2. Reversion of El Paso Capacity

SoCalGas proposes to allocate to the consolidated portfolio all available unassigned El Paso capacity held by SoCalGas. Since we decline in this decision to authorize the utilities to consolidate their procurement operations, the question of how to allocate unassigned El Paso capacity to the consolidated portfolio is no longer relevant. The disposition of SoCalGas' reverting unassigned El Paso capacity remains an open question, however. We address it here.

SoCalGas currently holds 300 MMcfd of firm capacity on Transwestern Pipeline and 1150 MMcfd of firm capacity on El Paso Natural Gas' pipeline, for a total of 1450 MMcfd. In the last SoCalGas BCAP, the Commission allocated 1044 MMcfd of that capacity (all 300 MMcfd on Transwestern, and 744 MMcfd on El Paso) to core service. The remaining amount, just under 400 MMcfd (all on El Paso) was unassigned. SoCalGas brokers this capacity, and any shortfall in the brokering revenues from the rate SoCalGas must pay El Paso is recovered by SoCalGas through the Interstate Transition Cost Surcharge (ITCS).

Some of the unassigned capacity is already brokered for the full remaining term of SoCalGas' El Paso contract. The following amounts of unassigned capacity have already reverted back to SoCalGas or will be available to SoCalGas upon expiration of contracts already signed: On November 1, 2001, SoCalGas recovered 160 MMcfd of capacity; on January 1, 2002, it recovered an additional 50 MMcfd; on March 1, 2003, to comply with existing contracts SoCalGas will transfer to third parties 100 MMcfd; on January 1, 2005, SoCalGas will recover 30 MMcfd of capacity. The amount of capacity that reverts to SoCalGas between November 1, 2001 and August 31, 2006 when the SoCalGas - El Paso contracts expire is never more than 210 MMcfd and after March 1, 2003, significantly less.

SoCalGas' current 1044 MMcfd core allocation is roughly equal to SoCalGas' average daily core load under average weather conditions. SDG&E, on the other hand, has about 125 MMcfd of core load, and about 25 MMcfd of firm interstate capacity from Canada and 10 MMcfd of firm capacity on El Paso (plus 3.6MMcfd capacity recently obtained in an El Paso open season). SDG&E's interstate capacity rights are just under 90 MMcfd less than its annual average core demand.

The record shows that SDG&E's interstate capacity holdings are significantly less than its average daily core load. In this decision, we will not assign to SDG&E or any other customer (including SoCalGas' own core procurement department) the interstate capacity that reverts back to SoCalGas between November 1, 2001 and August 31, 2006. We believe it is prudent, however, to consider directing for SoCalGas to first make available, consistent with the Federal Energy Regulatory Commission's capacity release rules, this capacity to its wholesale customers and other gas utilities that procure gas for core customers⁴. This flexibility would allow shippers to select the capacity delivery points and terms that best fit their respective needs. In a separate Rulemaking R.02-06-041, we require California energy utilities to acquire capacity that becomes available on the El Paso Pipeline. We will consider the reverting SoCalGas capacity identified in this decision, in the appropriate phase of that proceeding. The Commission will evaluate utilities' additional interstate pipeline holdings separately.