Responses to SoCalGas' Proposal to
Institute 100 Percent Balancing of Noncore
Throughput Revenue Risk

Watson commented on SoCalGas' balancing proposal in its response to ORA's Motion. Watson points out that the CSA approved in the GIR, D.01-12-018 put SoCalGas 100 percent at risk for recovery of unbundled backbone transmission and storage costs, and specified that the Commission will review SoCalGas' risk for local transmission revenues in the BCAP case. Watson further argues that the Commission needs to consider placing SoCalGas at greater risk for recovery of its local transmission and distribution costs. Watson believes that guaranteeing SoCalGas recovery of its revenues in the noncore market removes any incentive for the utility to reduce its costs in order to keep its service to electric generators competitive with the comparable costs of generators located elsewhere. With regard to noncore throughput, Watson states that gas and electric demand have moderated significantly, due principally to conservation efforts and a slower economy. In addition, new generating capacity is in operation or under construction in California and the western U.S.

Although EGA does not directly address SoCalGas' proposal for 100 percent balancing for noncore throughput revenue risk, it questions why noncore balancing accounts would be so dramatically undercollected at this time, since the throughput of noncore customers, particularly electric generation customers, in 2001, was well above the amounts forecasted in the last BCAP. EGA states that at a minimum, it would like to have the opportunity to ascertain through discovery or otherwise, that the amounts in the balancing accounts are legitimate and accurate.

None of the other parties responding to ORA's Motion to defer the BCAP proceeding 12 months commented on SoCalGas proposal for 100 percent balancing account protection for noncore throughput revenue risk.