Background

SoCalGas and San Diego Gas & Electric Company (SDG&E) filed their BCAP applications on September 21, 2001, and October 5, 2001, respectively. Both applications included rates based on long-run marginal cost, but proposed that the Commission return to embedded cost ratemaking. SoCalGas and SDG&E filed amended applications, November 13, 2001, and November 21, 2001, respectively, to present rates resulting from an embedded cost approach to cost allocation.

On December 4, 2001, an initial prehearing conference (PHC) was held and the procedural schedule proposed by the parties was adopted. On December 11, 2001, the Commission issued Decision (D.) 01-12-018, approving the Comprehensive Settlement Agreement (CSA) in Investigation (I.). 99-07-003, the Gas Industry Reform (GIR) proceeding. The GIR significantly alters the market structure for gas transportation and storage services in southern California by unbundling transmission and storage costs. Both utilities told the Commission that the GIR would require them to file revised BCAP applications.

On December 3, 2001, the Electric Generator Alliance (EGA) filed a motion to strike the embedded cost proposals of SoCalGas and SDG&E. A hearing on EGA's motion was scheduled for January 10, 2002. On December 28, 2001, the Office of Ratepayer Advocates (ORA) filed a motion to suspend the procedural schedule adopted at the December 4, 2001, PHC on the ground that since the utilities would be filing revised applications, ORA needed more time to respond than the initial procedural scheduled allowed.

At the January 10, 2002, hearing on EGA's motion, SoCalGas was ordered to file its revised application by March 4, 2002, and SDG&E to file its revised application by March 18, 2002. The parties were ordered to meet and confer to develop a revised procedural schedule. ORA's motion to suspend the original schedule was granted, and a new schedule was adopted with evidentiary hearings scheduled for August and September 2002, and ORA's testimony due June 14, 2002.

On March 19, 2002, ORA filed a Motion to Suspend the Procedural Schedule and to defer the BCAP Proceedings for a period of 12 months. Responses to ORA's Motion were received on April 3, 2002, from The California Industrial Group and the California Manufacturers & Technology Association (CIG/CMTA); the EGA, SoCalGas and SDG&E, Southern California Generation Coalition (SCGC); California Cogeneration Council (CCC); and Watson Cogeneration Company (Watson). ORA filed a reply to the responses to its Motion on April 9, 2002. On April 23, 2002, the assigned ALJ issued a ruling granting ORA's motion and the proceedings were deferred until March 2003. The ALJ Ruling stated that SoCalGas' request to modify the 75/25 (ratepayer/shareholder) balancing of noncore throughput revenue risk would be addressed in a subsequent proposed decision. We are addressing this issue today.