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CPUC Finds 10 Areas Requiring More Gas Restructuring

CPUC Finds 10 Areas Requiring More Gas Restructuring

California energy regulators yesterday identified 10 items for potential natural gas industry restructuring, most of which deal with wholesale or large customer operations. State regulators also encouraged utilities and large customers to cease their bickering and come up with a broad-based settlement on gas unbundling.

In the meantime, the California Public Utilities Commission will conduct a separate proceeding to analyze the cost-benefits of each of the 10 areas noted. "The [CPUC decision] is seeking to develop a structure that preserves the utilities' traditional role of providing full service to core customers while clearing obstacles to the competitive offering of gas [supply], transmission, storage, balancing and other services for all customers throughout the state," the CPUC said in its news announcement on its action.

Half of the areas outlined by the regulators deal with attempts to bring more transparency and consistency into wholesale gas operations, such as improving statewide access to transmission/storage services, trading of transmission, storage and balancing rights, balancing service, hub services, and improving the flow of information related to market transactions.

Regarding the latter, the CPUC indicated in taking its action that it will determine the adequacy of current information gas utilities provide to customers and competitors alike. For all customers, the CPUC calls for separate costs and rates being delineated for all gas utility services in the state as one of the 10 areas specified for potential unbundling.

Of additional interest to the smallest (residential and business) customers, the CPUC identified the need to "refine" utility gas buying and "expand competitive options" for the captive core customers, the smallest ones which tend to rely on the utilities for all of their needs.

Metering and billing options are two other areas of specific focus on the mass residential and small business customers.

While pushing parties to settle the issues and bring that proposal to the regulators, if a settlement is not reached relatively quickly, the CPUC said it is prepared to hold hearings this fall to examine the cost-benefit aspects of increasing unbundling in the 10 areas identified. The regulators also cited previously established goals for gas unbundling as criteria with which to test each of the proposed areas. Those specify that any further gas unbundling should do the following: Complement and enhance benefits of electric restructuring; eliminate inappropriate cross-subsidies; eliminate and prevent barriers to competitors' entry into the California gas market, mitigate competitive abuses from one firm having market power; enhance competition by providing separate rates for each major component of utility service and allow customers to choose other firms to provide those services; ensure rates customers pay reflect the cost of the services they are receiving; preserve current low costs; provide adequate consumer protection; and ensure natural gas safety and reliability.

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