COM/RB1/ALB/eap DRAFT Item 2
12/21/2000
Decision PROPOSED DECISION OF COMMISSIONER BILAS
(Mailed 11/21/2000)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Investigation on the Commission's Own Motion to Consider the Costs and Benefits of Various Promising Revisions to the Regulatory and market Structure Governing California's Natural Gas Industry and to Report to the California Legislature on the Commission's Findings. |
Investigation 99-07-003 (Filed July 8, 1999) |
(See List of Appearances in Attachment A)
FINAL OPINION
APPROVAL WITH MODIFICATIONS OF THE INTERIM
SETTLEMENT ENHANCING AND ENABLING COMPETITIVE
MARKETS ON THE SOUTHERN CALIFORNIA GAS COMPANY
SYSTEM AND OTHER DECISIONS ON THE PROMISING OPTIONS
SET FORTH IN DECISION 99-07-015 AS APPLIED TO SOUTHERN
CALIFORNIA GAS COMPANY'S SYSTEM AND SAN DIEGO GAS
AND ELECTRIC COMPANY'S SYSTEM
Table of Content
Title Page
FINAL OPINION APPROVAL WITH MODIFICATIONS OF THE INTERIM SETTLEMENT ENHANCING AND ENABLING COMPETITIVE MARKETS ON THE SOUTHERN CALIFORNIA GAS COMPANY SYSTEM AND OTHER DECISIONS ON THE PROMISING OPTIONS SET FORTH IN DECISION 99-07-015 AS APPLIED TO SOUTHERN CALIFORNIA GAS COMPANY'S SYSTEM AND SAN DIEGO GAS AND ELECTRIC COMPANY'S SYSTEM 1
I. Summary 2
II. Background 4
III. Discussion 7
A. Precedent 7
B. Current Situation 9
C. Summary of Each Proposed Settlement 11
1. Summary of Interim Settlement 11
2. Summary of Post-Interim Settlement 14
3. Summary of Comprehensive Settlement 16
4. Summary of Long Beach Proposal 29
D. The Legal Standard for Considering Settlements 30
1. Public Interest 31
a) The PI and the Public Interest 31
b) The CS and the Public Interest 32
(1) Costs to the Core 34
(2) Gas Cost Savings may be Ephemeral 35
(3) Matching Service to Need In Changing Circumstances 42
(4) Innovation and Value-Added Services Are Speculative 45
(5) Intrastate Transmission Unbundling Has Weak Customer Support 46
c) The Long Beach Proposal and the Public Interest 48
d) The IS and the Public Interest 49
(1) Receipt Points/ Intrastate Transmission 50
(2) Storage Unbundling 53
(3) Balancing, Imbalance Trading , Information about
OFOs, and Pooling 55
(4) Modifications to the IS 58
(5) Implementation Costs 59
(6) IS-related Tariff Approval 68
2. Reasonable In Light Of The Whole Record 68
3. Consistent with the Law 69
E. Decisions on Other Matters Litigated 71
1. Core Interstate Transportation Capacity Unbundling 71
a) The Proposals in the Settlements 73
b) Stranded Cost Allocation from Core Interstate Capacity Unbundling 75
c) Cap of 10% for Bundled Core Customers 79
d) Treatment of "Noncore ITCS" 80
e) Brokerage Fee 88
f) Effect and Implementation of Stranded Cost Allocation Determinations 89
2. "Retail" Promising Options 90
a) Elimination of Core Subscription 91
b) Core Aggregation Program Cap and Threshold 93
c) Data Access for Customers and their ESPs 96
d) Consumer Protections for those using ESPs and CTAs 98
e) Metering and Consolidated Billing 99
f) Avoided Billing Cost Credit, the Information-only Bill,
and Bill Inserts 102
g) Consistency with Pub. Util. Code Section 328.2 105
h) Costs of Implementation of Unbundling Interstate
Capacity and Retail Reforms 106
IV. CONCLUSION 107
V. Comments On Draft Decision 108
VI. Findings of Fact 109
VII. Conclusions of Law 121
ORDER 127
ATTACHMENT A - List of Appearances
APPENDIX I - Interim Settlement Enhancing and Enabling Competitive
Markets on the SoCalGas System
APPENDIX II - Comparison of Comprehensive, Interim, and Post Interim
Settlements
APPENDIX III - List of Acronyms
I. Summary
In this opinion, we consider three contested settlement proposals addressing the promising options raised in Decision (D.) 99-07-015 as applied to the Southern California Gas Company (SoCalGas) natural gas system, and to a lesser extent, the San Diego Gas and Electric Company (SDG&E) gas system. The three settlements are known as the Interim Settlement Agreement (IS) filed in December 1999, the Post-Interim Settlement Agreement (PI) filed in February 2000 and the Comprehensive Settlement Agreement (CS) filed in April 2000. At the time of submission, all three settlements still had supporters.
Based on the record developed regarding costs and benefits, and the official notice we take of gas prices at the border and at PG&E's citygate in the past few months since the close of the evidentiary hearing, we choose not to act on a number of the promising options at this time. In light of energy market conditions at this time, we choose instead to approve the most modest proposal, the IS, with some modifications. The major modification is the rejection of the provision for an automatic expansion of capacity at Wheeler Ridge with rolled-in rates if certain criteria are met.
This Settlement, in pertinent part,: 1) eliminates SoCalGas' current "windowing" process and replaces it with an announced daily calculation of physical capacity available at each receipt point; 2) institutes an Operational Flow Order procedure (OFO); 3) establishes Hector Road as a formal receipt point on SoCalGas' system at which nominations may be made; 4) provides a forum for further changes in OFO procedures during the term of this Settlement if their frequency exceeds a stated threshold; 5) provides for the establishment of "pools" of gas on the SoCalGas transmission system that are intended to increase the liquidity of trading of gas supplies; 6) makes changes in the transportation balancing rules on SoCalGas' system, while retaining the current 10% monthly imbalance tolerance for transportation customers; 7) explicitly subjects SoCalGas' Gas Acquisition Department to the same balancing rules and penalties as all other shippers on the SoCalGas system, as well as applying the more stringent winter balancing rules; 8) allows trading of imbalances to some extent; 9) allows some right to assign and reassign unbundled storage contracts in a secondary market and makes a SoCalGas electronic bulletin board available to do so; 10) unbundles from core transportation rates the storage capacity cost exceeding that required for core minimum reliability, as defined by the Commission in D.00-04-060; 11) provides for recovery in rates of all implementation costs actually incurred by SoCalGas to implement its provisions, in a capitalized amount not to exceed $3.5 million. The IS, and its appendices A-F, is attached as Appendix I to this opinion.
Additionally, based on the evidence in the record, we unbundle core interstate transportation from rates, eliminate core contribution to noncore interstate transition cost surcharges (ITCS) and the core subscription option as well as the caps and thresholds for core aggregation programs. We reduce the core aggregation program threshold, and offer billing options to core aggregators. Finally, we once again urge the Legislature to enact consumer protection legislation for those ratepayers served by core aggregators and other marketers.
We emphasize that we see our action today as an interim measure. We put the parties on notice that we may open another investigation two years after the effective date of the tariff revisions arising from this decision, regarding the gas industry, in light of conditions in the market that time.
