7. Comments on Proposed Decision
The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Comments were filed on October 6, 2008, by the Sempra utilities, PG&E, Woodside, El Paso, CE Council, and RACE, and reply comment were filed on October 14, 2008, by the Sempra utilities, PG&E, Woodside, Coral's successor Shell Energy North America, the Indicated Producers, RACE, TURN, DRA and Sempra LNG. We have considered the comments; to the extent that they identified factual, legal or technical error in the proposed decision, we have made appropriate changes and, to the extent that they merely reargue positions taken in the proceeding, we accord them no weight.
The Sempra utilities express concern that requiring LNG supply to compete "head-to-head" with domestic supply may effectively foreclose the Commission from considering the non-price benefits of potential long-term LNG supply contracts in the future. To the contrary, our discussion acknowledges that the value of any supply contract is based on the contract taken as a whole, including supply reliability, price guarantees and other contractual terms. There is no need to qualify our determination that LNG supply should be competitive with domestic supply.
PG&E expresses concern that the proposed decision's findings that formal RFPs should be for all sources of supply unreasonably ties the utilities' hands and is contrary to our determination that, pursuant to our current gas policy and procedures, the utilities' solicitation and procurement of LNG supply shall be at their discretion, with cost recovery subject to the gas utilities' procurement incentive mechanisms. We modify the decision to delete language directing the utilities to conduct all-supply source solicitations in the event of the conduct of an RFP for gas supply, so as to eliminate any suggestion that the utilities' procurement of LNG supply is subject to different requirements than apply to their procurement of gas supply generally.
PG&E contends that there is no record basis for the proposed decision's conclusion that California utilities need not take on the role of anchor tenants through long-term supply contracts in order to ensure the development of the market. To the contrary, the proposed decision cites to the number of LNG projects being proposed on the West Coast without a major California utility customer and the ability for LNG projects to serve customers other than the California utilities.
In its reply comments, PG&E reiterates its interest in a collaborative process with the Commission and other stakeholders to address issues related to LNG supply procurement. For all the reasons discussed, we decline to establish a special process to assist the utilities in their assessment and procurement of LNG supply.
CE Council urges the Commission to reconsider its previous determination of need for LNG, made in D.04-09-022, as affirmed in D.05-10-045, on the basis that it is outdated. The proper vehicle for seeking change to an issued decision is a petition for modification. CE Council urges the Commission to re-open the comment period on the Scoping Memo in R.08-06-025 to allow parties to address issues raised in this decision or, in the alternative, to open a new phase in R.08-06-025 to consider LNG contracting issues; CE Council also urges the Commission to consider the environmental characteristics of LNG versus domestic natural gas in R.08-06-025. The determination of the scope of R.08-06-025 is beyond the scope of this proceeding. CE Council identifies certain errata, which we correct as appropriate.
RACE challenges the proposed decision for declining to revisit the Commission's previous determination of need for LNG, and for determining that environmental issues are beyond the scope of the proceeding. RACE's comments merely reargue the points raised in earlier filings and do not require any separate discussion.
