VII. Assignment of Proceeding
Dian M. Grueneich is the Assigned Commissioner and John S. Wong is the assigned Administrative Law Judge in this proceeding.
1. PG&E's application proposes the adoption of a 1-day-in-10-year peak day planning standard for core reliability, and that incremental firm core storage capacity be added to meet the planning standard.
2. TURN's February 9, 2006 motion requesting that it be allowed to late-file two exhibits was granted with respect to Exhibit 21, but denied with respect to PG&E's system temperature data.
3. The 1-day-in-10-year peak day demand for 2007-2008 is estimated to be 2,584 MDth.
4. PG&E's core customers currently have pipeline capacity and storage withdrawal capacity of about 2482 MDth per day, which is sufficient to meet a 1-day-in-4-year peak day event.
5. To serve an event colder than the 1-day-in-4-year peak day, core load would have to be served from spot gas purchases, or through the diversion of noncore gas supplies.
6. The adoption of the 1-day-in-10-year peak day planning standard will require approximately 100 MDth per day of additional withdrawal capacity, coupled with sufficient inventory to meet that level of withdrawal.
7. Storage capacity for the core has not increased since the Gas Accord was adopted in August 1997.
8. Core gas demand has grown since August 1997.
9. Most electric generators can no longer use alternative fuels.
10. If diversions of noncore gas were to occur, the diversions would have severe economic consequences for California's economy.
11. The adoption of PG&E's proposed planning standard for the core, and the incremental core storage capacity, will alleviate the potential impacts by reducing the core's reliance on diversions during a peak day event.
12. SoCalGas' core planning standard is a 1-day-in-35-year peak day event, and the Commission is considering SoCalGas' core storage proposal to meet this standard in R.04-01-025.
13. The cost of adopting the 1-day-in-10-year planning standard is estimated to cost between $2 million to $6 million, and will result in an increase to PG&E's core customers of less than 0.5%.
14. The cost of meeting PG&E's planning standard is small as compared to what could happen to gas prices and the gas supply in the event of a peak day event.
15. The primary beneficiary of the planning standard is the core.
16. The participation of DRA and TURN in the evaluation process will help ensure that the cost of meeting PG&E's proposed planning standard will be minimized.
17. The 1-day-in-10-year planning standard will result in an increase in gas supply reliability for the core.
18. PG&E proposes that its credit policies in Rule 25 of its tariff apply to the storage providers bidding on the incremental storage capacity.
19. Under PG&E's proposed credit policies, if a storage provider does not have a debt rating, the storage provider would be required to provide credit support that equals 100% of the replacement cost of the gas to be stored.
20. Under PG&E's proposed credit policies CGT would be considered creditworthy because CGT is backed by PG&E's credit rating, and CGT would not be required to post any credit support.
21. The transactions for incremental storage capacity are different from the transactions contemplated in PG&E's credit policies in Rule 25.
22. Obtaining credit support in an amount that equals the value of the gas that PG&E is storing would amount to millions of dollars, and tie up capital.
23. CGT would have an advantage in the bidding process if PG&E's credit policies were adopted.
24. Several other criteria have been suggested for assessing the independent storage providers' ability to provide storage services, while providing assurance that the risk of loss of the stored gas will be covered.
25. Exhibit 20, which was signed by all the active parties, addresses how the process for soliciting bids for incremental storage capacity for the core will work.
26. Section B.2 of Exhibit 20 is interpreted to mean that the competing bids of the independent storage providers will not be provided to CGT.
27. The preapproval process referred to in the third bullet of Section 4 of Exhibit 20 means the procedure set forth in Section 6.7 of D.04-09-022.
28. The term "acceptable" in subdivision (2) of the first bullet of Section 5 of Exhibit 20 is interpreted to mean that the storage contract must still meet the "reasonable price threshold."
29. The term "process" in the second sentence in subdivision (2) of the first bullet of Section 5 of Exhibit 20 refers to Section 6.7, 6.8, and 6.9 of D.04-09-022, and could also result in the filing of a formal application.
30. PG&E requests that the preapproval process in D.04-09-022 be modified to apply to storage contracts of less than three years duration and which are acquired to meet the 1-day-in-10-year peak day standard.
31. Any proposal to reduce the current holding of core pipeline capacity so that more storage can be used is more appropriately addressed in a proceeding addressing PG&E's costs and rates for its gas transmission and storage services.
1. Exhibits 20 and 21 are admitted into evidence.
2. The Commission should adopt the 1-day-in-10-year peak day planning standard for PG&E's core customers, and PG&E should be allowed to recover the costs of meeting the planning standards from the core.
3. The adoption of PG&E's credit policies would provide CGT with advantages in the bidding process, which is contrary to the intent in
D.04-09-022 that there be competitive provisioning of core storage.
4. PG&E's proposal to use its existing credit policies, as contained in Rule 25, for evaluating an independent storage provider's creditworthiness, should not be adopted.
