V. Comments on Draft Decision

The draft decision in this matter was mailed on January 7, 2002, to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. PG&E, which was the only party to file comments, supports the adoption of the draft decision.

Findings of Fact

1. On January 26, 2001, the NCGC filed an emergency petition to modify D.97-08-055 and Resolution G-3288.

2. One of the reasons for opening R.01-03-023 was because of NCGC's petition to modify D.97-08-055 and Resolution G-3288 to give electric generators a higher priority, for the duration of the electricity crisis, than other noncore gas customers in the event of a diversion or curtailment of gas supplies in PG&E's service territory.

3. D.01-12-019, issued in R.01-03-023, decided that electric generators should not be given a priority for gas service.

4. The curtailment and diversion rules are found in PG&E's Gas Rule 14.

5. The term gas "curtailment" and gas "diversion" have separate and distinct meanings in PG&E's Gas Rule 14.

6. Electricity generation is important, especially when more electric generating capacity is needed.

7. The DOE orders and the President's declaration did not address PG&E's curtailment and diversion priorities.

8. The priority of service rules have been in existence in one form or the other since November 1991.

9. The former system of using end-use priority to determine curtailments was eliminated in D.91-11-025, and replaced by a system that noncore customers would receive service according to their level of payment.

10. The elimination of the alternative fuel requirement for noncore customers raised the UEG priority to the same level as other noncore customers, except for cogeneration.

11. In the PG&E Gas Accord decision, all noncore uses, including UEG and cogeneration, were made equal in priority.

12. If the gas supplies of non-electric generator customers are diverted or curtailed, it is likely that some of these noncore customers will be forced to shut down or reduce their operations, which is likely to have a ripple effect throughout the state's economy.

13. The choice between a shortage of electricity and a shortage of natural gas for other noncore customers is a difficult one.

14. The potential economic impact of a change in priority of service was recognized in D.01-12-019.

15. D.01-12-019 recognized that there should be adequate natural gas supplies over the next 12 months, and that no curtailments or diversions are expected.

16. In CGC's comments to the draft decision of D.01-12-019, it acknowledged that the crisis that provided the motivation for a change in gas priority had passed.

Conclusions of Law

1. The priority of service rules should not be changed without a thorough evaluation of the ramifications resulting from the proposed modifications, and the input of affected parties.

2. The Gas Accord settlement was a negotiated compromise on a number of issues, and should be treated as an entire package.

3. The Commission should thoroughly evaluate the advantages and disadvantages of assigning a higher priority to gas-fired electric generators than to other noncore customers before making any changes to the priorities for curtailment and diversion.

4. NCGC's petition for modification of the PG&E Gas Accord decision and Resolution G-3288 should be denied.

ORDER

1. The emergency petition for modification of Decision 97-08-055 and Resolution G-3288, that was filed by the Northern California Generation Coalition on January 26, 2001, is denied.

2. These proceedings are closed.

This order is effective today.

Dated February 7, 2002, at San Francisco, California.

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