V. Assignment of Proceeding.
Geoffrey F. Brown is the Assigned Commissioner and John S. Wong is the assigned Administrative Law Judge in this proceeding.
1. The September 7, 2005 motion to adopt the Revised Joint Stipulation replaced the July 21, 2004 motion to adopt the original stipulation.
2. The August 20, 2004 supplement to the original stipulation is to be considered as part of the Revised Joint Stipulation.
3. The application seeks Commission authorization to allow SoCalGas to establish a cost and revenue sharing mechanism for the exploration and production of native gas.
4. SoCalGas is aware of two potential economically viable reservoirs of native gas.
5. The Settlement Agreement proposes a mechanism for the equal sharing of costs and revenues between utility shareholders and customers.
6. The Settlement Agreement proposes that the known native gas reservoir at La Goleta be put into storage service without seeking additional Commission approval.
7. The Revised Joint Stipulation was the result of the efforts of the stipulating parties to reconcile the inconsistencies between the Settlement Agreement and the original stipulation.
8. The Revised Joint Stipulation accepts the revenue and cost allocation provisions that are contained in the Settlement Agreement, and contains most of the provisions that were in the original stipulation.
9. The Interim Rules Applicable to Native Gas are referred to in Paragraph 7 of the Revised Joint Stipulation.
10. Evidentiary hearings were held in December 2005 concerning Paragraphs 7.d.v. and 12 of the Revised Joint Stipulation.
11. To re-open and admit additional testimony from another proceeding to rebut points that were already raised in connection with exhibits, testimony, and argument in this proceeding is unnecessary and will unreasonably prolong this proceeding.
12. A sharing mechanism will provide an incentive framework for SoCalGas to explore for, and produce native gas.
13. The original sharing mechanism proposal minimizes the economic risks to ratepayers and minimizes their potential to share in any native gas revenues should the production of native gas exceed expectations.
14. The Settlement Agreement allows ratepayers to equally share in the revenues from the sale of native gas, while limiting their cost exposure.
15. The Revised Joint Stipulation concurs in the cost and revenue treatment in the Settlement Agreement, while allowing the California producers to use rate-based facilities at SoCalGas' incremental cost, and providing a preference for gas from Exxon Mobil and POPCO over native gas.
16. Paragraph 7.d.v. of the Revised Joint Stipulation fairly balances the use of rate-based facilities by both SoCalGas and the California producers.
17. The issue of what rights Exxon Mobil and POPCO have with respect to access to SoCalGas' transmission facilities was extensively examined in this proceeding.
18. Since at least the year 2000, SoCalGas has treated Exxon Mobil and POPCO as if it has MDV-like rights.
19. There should be sufficient capacity for SoCalGas' native gas to access SoCalGas' transmission system because of the decline in California gas production in recent years.
20. The Settlement Agreement's treatment of the costs and revenues equitably compensates ratepayers, and is fair to both SoCalGas' shareholders and ratepayers.
21. The allocation of the ratepayers' share to the core and non-core is reasonable.
22. Exhibit 2 provides assurance that SoCalGas will obtain any permits or approvals that may be required by a local or state agency before exploration of a native gas prospect occurs.
23. The access rules and reporting requirement, as agreed to by SoCalGas, will ensure that the native gas that is produced will meet the same gas quality specifications as other California producers are required to meet.
24. Both the Settlement Agreement and the Revised Joint Stipulation contain provisions to actively monitor native gas production and storage reservoir data to ensure that gas storage operations are not compromised.
25. With the exception of the La Goleta storage field, SoCalGas intends to file an application with the Commission before a depleted reservoir or native gas facilities are used to provide gas storage services.
26. SoCalGas' control of the exploration and production of native gas is appropriate because it should minimize the costs of the native gas prospects, and minimize issues regarding the possible production of storage gas.
27. As long as the purchases of native gas by SoCalGas' Gas Acquisition Department are done through an open, competitive bidding process, there should not be any affiliate transaction problems or gaming of the GCIM results.
28. The adoption of the Settlement Agreement and the Revised Joint Stipulation in this proceeding sets no precedent for use in any other proceeding.
1. The motion of Exxon Mobil to re-open the evidentiary record in this proceeding to allow the admission of certain rebuttal testimony from Application 04-08-018 should be denied.
2. A sharing mechanism for the exploration of, and production of native gas by SoCalGas is in the public interest.
3. Paragraph 7.d.v. of the Revised Joint Stipulation should remain unchanged.
4. Paragraph 12 of the Revised Joint Stipulation treats native gas the same as other new California gas production, and is consistent with the Commission's statements in D.04-09-022 that new gas supplies should be allowed to compete on an equal footing with existing supplies.
5. Paragraph 12 of the Revised Joint Stipulation should remain unchanged.
6. No CEQA review is needed at this juncture because SoCalGas is only seeking approval of a sharing mechanism, and is not requesting approval of native gas exploration at any particular site.
7. As a condition of our approval of the sharing mechanism, SoCalGas should be required to obtain all permits and approvals that a local or state agency may require before any exploration or production of native gas, or gas storage activities, take place.
8. We interpret Paragraph 19 of the Settlement Agreement and Paragraph 11 of the Revised Joint Stipulation to mean that SoCalGas shall also immediately notify the Commission in the event gas storage operations are compromised as a result of the production of native gas.
9. Before the known native gas reservoir at La Goleta can be used for gas storage activities, SoCalGas should be required to obtain any permits or approvals that may be required by any other local or state agency to produce the native gas at this reservoir, or to use the depleted reservoir for gas storage.
10. The Settlement Agreement and the Revised Joint Stipulation are reasonable in light of the record in this proceeding, consistent with the law, and in the public interest.
11. The Settlement Agreement and the Revised Joint Stipulation, as clarified by us in our discussion, should be adopted as the cost and revenue sharing mechanism for SoCalGas' exploration and production of native gas.
12. The Interim Rules Applicable to Native Gas, which is contained in the August 20, 2004 Supplement to the original stipulation, should be adopted as part of the cost and revenue sharing mechanism for SoCalGas' exploration and production of native gas.
IT IS ORDERED that:
1. The March 9, 2006 motion of Exxon Mobil Corporation to re-open the evidentiary record in this proceeding to allow the admission of certain rebuttal testimony from Application (A.) 04-08-018 is denied.
2. The July 25, 2005 request of Southern California Gas Company (SoCalGas) to adopt the Settlement Agreement, which is attached hereto as Appendix B, and the September 7, 2005 motion to adopt the Revised Joint Stipulation, which is attached hereto as Appendix C, are granted.
3. We adopt a cost and revenue sharing mechanism for SoCalGas' native gas program, which shall consist of the terms, conditions, and rules specified in Appendix B (Settlement Agreement), Appendix C (Revised Joint Stipulation), and Appendix D (Interim Rules Applicable to Native Gas) of this decision, as clarified by this decision.
4. SoCalGas is required to obtain all permits and approvals that other local or state agencies may require before any exploration or production of native gas, or gas storage activities, take place.
5. A.04-01-034 is closed.
This order is effective today.
Dated June 29, 2006, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
DIAN M. GRUENEICH
RACHELLE B. CHONG
Commissioners
Commissioner John A. Bohn recused
himself from this agenda item and was not
part of the quorum in its consideration.
