IV. Discussion

The monthly gas balancing rules are found in SoCalGas' G-IMB tariff, its "transportation imbalance service" tariff. In the "Description of Service" portion of the G-IMB tariff, the tariff references the winter balancing rules, which are contained in SoCalGas' Rule 30. SoCalGas provides a no-charge balancing service to its transportation customers if the cumulative imbalance at the end of the monthly imbalance trading period is within 10 percent of the customer's usage (tolerance band) for the billing period. However, as described under the "Rates" section in G-IMB, the remaining imbalance quantities that are outside the tolerance band at the end of the imbalance trading period are subject to a standby procurement charge when there is a negative imbalance, or to a buy-back when there is a positive imbalance.

SCGC's petition requests a waiver of "the 10 percent positive monthly imbalance limitation" during the winter heating season. The text of SCGC's petition states that removal of the 10 percent limit "would permit them to bring gas into the system at levels sufficient to be assured of avoiding daily balancing penalties without running the risk of incurring monthly imbalance penalties." (SCGC Petition, pp. 5-6.) The waiver of the tolerance band for positive imbalances would allow noncore customers to overnominate as much gas as they want during the winter season. It is unclear from SCGC's petition, however, whether it seeks to waive the provision which requires SoCalGas to purchase the overnominations.

SCGC's second request is to permit customers to use their accumulated positive monthly imbalance volumes to meet their winter daily balancing flowing supply requirements above 50 percent of the customers' daily burn. This would allow noncore customers to carry over their positive monthly imbalances and add it as a credit toward the winter months' daily balancing flowing supply requirement. This carry over proposal suggests that SCGC seeks to waive the purchase of the noncore customers' overnominations by SoCalGas.

There are several reasons why we believe SCGC's petition should be denied. The first reason is that Rule 47 of the Commission's Rules of Practice and Procedure requires the petitioner to "propose specific wording to carry out all requested modifications to the decision."

SCGC has not proposed specific wording changes to either D.90-09-089 or to D.97-11-070. Instead, SCGC has broadly worded its petition, and has left it up to the Commission and the other parties to decipher the exact relief sought by SCGC. Although we can surmise what SCGC is seeking, it has failed to propose the specific wording changes needed to carry out all of its requested modifications. An example of this is whether or not SCGC seeks to waive the purchase of any overnominations by SoCalGas. SCGC did not specifically state whether this provision of the monthly balancing rule should be changed. Based on other statements in SCGC's petition, we could assume SCGC's requests such a waiver. However, the burden of proposing the specific wording changes to a decision is on the petitioner, which SCGC has failed to do.

The second reason for denying SCGC's petition is that it essentially makes permanent and extensive revisions to the gas storage and balancing rules that were adopted in D.90-09-089 and D.97-11-070. These storage and balancing rules were extensively debated. In D.97-11-070, the Commission stated:

"We never intended that SoCalGas would be a provider of last resort for gas shippers who did not wish to assume the risk associated with market price variability which occurs with the change of seasons. With regard to balancing services specifically, D.90-09-089 found that the utilities' balancing services should promote good planning and should not impose additional costs on the utilities or their core ratepayers. D.90-09-089 states, `Our adopted rules for balancing services should not replace storage service ... the utilities and their ratepayers should not be responsible for the costs associated with imbalances.' " (76 CPUC2d at p. 603.)

D.97-11-070 also stated:

"That [SoCalGas'] storage system ... must be available first for the needs of the core customers who pay the majority of associated costs and who do not have the same opportunities as noncore customers to participate in competitive commodity and transportation markets. SoCalGas has effectively provided free storage services to noncore customers by permitting substantial imbalances to accrue on SoCalGas's system. We see no reason to continue this subsidy during a period of reliable gas supplies and firm transportation." (76 CPUC2d at p. 603.)

We agree with the observations of SoCalGas and TURN that SCGC's proposals allow noncore customers to avoid having to pay gas storage charges. Under SCGC's proposal, noncore customers would be allowed to overnominate as much gas as they want during the winter months. Under SCGC's second part of its request, noncore customers could carry over the previous months' positive imbalances and apply it toward the daily flowing supply requirement. If SCGC's petition is granted, noncore customers will be able to use the positive imbalances that they overnominated in prior months to make up the winter month's undernomination. This will allow noncore customers to avoid having to pay some or all of the daily balancing standby charge of 150 percent of the highest Southern California Border price. Meanwhile, SoCalGas would have to draw on the gas that noncore customers overnominated in the prior months in order to balance the undernominations by the noncore customers during the winter months. Under SCGC's proposal, SoCalGas would not be paid by the noncore customers for this service.

Clearly, SCGC's proposal is contrary to the express goals of both D.90-09-089 and D.97-11-070. As the Commission concluded in D.97-11-070, "SoCalGas' gas customers should not be required to subsidize the use of SoCalGas' storage or gas purchasing services by gas shippers who undernominate gas supplies to SoCalGas' system. (76 CPUC2d at p. 604.) In D.90-09-089, the Commission rejected a proposed settlement provision which would have allowed SoCalGas' transportation customers to carry over the positive imbalances equal to 10 days of average use without penalty. In rejecting that settlement provision, the Commission stated that the provision regarding balancing services amounted to free storage, and the provision was "unlikely to encourage customers to plan their gas takes carefully, and that utilities and their ratepayers should not be responsible for the costs associated with imbalances." (37 CPUC2d at p. 623.) SCGC's petition seeks to revisit certain elements of the balancing rules which have previously been rejected by the Commission. There is no need to entertain similar kinds of provisions in this proceeding again.

The third reason for rejecting SCGC's petition is that it seeks relief because of an alleged emergency resulting from SoCalGas' imposition of the 90 percent daily delivery requirement, and the spike in gas prices. We are not convinced that an emergency exists. As SoCalGas noted in its response, noncore customers had advance notice of SoCalGas' storage inventory and the daily balancing requirements through the GasSelect electronic bulletin board. In addition, the 70 percent daily balancing requirement went into effect on January 21, 2001, followed by the 90 percent requirement a month later. Although gas prices spiked around the time the 90 percent balancing requirement went into effect, gas prices have since dropped. We agree with SoCalGas that the rise in gas prices around February 15, 2001 cannot be attributed solely to the imposition of the 90 percent requirement. In light of these circumstances, an emergency does not exist.

Due to the alleged emergency, SCGC seeks a waiver of the 10 percent limit on monthly positive imbalances during winter balancing periods. However, the need to make an immediate change is no longer necessary because the winter heating season is now over. Although winter will reoccur again in December 2001, we believe that the parties and the Commission should focus their efforts on ways in which the amount of gas supply, including gas in storage, can be enhanced for the next winter season, rather than adopting mechanisms which allow noncore customers to have access to free gas storage.⁷ Those kinds of proposed mechanisms have been explicitly rejected by the Commission in D.90-09-089 and D.97-11-070.

Based on the three reasons stated above, SCGC's petition for modification of D.90-09-089 and D.97-11-070 should be denied.

We decline at this time to entertain the suggestion of TURN to rebundle in transportation rates, on an interim basis, the costs of storage for electric generators. As TURN itself notes, that issue is more properly raised in another proceeding.