Conclusions of Law
1. Rejecting or deferring a decision on the system integration proposal will send a negative price signal to Sempra LNG and to Coral, and may result in the loss of Baja California LNG as a supply source.
2. When the rate increase to SoCalGas customers is balanced against the benefits of gas flowing through Otay Mesa, the benefits outweigh the concerns
over cross subsidies and the rate impact on SoCalGas customers.
3. The system integration proposal should not be contingent on a commitment by the utilities to refrain from proposing or supporting rolled-in rate treatment of the costs related to the potential capacity expansion of the Otay Mesa receipt point.
4. The system integration proposal should be adopted.
5. Since the peaking rate tariff does not apply when a noncore customer receives gas through a SoCalGas receipt point, the peaking rate tariff should not apply when a noncore customer of SoCalGas, including SDG&E, procures gas through the joint receipt point of Otay Mesa.
6. There is no bypass of the SoCalGas transmission costs under the system integration proposal because the customers of SDG&E and SoCalGas continue to pay a share of the SoCalGas transmission costs.
7. The methodology that SDG&E and SoCalGas used to develop the system integrated rates that are reflected in Appendix A of this decision is adopted.
8. SDG&E and SoCalGas should be allowed to establish the ITBA.
9. The system integration proposal is not contrary to D.98-03-073 or D.01-09-056.
10. The Joint Recommendation is not adopted.
11. The rates set forth in Appendix A shall be updated in an advice letter to reflect all rate updates presented to the Commission after the rates in Appendix A were developed.
12. The updated transmission rates shall apply to the customers of SDG&E and SoCalGas, and shall go into effect on the first day of the month in which regasified LNG is expected to flow through Otay Mesa.
13. If significant gas supplies through Otay Mesa do not materialize, and gas-on-gas competition does not occur, a party may file a petition for modification of this decision requesting that the Commission examine whether continuation of a single integrated rate is still appropriate in light of market conditions.
1. The system integration proposal of San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas) is adopted.
a. SDG&E and SoCalGas shall combine the transmission costs on both systems and develop integrated transmission rates for each customer class of each utility using the allocation methodology discussed in this decision.
b. SDG&E and SoCalGas shall establish the Integrated Transmission Balancing Account.
c. The integrated transmission rates shown in Appendix A shall be updated by SDG&E and SoCalGas in an advice letter to reflect all rate updates that were presented to the Commission after the development of the rates shown in Appendix A.
d. SDG&E and SoCalGas shall file the advice letter with the Energy Division 120 days before the flow of regasified liquefied natural gas (LNG) through Otay Mesa is expected.
e. The updated integrated transmission rates shall go into effect on the first day of the month in which regasified LNG is expected to flow through Otay Mesa.
1. This proceeding remains open to address the remaining issues.
This order is effective today.
Dated April 13, 2006, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
DIAN M. GRUENEICH
RACHELLE B. CHONG
Commissioners
Commissioner JOHN A. BOHN
recused himself from this agenda
item and was not part of the
quorum in its consideration.
