STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

June 15, 2001

TO: PARTIES OF RECORD IN APPLICATION 01-04-007

Enclosed is the draft decision of Administrative Law Judge (ALJ) John Wong. It will be on the Commission's agenda at the meeting on June 28, 2001. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Pursuant to Rule 77.7(f)(9), comments on the draft decision must be filed no later than June 25, 2001. No reply comments will be accepted.

In addition to service by mail, parties should send comments in electronic form to those appearances and the state service list that provided an electronic mail address to the Commission, including ALJ Wong at jsw@cpuc.ca.gov. Finally, comments must be served separately on the Assigned Commissioner, and for that purpose I suggest hand delivery, overnight mail, or other expeditious methods of service.

/s/ LYNN T. CAREW

Lynn T. Carew, Chief

Administrative Law Judge

LTC:t93

Attachments

ALJ/JSW/t93 DRAFT Item 7

6/28/2001

Decision DRAFT DECISION OF ALJ WONG (Mailed 6/15/2001

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of Southern California Gas Company for Authority Pursuant to Public Utilities Code Section 851 to Sell Cushion Gas in its Aliso Canyon and La Goleta Storage Fields. (U 904 G)

Application 01-04-007 (Filed April 9, 2001)

INTERIM OPINION REGARDING THE SALE OF CUSHION GAS

TABLE OF CONTENTS

Title Page

INTERIM OPINION REGARDING THE SALE OF CUSHION GAS 3

I. Summary 2

II. Background 2

III. Positions Of The Parties 4

A. SoCalGas 4

B. Office of Ratepayer Advocates 12

C. The Utility Reform Network 13

D. California Industrial Group and California Manufacturers & Technology Association 15

E. Duke Energy North America, LLC and Duke Energy Trading and Marketing, L.L.C. 16

F. Division of Oil, Gas, and Geothermal Resources 17

G. Southern California Edison Company 17

H. Southern California Generation Coalition 19

IV. Discussion 20

A. Phasing Of The Application 20

B. Public Utilities Code Section 851 21

C. California Environmental Quality Act 26

D. Phase 1 Authorization 29

E. Waiver Of Rules 35 and 36 31

F. Phase 2 Issues 32

V. Comments on Draft Decision 33

Findings of Fact 33

Conclusions of Law 35

INTERIM ORDER 37

I. Summary

In this decision, we consider the application of Southern California Gas Company (SoCalGas) for authority to sell cushion gas in its Aliso Canyon and La Goleta natural gas storage fields.

We conclude that Pub. Util. Code § 851 applies to the proposed activities which would reclassify 14 billion cubic feet (Bcf) of cushion gas in these storage fields as working gas available for sale. SoCalGas is authorized to perform the activities described in its application, except that the sale of the reclassified cushion gas shall not take place until further order of this Commission. We also conclude that the proposed activities are exempt from the California Environmental Quality Act (CEQA).