On the 10th anniversary of adoption of Pacific Gas and Electric Co.'s (PG&E) unbundling and opening up of its natural gas transmission pipeline and storage system in what has come to be called its Gas Accord, the California Public Utilities Commission (CPUC) last Thursday approved a 31-party settlement creating Gas Accord IV covering 2008 through 2010. Separately, the CPUC also approved the utility's proposed program for retail gas user rebates this winter as rewards for conserving energy in the height of the space heating season.
PG&E's 10/20 Plus program provides residential and small business customers with a gas bill rebate if they can reduce their gas consumption as compared to their average consumption over the same monthly period during the past three years.
Gas Accord IV provides acceptable ranges of prices for the transportation and storage of customer-owned gas supplies and is built on its success among stakeholders over the past 10 years, according to CPUC Commissioner Timothy Alan Simon. "It makes it possible for buyers and sellers to come together in a [transparent] gas market, establishing a procedure for allocating firm, saleable transmission services," Simon said.
As the fourth Gas Accord approved by the CPUC, the latest settlement provides only "modest changes to the prices negotiated in the third Gas Accord," Simon said. The substance of the deal is important to California, and there was no controversy associated with it, he said.
As the newest of the five CPUC members, Simon noted the simplicity and workable nature of California's restructured, direct-access natural gas market as compared to the state's failed attempt in the late 1990s to do the same with electricity. While the electric restructuring model set up the California Independent System Operator (CAISO), in the gas industry the transmission pipeline grid was left in the hands of its major utility operators -- PG&E and Sempra Energy's Southern California Gas Co. -- and bilateral contracts, rather than the now defunct California Power Exchange, were allowed in the gas markets.
Simon urged his colleagues to look for applying lessons from the successes in deregulated gas and telecommunications markets to apply to the still developing electricity markets.
For the winter rebate program, which the CPUC has approved for PG&E in the two previous years, Simon said the 10/20 program "doubles your money back" by allowing customers to cut consumption over the same month in previous winters by at least 10%, and get a 20% discount on the next month's bill. He called it "great for consumers."
PG&E said in the 2005-06 winter, 20% of eligible customers received rebates with an average decline in use of 28%, and last winter, 44% of eligible customers received a rebates with an average decline of usage at 19%.
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