With two more months of breathing room to work out a deal,Southern California Gas Co. has substantially modified its originalrestructuring proposal for the resumption of settlementnegotiations this week in Los Angeles. With SoCalGas leading theway, representatives of 75 interested parties are attempting tohammer out a consensus on how further unbundling is shaped forCalifornia’s natural gas industry.

The major changes SoCal has made in its proposal include: theelimination of so-called “windowing” of various receipt pointsalong its intrastate transmission network; keeping monthlybalancing as opposed to the proposal to switch to daily balancing(except under OFO conditions); and the use of operational floworders (OFOs) when the system gets too far out of balance as areused on the Pacific Gas and Electric Co. intrastate gastransmission system in the north.

The utility distributed its revised proposal to all partiesbefore the Labor Day weekend. The action followed the Sept. 1decision by state regulators to extend until Oct. 27 the deadlinefor achieving an all-party settlement or providing tangibleevidence of a settlement being achievable.

California regulators have been strongly encouraging SoCalGasand PG&E’s gas utility to work out an all-encompassingsettlement that will provide a market solution to the remainingunbundling of California’s gas business – particularly focusing ontransmission and storage operations. Without a market solution, theCalifornia Public Utilities Commission is set to conduct a seriesof evidentiary administrative law hearings early next year.

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