5. The criteria discussed in Section III.C. are adequate for assessing the independent storage providers' ability to provide storage service, while providing assurance that the risk of loss of the stored gas will be covered.
6. PG&E should be directed to have the storage providers' financial ability and insurance coverage evaluated as discussed in this decision.
7. The stipulations reached in Exhibit 20 are reasonable in light of the record, consistent with the law, and in the public interest.
8. Exhibit 20 should be adopted by the Commission, and PG&E should be directed to use Exhibit 20 in its RFO process for incremental core gas storage capacity.
9. D.04-09-022 cannot be modified through this decision because this proceeding is a separate docket from the docket in which D.04-09-022 was issued in.
10. PG&E should be directed to discuss the suggested modifications to the CPIM with DRA.
1. The proposal of Pacific Gas and Electric Company (PG&E) for a reliability planning standard for core customers of a 1-day-in-10-year peak day is adopted.
(a) PG&E is authorized to acquire incremental storage capacity to meet the core planning standard, and additional storage opportunities that provide economic benefit to core customers.
(b) PG&E shall be allowed to recover the costs of meeting the planning standard and additional economic storage opportunities in the monthly core procurement rates.
(c) In the event PG&E cannot obtain incremental core storage at a reasonable market price to meet the
1-day-in-10-year peak day standard, PG&E shall obtain sufficient firm intrastate and interstate pipeline capacity, and/or firm peaking supply contracts at either the city gate or the California border on a temporary basis, to meet the standard using the Commission-approved processes in
D.04-09-022.
2. PG&E's proposal to use its current credit policies, as set forth in Rule 25 of PG&E's tariff, for evaluating an independent storage provider's creditworthiness for providing incremental storage capacity, is not adopted.
3. PG&E is directed to do the following:
(a) The criteria discussed in this decision shall be utilized by PG&E in a manner consistent with this decision to assess the independent storage providers' ability to provide storage service, while providing assurance that the risk of loss of the stored gas will be covered.
(b) Within three weeks of the issuance of this decision, PG&E shall select an independent credit analysis agency, subject to the approval of each of the independent storage providers. The independent storage providers are to submit their financial statements to the selected agency for a determination of financial strength consistent with industry standards.
(c) Within three weeks of the issuance of this decision, PG&E shall select a third party insurance review agency, subject to the approval of each of the independent storage providers. The independent storage providers are to submit their insurance policies to the selected agency for the purpose of determining whether the coverage provided is consistent with industry standard.
4. The stipulations contained in Exhibit 20, which is attached to this decision as Appendix A, and our interpretation of those stipulations as set forth in this decision, are adopted.
(a) PG&E shall use the request for offer process described in Exhibit 20 to solicit bids for the incremental storage capacity.
5. The Director of the Commission's Energy Division is delegated the authority to approve or disapprove incremental core storage contracts and economic storage products that are acceptable to PG&E, DRA and TURN, and filed under the expedited process described in this decision.
6. PG&E may file a regular Advice Letter requesting approval of a storage contract without the concurrence of DRA and TURN. The Energy Division may approve the Advice Letter if it finds PG&E's request reasonable and a valid protest is not filed. (See D.05-01-032, Appendix, § 4.2.) Alternatively, PG&E may file a formal application seeking Commission approval of such a storage contract.
7. A ruling will issue in Rulemaking 04-01-025 to solicit comments on PG&E's proposed modification to Decision 04-09-022.
8. PG&E shall meet with the Division of Ratepayer Advocates to discuss the suggested modifications to PG&E's Core Procurement Incentive Mechanism.
9. Application 05-03-001 is closed.
This order is effective today.
Dated July 20, 2006, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
Commissioners
Gerald Lahr
ABAG POWER
PO BOX 2050
OAKLAND CA 94604
(510) 464-7908
jerryl@abag.ca.gov
For: ABAG Power
Paul Angelopulo
Legal Division
RM. 5031
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-4742
pfa@cpuc.ca.gov
Dan L. Carroll
ANN L. TROWBRIDGE
Attorney At Law
DOWNEY BRAND, LLP
555 CAPITOL MALL, 10TH FLOOR
SACRAMENTO CA 95814
(916) 444-1000
dcarroll@downeybrand.com
For: Lodi Gas Storage, LLC
Jeanne B. Armstrong
Attorney At Law
GOODIN MACBRIDE SQUERI RITCHIE & DAY LLP
505 SANSOME STREET, SUITE 900
SAN FRANCISCO CA 94111
(415) 392-7900
jarmstrong@gmssr.com
For: Wild Goose Storage, Inc.
