Background

San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas) filed the above-captioned application on December 2, 2004. The application makes three proposals. The first proposal is to integrate the gas transmission systems of SDG&E and SoCalGas, including the gas transmission rates. The second proposal is to establish a system of firm access rights at various transmission zones on the SDG&E and SoCalGas gas transmission system. The third proposal is to provide off-system deliveries to Pacific Gas and Electric Company (PG&E) and to interconnections with interstate gas transmission lines serving California.

Thirteen protests and three responses to the application of SDG&E and SoCalGas were filed. SDG&E and SoCalGas filed a reply to the protests and responses on January 31, 2005.

The application before us was filed in response to the Phase I decision (D.04-09-022) in Rulemaking (R.) 04-01-025, which is addressing policies and rules to ensure reliable, long-term supplies of natural gas to California. SDG&E and SoCalGas had advocated for the adoption of their transmission system integration and firm access rights proposals in Phase I of R.04-01-025. In D.04-09-022, the Commission declined to adopt those proposals and directed SDG&E and SoCalGas to file an application regarding those proposals. D.04-09-022 also directed SoCalGas to make a showing of how it could provide off-system deliveries for natural gas to be consumed within California.

The origins of the proposal for firm access rights can be traced back to R.98-01-011, the rulemaking that was opened to assess the market and regulatory framework of California's natural gas industry. In that rulemaking, firm tradable access rights was identified in D.99-07-015 as a promising option. Following settlement discussions and hearings, a system of firm tradable rights was included as part of the Comprehensive Settlement Agreement (CSA) adopted in D.01-12-018 in Investigation (I.) 99-07-003. In D.01-12-018, the Commission ordered SoCalGas to file advice letters to implement the CSA. SoCalGas filed the advice letters, which were addressed by the Commission in Resolution G-3334. The resolution denied the advice letters without prejudice, and SoCalGas was directed to file an application to implement D.01-12-018. In response to the resolution, SoCalGas filed Application (A.) 03-06-040. Following evidentiary hearings, SoCalGas' implementing tariffs were adopted with changes in D.04-04-015. However, the Commission stayed the implementation pending the issuance of the Phase I decision in R.04-01-025. As a result of making changes to the gas transmission systems of SDG&E and SoCalGas in the Phase I decision, the Commission in D.04-09-022 ordered that the stay in D.04-04-015 be continued until further notice.

Motion to Intervene

Kern Oil's motion to intervene in this proceeding was filed on January 18, 2005. Kern Oil seeks to intervene due to the effect the application will have on its operations if the proposals are adopted. No responses to the motion were received.

Rule 54 of the Commission's Rules of Practice and Procedure govern intervention in an application proceeding. Normally, an appearance may be entered by appearing at the hearing and completing an appearance form. Since Kern Oil's motion disclosed Kern Oil's interest in the application and no one objected to the motion, Kern Oil's motion to intervene should be granted. Kern Oil shall be granted party status in this proceeding, and the four individuals listed in Kern Oil's motion shall be added to the service list for this proceeding.