Conclusions of Law
84. We should adopt a backbone adequacy standard of one-in-ten cold, and dry-hydroelectric year reliability.
85. We should make explicit the requirement that the utilities plan their backbone and storage systems so as to meet the peak day criteria already in place for their local transmission systems.
86. We should require the utilities to demonstrate in biennial advice letter filings with the Commission's Energy Division that they hold adequate backbone transmission capacity and have slack capacity consistent with their proposals presented herein.
87. We should adopt Kern River's recommendation of requiring SoCalGas to monitor the use of the receipt points and to provide reports to the Commission showing the extent to which shippers are (or are not) seeking access above available capacity. We will require these reports on a semi-annual basis instead of on a quarterly basis as requested by Kern River.
88. We should require SoCalGas to explain, in each report, why the company should or should not pursue receipt point expansion in response to existing or forecast constraints.
89. SoCalGas should take the steps necessary to respond more promptly to requests for cost estimates, whether this requires hiring additional personnel, having consultants on call, or both.
90. The adequacy of the core storage set-aside should be reviewed not in a generic infrastructure adequacy context, but in a proceeding more directly focused on core service.
91. Charges for SoCalGas' unbundled storage services an other storage issues may be addressed by the Commission in A.06-08-026.
92. Each utility must continue to study and report on the adequacy of its entire system, including local transmission, and act to ensure that it remains reliable.
93. We do not adopt SDG&E and SoCalGas' proposed changes to their rules for conducting open seasons on the local transmission system.
94. For smaller customers, SoCalGas and SDG&E should retain the current practice of requiring no more than 2-year commitments from those seeking firm capacity through open seasons. For large customers, SoCalGas and SDG&E should require that they make take-or-pay commitments which last until the earlier of the following two events occurs: either two years shall have elapsed from the date that the associated facilities are placed into service; or five years shall have elapsed from the customer's sign-up date.
95. SoCalGas and SDG&E should file an advice letter within 90 days of the adoption of this decision to implement its proposal to offer tradable capacity rights on its local transmission system, as well as revisions to its open season commitment period as described herein.
96. Electric generators should do their part to fill storage fields, and to withdraw gas during times of system peak.
97. Woodside's proposal to require utilities to identify all potential suppliers interesting in obtaining access to capacity expansions and allocate costs equally is rejected. One of the most significant reasons for imposing incremental expansion costs on the entity making the additional deliveries is to require the incremental supplier to take those costs into account when siting its facilities. That economic signal may be diluted, if not destroyed, if the costs are subject to change over time.
98. We should adopt the Interconnection and Operational Balancing agreements as described and modified in this decision.
99. We should adopt the proposed Independent Storage Provider Agreement described in this decision.
100. A maximum Wobbe Index should be included as an element of SDG&E's and SoCalGas' revised tariffs.
101. A Wobbe Index standard should not be incorporated into PG&E's tariff at this time.
102. The Commission need not adopt a single state-wide gas quality standard at this time.
103. The Commission should not adopt regional gas quality standards to replace the utility systemwide standards in place today.
104. The Commission should consider the impact of gas quality requirements on natural gas supply and cost to fulfill its constitutional and statutory mandate to ensure reliable service at the lowest reasonable cost.
105. A 1360 maximum Wobbe Index would unnecessarily constrain California's natural gas supplies.
106. A maximum Wobbe Index that requires conditioning gas for the California market would add costs for California consumers.
107. The Commission may adopt policies that increase supplies of natural gas to ensure reliable service at a reasonable cost.
108. The Commission should consider the potential impacts of high Wobbe gas on emissions and the performance of end-use equipment.
109. The District's proposal that the Commission should adopt a policy within the Air Basin that would only permit gas supplies that are similar to average historical gas supplies is not reasonable because regional standards should not replace utility systemwide standards.
110. The approach of the NGC+ White Paper is reasonable because it is a consensus of the natural gas industry based upon the best available information.
111. The Commission should adopt a gas quality standard that is consistent with the best information currently available today.
112. Further delays in the implementation of a new gas quality tariff until all additional research is completed may have adverse impacts on the reliability and cost of natural gas within California.
113. Adopting a reasonable standard today, based on the best information available is in the public interest.
114. It is prudent to adopt the interim gas quality specifications recommended in the NGC+ White Paper because this is an industry wide consensus based upon the best available information.
115. A Wobbe range of 1279 to 1385 is consistent with the NGC+ recommendation.
116. It is unreasonable to adopt a systemwide Wobbe Index standard due to the requirements of one power plant within the SDG&E's or SoCalGas' service territory.
