COM/MP1/rsk/gir Mailed 9/27/06
Decision 06-09-039 September 21, 2006
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Establish Policies and Rules to Ensure Reliable, Long-Term Supplies of Natural Gas to California. |
Rulemaking 04-01-025 (Filed January 22, 2004) |
(APPENDIX - Settlement Agreement Attached)
PHASE 2 ORDER ADDRESSING INFRASTRUCTURE
ADEQUACY & SLACK CAPACITY, INTERCONNECTION & OPERATIONAL BALANCING AGREEMENTS, AN INFRASTRUCTURE WORKING GROUP,
NATURAL GAS SUPPLY AND INFRASTRUCTURE ADEQUACY
FOR ELECTRIC GENERATORS, NATURAL GAS QUALITY, AND OTHER MATTERS
Table of Contents
Title Page
PHASE 2 ORDER ADDRESSING INFRASTRUCTURE ADEQUACY & SLACK CAPACITY, INTERCONNECTION & OPERATIONAL BALANCING AGREEMENTS, AN INFRASTRUCTURE WORKING GROUP, NATURAL GAS SUPPLY AND INFRASTRUCTURE ADEQUACY FOR ELECTRIC GENERATORS, NATURAL GAS QUALITY, AND OTHER MATTERS 22
I. Measuring Infrastructure Adequacy for Natural Gas Utilities 88
A. Backbone Capacity - Defining the Standard 88
C. Looking Specifically at Receipt Points - Management, Use and Expansion of Receipt Points 2727
D. Looking at Storage Adequacy and Practices - Is There Enough? 3535
E. How Should the Gas Utilities Use Core Storage? 4747
F. Should New Storage Facilities Be Part of Rate Base? 4949
G. Planning and Expanding the Local Transmission System 4949
II. Measuring Gas Infrastructure Adequacy for Electric Utilities 6565
A. The Energy Division Issued a Report 6666
B. Various Parties Offered Comments 6868
III. Creating an Infrastructure Working Group 7272
B. Comments on the Proposal 7676
IV. Paying for and Gaining Access to New Facilities 7878
A. Charging All Ratepayers vs. Charging the New Users 7878
B. The Woodside Natural Gas Proposal Concerning the Cost of Receipt Point Expansion 7979
C. Gaining and Maintaining Access to New Facilities 8383
V. Interconnection and Operational Balancing Agreements 8484
C. The IOBA Should Be Separated Into an Interconnection Agreement and anOperational
Balancing Agreement. 8787
D. In-State Gas Suppliers Should Not Be Subject to These Contracts. 8787
E. The Contracts Should Not Affect Existing Agreements With Interstate Facilities and PG&E. 8888
F. Interconnect Collectible System Upgrade Agreement 8888
G. Issues Specific to the Interconnection Agreement and the Operational Balancing Agreement 8888
VI. Independent Storage Provider Direct Interconnection With California
Producers, As Well As Electric Generators and Other Noncore Customers 102102
B. Description of the Settlement 104104
A. San Diego Gas & Electric Company and Southern California Gas Company 110110
B. South Coast Air Quality Management District 118118
H. Indicated Producers, the Western States Petroleum Association And the California
Independent Petroleum Association 127127
I. Kern River Gas Transmission Company 131131
L. Shell Trading Gas & Power 138138
M. Southern California Edison 143143
A. Should the Commission Approve any Changes to the Existing Gas Quality Tariff Specifications
of SDG&E and SoCalGas? 153153
B. Should the Commission Approve any Changes to the Existing Gas Quality Tariff Specifications
of PG&E? 153153
C. State-Wide, Utility Specific and Regional Gas Quality Standards 154154
F. Limits on Specific Hydrocarbons 161161
H. Wobbe Rate-of-Change Requirement 162162
I. CARB CNG Specifications 163163
J. Other Tariff Changes Proposed by PG&E and SDG&E/SoCalGas 163163
K. Deviations from the SDG&E/SoCalGas Tariff 164164
M. Timing of New Tariffs 166166
X. Requirements of CEQA 166166
Comments on Proposed Alternate Decision 170170
Assignment of Proceeding 170170
APPENDIX Settlement Agreement
PHASE 2 ORDER ADDRESSING INFRASTRUCTURE
ADEQUACY & SLACK CAPACITY, INTERCONNECTION & OPERATIONAL BALANCING AGREEMENTS, AN INFRASTRUCTURE WORKING GROUP,
NATURAL GAS SUPPLY AND INFRASTRUCTURE ADEQUACY
FOR ELECTRIC GENERATORS, NATURAL GAS QUALITY, AND OTHER MATTERS
Summary
This decision is the culmination of a proceeding initiated by the Commission in January 2004 to assess the sufficiency of natural gas supplies and infrastructure in California. The Commission issued a Phase I decision in September 2004, specifically resolving some matters related to the anticipated introduction of gas supplies derived through liquefied natural gas (LNG). This order addresses the remaining issues in the proceeding. This order, among other things, does as follows:
1. Approves Interconnection Agreements and Operational Balancing Agreements for LNG providers (including gas arriving at Otay Mesa).
2. Directs the Pacific Gas and Electric Company (PG&E), the San Diego Gas & Electric Company (SDG&E), and the Southern California Gas Company (SoCalGas) to adopt, as a backbone transmission planning standard, one-in-ten cold and dry year average demand.
3. Approves an agreement between PG&E and independent storage providers for direct interconnection to storage customers.
4. Endorses the creation of an Infrastructure Working Group which will enable all participants and relevant state agencies to monitor system utilization and identify expansion needs.
5. Clarifies and expands policies related to receipt point expansion on the SoCalGas system.
6. Finds that no party has identified a specific example of inadequate infrastructure affecting the delivery of gas over the next decade.
7. Finds that the backbone transmission capacity on both the PG&E and SoCalGas systems is adequate and that we are comfortable with the proposed slack capacity ranges for backbone capacity as proposed by the utilities.
8. Modifies SoCalGas' proposed revisions to its rules affecting open seasons related to local transmission capacity. SoCalGas seeks to establish a requirement that customers seeking firm capacity commit to 5- or 10-year contracts. Affirms current practice of requiring no more than 2-year commitments for smaller customers. For larger customers we require take or pay commitments until the earlier of either (1) two years elapsing from the date that the associated facilities are placed into service, or five years elapsing from the customer's sign up date. Requires SoCalGas and SDG&E to upgrade system when nominations exceed available capacity, or explain its reason not to. Requires that tradeable rights be implemented for local transmission capacity.
9. Adopts rule changes to SoCalGas and PG&E tariffs regarding gas quality. SoCalGas Rule 30 is revised to reflect a maximum Wobbe Index of 1385. The California Environmental Quality Act (CEQA) does not apply to these tariff rules changes.
10. Historical California natural gas production is grandfathered under current tariff rules.
11. Adopts various other changes to PG&E's Rule 21 and SoCalGas' Rule 30 establishing gas quality standards, to make the two rules more consistent with each other.
