Anticipating that its joint settlement will be approved by stateregulators by this fall, Sempra Energy’s utility subsidiaries arepushing a new “Customer Choice” campaign designed to increase thenatural gas volumes residential and small business customers buyfrom energy service providers (ESPs). Sempra is stressing to itsutility employees that the increased ESP business cannot beachieved without “major opening up” of the gas markets in thestate.

Southern California Gas and San Diego Gas & Electric, thetwo Sempra-owned utilities, are portraying their joint settlementas including more than 30 parties and as being “a major step inachieving (the) vision of transforming retail markets.” Among thestakeholders signing onto the proposed settlement are largeend-users, marketers, producers, suppliers, utilities, merchantstorage operators, state regulators and the CPUC’s independentOffice of Ratepayer Advocates (ORA).

In communications to utility employees last month, a SoCalGascustomer services/marketing vice president, Rick Morrow, saidSempra’s California Public Utilities Commission (CPUC)-regulatedutilities are “trying to promote more customer choice in a mannerthat enhances the benefits of electric restructuring, enablescompetition and provides innovative solutions for customers.”

Morrow and other Sempra officials hold out more business for theESPs and savings for end-use customers while acknowledging that theproposed deal with various pipelines, shippers, marketers and largeend-users impacts mostly “upstream” points on the SoCalGastransmission pipeline system, as opposed to the linkages closer tothe end-use customers.

The proposed settlement, which Sempra expects the CPUC to ruleon this fall, changes gas operations in four basic areas: (1) coreinterstate transmission — ESPs would be able to buy interstatetransmission at market — rather than assigned — rates; S(2)intrastate transmission — ESPs and large (noncore) end-usecustomers will have the option of buying firm transmission rights,along with new options for buying and trading firm rights; (3)storage — ESPs can choose how much they want from SoCalGas oranother provider, aside from basic amounts of SoCal storage thatmust remain held to assure core reliability; (4) balancing —self-balancing will be an option, with credits given for avoidedutility costs.

Other changes in the agreement remove existing limitations tothe aggregation programs among residential and small business(core) customers; provide credits for ESPs who do their ownbilling; and eliminate so-called “core subscription” services forlarge customers not wanting to buy their own supplies. For thosecustomers, the settlement would require they pay the full rate ofbeing a core customer, depending on the utility to buy theirsupplies as well as transport them.

While the proposed settlement is pending at the CPUC, SoCalGashas set up a cadre of its marketing employees to encouragehospitals, colleges, government sites and other large, corecustomers to switch to ESPs since these large customers provide themost lucrative potential for the nonutility energy suppliers.

“The settlement agreement helps meet the CPUC’s objectives ofrestructuring the gas industry,” Morrow was quoted in an employeenewsletter. “Our filing addresses all of the CPUC’s most promisingoptions for creating a competitive marketplace.”

Richard Nemec, Los Angeles

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