Amoco’s objections and its standing as a major customer ofTrailblazer Pipeline have made it impossible for the Federal EnergyRegulatory Commission to approve a settlement on new rates, FERCsaid in dumping the dilemma back in the lap of an administrativelaw judge.

The Commission advised it can approve a settlement and segregateout the interests of dissenting parties only if the parties haveonly a minor interest and if the disputed issues are relativelyminor. Neither is the case in the Trailblazer proceeding(RP97-408-004). An order voted out during FERC’s bi-weekly openmeeting last Wednesday instructed all the parties to try again fora total settlement or file briefs so the Commission may decide theissues point-by-point.

Amoco, the lone producer holdout among “Indicated Shippers,” hasargued Trailblazer’s rates going forward are 86% higher than whatwould be just and reasonable, and are based on a rate base whichexceeds the standard by 24.5% and a cost of service that is beyondreasonable by 74.3%. The producer disputes four major cost ofservice items including depreciation expense, other taxes, rate ofreturn and the Columbia exit fee credit. In addition Amoco objectsto the revenue crediting mechanism, saying the billing determinantsare understated because they do not include any for short-term firmservice. Ellen Beswick

California Schedules Slower, More Cautious Approach toUnbundling

The perception that there is no need to “rush” natural gasunbundling and customer choice has prevailed in Californiafollowing actions by the state legislature and energy regulators.That allows the major investor-owned gas utilities to prepare formore competition and gain more experience in wide-rangingsettlements that they negotiated with their major suppliers,shippers and marketers.

Despite the fact that 1998 began with projections of a naturalgas industry overhaul by the end of year, California has run intoutility and legislative concerns that have pushed back unbundlingand full customer choice for another year under a revised timetableestablished by the California Public Utilities Commission earlierthis month. This is a new “road map” in response to new statelegislation (SB 1602) that delays major gas changes until 2000.

A Pacific Gas and Electric utility spokesperson said itsso-called Gas Accord settlement with its major shippers containsprovisions against some unbundling while the five-year agreement isstill in effect. Further, the PG&ampE utility still “has concernsabout safety issues that need to be investigated,” the spokespersonsaid.

A pre-hearing conference by the California Public UtilitiesCommission will be held Nov. 4 in San Francisco to start theprocess leading to a full report and recommendations to the statelegislature by mid-part of next year. For now, all of the sameoutstanding issues-many of which are controversial among thestate’s investor-owned gas utilities-will be covered in theupcoming hearings, according to a CPUC staff analyst familiar withthe gas case.

That means everything from unbundled billing/meter readingservices to competitive intrastate transmission/storage services isin play-at least theoretically- although the state’s three majornatural gas utilities collectively have expressed a lot of concernswith proposals to unbundle gas to the same degree as the electricindustry is being opened up. Concerns about public safety andconsumer protection have been strongly expressed by SouthernCalifornia Gas Co., PG&ampE and San Diego Gas and Electric Co.

“Timing is the main difference” now as opposed to where the CPUCwas headed earlier in the year on natural gas, said the CPUC staffanalyst, noting that the issues on the table are still the same,including a proposed divestiture of intrastate transmission andstorage assets, along with the formation of a third-partyindependent (transmission pipeline) system operator, or ISO, likethe one currently operating most of California’s electricitytransmission grid.

Under the delayed schedule, evidentiary hearings will be held inDecember, briefs by the parties will be filed in January, oralarguments will be held in February, and a final report withproposed actions will be provided to the state legislature bymid-year. Under current state law, the CPUC cannot begin furtherunbundling gas services until 2000.

In the meantime, the CPUC is expected this month to circulatefor comments a set of gas consumer protection guidelines. Oncethose are in place-assuming that step can be taken apart fromoverall gas strategy-the CPUC believes it can lift all restrictionson the state’s controlled, pilot project offering residential andsmall business customers choice of their gas suppliers by poolingtheir energy loads with others under an “aggregator.” This is theso-called “core aggregation” program that has been ongoing inCalifornia since 1991.

On the question of safety and proposed “after-meter” serviceunbundling, a Revenue Cycle Services Working Group was unable toagree on a recommendation in a safety report it submitted in earlySeptember. Therefore, the issue is still alive and will beaddressed in the upcoming proceedings, the CPUC staff analyst said.

Richard Nemec, Los Angeles

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