IV. CONCLUSION

SoCalGas, SDG&E, and other parties have been highly responsive to the Commission's direction in this proceeding. With our approval of the modified CS, we adopt many of the "promising options" identified in D.99-07-015. The centerpiece of this investigation, the unbundling of intrastate transmission and the implementation of a system of firm, tradable intrastate transmission rights, should not be delayed any longer. In addition, based on the record in R.98-01-011 and I.99-07-003, we find that now is the time for other gas industry reforms. We reject the PI and the IS because they do not provide for firm, tradable, intrastate capacity rights and, as a whole, they are not in the public interest. As the natural gas market gets more competitive, and demand for natural gas grows nationwide, customers need additional assurance that their gas supplier will be able to meet their needs. In addition, we are concerned that, absent a reservation system like that proposed by the CS, SoCalGas will need to continue to estimate its customers' gas requirements from year to year and the core customers will eventually bear the costs associated with variances in throughput. The CS provides clear procedures for allocating existing capacity and determining when and where additional capacity is needed. The CS also puts the utility at risk for this capacity. The CS will result in rate stability for all classes of customers since the rates will be fixed subject only to an annual escalation factor. The fact that rates will be essentially fixed for the term of the settlement will simplify future cost allocation proceeding. Furthermore, consistency between the SoCalGas and PG&E systems will permit these entities and the Commission to develop a single set of planning criteria that could be applied statewide. Accordingly, we believe Californians are better served at this juncture by the adoption with modifications of the CS.

Finally, we note that, unlike electric restructuring, adoption of the CS would not result in the Commission relinquishing jurisdiction over the transportation of natural gas on the SoCalGas system. A key and critical element of this decision is that the Commission will retain jurisdiction over all aspects of the new market structure. We intend to monitor the market structure closely; if we see any indications of problems in the market such as high concentrations of capacity in individual market segments, high prices, or high percentages of customers opting for core service, we will open an investigation into changing the market structure to address these problems.

We are convinced that the CS, as modified, balances the interests at stake for the period of the settlement. Thus, we find that the CS, as modified, is reasonable in light of the whole record, consistent with the law and in the public interest.