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SoCalGas, SDG&E Propose to Merge CA Gas Transmission Rates

SoCalGas, SDG&E Propose to Merge CA Gas Transmission Rates

In response to the California Public Utilities Commission's natural gas supply rulemaking last September, Sempra Energy's two utilities asked the CPUC to approve a merger of the gas transmission charges for pipeline transportation on the utilities' in-state backbone transmission systems. Integrating the now separate charges by the combined utilities would result in lower charges to retail gas transportation customers, the utilities contend.

In a Dec. 2 filing to the CPUC, Southern California Gas Co. and San Diego Gas and Electric Co. noted that they are now physically integrated, so it is only logical to have one Sempra rate for pipeline transportation. The filing also asked for authorization for the utilities to establish a system of "firm access rights" (FAR) and provide off-system gas transportation services.

Earlier in the CPUC's statewide Phase I natural gas proceeding, the state regulators refused to integrate the SoCal-SDG&E transportation rates as a matter of policy, but stated that "any solution to transmission access problems will be based on efficiency and fairness to both affected ratepayers and suppliers." The CPUC established Otay Mesa as a common natural gas receipt point for the two related utilities and called for the utilities to make the joint filing.

Noting that physical expansions in the transmission system alone will not assure customers of adequate access to competitively priced supplies, Richard Morrow, the Sempra utilities' major customers vice president, said that Sempra agreed with the CPUC that "a revision in the existing natural gas framework to allow (customers) to obtain access to new supply sources and enhance their ability to procure reasonably priced gas commodity supplies through a FAR system" was needed.

"Absent a system of firm access rights, SoCalGas and SDG&E will have to continue to rely on the scheduling practices and policies of the upstream pipelines, primarily interstate pipelines subject to the jurisdiction of the Federal Energy Regulatory Commission," Morrow said in testimony submitted with the application, which he characterized as promoting "greater customer choice and gas-on-gas competition."

Ultimately, the utilities are contending that integration of the transmission rate for consumers will be the best means of creating "greater gas-on-gas competition," noting that customers using the integrated facilities "should pay for those facilities on an equivalent basis, and thus receive their supplies on an equivalent basis."

SoCal and SDG&E said they cannot predict which of the specific joint receipt points on the utility backbone transmission system will be preferred by customers, but they can do everything possible to encourage new supplies to come into the system to create more competition, and thus mitigate against rising wholesale prices.

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