11. Limiting FAR Sales When Capacity is Constrained
Once SDG&E/SoCalGas post any notice that identifies a reduced receipt point or transmission zone capacity, SDG&E/SoCalGas must limit the sale and exchange (re-contracting) of firm receipt point capacity to the reduced capacity quantity for that receipt point and transmission zone for the duration of the posted event.61 SDG&E/SoCalGas must not sell incremental firm receipt point capacity following the announcement of an OFO for the flow day on which the OFO is called.62 Once an OFO has been called, SDG&E/SoCalGas may sell only incremental interruptible access capacity for the flow day on which the OFO is called.
Currently, the holder of FARs at a particular receipt point can, for the most part, be assured that its nominations will be confirmed no matter how much gas is nominated upstream of that receipt point. However, FAR holders may not be able to use their FARs when overall system capacity becomes a constraint.
In particular, the System Operator issues an OFO when confirmed nominations exceed overall system capacity.63 If nominations exceed system capacity after an OFO has been called, firm nominations must be reduced to meet the overall system capacity constraint if reductions to interruptible or alternate firm nominations are not sufficient to relieve the constraint.
Currently, SDG&E/SoCalGas continue to sell additional FARs during OFOs or maintenance periods when receipt point or system capacity is constrained and cuts to firm nominations are necessary. Shippers purchase additional short-term FARs during such times to avoid the impact of reduced system capacity, with the sale of short-term FARs doubling during prolonged maintenance periods. Continuing to sell FARs when system capacity is reduced leads to system-wide windowing of FARs, resulting in significant cuts to holders of long-term FARs.
Limiting the sale and exchange of FARs at receipt points where capacity has been reduced for any reason, including scheduled maintenance, will enable customers holding FARs at a constrained point to know the extent to which their gas will flow at that receipt point. Prohibiting the sale of additional, incremental FARs at any receipt point once an OFO has been announced will preserve the value of FARs because a shipper holding FARs on an OFO day will not see its rights further reduced through proration resulting from additional FAR sales. It is reasonable to prohibit the sale of FARs at any receipt point once an OFO has been announced and to limit the sale and exchange of FARs at receipt points where capacity has been reduced for any reason because this will provide additional certainty to FAR holders.
61 This adopts Recommendation No. 8 of Exhibit No. JRO-1.
62 This adopts Recommendation No. 9 of Exhibit No. JRO-1.
63 SoCalGas Gas Rule No. 41.
