CPUC Asks SoCalGas to File Plan for Implementing 2-Year-Old Gas Settlement

After months of posturing, the California Public Utility Commission on Thursday voted unanimously (5-0) to order Sempra Energy's Southern California Gas Co. to file a formal restructuring of in-state transmission pipeline and storage system. The utility has 45 days to make the application, but it has been attempting a more streamlined "advice letter" approach on the subject for more than two years since the CPUC approved a comprehensive settlement on the matter.

The application is needed, CPUC staff said, because of the settlement's "degrees of complexity" and the many changes in the industry and state that have taken place in the nearly three years since the document was negotiated.

In essence, the restructuring of SoCalGas' transmission/storage system would provide for firm, tradable rights on the utility's intra-state backbone transmission and storage network in the southern half of the state. In its action Thursday, the CPUC formally denied all of the outstanding advice letters and ordered the utility to file the application, meaning the record will be updated.

"Bravo to the commission for having the fortitude to make this decision; it took longer than it should to get there, but it is the right decision," said Matthew Brady, a Sacramento-based energy attorney who represents California's Department of General Services (DGS). "This was a stale decision [on the settlement] with a stale record."

The DGS, which was involved in the early settlement talks but never signed the comprehensive settlement, opposed implementing what regulators had okayed at the end of 2001, said Brady, who said the state agency is "ecstatic" about the CPUC's decision, which was passed unanimously on a day when the regulators disagreed on a number of other issues.

Brady and other stakeholders argued that over time the building of new pipelines onto or connecting with SoCalGas' system, the decrease in the number of market participants, and the general meltdown in the energy industry raised questions about whether the new system still made sense. The formal application process, with public hearings will re-examine those questions.

One of the CPUC commissioners, Geoffrey Brown, indicated he thought parties had been meeting privately to resolve many of the issues contained in the advice letters to the CPUC, so he thought the application process might be relatively short. Of course, he added that was a "hope, not a promise," on his part as the lead commissioner on the case.

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