117. SDG&E's and SoCalGas' proposal to increase the minimum allowed heating value from 970 Btu/scf to 990 Btu/scf is reasonable.
118. The Commission should not adopt any new hydrocarbon constituent standards since no party offered compelling arguments for adopting these recommendations.
119. SDG&E's and SoCalGas' gas quality specifications should be brought into closer alignment with PG&E's tariff.
120. The utilities' gas quality tariffs should not include a Wobbe Index rate-of-change requirement.
121. End-users should be provided real-time information on the Wobbe Index to manage their operations if necessary.
122. The Commission should not adopt the current CARB CNG specifications as part of the SDG&E/SoCalGas tariff.
123. SDG&E and SoCalGas should work with the owners of older CNG vehicles and relevant governmental agencies so that the natural gas vehicle fleet in Southern California gets the gas supplies it needs.
124. PG&E should not add a minimum Methane Number requirement to its gas quality tariff.
125. The new gas quality tariffs should not limit existing California production.
126. Historical California production should be granted a generic deviation from the new SDG&E and SoCalGas gas quality tariffs.
127. LNG supplies and interstate gas supplies should not receive deviations.
128. The Commission should not order parties to perform studies or oversee the completion of studies.
129. If additional studies suggest that the Commission should modify the gas quality tariffs adopted herein, parties may file a Petition for Modification of this decision.
130. The narrowing of the parameters of the gas quality standards in SoCalGas Rule 30 is not an essential step culminating in action that may affect the environment and, therefore, is not a project under CEQA.
131. The narrowing of the parameters of the gas quality standards in SoCalGas Rule 30 does not trigger CEQA review.
IT IS ORDERED that:
132. The Pacific Gas and Electric Company and the Southern California Gas Company shall plan and maintain intrastate natural gas backbone transmission systems sufficient to serve all system demand on an average day in a one-in-ten cold and dry-hydroelectric year.
133. The Pacific Gas and Electric Company and the Southern California Gas Company shall plan their backbone and storage systems so as to meet the peak day criteria already in place for their local transmission systems.
134. The Pacific Gas and Electric Company and the Southern California Gas Company shall demonstrate in biennial advice letter filings to the Commission's Energy Division starting 2008 that they hold adequate backbone transmission capacity and have slack capacity consistent with their proposals presented herein. The first filing is due July 1, 2008.
135. SoCalGas shall monitor the use of the receipt points on its backbone system and provide semi-annual reports to the Commission showing the extent to which shippers are (or are not) seeking access at levels above available capacity. In addition, we will require SoCalGas to explain, in each report, why the company should or should not pursue receipt point expansion in response to existing or forecast constraints. In addition to filing these reports at the Commission, SoCalGas shall serve copies of the reports on any parties to this proceeding requesting service.
136. SoCalGas shall take the steps necessary to respond more promptly to requests for receipt point expansion cost estimates, whether this requires hiring additional personnel, having consultants on call, or both. It is not reasonable to take six to eight months to prepare such estimates.
137. In assessing the adequacy of in-state infrastructure, the utilities shall consider the physical system as a whole (the interaction of backbone pipelines, storage, and local transmission) including the probability of storage withdrawal and the deliverability of withdrawn gas during periods of peak demand.
138. SDG&E/SoCalGas' request for revisions to the open season process for expansion of local transmission facilities is modified.
139. For smaller customers, SoCalGas and SDG&E shall retain the current practice of requiring no more than 2-year commitments from those seeking firm capacity through open seasons. For large customers, SoCalGas and SDG&E shall require that they make take-or-pay commitments which last until the earlier of the following two events occurs: either two years shall have elapsed from the date that the associated facilities are placed into service; or five years shall have elapsed from the customer's sign-up date.
140. SoCalGas and SDG&E should file an advice letter within 90 days of the adoption of this decision to implement its proposal to offer tradable capacity rights on its local transmission system, as well as revisions to its open season commitment period as described herein.
141. In addition to the use of open seasons to allocate access to constrained resources, SDG&E and SoCalGas shall include the expansion of local transmission facilities in its usual system planning process, and undertake expansion projects as needed to serve all types of customers.
142. We expect PG&E, SDG&E, and the Southern California Electric Company to demonstrate, as part of the integrated resource planning process, that they have taken all necessary steps to ensure gas supply. As part of each planning cycle, they shall actively consider the role of firm interstate capacity and report on their reasons for pursuing the strategy that they propose. We also expect the electric utilities to inject and withdraw storage gas consistently, as part of the annual fuel supply cycle. As is true with other aspects of gas infrastructure and supply reserve, the electric utilities should define and work toward achieving a storage goal that is quantitatively related to the nature of their resource portfolios and the level of gas usage. This, too, should be developed and explained fully as part of each procurement plan.
