ALJ/TJS/avs

Decision 01-05-003 May 3, 2001

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation Into the Gas Procurement Ratemaking Practices of San Diego Gas & Electric Company.

Investigation 00-08-003 (Filed August 3, 2000)

OPINION ESTABLISHING METHODOLOGY FOR
CALCULATING THE GAS PRICES FOR SDG&E CUSTOMERS

Introduction - Adopting a Border Price Methodology for Pricing Procured Gas; Rebating Past Over-Collections and Recovering Under-Collections

We order San Diego Gas and Electric (SDG&E) to modify the methodology that it uses to price natural gas for its core and non-core customers commencing with the first tariff filing following the adoption of this decision. The implementation of Option 2, the Border Price Method, corrects a flaw in the current methodology. The methodological flaw shifts some costs for the transportation of gas incurred to provide gas to non-core customers to the bills of core customers. This cost shifting contravenes Commission policy.

We order SDG&E to rebate to core customers via surcredits applied for one year the overcharges paid since February 2000, when Office of Ratepayer Advocates (ORA) first filed a formal protest pointing out the methodological flaws and the consequences for consumers. We permit SDG&E to recover the misallocated charges and the undercollection of gas transport costs from non-core customers by booking the costs and charges into the noncore Purchased Gas Account (PGA). The booking must recover no more revenues than those rebated to core customers. If SDG&E declines to book the misallocated charges into the noncore PGA at this time, it cannot recover these undercollections by other means.