STATE OF CALIFORNIA GRAY DAVIS, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
November 26, 2001 Alternate Order to H-2
From 11/8/2001
TO: PARTIES OF RECORD IN INVESTIGATION 99-07-003
Enclosed is the Alternate Proposed Decision of Commissioner Carl Wood to the Proposed Decision of Administrative Law Judge (ALJ) John Wong previously mailed to you.
When the Commission acts on this agenda item, it may adopt all or part of it as written, amend or modify it, or set aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.
As set forth in Rule 77.6(d), parties to the proceeding may file comments on the enclosed alternate at least seven days before the Commission meeting or no later than December 4, 2001. Reply comments should be served by December 6, 2001. An original and four copies of the comments and reply comments with a certificate of service shall be filed with the Commission's Docket Office and copies shall be served on all parties on the same day of filing. The Commissioners and ALJ shall be served separately by overnight service.
Lynn T. Carew, Chief
Administrative Law Judge
LTC:epg
Enclosure
111119
COM/CXW/epg DRAFT Alternate Order to H-2
From 11/8/2001 Agenda
Decision ALTERNATE PROPOSED DECISION OF COMISSIONER WOOD
(Mailed 11/26/2001)
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 3
III. Discussion 7
A. Prior Decisions 7
B. Current Situation 8
C. Summary of Each Proposed Settlement 9
1. Summary of Interim Settlement 9
2. Summary of Post-Interim Settlement 12
3. Summary of Comprehensive Settlement 15
4. Summary of Long Beach Proposal 28
D. The Legal Standard for Considering Settlements 29
1. Public Interest 30
a) The PI and the Public Interest 30
b) The CS and the Public Interest 31
(1) Costs to the Core 33
(2) Gas Cost Savings may be Ephemeral 34
(3) Matching Service to Need In Changing Circumstances 41
(4) Innovation and Value-Added Services Are Speculative 44
(5) Intrastate Transmission Unbundling Has Weak Customer Support 45
c) The Long Beach Proposal and the Public Interest 47
d) The IS and the Public Interest 48
(1) Receipt Points/ Intrastate Transmission 48
(2) Storage Unbundling 51
(3) Balancing, Imbalance Trading, Information about OFOs, and Pooling 53
(4) Modifications to the IS 56
(5) Implementation Costs 57
(6) IS-related Tariff Approval 66
2. Reasonable In Light Of The Whole Record 66
3. Consistent with the Law 67
E. Decisions on Other Matters Litigated 69
1. Core Interstate Transportation Capacity Unbundling 69
a) Treatment of "Noncore ITCS" 70
b) Brokerage Fee 73
c) Effect and Implementation of Stranded Cost Allocation Determinations 74
2. "Retail" Promising Options 75
IV. CONCLUSION 86
V. Comments On Draft Decision 87
VI. Findings of Fact 87
VII. Conclusions of Law 96
ORDER 101
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, as well as the dramatic developments in the electric industry and in gas prices at the border and at Pacific Gas and Electric Company's (PG&E) citygate in the months since the close of the evidentiary hearing, we choose not to adopt many of the promising options at this time. In light of energy market conditions at this time, we choose instead to approve portions of the IS, with some modifications. Our actions, today, are also prompted by recent proposals by SoCalGas in other dockets to eliminate the windowing process and institute firm intrastate transmission rights through bundled rates.
The adopted provisions: (1) establish Hector Road as a formal receipt point on SoCalGas' system at which nominations may be made; (2) provide for the establishment of "pools" of gas on the SoCalGas transmission system that are intended to increase the liquidity of trading of gas supplies; (3) allow trading of imbalances to some extent; and (4) provide 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 elect not to unbundle core interstate transportation from rates at this time, and we 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 following Commission implementation of consumer protections. We reduce the core aggregation program threshold, and offer billing options to core aggregators.
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.