143. The Commission hereby endorses the effort to expand and encourage active participation in the Natural Gas Working Group. Meetings between state agency representatives and utility representatives should generally be open to the general public. The Commission asks that all meetings involving more than just state agency representatives be open to all participants. However, it may be necessary, at times, for the utilities to discuss confidential matters. Therefore, two of the quarterly meetings will be restricted to the state agencies and the utilities as described Section III. We encourage the Group to err on the side of sunshine in its communications as a body with outside entities, and to function more privately only when necessary.
144. Woodside's proposal to require utilities to identify all potential suppliers interesting in obtaining access to capacity expansions and allocate costs equally is rejected. One of the most significant reasons for imposing incremental expansion costs on the entity making the additional deliveries is to require the incremental supplier to take those costs into account when siting its facilities. That economic signal may be diluted, if not destroyed, if the costs are subject to change over time.
145. The standardized Interconnection Agreement and Operational Balancing Agreement described and modified in Section V of this decision are approved.
146. Those entities providing gas from new sources of supply shall pay for any odorization costs in excess of those faced by the utility in treating gas from other sources. The utilities shall file advice letters within 60 days of the effective date of this decision in which they provide estimates of the average amount they are spending, per mmBtu, to odorize gas from existing interstate sources, and modifying the Interconnection Agreements accordingly.
147. The settlement agreement between PG&E and independent storage providers concerning direct interconnection of those independent providers with California producers, as well as electric generators and other noncore customers is approved.
148. SDG&E and SoCalGas are directed to file revised Rule 30 tariffs that contain the following specifications:
149. Minimum Wobbe Index of 1279
150. Maximum Wobbe Index of 1385
151. Minimum Heating Value of 990 Btu/scf
152. Maximum Heating Value of 1150 Btu/scf
153. Changes to hydrogen sulfide, mercaptan sulfur, total sulfur, water vapor, hydrocarbon dew point, liquids, merchantability, landfill gas, and biogas specifications contained in Exhibit 101, Prepared Testimony of Joseph W. Bronner, Attachment 2.
154. PG&E is directed to file a revised Rule 21 tariff that adopts the changes to the hydrogen sulfide, mercaptan sulfur, total sulfur, water vapor, hydrocarbon dew point, liquids, landfill gas, and biogas, as contained in Exhibit 101, Prepared Testimony of Joseph W. Bronner, Attachment 2.
155. SDG&E and SoCalGas are required to post real-time information on the Wobbe Index of gas at identified points in the pipeline system on an electronic bulletin board.
156. Historical California production is granted a generic deviation according to the definition proposed by the Producers in their Opening Brief if that production complied with the prior SDG&E and SoCalGas tariffs or if that production already has a deviation in place.
157. SDG&E and SoCalGas are required to work with producers of new sources of California supply to determine if any noncompliant gas would have a negative system impact. If the noncompliant gas would not have a negative system impact, SDG&E and SoCalGas must file Advice Letters to grant deviations.
158. PG&E, SDG&E and SoCalGas are each directed to file an Advice Letter by November 1, 2006 to implement the revised tariff specifications as ordered herein.
159. SoCalGas, SDG&E and PG&E must provide a deviation for gas flowing through each interstate pipeline connected to their respective systems, if requested, for a period of time no greater than 12 months from the date of this decision.
160. Rulemaking 04-01-025 remains open.
This order is effective today.
Dated September 21, 2006, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
Commissioners
************ APPEARANCES ************ |
Charles Scolastico |
Raveen Maan |
Shyletha A. Williams |
James W. Mctarnaghan |
William S. Garrett, Jr. |
Norman A. Pedersen |
John W. Leslie |
Frank R. Lindh |
Steven Cohn |
John R. Ellis |
Andy Bettwy |
Marcel Hawiger |
Susanne Phinney, D.Env. |
John Pacheco |
David R. Effross |
Diana L. Lee |
Wendy M. Phelps |
Gerald L. Lahr |
Catherine E. Yap |
Fredric C. Fletcher |
John A. Cioffiu |
Tim Nichols |
Norman J. Furuta |
Clarence Binninger |
Curtis Kebler |
Laura J. Scott |
Gregory R. Pohl |
Karl W. Meyer |
Lynn Chas. Riser |
Gary Hinners |
Edgar Kuipers |
Douglas Porter |
David A. Schlissel |
Kelly Allen |
Elaine M. Duncan |
(END OF APPENDIX A)
Appendix Settlement Agreement to D0609039
