III. CONCLUSION

For the reasons discussed above, the application for rehearing of D.02-08-065 is denied. However, D.02-08-065 should be modified for purposes of clarification and to correct typographical errors, as ordered below.

THEREFORE, IT IS ORDERED that:

1. For purposes of clarification, D.02-08-065 will be modified as follows:

a. Page 22 is modified to add a paragraph, after the first full paragraph of that page, as follows:

"We also agree that electric generation, refinery, and EOR customers of both SoCalGas and SDG&E, who consume over 250,000 therms per year, should not be able to choose core transportation service or bundled core transportation and utility procurement service. Such customers have very different load profiles than general commercial and industrial customers in that their loads exhibit large fluctuations daily and monthly. Electric generation, refinery, and EOR customers are sophisticated and capable of managing their own purchases. Additionally, some of these customers also possess varying alternate fuel capabilities. These characteristics make it almost impossible for a gas utility to forecast gas usage accurately and could lead to potential problems associated with balancing purchases for the core portfolio, thus affecting other core customers. Finally, such customers have not demonstrated a compelling need to have the ability to elect core transportation service or bundled core transportation and utility procurement service. For these reasons, we adopt the SoCalGas and SDG&E proposal to ban electric generation, refinery, and EOR customers from having the ability to choose core transportation service or bundled core transportation and utility procurement service."

b. D.02-08-065, Finding of Fact 17 is added as follows:

"The daily and monthly loads of electric generation, refinery, and enhanced oil recovery (EOR) customers exhibit large, unpredictable fluctuations to a greater extent than other customers."

c. D.02-08-065, Conclusion of Law 3 is modified to read as follows:

"It is reasonable for SoCalGas and SDG&E to implement revised uniform rules for their noncore customers wishing to obtain core service from them, but not to extend such a choice to electric generation, refinery, and EOR customers using more than 250,000 therms per year, due to the fluctuations in usage by those customers."

2. To correct typographical errors, D.02-08-065 will be modified as follows:

a. Page 3, first sentence of the third full paragraph, to read as follows:

"Pending the outcome of the investigation set forth in Decision 02-06-023, we will at this time defer consideration of applicants' request to:"

b. D.02-08-065, p. 15, second sentence of the fourth full paragraph is modified to read as follows:

"The investigation that we contemplate in D.02-06-023, may clarify the issues."

c. D.02-08-065, Conclusion of Law 1, is modified to read as follows:

"1. Further consideration and a final determination regarding the SoCalGas and SDG&E core procurement consolidation will be addressed at a later date pending the outcome in

D.02-06-023 on the California 2000/2001 border price spikes."

d. D.02-08-065, Ordering Paragraph 1, is modified to read as follows:

"1. The request of Southern California Gas Company (SoCalGas) and San Diego Gas & Electric Company (SDG&E) to consolidate their core gas procurement portfolios is deferred pending the outcome of D.02-06-023."

3. Rehearing of D.02-08-065, as modified, is denied.

This order is effective today.

Dated May 22, 2003, at San Francisco, California.

MICHAEL R. PEEVEY

President

GEOFFREY F. BROWN

SUSAN P. KENNEDY

Commissioners

I abstain.

/s/ CARL W. WOOD

Commissioner

I reserve the right to file a dissent.

/s/ LORETTA M. LYNCH

Commissioner