D0004060

II. Background

SoCalGas and SDG&E seek to revise rates for gas service effective August 1, 1999, to reflect the allocation among customers of costs of service previously authorized by the Commission for recovery in gas service rates. They also seek to reflect in gas service rates the remaining account balances in various balancing, tracking, and memorandum accounts previously authorized by the Commission.

SoCalGas proposed rates that would reduce total revenue by approximately $204.4 million, or 11.2%, annually, compared to revenue at present rates (October 1998). SDG&E proposed rates that would reduce total gas revenue by $9.3 million or 3.8% annually from present rates (October 1998). The two applications were consolidated for hearing. Twenty three days of public hearings were held before Administrative Law Judge (ALJ) Robert Barnett and the proceedings were submitted September 3, 1999; proceedings were reopened November 11, 1999 to receive briefs on the issue of the appropriate amortization period for the regulatory account balances resulting from reallocation of interstate pipeline surcharges to noncore customers; the proceedings were resubmitted December 20, 1999. The Proposed Decision was timely issued on January 11, 2000.

Eighteen active parties ¹ participated in one or more issues and filed briefs. For the sake of brevity this decision will not discuss every argument of every active party, but will cover the salient points made in the briefs.

On January 29, 1999, SoCalGas filed revised testimony, reflecting a revenue decrease of $207.8 million (or 11.4%) as compared to rates effective in October 1998.

Subsequent to the filing of the applications, the Commission issued Resolution G-3247 approving Advice Letter No. 2751 filed on October 15, 1998 by SoCalGas. This resolution approved revisions to SoCalGas' rates effective January 1, 1999 to reflect the amortization of various balancing account balances. The resolution resulted in a decrease of $125.5 million in core revenue and a decrease of $33.0 million in noncore revenue. On December 16, 1999, the Commission issued Resolution G-3275 approving Advice Letter No. 2847 filed by SoCalGas on September 20, 1999. This resolution approved a refund to SoCalGas' core customers of $100 million, to reflect an overcollection in the CFCA, through a one-time bill credit in the December 1999 billing cycle to eligible core customers.

After considering the effect of the two reductions authorized by Commission resolutions, there remain issues regarding tariffs that recover excessive revenue, especially in the ITCS computation; modification of tariffs that would shift costs between core and noncore; elimination of tariffs; consolidation of tariffs; and the reasonableness of various practices of SoCalGas and SDG&E.

ORA estimates that the SoCalGas Joint Recommendation will result in a revenue decrease of approximately $63.9 million for SoCalGas customers, from rates in effect January 1, 2000, in addition to the reductions authorized in the two Commission resolutions. This estimate does not include revenue reductions resulting from ITCS shifts and overcollections in the CFCA not captured in the two Commission resolutions. The differences between SoCalGas and ORA are primarily attributable to the different ITCS amounts allocated to noncore customers.

This decision will first resolve SoCalGas issues and then resolve SDG&E issues. Those issues common to both companies will be resolved in the SoCalGas portion of the decision.

¹ Southern California Gas Company (SoCalGas); San Diego Gas & Electric Company (SDG&E); the Office of Ratepayer Advocates (ORA); California Cogeneration Council and Watson Cogeneration Company (CCC); California Industrial Group and California Manufacturers Association (CIG/CMA); Department of General Services (GS); Electric Generator Alliance (EGA); Kern River Gas Transmission Company and Questar Southern Trails Pipeline Company (Kern River); city of Long Beach (LB); Monsanto Company (Monsanto); Pacific Gas and Electric Company (PG&E); Southern California Edison Company (SCE); Southern California Generation Coalition (SCGC); The Utility Reform Network and the Utility Consumers' Action Network (TURN or UCAN); Ultramar, Inc. (Ultramar); city of Vernon (Vernon); Western Hub Properties, Inc. (WHP); and Western Mobilehome Park Owners Association (WMA).