VIII. Service By Electronic Mail

Because of the expedited schedule in this proceeding, service of the comments is to be made by electronic means to all parties providing the Commission with an electronic mail address. Paper originals and the required number of copies must still be filed with the Commission's Docket Office. The assigned Administrative Law Judges are to be served electronically at jsw@cpuc.ca.gov and dkf@cpuc.ca.gov. In addition, the advisory Commission staff assigned to this proceeding are to be served electronically at hym@cpuc.ca.gov, ram@cpuc.ca.gov, skh@cpuc.ca.gov and wmp@cpuc.ca.gov. Service by electronic mail will be used in lieu of paper mail where an electronic address has been provided. Any party on the service list who has not provided an electronic mail address shall serve and take service by way of paper mail. Service by mail is described in Rule 2.3(a).

ORDER

Therefore, IT IS ORDERED that:

1. A rulemaking is initiated on the Commission's own motion to establish policies, processes and rules to ensure reliable, long-term supplies of natural gas to California.

2. California's natural gas public utilities, Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Southwest Gas Corporation (Southwest Gas), are made Respondents to this proceeding.

3. The Executive Director shall cause this Order Instituting Rulemaking (OIR) to be served on Respondents and on the service list for Rulemaking 02-06-041.

4. The initial service list for this proceeding shall be the R.02-06-041 service list, and that service list shall be used until a ruling is issued notifying parties of a new service list.

5. The category of this rulemaking is preliminarily determined to be "quasi-legislative" as that term is defined in Rule 5(d) of the Commission's Rules of Practice and Procedure.

6. By February 24, 2004, Respondents shall file Phase I proposals for rules providing guidelines for how they should: (1) enter into contracts with interstate pipelines (whether new contracts or renewals of existing contracts) to meet core supply obligations; (2) provide access to liquefied natural gas supplies of natural gas; and (3) provide access to additional supplies of natural gas transported on interstate pipelines. Respondents shall also file (as attachments to their Phase I proposals) their responses to the Commission's data requests in Appendix A, attached to this decision.

7. Interested parties may submit comments on these Phase I issues by March 23, 2004, and Respondents may file reply comments by April 6, 2004.

8. By March 23, 2004, Respondents shall file Phase II proposals for rules which will provide guidelines for: (1) how the designated utilities should provide emergency reserves consisting of slack intrastate pipeline capacity, contracts for additional firm interstate pipeline transportation rights, and supplies of natural gas in storage dedicated for emergency needs; (2) the process by which the utilities would keep the Commission informed of whether or not they should perform a backstop function to secure enough additional firm transportation rights if the noncore participants do not subscribe to sufficient interstate pipeline firm capacity rights; and (3) new ratemaking policies that will be consistent with the goal of ensuring adequate and reliable long-term supplies of natural gas at reasonable rates to California.

9. Interested parties may submit comments on these Phase II issues by May 4, 2004, and Respondents may file reply comments by May 18, 2004.

10. The above-mentioned deadlines are preliminarily approved and adopted, but may be changed, if necessary, by an Assigned Commissioner Ruling or an ALJ Ruling. In addition, if warranted, in an Assigned Commissioner Ruling or an ALJ Ruling, one or more Phase I issues may be transferred to Phase II of this proceeding.

11. Pursuant to Commission Rules of Practice and Procedure, Rule 6(c)(2), Respondents and interested parties shall include with their initial Phase I pleadings any objections they may have regarding the categorization of this OIR or the procedural schedule.

This order is effective today.

Dated January 22, 2004, at San Francisco, California.

MICHAEL R. PEEVEY

President

CARL W. WOOD

LORETTA M. LYNCH

GEOFFREY F. BROWN
SUSAN P. KENNEDY

Commissioners

1. Please provide in aggregate amounts on an MMcf/d basis for Calendar Years 2006 and 2016 Your Utility's demand forecasts for its service territory under the following scenarios.¹³

a. Average Year Scenarios

i. Average Year

ii. Average Year + 10%

iii. Average Year + 20%

b. Abnormally Cold Year Scenarios

i. 1 in 10 years

ii. 1 in 10 years + 10%

iii. 1 in 35 years

iv. 1 in 35 years + 10%

c. Abnormally Dry Year Scenarios

i. 1 in 10 years

ii. 1 in 10 years + 10%

iii. 1 in 35 years

iv. 1 in 35 years + 10%

d. Abnormally Cold and Dry Year Scenarios

i. 1 in 10 years

ii. 1 in 10 years + 10%

iii. 1 in 35 years

iv. 1 in 35 years + 10%

2. For each of the scenarios in 1. a. i-iii through d. i-iv above please provide in aggregate amounts on an MMcf/d basis for Calendar Years 2006 and 2016 the infrastructure needed for Your Utility's forecasts identified below

