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Final Chapter Written on SoCalGas, SDG&E Gas Charges

California regulators on Nov. 20 quietly closed the curtain on the multi-year natural gas transmission and storage case for Sempra Energy's two major utilities, Southern California Gas Co. (SoCalGas) and San Diego Gas and Electric Co. (SDG&E). Handled as a consent agenda item without any discussion, the California Public Utilities Commission (CPUC) unanimously approved a utilities-stakeholders settlement allocating nearly $2 billion between the two utilities.

The CPUC endorsed the June 2 settlement agreement of all the Phase Two issues in a long-standing case that opened up and consolidated the SoCalGas-SDG&E utility gas transmission pipeline and storage system covering the southern half of California. Some $1.685 billion of previously authorized gas revenues were allocated to SoCalGas customers, and another $280.5 million to SDG&E customers.

Along with the two utilities, 12 other parties joined the settlement, with Shell Energy North America (US) opposing certain provisions. Under the settlement, a typical SDG&E residential gas customer will have a 1.7% increase on a monthly bill, and a typical SoCalGas residential customer will see a 1% decrease.

Last year Sempra's utilities finally launched a major operational overhaul of their Southern California gas transmission/storage system that had been six years in the making and included a bid-based market for firm pipeline access rights (FAR) and off-system deliveries (OFF). It was designed to provide more flexibility, reliability and a new citygate pricing point.

Phase Two dealt with some of the mechanics and methodology used to determine how the added costs of the new transmission/storage system would be spread among the various customer groups. Many of the issues were arcane and involved the regulatory process, such as whether Sempra's utilities should be allowed to have three years between periodic reallocation filings to the CPUC and whether merchant generators should be exempt from an regulatory surcharge assessed for transmission/storage services.

The parties agreeing with the utilities were Bridge Housing Inc., the California Cogeneration Council, California Manufacturers and Technology Association, City of Long Beach, the CPUC's independent Division of Ratepayer Advocates, Electric Generator Alliance, Indicated Producers, Southern California Edison Co., Southern California Generation Coalition, Southwest Gas Corp., The Utility Reform Network, and Watson Cogeneration Co. Shell Energy and Kern River Gas Transmission Co. were both active parties, but did not join the Phase Two agreement.

"Shell Energy filed comments on the joint motion to adopt the settlement agreement, and requested that parts of the settlement be clarified or eliminated," the CPUC said.

Updated transmission and storage tariffs will be filed by SDG&E and SoCalGas to implement the Phase Two deal. The CPUC said this case, which began in early 2008 as an offshoot of the long-standing restructuring case, is officially closed.

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