STATE OF CALIFORNIA GRAY DAVIS, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
December 17, 2001
TO: ALL PARTIES OF RECORD IN INVESTIGATION 99-07-003
Decision 01-12-018 is being mailed without the Dissent of Commissioner Wood. The Dissent will be mailed separately.
Very truly yours,
/s/ LYNN T. CAREW
Lynn T. Carew, Chief
Administrative Law Judge
LTC:acb
COM/RB1/acb MAILED 12/17/01
Decision 01-12-018 December 11, 2001
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Investigation on the Commission's Own Motion to Consider the Costs and Benefits of Various Promising Revisions to the Regulatory and Market Structure Governing California's Natural Gas Industry and to Report to the California Legislature on the Commission's Findings. |
Investigation 99-07-003 (Filed July 8, 1999) |
(See List of Appearances in Attachment A)
FINAL OPINION
APPROVAL WITH MODIFICATIONS OF THE COMPREHENSIVE GAS OII SETTLEMENT AGREEMENT FOR
SOUTHERN CALIFORNIA GAS COMPANY AND
SAN DIEGO GAS AND ELECTRIC COMPANY
Table of Content
Title Page
FINAL OPINION APPROVAL WITH MODIFICATIONS OF THE COMPREHENSIVE GAS OII SETTLEMENT AGREEMENT FOR 1
SOUTHERN CALIFORNIA GAS COMPANY AND 1
SAN DIEGO GAS AND ELECTRIC COMPANY 1
I. Summary 2
II. Background 4
III. Discussion 7
A. Precedent 7
B. Current Situation 9
C. Summary of Each Proposed Settlement 11
1. Summary of Interim Settlement 11
2. Summary of Post-Interim Settlement 14
3. Summary of Comprehensive Settlement 17
4. Summary of Long Beach Proposal 29
D. The Legal Standard for Considering Settlements 30
1. Public Interest 31
a) The PI and the Public Interest 31
b) The Long Beach Proposal and the Public Interest 33
c) The IS and the Public Interest 34
d) The CS and the Public Interest/ Modifications to the CS 39
(1) Intrastate Transmission 40
(2) Storage Unbundling 57
(3) Balancing, Imbalance Trading, Information about OFOs, and Pooling 63
(4) Reducing Core Aggregation Program Thresholds and Eliminating the Cap 68
(5) Core Interstate Transportation Capacity Unbundling and Eliminating Core Contribution to Noncore ITCS 71
(6) Brokerage Fee 88
(7) Elimination of Core Subscription 90
(8) Data Access for Customers and their ESPs 93
(9) Consumer Protection 95
(10) Metering and Consolidated Billing 101
(11) Avoided Billing Cost Credit, the Information-only Bill, and Bill Inserts 103
(12) Consistency with Pub. Util. Code Section 328.2 106
(13) Implementation Costs 107
3. Consistent with the Law 121
IV. CONCLUSION 125
V. Comments On Draft Decision 126
VI. Findings of Fact 127
VII. Conclusions of Law 138
ORDER 144
APPENDIX I - Comprehensive Settlement
APPENDIX II - Comparison of Comprehensive, Interim, and Post Interim
Settlements
APPENDIX III - List of Acronyms
I. Summary
In this opinion, we consider three contested settlement proposals addressing the promising options raised in Decision (D.) 99-07-015 as applied to the Southern California Gas Company (SoCalGas) natural gas system, and to a lesser extent, the San Diego Gas and Electric Company (SDG&E) gas system. The three settlements are known as the Interim Settlement Agreement (IS) filed in December 1999, the Post-Interim Settlement Agreement (PI) filed in February 2000 and the Comprehensive Gas OII Settlement Agreement (CS) filed in April 2000. At the time of submission, all three settlements still had supporters.
Based on the record developed regarding costs and benefits, we choose to adopt the CS, with certain modifications.1 We believe that the CS will provide significant benefits to all utility customers by allowing customers access to firm tradable transmission rights on SoCalGas' system. The costs associated with intrastate backbone transmission will be unbundled for noncore customers. Noncore customers will be able to acquire intrastate backbone transmission capacity through an open season or purchase gas at the citygate. The utilities' retail core procurement department will continue to reserve interstate capacity, intrastate backbone transmission, and storage to meet the requirements of retail core procurement customers. These changes will provide SoCalGas (and SDG&E) customers with numerous new service choices, and the opportunity to reduce costs by avoiding services that they do not need. The availability of firm, tradable transmission rights will allow customers to place an increased reliance on longer-term firm contracts. We anticipate that this increased reliance on longer-term contracts will bring with it badly needed price stability and rate certainty to all gas customers.
The CS, in pertinent part,: 1) creates firm tradable intrastate transmission rights on the SoCalGas system; 2) establishes a secondary market for intrastate transmission capacity; 3) places the utility at risk for the recovery of backbone transmission costs; 4) establishes Hector Road as a formal receipt point on SoCalGas' system at which nominations may be made; 5) creates firm tradable storage rights together with a secondary market for the trading of those rights; 6) provides for the core and noncore classes to be balanced separately thereby eliminating any potential for cross-subsidization; 7) provides for anonymous monthly imbalance trading; 8) provides for trading OFO imbalance rights; 9) reduces the minimum size requirement and eliminates the core market share restriction for the CAT program; and 10) eliminates core subscription service.
In response to concerns that certain provisions of the CS would invite market manipulation or would increase costs to the core, we adopt several modifications to the CS. The major modifications include a revision to the market concentration limits; the rejection of CS' reduction in the amount of intrastate capacity and storage reserved for the core, and the adoption of a price cap for secondary market transactions. We also emphasize that any unutilized firm capacity held by other parties must be made available daily by SoCalGas on an interruptible basis. The CS, and its appendices, is attached as Appendix I to this opinion.
Additionally, following adoption of this decision, we propose to open a rulemaking to adopt consumer protection rules to protect those ratepayers served by core aggregators and other marketers.
