ALJ/DUG/jva Mailed 7/15/2003
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking Adopting Rules To Account For The Consideration Received By Regulated California Electric And Natural Gas Utilities Under A Settlement With El Paso Natural Gas Company, et al. |
FILED PUBLIC UTILITIES COMMISSION JULY 10, 2003 SAN FRANCISCO OFFICE RULEMAKING 03-07-008 |
ORDER INSTITUTING RULEMAKING ADOPTING RULES TO ACCOUNT FOR THE CONSIDERATION RECEIVED BY REGULATED CALIFORNIA ELECTRIC AND NATURAL GAS UTILITIES UNDER A SETTLEMENT WITH EL PASO NATURAL GAS COMPANY, ET AL.
I. Summary
The Governor of the State of California, the California Attorney General (AG), the California Public Utilities Commission (Commission), the California Department of Water Resources (CDWR), Southern California Edison Company (Edison), Pacific Gas & Electric Company (PG&E), the Attorney Generals from Nevada, Washington and Oregon, law firms representing plaintiffs in 15 lawsuits, including class action lawsuits, and others, have reached a settlement with El Paso Natural Gas Company, its parent corporation, and affiliates (El Paso) resolving issues concerning El Paso's alleged involvement in the extremely high natural gas and electric prices in California during the period March 1, 2000 through May 31, 2001, which is the subject of the Commission's complaint proceeding, Docket No. RP00-241-000 at the Federal Energy Regulatory Commission (FERC), the investigations by the AG and the Attorneys General from Nevada, Washington, and Oregon, and 15 separate plaintiffs' lawsuits in the San Diego Superior Court (hereinafter, this overall settlement will be referred to as the "Settlement"). This Order Instituting Rulemaking (OIR) will adopt the appropriate ratemaking mechanisms to enable the three major investor-owned electric utilities, Edison, San Diego Gas and Electric Company (SDG&E) and PG&E, and the four major investor-owned gas utilities, PG&E, Southern California Gas Company (SoCalGas), SDG&E, and Southwest Gas Company (Southwest) to implement accounting mechanisms for the proceeds they receive from the Settlement. Although the Settlement is pending before FERC and the Superior Court in San Diego California,1 it is the Commission that must determine how to allocate fairly the settlement proceeds the respondent utilities receive from El Paso under the Settlement.
The need for this rulemaking has arisen because of the significant consideration that the California public utilities will receive under the Settlement, and the appropriate deference in the Settlement to the Commission's jurisdiction over the California public utilities' rates.
The Commission will herein solicit comments on its proposals regarding what actions Edison, PG&E, SDG&E, SoCalGas and Southwest should take in their accounting for and rate treatment of the consideration they receive under the Settlement. To the extent that investor-owned California electric public utilities (with much smaller California service territories than Edison, PG&E and SDG&E) receive any consideration under the Settlement, they should track the consideration in a memorandum account upon its receipt and file a proposal in their next appropriate proceeding or as an advice letter as to how to credit or refund the consideration to their ratepayers.2
1 The FERC settlement was filed on June 4, 2003, and the Master Settlement Agreement (with an Allocation Agreement as an attachment) (collectively the "Master Settlement Agreement") was filed with the San Diego Superior Court on June 26, 2003. The Master Settlement Agreement contains the provisions with the consideration provided to the California public utilities under the Commission's jurisdiction, and to entities who are not under the Commission's jurisdiction (e.g., California Department of Water Resources (CDWR), non-core gas customers in California, municipalities in California, and the Attorney Generals in Nevada, Washington in Oregon). On the Commission's own motion, the Master Settlement Agreement will be entered into the record in this OIR and provided on the Commission's web site. The Master Settlement Agreement is also available in hard-copy at the Commission's Central Files office. 2 All California utilities including PG&E, Edison, SoCalGas, and Southwest, should always file with the Commission an application or advice letter to address how to refund or credit to their ratepayers any revenues or other consideration that they receive as a result of orders by state or federal court or the FERC.
