Under its still relatively new natural gas transmission/storage system and firm access rights (FAR), including an independent system operator, Southern California Gas Co. (SoCalGas) won three and lost two minimum-flow contracts at the California Public Utilities Commission’s (CPUC) business meeting Thursday in San Francisco. The estimated cost of the three approved deals is $2.6 million, the CPUC said.

Through a fast-track advice letter process, Sempra Energy’s Los Angeles-based gas utility requested expedited approval of five contracts to support its minimum-flow requirements on its Southern System transmission pipeline network. The contracts came as a result of the transmission system operator’s request for offers.

The two contracts denied included one with the SoCalGas utility gas acquisition department for gas supplies and a capacity purchase deal with El Paso Natural Gas. The CPUC said it was not adequately demonstrated that the gas utility department contract was needed and there was no proposal on how to treat the revenues from the contract.

Regulators also denied the El Paso deal because it involved off-system deliveries, which are the subject of a separate proceeding at the commission. “It’s not an appropriate issue for this advice letter filing,” a CPUC staff member told the five CPUC commissioners.

“This is the first time the commission has addressed SoCalGas system operator contracts to support minimum-flow requirements on the Southern System since the decision two years ago to establish a system operator,” said Commissioner Timothy Alan Simon, noting that the system operator’s efforts need to be focused on seeking the lowest-cost gas supplies. “It does this for the benefit of all the gas utility customers and for maintaining system reliability.”

Regarding the issue of how revenues from the contracts are treated, Simon said it would be “best if the parties can get together to address the issue for future consideration in these contracts.” The operator will seek the contracts annually, and Simon encouraged SoCalGas to “pursue low-cost contracts to be able to operate it system.”

On an issue of whether the system operator should be required to pay a fee for FAR as any other operator on the Southern System must do, Simon said the issue should be addressed in a biannual gas cost proceeding and the upcoming FAR review proceeding. For the time being, the CPUC is saying the operator should pay the FAR fee.

Three parties protested all or parts of the contract advice letter: the CPUC’s independent consumer unit, the Division of Ratepayer Advocates; the Southern California Generation Coalition, including large electric generators such as Southern California Edison Co.; and Shell Energy North America.

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