Southern California Gas Co. has filed its latest two-yearcost-allocation rate proposal with California state regulators,proposing a massive $204 million rate cut, including transportationrate decreases for all customers with the largest targeted forlarge industrial and wholesale customers.

Coming on the heels of the start of an open season among itslargest customers from two competing interstate pipeline companies(Williams and Questar), SoCalGas’s proposed rate adjustments, whichare to take effect Aug. 1, 1999, seem designed to keep as many aspossible of its large customers from physically hooking ontoproposed new gas transmission pipelines that are slated to comeinto the heart of SoCal’s service territory in Long Beach.

Transportation rate reductions in the range of 35-55% areproposed for the largest customers. Residential customers areslated for a 3% reduction in winter gas bills, which includecommodity and transportation/storage charges. The rate decreases totransportation customers are being made possible by the gasutility’s so-called “global settlement” among its largest suppliersand transportation customers from 1994 and the lowering of strandedcosts from its western Canadian and offshore California gas supplyprojects, according to a SoCalGas spokesperson. Residential ratedecreases come from a colder-than-normal winter season.

The recent proposed settlement at FERC regarding SoCalGas’spaper interstate pipeline affiliate, Pacific InterstateTransmission Co. (PITCO) figures to contribute longer term to thelower rates. PITCO, which is being phased out, has allowed SoCal toobtain Alberta Canada gas supplies through the western interstatepipeline systems of PG&ampE Gas Transmission-Northwest andNorthwest Pipeline Co. FERC approval of the settlement is slatedfor Dec. 18.

Added load in 1998 to new customers served by SoCal along theCalifornia-Mexico border also is contributing to the nation’slargest natural gas distribution company being able to lower itsrates.

SoCalGas is proposing in its filing to the state publicutilities commission that the decreases stay in effect through theyear 2002 when its current performance-based rate (PBR) structureexpires. This rate filing is viewed as a mid-course adjustment tothe PBR mechanism that became effective Aug. 1, 1997, and SoCal isrecommending that the California Public Utilities Commissioncontinue the structure with no major changes.

As with similar past cost-allocation proceedings, SoCal, asubsidiary of the newly merged Sempra Energy in San Diego, isproposing that residential rates be adjusted to bring them more inline with the higher cost of providing service to smallest energyusers. It proposes getting flatter commodity rates, which now havetwo tiers to penalize use over a threshold amount, and to increasethe monthly demand charge from $5 to $7 for its 4.7 millionresidential customers.

Richard Nemec, Los Angeles

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