a. Intrastate pipeline capacity necessary to meet demand in service territory

i. Total intrastate pipeline capacity necessary for service territory

ii. Intrastate pipeline capacity necessary for core customers

iii. Intrastate pipeline capacity necessary for noncore customers

b. Storage capacity necessary to meet demand

i. Total storage capacity necessary for service territory

ii. Storage capacity necessary for core customers

iii. Storage capacity necessary for noncore customers

c. Interstate pipeline capacity necessary to meet demand¹⁴

i. Total interstate pipeline capacity necessary for service territory

ii. Interstate pipeline capacity necessary for core customers

iii. Interstate pipeline capacity necessary for noncore customers

3. Please provide information concerning the firm interstate pipeline transportation contracts (with California primary delivery points) held by California Natural Gas Public Utilities and by Other Entities¹⁵

a. Provide the amount of firm transportation rights Your Utility currently has on each interstate pipeline to California

b. Provide the total amount of firm interstate pipeline transportation rights currently held by Other Entities (with primary delivery points to California) on each of the following interstate pipelines:

i. El Paso Natural Gas Company

ii. Transwestern Pipeline Company

iii. Gas Transmission Northwest Corporation

iv. Kern River Gas Transmission Company (Kern River)

c. Provide the total amount of firm interstate pipeline transportation rights held by California Natural Gas Public Utilities or Other Entities, which had primary delivery points to California in Calendar Year 2000 but now have primary delivery points to markets other than California due to long-term capacity releases on each of the following interstate pipelines:¹⁶

i. El Paso Natural Gas Company

ii. Transwestern Pipeline Company

iii. Gas Transmission Northwest Corporation

iv. Kern River

d. Provide the total amount of firm interstate pipeline transportation rights which will be held by Other Entities (with primary delivery points to California) on each of the following interstate pipelines in Calendar Years 2005, 2006 and 2007¹⁷

i. El Paso Natural Gas Company

ii. Transwestern Pipeline Company

iii. Gas Transmission Northwest Corporation

iv. Kern River

e. Please provide a general description of any contingency plan Your Utility currently has in place to the extent that Other Entities do not subscribe to a sufficient amount of firm interstate pipeline transportation rights to California in order to serve the noncore market in Your Utility's service territory in Calendar Years 2005, 2006 and 2007

4. Please provide the deadlines facing each of the California Natural Gas Public Utilities and others identified below:

a. For each contract which Your Utility currently has with interstate pipelines for firm transportation rights to California primary delivery points (identified by pipeline, Contract Demand amount, and pipeline delivery points) provide:

i. Date of expiration of each contract

ii. Notice of termination date or exercise of right of first refusal date pursuant to each contract

c. Provide LNG-related deadlines affecting for access in Baja California

d. Provide any current interstate pipeline's open season deadline for expansions to California

c. Provide any other deadlines affecting long-term supply options

5. Provide the following information concerning increasing access to Kern River¹⁸

¹³ In answering this data request, please provide your assumptions in your forecasts as to electric generation plants retired, repowered, or constructed in your utility's service territory. ¹⁴ "Interstate pipeline capacity" as used in this particular data request refers to firm transportation rights on interstate pipelines for Calendar Year 2006, but for Calendar Year 2016 more generally refers to access to out-of-state supplies of natural gas, whether transported on interstate pipelines to California or imported and shipped to Liquefied Natural Gas (LNG) facilities which access California's natural gas market. ¹⁵ The phrase "Other Entities" as used in this data request refers to participants in the noncore market in California, whether end-users (e.g., generators or industrial customers) or marketers which sell natural gas to end-users in California. Southwest Gas only needs to identify for its response to this data request the firm transportation rights Your Utility has on interstate pipelines to serve its California customers, and a breakdown of its core customers and noncore customers' demand (by volumes and percentages). ¹⁶ If Your Utility is unable to answer some or all of this particular data request, please provide partial answers, where you can, and explain why you are unable to provide fuller responses. ¹⁷ If Your Utility is unable to answer some or all of this particular data request, please provide partial answers, where you can, and explain why you are unable to provide fuller responses. ¹⁸ PG&E and SoCalGas are the only utilities, which need to respond to this request.