PROTESTS

The Office of Ratepayer Advocates (ORA) filed a protest on September 13, 2000 recommending that the Commission deny SoCalGas' proposed contract amendment.

ORA expressed concern with the preferential treatment afforded to SWG by the amendment. The option for acquiring SoCalGas' rights to El Paso capacity in exchange for a credit to ITCS payments may not be available to other SoCalGas noncore customers. ORA stated:

"It is discriminatory to offer capacity rights to a single customer in exchange for a credit to ITCS payments. This arrangement is particularly favorable given the current capacity market. Capacity availability is constrained and rates are typically at the full-as-billed tariffs charged by the interstate pipeline companies."

ORA recommended:

"If SoCalGas is interested in brokering its pipeline capacity rights in this manner, it should file an application which requests an open season, or other options that are available to all noncore customers, rather than giving the preferential opportunity solely to Southwest. As a matter of policy, SoCalGas should broker all of its noncore capacity on a monthly basis."

Finally, ORA recommends that the Commission reject SoCalGas' request for an Amendment to its Wholesale Agreement with SWG.

SoCalGas' Response

On September 20, 2000 SoCalGas filed a response to ORA's protest and presented its arguments for denying ORA's protest. SoCalGas stated:

"Any time a utility negotiates a different term or provision with one customer vis a vis another there is an element of discrimination involved. The Commission, however, is empowered to approve different contract language for different customers as long as any resulting discrimination is not "undue" within the meaning of applicable case law and Commission decisions. The issue in this Advice Letter is not whether all other noncore transportation customers should be able to negotiate similar terms and provisions as SWG, but rather whether the proposed Amendment to the Wholesale Agreement is in the public interest. Southwest Gas is further distinguished from other noncore customers in that it is itself a regulated public utility, serving primarily core residential customers.

The proposed Amendment to the Wholesale Agreement will permit SWG to remain a wholesale customer of SoCalGas customers through the transportation revenues SWG provides to SoCalGas. The particular provision to which ORA objects will not harm any other customers, since SWG will simply receive a credit in the exact amount by which any subscription by SWG to capacity on the system of El Paso Natural Gas Company will reduce Interstate Transition Cost Surcharge amounts generally. Southwest currently does not hold any such interstate capacity. Accordingly, the Amendment is in the public interest and should be approved.

ORA recommends that SoCalGas submit an Application to make this option available to other noncore customers. SoCalGas does not believe that such an Application is appropriate, given the varying circumstances of negotiations with different customers in different circumstances than SWG. If the Commission believes that other noncore customers should be provided the same option the Amendment would provide to SWG, SoCalGas would have no objection to the Commission addressing this in any appropriate proceeding currently pending before the Commission, or upon the Commission's own motion."