8. Conclusion

All the available evidence leads us to conclude that, in ORA's words, "[t]he primary value of the Montebello facility is the working and cushion gas ...". (ORA ACR response, p. 8.) Review of the Final MND persuades us that the cushion gas can be withdrawn and Montebello can be decommissioned in full compliance with environmental laws. While the terms of the Amended Settlement may not be precisely those we would have fashioned after full litigation of each of the issues, we are persuaded that its terms are reasonable and fair to both ratepayers and shareholders in light of all of the circumstances of this proceeding. We stress, as the parties have noted repeatedly, that in approving negotiated resolutions we do not set a precedent that requires like treatment of these issues in future.

Our decision is heavily influenced by both the impact of current transmission constraints in Southern California and the potentially high cost to SoCalGas' ratepayers of further delay. For those customers, the opportunity cost of SoCalGas continuing to maintain Montebello is the sum of the gain on sale of gas in storage and the cost of the field in rates, as well as the avoided costs of curtailments that might occur in the absence of access to the gas.

We will approve the Amended Settlement, but with two conditions. First, we direct SoCalGas to commence gas withdrawals at Montebello as quickly as safe operating practices will allow. Information obtained in the course of environmental review indicates that Montebello can become productive in two-three weeks, rather than the 30 day-period indicated in the Amended Settlement.

Second, should natural gas prices increase above current forecasts, such that the estimates of ratepayer gain increase significantly above $30 million, then any signatory to the Amended Settlement may petition for modification of this decision to permit an additional rate reduction effective in 2002, in advance of any final true up. This is fair and reasonable, we believe, since price forecasts are uncertain and since approximately 75% of Montebello's gas inventory will be withdrawn in the next two years.

Finally, we remind SoCalGas of its public utility obligation to exercise prudent managerial and operational judgment in carrying out the terms of the Amended Settlement, and in light of current system constraints, determining whether to burn or store gas withdrawn.