ALJ/LRB/epg DRAFT CA-5

9/21/2000

Decision PROPOSED DECISION OF ALJ BYTOF (Mailed 8/22/2000)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of SOUTHERN CALIFORNIA GAS COMPANY (U 904 G) Under the Catastrophic Event Memorandum Account (CEMA) for Recovery of Costs Related to the El Niño Storms.

Application 99-03-049 (Filed March 19, 1999)

(See Appendix A for List of Appearances.)

TABLE OF CONTENTS

TITLE Page

OPINION 2

I. Summary 2

II. Procedural Background and The Stipulation 3

A. Procedural Background 3

B. The Declared Disaster 6

C. SoCalGas' and ORA's Stipulation 8

D. Standard of Review 9

E. Positions of the Parties 11

F. Review In Light of the Whole Record 12

III. CEMA Applicability and Reasonableness of Costs 15

A. Background 15

B. Applicability of CEMA to Recover Costs For Damage
Attributed to the El Niño-Caused Storms 17

C. Scope of the Disaster 19

D. Damage Attributable to the 1998 El Niño Storms 20

1. SoCalGas' Prior Knowledge of the Hazards 22

2. Landslide Movement and Effect of the 1995 Rainstorms 24

3. Should SoCalGas have relocated these pipelines earlier? 27

4. Timing of the Damage 29

E. Future Consideration of Pipeline Maintenance, Repair,
and Relocation 32

F. Future Consideration of the CEMA 34

IV. Review of the Stipulation 36

V. Cost Allocation 40

A. SoCalGas' Proposed Cost Allocation 40

B. TURN's Proposed Cost Allocation 42

C. ORA's Position 44

D. Discussion 44

VI. Comments on Proposed Decision 51

Findings of Fact 51

Conclusions of Law 57

ORDER 61

Appendix A

OPINION

I. Summary

Southern California Gas Company (SoCalGas) and the Office of Ratepayer Advocates (ORA) present for Commission approval a stipulation regarding SoCalGas' recovery of certain costs through the Catastrophic Event Memorandum Account (CEMA). The stipulation purports to resolve all issues presented except for The Utility Reform Network's (TURN) issue regarding the appropriate manner in which to allocate the revenue requirement among customer classes. We modify the stipulation to allow SoCalGas to recover $4,713,616, reduced by $110,000 in disallowed costs, through 2002, as well as future carrying costs for the capital investments. In their comments to the Proposed Decision, the stipulating parties should state whether they agree with the modifications to the stipulation. If so, we adopt the stipulation as modified. If not, we reject the stipulation and render this decision based on the evidentiary record developed in this case.

We adopt TURN's recommendation and direct, for this case only, that the costs be allocated to customers based upon function. We direct that SoCalGas address the issue of pipeline location, maintenance, and repair in its next cost-of-service¹ or performance-based ratemaking (PBR) proceeding. Furthermore, we may institute other proceedings in the future to consider seeking a statutory amendment or enacting guidelines that will ensure that the CEMA is not used as a substitute for routine maintenance and repairs or capital projects that have been unjustifiably delayed.