GTN

GTN asserts the Commission has a longstanding policy to "let the market decide" which pipelines should be built. In Investigation (I.) 88-12-027 and D.90-02-016, the Commission promulgated the general parameters of its let-the-market-decide policy. There, the Commission refrained from trying to pick the "best" project. Instead, the Commission established criteria and committed to support all pipeline projects that met those criteria. The Commission stated:

[W]e expect the California's LDCs [gas utilities], as potential large subscribers to firm capacity, will be in excellent position to extract favorable terms for long-term supply capacity agreements. The LDCs should take advantage of the competition among project sponsors to negotiate favorable deals, taking into consideration both costs and risks for ratepayers ... We will, of course, review in appropriate proceedings the reasonable decisions of both the LDCs and electric utilities on subscriptions to additional capacity. (D.90-02-016, 35 CPUC2d 196, 249.)

GTN argues that PG&E has disregarded every element of this policy. PG&E did not let competition develop. Rather, it actively inhibited competition by keeping its needs a secret to all but one market participant. Subsequently, PG&E not only attempted to choose the winner, but lobbied on behalf of its decision with other potential customers in an effort to make it succeed.

GTN states the Commission previously addressed circumstances similar to PG&E's current application. In 1991, PG&E filed A.91-03-052 for Commission pre-approval of PG&E's proposed contract for expansion capacity on the Transwestern Pipeline (Transwestern). The Commission denied PG&E's application in D.91-07-007, stating:

Utilities may be tempted to substitute our regulatory judgment for their own assessment of market demand for firm interstate capacity. This is precisely the scenario we stressed we would avoid by allowing market forces to determine if, when, and which interstate pipelines would be built. We will abide by our policy and let the market decide whether the subject facilities will be built. (D.91-07-007, 40 CPUC2d 667, 671, and 674.)

The Commission did not review the merits of PG&E's Transwestern contract until after FERC certificated the expansion in August 1991, the project was placed in service, and PG&E had signed final transportation contracts. The Commission ultimately found that PG&E's contract for Transwestern capacity was imprudent and denied recovery of the costs.