ALJ/LEG/jva Mailed 1/27/2004
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Establish Policies and Rules to Ensure Reliable, Long-Term Supplies of Natural Gas to California. |
FILED PUBLIC UTILITIES COMMISSION JANUARY 22, 2004 SAN FRANCISCO OFFICE RULEMAKING 04-01-025 |
ORDER INSTITUTING RULEMAKING TO ESTABLISH
POLICIES AND RULES TO ENSURE RELIABLE,
LONG-TERM SUPPLIES OF NATURAL GAS TO CALIFORNIA
TABLE OF CONTENTS
Title Pages
ORDER INSTITUTING RULEMAKING TO ESTABLISH POLICIES AND
RULES TO ENSURE RELIABLE, LONG-TERM SUPPLIES OF
NATURAL GAS TO CALIFORNIA 22
III. Data Requests And Proposals To Address California's Long-Term
Need For Natural Gas 99
1. Sufficient Interstate Pipeline Capacity to Meet Core Procurement
Supply Obligations 1111
2. Access on Intrastate Pipelines to LNG Supply 1313
3. Access on Interconnecting Facilities with Interstate Pipelines 1414
1. Natural Gas Utilities' System Reserves for Emergencies 1616
2. The Utilities' Potential Backstop Function 1919
3. New Ratemaking Policies Consistent with the Goal of Ensuring
Adequate and Reliable Long-Term Natural Gas Supplies 2222
IV. Preliminary Scoping Memo 2424
V. Phase I And Phase II Schedules 2525
VI. Ex Parte Communications 2626
VIII. Service By Electronic Mail 2727
ORDER.......................................................................................................2828
Appendix A Data Requests
ORDER INSTITUTING RULEMAKING TO ESTABLISH
POLICIES AND RULES TO ENSURE RELIABLE,
LONG-TERM SUPPLIES OF NATURAL GAS TO CALIFORNIA
I. Summary
This Order Instituting Rulemaking (OIR) is issued in response to new reports, recent Federal Energy Regulatory Commission (FERC) orders, and ongoing changes in the natural gas market, which indicate that in the long-term, there may not be sufficient natural gas supplies and/or infrastructure to meet the requirements of all California residential and business consumers unless the Commission takes certain actions in the near future. As the California Energy Commission (CEC) recommended in its 2003 Integrated Energy Policy Report (IEPR), issued in December, 2003, at VI, VIII, 26 and 29, California must reduce or moderate demand for natural gas and promote infrastructure enhancements, such as additional interstate pipeline capacity, increased use of in-state storage, and access to Liquefied Natural Gas (LNG) facilities on the West Coast. These recommendations were supported by many of the participants at the two-day workshop entitled "Natural Gas Market Outlook 2006-2016," which our Commission and the CEC jointly sponsored on December 9-10, 2003.
In order to ensure reliable, long-term natural gas supplies to California at reasonable rates, the Commission must make certain decisions in 2004 with regard to the California natural gas public utilities, which the Commission regulates, so that: (1) increased demand reduction efforts (e.g., energy efficiency and renewable energy programs) help moderate the potential supply imbalance in the future; (2) sufficient firm interstate and intrastate pipeline capacity will be available to serve California; 3) the benefits and flexibility of storage facilities will be fully appreciated and utilized; and 4) access to imported natural gas supplies (e.g., from LNG facilities) will be available to meet the new challenges we face. We must make a number of decisions related to these issues this year, due to the long lead time to construct LNG facilities and due to certain deadlines in 2004 involving existing interstate pipeline capacity contracts and open seasons for new pipelines, including pipelines related to LNG projects.1
In a separate rulemaking (i.e., Rulemaking (R.) 01-08-028), the Commission is addressing natural gas energy efficiency programs and is exploring how to increase demand reduction efforts, including increasing funding for natural gas energy efficiency programs.
In the present rulemaking, the Commission is naming as Respondents the following California 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). We are requiring them to respond to data requests and to submit proposals to the Commission to address how California's long-term natural gas needs should be met with interstate and intrastate pipeline expansions, more flexible storage operations and access to proposed LNG facilities. The Commission invites all other interested parties to respond to the California natural gas utilities' proposals and to participate in this rulemaking.
In light of certain deadlines facing the California natural gas utilities and/or other participants in the natural gas market, we are establishing two phases in this rulemaking. In Phase I, we are requiring the utilities to address in their proposals those matters which may require a decision by the Commission by the Summer of 2004. Phase II will address those matters which the Commission can decide by the end of the year. Accordingly, certain issues will have to be addressed by all interested parties, as well as the Commission, on a much more accelerated pace than other issues.
