6. Interconnection Issues

6.1 Scope of the Required Interconnection Facilities

As proposed, the expansion project will interconnect with PG&E's Line 400/401, the Redwood Path, near the Delevan Compressor Station. Wild Goose will bear all costs for construction and installation of the 25.5 mile pipeline from the storage field to Line 400/401. The record does not yet contain a list of the specific facilities necessary to accomplish the interconnection near Delevan, and Wild Goose states in its opening brief that this matter is still under review with PG&E.

Wild Goose seeks assurance that it will be permitted to participate in the design and construction of the interconnection facilities, since it brings considerable experience to such undertakings, as does its parent, Alberta Energy. Wild Goose notes that PG&E has no tariffs that directly address transmission level interconnections between utilities and tends to refer, by analogy, to PG&E Rule 15 (Gas Main Extensions) and Rule 16 (Gas Service Extensions). Both rules include provisions that permit "applicant installation options". We recognize that Wild Goose has expertise, and access to expertise, in natural gas system design and development. We direct PG&E to allow Wild Goose to participate in developing the details of the interconnection. Based on the record before us, we have no reason to prohibit Wild Goose from undertaking the construction or portions of it. Our primary concerns in this matter remain the safe and reliable operation of the interconnected natural gas system throughout the construction period, however, not the economic advantage of one party relative to another.

6.2 Allocation of Costs for Interconnection Facilities

The Gas Storage Decision addresses cost responsibility associated with interconnecting third-party storage providers as follows:

Utilities should interconnect with independent storage providers as if the latter were consumers of gas. Thus standard interconnection costs will be recovered on a rolled-in basis. Special facilities costs will be charged to the storage provider. (1993 Cal. PUC LEXIS 66 at *46.)

This principle, reiterated in the decisions granting CPCNs to Wild Goose and to Lodi, is the basis for Rules 2.1 and 2.3 of the Commission's Adopted Rules for Gas Storage Service (Gas Storage Rules):

2.1 A utility must interconnect its transmission facilities with an independent storage facility that requests such interconnection, unless the utility can make a clear showing that such interconnection will impair its ability to serve existing utility customers. Interconnection obligations shall not differ from obligation to serve gas transportation customers having similar loads.

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2.3 The utility shall be responsible for the cost of standard interconnection facilities required, installed, and paid by the utility for transportation customers having similar loads. Responsibility for special facilities in excess of standard interconnection facilities will be assigned by agreement of the Parties or will be submitted to the Commission for resolution. Utility ratepayers shall not be responsible for costs of special facilities. The utility shall not delay installation of interconnection facilities pending resolution of any dispute regarding cost responsibility. (Id. at *103, emphasis added.)

With respect to what kinds of facilities should be deemed standard or special, the Gas Storage Decision states "PG&E's Rule 2 is a reasonable model...". (Id. at *46.) PG&E's Rule 2 (Description of Service) includes a general description of special facilities at part 2.C.

We have not been asked previously to distinguish between standard and special facilities for gas storage interconnections, or to address cost allocation, since the two gas storage CPCN decisions the Commission has issued approve agreements between the respective storage providers and PG&E regarding these matters.¹¹ Each CPCN decision expressly limits cost allocation approval to the agreement under review. This limitation is consistent with the Commission's Rules of Practice and Procedure, which include the provision that Commission adoption of a stipulation or settlement shall not serve as precedent in future proceedings "[u]nless the Commission expressly provides otherwise...". (Rule 51.8)

No agreement has been reached in this proceeding. In Wild Goose's view, Gas Storage Rule 2.3 is clear and requires that PG&E (through its ratepayers) absorb the cost of those standard facilities that would be necessary to interconnect a transportation customer with a comparable load, e.g. a customer with gas usage equal to the injection capabilities of the expanded facility (450 MMcf/d) and with delivery service at existing pressures ranging between 800 - 1200 pounds per square inch (psig) at the Delevan interconnect. Wild Goose concedes that it should pay for any special facilities. Lodi agrees with Wild Goose.

