ALJ/XJV/t94 Mailed 7/3/2001

Decision 01-06-081 June 28, 2001

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of SOUTHERN CALIFORNIA GAS COMPANY for Authority Pursuant to Public Utilities Code Section 851 to Sell its Storage Field in Montebello, California.

Application 00-04-031 (Filed April 20, 2000)

OPINION APPROVING AMENDED
SETTLEMENT, WITH MINOR CONDITIONS

TABLE OF CONTENTS

Title Page

OPINION APPROVING AMENDED SETTLEMENT, WITH MINOR CONDITIONS ................................................1

1. Summary 2

2. Procedural Background 3

3. The Montebello Assets 5

4. Overview of the Amended Settlement Terms 6

5. Tests for Approving Amended Settlement Agreements 9

6. Discussion 10

6.1 Operational and Market Factors 12

6.2 Ratemaking 15

6.3 Other Considerations 17

7. Environmental Review 18

7.1 MND 19

7.2 Mitigation Measures 21

8. Conclusion 23

9. Case Categorization and Need for Hearing 25

10. Comments on Draft Decision 25

Findings of Fact ...............................................25

Conclusions of Law ...............................................28

ORDER ...............................................29

ATTACHMENT A

ATTACHMENT A-1

1. Summary

By this application, Southern California Gas Company (SoCalGas) seeks authority to dispose of all of the assets which comprise its West Montebello natural gas storage field (Montebello). We review an amended all-party settlement (Amended Settlement), filed on May 3, 2001, which recommends withdrawal and sale to the market of the working gas and cushion gas at Montebello, salvage of other utility property, sale of the abandoned site, and specific ratemaking adjustments. We also review the final mitigated negative declaration (MND), which concludes that this proposal will not result in significant impacts on the environment.

After adopting the final MND, we approve the Amended Settlement, with two minor conditions, one of which is implied in that document already. Thus, within 60 days SoCalGas' customers will begin to realize the sizeable rate reduction which the Amended Settlement provides: approximately $44.1 million allocated in twelve monthly installments over the next year. Approximately $30 million is an estimate of the ratepayer share of the net gain on sale of cushion gas, allocated in accordance with the terms of the Amended Settlement. The other $14.1 million consists of a permanent rate reduction equivalent to the annual costs to SoCalGas of owning, operating, and maintaining Montebello.

The minor conditions on our approval are these:

· SoCalGas shall commence gas withdrawals at Montebello as quickly as safe operating practices will allow.

· Any signatory to the Amended Settlement may petition for modification of this decision to permit an additional rate reduction effective in 2002, if natural gas prices increase above current forecasts such that the estimates of ratepayer gain increase significantly above $30 million.