receive. The rationale provided by SoCalGas for allowing a deviation from the two-year term in its initial request in 2924 and 2925, that the customers may procure natural gas suppliers from a third party provider or marketer, is clearly inconsistent with the point of core subscription service, stated in D.90-09-089 by the following: "D.90-07-065 also stated that the purpose of the core subscription service would not be to provide noncore customers with access to utility gas supplies when they happen to be priced comparatively low, or a means to increase utility loads. The purpose of the core subscription service would not be to provide customers with yet another competitive option on a short-term basis."5 SoCalGas provided no other justification for allowing these customers to leave the core subscription rate schedule.
In ALs 2924-A , 2925-A, and its response to TURN's protest, SoCalGas has proposed measures to address concerns raised by TURN regarding cost shifting impacts and discriminatory implications of allowing two customers the deviation requested by these advice letters. SoCalGas indicates in its amended request that AAA Glass and HF Coors would pay reservation charges embedded in the new core rate schedules that would be equivalent to the pipeline-related reservation charges they would have paid under G-CS. SoCalGas would ensure that core ratepayers are made whole by requiring that AAA Glass and HF Coors be made responsible for the costs associated with the core ITCS and the reservation charges under G-CS in the event of a deviation. SoCalGas, however, has not provided any rationale for an early termination of a short contractual obligation for two customers, one of whom signed their current G-CS contract less than six months before requesting to terminate the contract.
In ALs 2924-A and 2925-A, SoCalGas did not specify the core rate schedules to which the customers would switch. In response to Energy Division data requests, SoCalGas indicated that AAA Glass would switch to Schedule GT-10, core aggregation transportation service for core commercial and industrial customers, and HF Coors would switch to Schedule GN-10, bundled core service for small commercial and industrial customers. Apparently, HF Coors is no longer interested in obtaining gas from an alternate gas supplier, but still wants to switch schedules. This justification (obtaining gas from an alternative gas supplier) is no longer stated in AL's 2924-A or 2925-A.
SoCalGas first indicates that the customers would take service under other core rate schedules if allowed to switch from Schedule G-CS. SoCalGas then states that if the customers chose to take service under noncore rate schedules, the customers would be required to pay the full remaining reservation charges. SoCalGas does not specify that the customers would be required to continue contributing to recovery of core ITCS costs for the remainder of their contract term. SoCalGas also does not specify how the remaining reservation charges would be calculated.
SoCalGas cites in its response to TURN's protest, a prior request in AL 2521 where a deviation was granted and requests the Commission grant equivalent treatment. The customer involved in AL 2521 agreed to pay the fixed reservation charge on its remaining contract as part of the arrangement in order to terminate the contract. As SoCalGas acknowledges, the reservation is no longer a fixed charge. Interstate reservation costs are currently recovered by a volumetric charge. In addition, it does not appear that the customer was required to continue a contribution to recovery of core ITCS costs. This distinguishes the situation in AL 2521 from that which we review by ALs 2924-A and 2925-A.
Energy Division sent SoCalGas several data requests to try to gather from the utility adequate justification to authorize the requested deviation. It's possible that changes to the G-CS rate resulting from the recent Biennial Cost Allocation Proceeding (BCAP) implementation may have had an economic impact on the customers' decision to choose a preferential service to G-CS. The applicable customer charge on rate schedule G-CS was partly based on the customer's level of usage before the 1999 BCAP. When the 1999 BCAP became effective, the customer charge was applied without differentiating for usage levels. In addition, prior to the effective date of the 1999 BCAP rates, June 1, 2000, the reservation charge was stated as a fixed monthly charge. Under the new rates, the reservation charge is stated as strictly a volumetric charge. These changes in the core subscription tariff may have an economic impact on these customers. In any case, this does not constitute a reasonable basis by which to grant SoCalGas' request without further justification.
In addition, now that the customers would have to pay for core reservation charges and possibly core ITCS charges as provided by ALs 2924-A and 2925-A, the customers do not appear ready to give up the reliability of core service.
SoCalGas addressed TURN's protest regarding discriminatory behavior by proposing to extend similar treatment to that offered to AAA Glass and HF Coors to any G-CS customer seeking a deviation. Again, this proposal does not provide the justification needed to grant a deviation from a tariff provision. Rather than requiring the adequate information and justification needed to authorize a deviation from a tariff for two customers, SoCalGas would grant a deviation to any G-CS customer without clear justification. Although the likelihood is not high that such a policy would be exercised by SoCalGas as to invalidate Special Condition 4 of G-CS by piecemeal treatment, we should not put at risk the formal review process required to modify a tariff.
SoCalGas has given insufficient rationale by Advice Letters 2924 and 2925, and in its subsequent supplemental advice letters 2924-A and 2925-A to warrant a deviation from a provision that is a fundamental basis of contractual agreements under the core subscription tariff. We should deny SoCalGas' request in the above-mentioned advice letters. SoCalGas should include in any further submissions regarding the requested deviations: 1) a clear statement of justification for the requested deviations, 2) a calculation of the reservation charges remaining on each customers' G-CS contracts that the customers would be responsible for if granted the deviations, and 3) a calculation of the remaining core ITCS charges that the customers would pay should they elect noncore service at any point during the time frame they would have taken service under G-CS .
5 5. D.91-11-025, p.14, slip opinion.