PG&E, on the other hand, advances two alternative arguments for imposing all interconnection costs on Wild Goose. ORA agrees with PG&E. First, relying upon application and interpretation of its Gas Rule 2 (Description of Service) and Gas Rule 16 (Gas Service Extensions), PG&E argues that only special facilities are at issue. As noted above, the Gas Storage Decision requires use of PG&E's Gas Rule 2 as a "model" for identification of standard and special facilities. PG&E's Gas Rule 2.C.2 provides, in relevant part:

Special facilities are (a) facilities requested by an applicant, which are in addition to or in substitution for standard facilities which PG&E would normally provide for delivery of service at one point, through one meter... (PG&E Gas Rule 2.C.2., emphasis added)

According to PG&E, since the existing Wild Goose facility already interconnects with PG&E at Line 167, the proposed Line 400/401 interconnection at Delevan will provide for injection and withdrawal from a second point, through another meter or meters and thus, the facilities required to make that interconnection are special facilities. PG&E argues that its Gas Rule 16 reinforces this assessment, because that rule generally limits PG&E's obligation to provision of "one Service Extension ... for a single enterprise on a single Premises...." (PG&E Gas Rule 16.C.2.)

We agree that the proposed Line 400/401 interconnect will be a second service connection for the Wild Goose facility, and thus, its components constitute special facilities for which Wild Goose should pay. The expansion project increases the operating capacity of Wild Goose's existing facility in Butte County. The new pipeline connecting that expanded facility to Line 400/401 will provide an additional interconnection with PG&E's system. We rely solely upon the model provided by PG&E's Gas Rule 2 in reaching this result. We decline to comment, on this record, on whether PG&E's Gas Rule 16 might provide a useful analogy for other aspects of service expansion as its relates to transmission level interconnections of gas storage providers.

Having determined that the Line 400/401 interconnection facilities are special facilities, we briefly address PG&E's alternative argument, which we reject. PG&E postulates that if standard facilities are indeed at issue, they are subject, by analogy, to the Commission's 1997 decision modifying the distribution line extension rules. (See Rulemaking to Consider Line Extension Rules of Electric and Gas Utilities, D.97-12-098, 1997 Cal. PUC. LEXIS 1107; mod. D.98-03-039, 1998 Cal. PUC. LEXIS 56.) PG&E argues that the line extension modifications not only have amended PG&E's Gas Rule 15 (Gas Main Extensions), which governs extensions to distribution mains, but also effectively have revised the Commission's Gas Storage Rule 2.3, supra. Under PG&E's Gas Rule 15, the cost of standard interconnection facilities for main extensions is determined by offsetting the cost of those facilities by a revenue-based allowance tied to distribution revenue or monthly customer charge. PG&E contends that because Wild Goose has a zero offset under the Gas Rule 15 formula, it must pay the full cost of standard facilities.

We defer to some other, more appropriate proceeding the issue of whether the principles governing interconnection of new distribution main extensions might provide a useful analogy for the transmission level interconnections of gas storage providers and confine ourselves to pointing out the clear defect in PG&E's argument. The 1997 line extension decision does not even mention, let alone discuss, independent storage providers, the Gas Storage Rules or the Wild Goose CPCN decision. We find no legal basis for the argument that the 1997 line extension decision modified Gas Storage Rule 2.3.

Since we conclude that the interconnection facilities are special facilities, and that Wild Goose must bear all costs, we do not need to order further proceedings on this issue. However, Wild Goose should provide the Director of the Commission's Energy Division with a list of interconnection facilities once they have been determined and serve that list on the service list for this proceeding.

6.3 Operating and Balancing Agreement

ORA asks that we direct Wild Goose and PG&E to enter into an operating and balancing agreement for the expansion operations. No party contests this request and we required these agreements when we approved the Wild Goose and the Lodi CPCNs. We agree that an operating and balancing agreement should govern the expansion project. Wild Goose and PG&E may determine whether to draft a new, separate agreement or to amend the one that governs the existing facility's operations. This operating and balancing agreement must be in place before the expansion project commences operations. Wild Goose should provide the Director of the Commission's Energy Division with a copy of the agreement and serve it on the service list for this proceeding.