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Sempra Promotes CA Unbundling Restrictions in Other States

Sempra Promotes CA Unbundling Restrictions in Other States

A new California law restricting future natural gas unbundling fits the "vision" of $5-billion utility holding company San Diego-based Sempra Energy said, and it intends to "actively promote" similar restrictions in other states in which it operates.

The parent of two multi-billion-dollar utilities, Southern California Gas and San Diego Gas and Electric, Sempra has new or existing utility operations under way or proposed in North Carolina, Maine and several other states. "The new law represents a thoughtful treatment of issues of customer choice and safety," said Tom Brill, Sempra's director of regulatory policy, quoted in a company newsletter for employees and stakeholders. "The new law preserves both customer safety and customer choice in determining how the California Public Utilities Commission unbundles the costs of natural gas utilities." Sempra, and other advocates for the new laws-notably other utilities and the gas utility worker unions-contend that both utilities and nonutilities alike are free to "offer products and services with the goal of becoming the preferred providers in the restructured energy industry."

Critics argue that the new law (AB 1421) is aimed at keeping gas services mostly bundled for the smallest, mass market retail customers. It was squeezed out of a late night session of the lawmakers just before the last Labor Day weekend, ensuring that the utilities will remain the almost exclusive gas provider for small customers. Observers think the new law is basically consistent with actions earlier in the summer by the California Public Utilities Commission that are now being worked out in settlement discussions among the state's major gas industry participants. Those talks, which will resume Nov. 17, focus on the SoCalGas and Pacific Gas and Electric transmission and storage systems, mostly as they relate to large commercial and industrial customers and core aggregators. The new law (AB 1421) is mainly concerned with core customers and the utilities remaining the gas merchant for them.

"We supported the (new law)," said a PG&E utility spokesperson. "A key element for us is that (it) provides that (we) shall continue to provide services to core customers (revenue cycle and after-meter services). There are obvious safety considerations in those services, and we wanted to be able to continue to provide them to our core customers."

"AB 1421 upholds customer safety by preventing unbundling of the utility's costs for 'after-meter services', including leak investigation, inspecting customers piping and appliances, carbon monoxide investigation, pilot relighting and high-bill investigation," according to Sempra Energy's newsletter report. It also preserves the gas utilities' monopoly role in providing transmission, storage-for-reliability and distribution for residential and small business ("core") customers. Sempra opens the newsletter report by stating categorically that it hopes other states will follow California's approach.

The new law is designed to ensure that the state's major investor-owned gas utilities continue to provide bundled service for core customers, except those aggregating their loads under the state's eight-year-old program, for which the rules have been relaxed in recent years to allow any residential or small business customer to participate. So far, less than 10% of the customers have participated. However, even for those who choose an alternative, the law lessens the credit customers can receive from the utility and prohibits the after-meter services.

Richard Nemec, Los Angeles

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