7. Comments on Draft Decision
To avoid the possibility of significant harm to the public health and welfare, as mentioned above, the Commission must act immediately to protect SoCalGas' CARE customers from current and expected high natural gas prices for the 2005-2006 winter heating season. Therefore, pursuant to Public Utilities Code Section 311(f)(9), the Commission concludes that public necessity requires reduction of the otherwise applicable 30-day period for public review and comment on the draft decision. The public interest in adopting a decision before the expiration of the 30-day review and comment period clearly outweighs the public interest in having the full 30-day period for public review and comment on the draft decision.
On November 14, 2005, in accordance with the shortened comment period, SoCalGas and SCGC filed comments in support of the draft decision. Although SCGC's comments believes that the revenues from the expected sale of the 4 Bcf of additional gas storage capacity should be considered in Phase II of R.04-01-025, the scoping memo determined that this issue should be considered in a later phase of this proceeding. SoCalGas filed reply comments in opposition to SCGC's comments that the additional gas storage capacity issue should be considered in R.04-01-025..
1. On October 6, 2005, the Commission held a full panel hearing to address the impact of rising natural gas prices on low income customers, and as part of its response, SoCalGas filed this application on October 11, 2005.
2. The Commission needs to act as soon as possible on the authorizations sought by SoCalGas because of the impact of expected high winter natural gas costs on all gas consumers in California, especially low income customers in the CARE program.
3. A failure to act promptly on the authorizations sought by SoCalGas will result in significant harm to CARE customers because the benefits of lowering the cost of gas for CARE customers for the upcoming winter heating season will be lost.
4. Under Rule 17.1(i) of the Commission's Rules, the Commission is the lead agency for CEQA review of gas storage facilities.
5. The drilling work proposed in this application involves the reworking of existing wells, whereas the project in A.01-04-007 involved the drilling of new wells and the reworking of existing wells.
6. The project in A.01-04-007 was found to be exempt from CEQA review in D.01-06-086.
7. Assuming a winter gas price of $12.50 per mcf, SoCalGas estimates that the project will result in rates to CARE customers that will be approximately $48 million less than they otherwise would be.
8. The project contemplated in this application will help offset the impact of high natural gas prices on those customers who can least afford it.
9. The proposed well rework activities, reclassification, and the transfer of the gas in kind to CARE customers at book value will result in benefits to CARE customers, to other SoCalGas customers as a result of the expanded storage capacity, and to SoCalGas as a result of operational savings.
10. Based on the "let the market decide" policy in D.93-02-013 for expanding or constructing new gas storage facilities, the proposed drilling rework does not require specific authorization to expand the storage capacity.
11. The Commission may, in the future, decide on a different allocation of who should pay for the revenue requirement associated with the project costs for this application.
12. The revenue requirement associated with the project costs should be recovered initially from CARE customers because they will receive the direct benefit from the reclassification and sale of the gas.
1. SoCalGas' proposed reworking of the wells is exempt from CEQA review under §§ 15301 and 15304 of the CEQA Guidelines.
2. SoCalGas' statement in its application regarding CEQA, which we consider as a motion to exempt the proposed work from a CEQA review, is granted.
3. Public Utilities Code Section 851 applies to the reclassification, and transfer of the gas in kind to CARE customers.
4. It is in the public interest under Public Utilities Code Section 851 to authorize SoCalGas to reclassify the 4 Bcf of cushion gas as working gas, and to transfer that gas in kind to CARE customers at book value.
5. Rules 35 and 36 of the Commission's Rules are waived as to this application.
6. SoCalGas' proposal to put all of the project costs into rate base upon the completion of the project, and to recover the associated revenue requirement from CARE customers, should be adopted.
7. Upon the reclassification of the 4 Bcf of cushion gas as working gas, SoCalGas should remove from rate base the approximate $1.5 million in cushion gas cost.
8. In order to offset the winter bills of CARE customers, SoCalGas should be authorized to reflect in its CARE customer rates, starting December 2005 through March 2006, the expected gas cost avoidance benefits resulting from this project.
9. To avoid the possibility of significant harm to the public health and welfare resulting from current and expected high natural gas prices, public necessity requires that the 30-day public review and comment period on the draft decision be shortened.
IT IS ORDERED that:
1. The Southern California Gas Company (SoCalGas) is authorized under Public Utilities Code Section 851 to reclassify 3 Bcf of cushion gas at Aliso Canyon and 1 Bcf of cushion gas at La Goleta to working gas, and to transfer the gas in kind to SoCalGas' California Alternate Rates for Energy (CARE) customers at book value.
a. Upon the reclassification of the 4 Bcf of cushion gas as working gas, SoCalGas shall remove from rate base the approximate $1.5 million in cushion gas cost.
2. Upon the completion of the drilling rework project, SoCalGas is authorized to put all of the costs of the rework project into rate base, and to file an advice letter to increase its revenue requirement to recover these project costs.
3. The revenue requirement associated with the project costs shall be recovered from the CARE customers, unless changed by the Commission in this proceeding or in a Biennial Cost Allocation Proceeding of SoCalGas.
a. SoCalGas shall file an advice letter within 20 days of today's date to establish the necessary procedures for allocating these costs to SoCalGas' CARE customers.
4. SoCalGas is authorized to flow through into CARE rates the estimated cushion gas benefit that will result from the rework, reclassification, and transfer at book value to CARE customers over the four month period of December 2005 through March 2006.
5. SoCalGas shall keep the Commission's Energy Division informed of the progress of the project and all pertinent details related to the authorizations contained in this decision.
6. This proceeding shall remain open to address the remaining issues.
This order is effective today.
Dated November 18, 2005, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
DIAN M. GRUENEICH
JOHN A. BOHN
Commissioners
