California Gas Restructuring Inching Along
California regulators are scheduled to move natural gas industry
restructuring a few more notches forward this week, but not without
making still more modifications as suggested by additional comments
filed last week.
The only consensus seems to be around the proposed idea to push
the major stakeholders into a wide-ranging settlement on many of
the biggest issues surrounding the future unbundling of the natural
gas business in California. Otherwise, all of the parties are still
widely divided over the issues. Everyone wants fewer barriers to
competition, but no one agrees how to do it.
However, a California Public Utilities Commission (CPUC) staff
member, who is sorting through the varied comments in the case,
thinks the stakeholders all agree with the general direction of the
proposed decision that comes before the CPUC commissioners on June
24. At the same time, each have several changes they alone would
like to see slipped into the state's nearly two-year-old gas
restructuring effort. It has been touted as being complementary to
the state's electric restructuring, but not necessarily a mirror
image of it.
A key issue for the CPUC to consider this week is whether the
concerns about the restructuring's proposed timetable-assuming the
state legislature does not interfere - should cause regulators to
allow more time for a comprehensive settlement of the issues.
Several parties have recommended that more time be given. Las
Vegas-based Southwest Gas, which is both a California-regulated
local distribution utility and a wholesale customer of Southern
California Gas, does not think the prescribed 60 days for parties
to reach a settlement is adequate. Failing to reach such an
agreement, the CPUC proposed decision calls for a series of
hearings in the fall to work out the cost-benefit analyses for a
number of proposed unbundling steps.
"Given the experience observed in the residential market under
electric restructuring, Southwest is concerned that the proposed
decision contemplates development of systems and processes that
will be expensive to create, but that will provide little or no
benefit to our customers," Southwest's senior state regulatory
manager, Debra Jacobson, writes in its latest filing.
With concurrence from even the state's leading utility consumer
group, TURN (The Utility Reform Network), Southwest supports the
CPUC's proposal to keep monopoly providers as the "default
procurement" provider for gas for customers who do not want to
switch to a new source of supply. TURN suggested six to nine months
be allowed for settlement negotiations.
Nonutility commercial interests, as represented by Calpine Corp.
and Enron, urged the CPUC to go faster in opening up the industry
and addressing what they allege are market power advantages of the
state's three major gas monopolies, SoCalGas, Pacific Gas and
Electric, and San Diego Gas and Electric.
Calpine suggests the CPUC use its current record in the 18-month
gas proceeding to write a recommendation now to state lawmakers,
instead of waiting for a settlement and/or cost-benefit
proceedings. Then, it should require utilities "to provide
sufficient information to enable parties to evaluate the unbundling
of costs and rates." Finally, the regulators ultimately should
consider full unbundling and divestiture in the cost-benefit phase
of the ongoing gas investigation.
While contending that the current regulatory and industry
structures in California "conspire to deprive consumers of the
benefits of choice and competition," Enron continues to push for a
date-certain settlement that follows the proposed CPUC decision and
includes a requirement that the utilities bring to the table a
proposal at the first settlement meeting. It further urges the CPUC
to back off its requirement that a utility default procurement
services option be offered.
Enron also believes the CPUC could create statewide storage and
intrastate capacity markets, along with revised balancing rules
this year without violating the California law which prohibits
further gas unbundling until next year.
Still other opinions were offered by Southern California Edison,
one of the largest gas transporters in the state, including a
recommendation that the CPUC not foreclose the future option of
requiring divestiture of transmission and storage assets by the
utilities and creation of a gas ISO "if market and pricing abuses
by the gas utilities continue to occur."