With construction still ongoing Friday on three of its four major transmission upgrades that will collectively add 375 MMcf/d of capacity on its transmission pipeline system, Southern California Gas Co., Los Angeles, acknowledged its modified implementation plan for its in-state pipeline/storage restructuring will be on track by the fall when crunch time comes. Even so, the detailed steps outlined in a filing with state regulators last month indicated that there will be implementation continuing through next year to fully integrate all parts of what is called the “comprehensive settlement agreement” between the gas utility and its major customer/stakeholders.

Work at Wheeler Ridge has been completed, according to a SoCalGas spokesperson in Los Angeles, however, the upgrades at Kramer Junction, Hector Road, North Needles and Line 85 won’t be complete until later in the month. The target date for having them all in service had been Friday (March 15). The physical logistics remain straightforward, but the trading and deal-making details are far from resolved — at least from the standpoint of some major end-users, such as the State of California’s centralized gas-buying service.

SoCal and the marketers in initial customer meetings have assured end-users that sufficient information on the half-dozen receipt points will be forthcoming, so there will be more than a “Southern California Gas border price” to trade around, including a “citygate price,” too. The key question from the end-users standpoint is “how do you decide what receipt point to use?” asked Matt Brady, a Sacramento-based attorney who represents the California General Services Department’s consolidated gas-buying program.

“How do the customers get the information on which to base their decisions about where they go to buy when you have six receipt points and have to submit bids, and it is good to the year 2006?” Brady asked rhetorically, noting he has repeatedly raised this issue and “gotten the same answer,” which is the information exists. “That is a flaw in the system that has been created. The theoretical concept of unbundling makes sense, but the issue here is how does the customer get to play as opposed to being forced to buy at the citygate?

“If it is intended that everyone buy at the citygate, then that is okay as long as everyone understands this. And if that is the case, then we must realize that the state has ceded further authority to others, namely, the gas marketers holding the capacity. It is a dilemma for customers, and more entertaining from a regulatory perspective.”

In its advice letter to the California Public Utilities Commission last month, SoCalGas said it won’t conduct an open season or secure commitments from customers before final tariffs are approved, and it outlined a general implementation schedule calling for unbundling of storage services April 1, and firm, tradable intrastate transmission rights, balancing/pooling services and retail services all coming online Nov. 1.

“Although SoCalGas continues to believe that a Sept. 1, 2002 effective date for backbone transmission rights is reasonable and provides customers with adequate time to adjust to the new system before implementing additional enhancements, such as pooling and balancing services, (we are) not opposed to moving the implementation of the backbone transmission rights to commence on Nov. 1 to coincide with balancing and pooling services,” the utility told the CPUC.

Jan. 1, 2003 is proposed as the start of electronic trading of backbone rights, because SoCalGas does not think the needed information systems modifications can be completed before that date.

“This is basically ‘Gas Accord-South’, but it suffers from problems that PG&E did not have,” Brady said. “Where does the end-use customer get the information to be able to make a decision where they are going to get firm transmission capacity rights.”

Under SoCal’s detailed implementation plan outlined for the CPUC, tariff workshops (April) and informational meetings for end-use customers (May, June and July) will be held throughout the spring and summer leading up to tariffs being approved by the CPUC in August and open seasons (Phase 1, 2 and 3) being held in September and October. And there will be many more steps carrying through next year when all of the current core subscription contracts and services are slated to be eliminated Dec. 1, 2003.

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