California energy regulators yesterday identified 10 items forpotential natural gas industry restructuring, most of which dealwith wholesale or large customer operations. State regulators alsoencouraged utilities and large customers to cease their bickeringand come up with a broad-based settlement on gas unbundling.

In the meantime, the California Public Utilities Commission willconduct a separate proceeding to analyze the cost-benefits of eachof the 10 areas noted. “The [CPUC decision] is seeking to develop astructure that preserves the utilities’ traditional role ofproviding full service to core customers while clearing obstaclesto the competitive offering of gas [supply], transmission, storage,balancing and other services for all customers throughout thestate,” the CPUC said in its news announcement on its action.

Half of the areas outlined by the regulators deal with attemptsto bring more transparency and consistency into wholesale gasoperations, such as improving statewide access totransmission/storage services, trading of transmission, storage andbalancing rights, balancing service, hub services, and improvingthe flow of information related to market transactions.

Regarding the latter, the CPUC indicated in taking its actionthat it will determine the adequacy of current information gasutilities provide to customers and competitors alike. For allcustomers, the CPUC calls for separate costs and rates beingdelineated for all gas utility services in the state as one of the10 areas specified for potential unbundling.

Of additional interest to the smallest (residential andbusiness) customers, the CPUC identified the need to “refine”utility gas buying and “expand competitive options” for the captivecore customers, the smallest ones which tend to rely on theutilities for all of their needs.

Metering and billing options are two other areas of specificfocus on the mass residential and small business customers.

While pushing parties to settle the issues and bring thatproposal to the regulators, if a settlement is not reachedrelatively quickly, the CPUC said it is prepared to hold hearingsthis fall to examine the cost-benefit aspects of increasingunbundling in the 10 areas identified. The regulators also citedpreviously established goals for gas unbundling as criteria withwhich to test each of the proposed areas. Those specify that anyfurther gas unbundling should do the following: Complement andenhance benefits of electric restructuring; eliminate inappropriatecross-subsidies; eliminate and prevent barriers to competitors’entry into the California gas market, mitigate competitive abusesfrom one firm having market power; enhance competition by providingseparate rates for each major component of utility service andallow customers to choose other firms to provide those services;ensure rates customers pay reflect the cost of the services theyare receiving; preserve current low costs; provide adequateconsumer protection; and ensure natural gas safety and reliability.

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