John W. Leslie
Attorney At Law
LUCE, FORWARD, HAMILTON & SCRIPPS, LLP
11988 EL CAMINO REAL, SUITE 200
SAN DIEGO CA 92130
(858) 720-6352
jleslie@luce.com
For: Coral Energy Resources, LP
Robert B. Mclennan
Attorney At Law
PACIFIC GAS AND ELECTRIC COMPANY
PO BOX 7442
77 BEALE STREET
SAN FRANCISCO CA 94120
(415) 973-2069
rbm4@pge.com
For: Pacific Gas and Electric
Dave Maul
CALIFORNIA ENERGY COMMISSION
1516 NINTH STREET, MS-48
SACRAMENTO CA 95814
(916) 654-3941
Dmaul@energy.state.ca.us
Jairam Gopal
Fuels Office
CALIFORNIA ENERGY COMMISSION
1516 NINTH STREET, MS-23
SACRAMENTO CA 95814-5512
(916) 654-4880
jgopal@energy.state.ca.us
Lisa Decarlo
Staff Counsel
CALIFORNIA ENERGY COMMISSION
1516 9TH STREET MS-14
SACRAMENTO CA 95814
(916) 654-5195
ldecarlo@energy.state.ca.us
For: CALIFORNIA ENERGY COMMISSION
Eugene Cadenasso
Energy Division
AREA 4-A
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-1214
cpe@cpuc.ca.gov
Jacqueline Greig
Division of Ratepayer Advocates
RM. 4102
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-1079
jnm@cpuc.ca.gov
For: ORA
Kelly C. Lee
Division of Ratepayer Advocates
RM. 4102
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-1795
kcl@cpuc.ca.gov
Richard A. Myers
Energy Division
AREA 4-A
505 VAN NESS AVE
San Francisco CA 94102
(415) 703-1228
ram@cpuc.ca.gov
David White
GAS TRANSMISSION NORTHWEST
1400 SW FIFTH AVE.
PORTLAND OR 97201
(503) 833-4321
david_white@transcanada.com
For: TRANSCANADA'S GTN AND NORTH BAJA
Kebler Curtis
GOLDMAN, SACHS & COMPANY
2121 AVENUE OF THE STARS, 27/F
LOS ANGELES CA 90067
(310) 407-5619
curtis.kebler@gs.com
For: GOLDMAN, SACHS & COMPANY
Norman A. Pedersen
Attorney At Law
HANNA AND MORTON LLP
444 SOUTH FLOWER STREET, SUITE 1500
LOS ANGELES CA 90071-2916
(213) 430-2510
npedersen@hanmor.com
For: HANNA AND MORTON LLP
Gerry Stillwagon
MODESTO IRRIGATION DISTRICT
PO BOX 4060
MODESTO CA 95352-4060
(209) 526-7486
gerrys@mid.org
For: MODESTO IRRIGATION DISTRICT
Richard Smith
MODESTO IRRIGATION DISTRICT
1231 11TH STREET
MODESTO CA 95352-4060
(209) 526-7463
richards@mid.org
For: MODESTO IRRIGATION DISTRICT
MRW & ASSOCIATES, INC.
1999 HARRISON STREET, SUITE 1440
OAKLAND CA 94612
(510) 834-1999
mrw@mrwassoc.com
Karl W. Meyer
NORTHERN CALIFORNIA POWER AGENCY
180 CIRBY WAY
ROSEVILLE CA 95678
(916) 781-4274
karl@ncpa.com
For: NORTHERN CALIFORNIA POWER AGENCY
Kelly Allen
TRANSWESTERN PIPELINE COMPANY
REGULATORY AFFAIRS DEPARTMENT
5444 WESTHEIMER
HOUSTON TX 77056
(713) 989-2023
Kelly.Allen@crosscountryenergy.com
Thomas W. King
TURLOCK IRRIGATION DISTRICT
333 EAST CANAL DRIVE
TURLOCK CA 95382
(209) 883-8230
twking@tid.org
For: TURLOCK IRRIGATION DISTRICT
Willie G. Manuel
TURLOCK IRRIGATION DISTRICT
333 EAST CANAL DRIVE
TURLOCK CA 95382
(209) 883-8348
wgmanuel@tid.org
For: TURLOCK IRRIGATION DISTRICT
David J. Gilmore
Attorney
SOUTHERN CALIFORNIA GAS COMPANY
555 WEST FIFTH STREET, STE 1400
LOS ANGELES CA 90013-1011
(213) 244-2945
dgilmore@sempra.com
For: SoCalGas
Gregory Healy
SOUTHERN CALIFORNIA GAS COMPANY
555 WEST FIFTH STREET
LOS ANGELES CA 90012
(213) 244-3314
ghealy@semprautilities.com
Michael Rochman
SPURR
1430 WILLOW PASS ROAD, SUITE 240
CONCORD CA 94520
(925) 743-1292
Service@spurr.org
For: SPURR (School Project for Utility Rate Reduction)
Marcel Hawiger
MICHEL FLORIO
Attorney At Law
THE UTILITY REFORM NETWORK
711 VAN NESS AVENUE, SUITE 350
SAN FRANCISCO CA 94102
(415) 929-8876
marcel@turn.org
For: TURN
(END OF APPENDIX B)
