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CPUC Okays Gas Rate Hike for PG&E; Direct Access Customers Hit

The California Public Utilities Commission last Thursday unanimously approved -- although not without reservations -- a final cost allocation for Pacific Gas and Electric Co.'s natural gas service charges that will be used in establishing future gas throughput forecasts. The bottom line impact is a 1.2%/therm residential rate increase and decreases for small business (1%) and for large industrial customers, both core (5%) and transportation (22.7%), according to the lead CPUC commissioner on the case, Geoffrey Brown.

Brown's colleague, Commissioner Susan Kennedy, voted for the order, but not before warning that the action's failure to approve a settlement affecting direct access customers' charges leaves unresolved a major issue for businesses whose natural gas and electricity use are major parts of their costs-of-doing-business.

"I think we have a serious problem and this decision doesn't address it," Kennedy said. "As a result, we are going to have to address it on a piecemeal basis. For some industrial customers, the CARE [allocated low-income assistance costs] represent as much as 50% of their PG&E bill. This exacerbates an already significant problem for certain types of companies, such as light manufacturing firms -- companies for which the electricity and natural gas costs represent the majority of their expenses."

Kennedy's concern was that there are cumulatively some significant potential job losses for the state if these businesses are not given some relief from the public goods utility charges. "I think it was a serious mistake not to address the allocation methodology in this decision," she said, although she voted for it so the larger action of rate decreases could be put in effect.

Brown said the decision "resolves all outstanding issues" regarding the PG&E utility's gas rates and throughput forecasts, but he acknowledged that several charges that affect the transportation-only customers were left unresolved, such as the calculation of their payment of low-income customers subsidies. "This decision declines to change the allocation of 'CARE' (low-income assistance) costs and requires PG&E to allocate the self-generation incentive program costs to all ratepayers, and the long-run marginal costs used to set rates for different customers classes," Brown said.

Brown said if a number of companies subsequently come to the CPUC for relief individually, he would recommend consolidating the cases into one proceeding.

In other energy action, the CPUC also unanimously (5-0) approved new natural gas and electricity line extension rules for San Diego Gas and Electric Co. and Southern California Edison Co. that apply to establishing service to new residential and small business customers. The action established interim line extension rules through June next year, and directed the two utilities to file "a broader revision of line extension rules" to accommodate comments and protests from stakeholders that have been raised.

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