The nation’s largest gas distributor, Southern California Gas,last week signaled a possible future change in the way itscustomers access intrastate transmission during oral arguments atthe CPUC on future changes in California’s gas industry. Inaddition, for the first time, a number of the 19 major participantsin the state’s gas restructuring proceeding suggested a settlementprocess might be adopted to resolve some controversial issues.

The three current holdover members of the five-member CaliforniaPublic Utilities Commission, now must decide whether to beginpreparing recommendations to the state legislature, which couldconsider drafting a law for the final gas industry changes similarto what it did in 1996 to restructure the electric industry. CPUCPresident Richard Bilas told NGI he personally does not think a newstate law is needed to make the remaining changes to the state’sgas industry. Labor unions, however, already have proposed statelegislation this year to prevent wider gas unbundling.

A major change that could occur without legislation waspresented by SoCalGas. It indicated it would be willing to considerfirm capacity rates at receipt points along its several thousandmiles of intrastate transmission pipelines. The change would besimilar to what Pacific Gas and Electric Co. offers on itsintrastate transmission system in central and northern California.Currently SoCal’s transportation system uses “windows” and doesn’tallow customers to hold capacity rights, as PG&ampE does on itssystem.

Under its Gas Accord, PG&ampE has “tradable rights” like theinterstate pipelines in which you essentially buy a piece of thespace for transporting gas in the pipeline. “SoCalGas doesn’t havethat system,” noted a CPUC staff member assigned to the gasrestructuring proceedings. “A customer pays them to move gas andnominate into [SoCal’s] system and the utility tells the customerif it has space to move it or not. A customer doesn’t have any’rights’ on the SoCal transmission system.” The change suggested bySoCalGas in the recent CPUC proceeding is a “fairly major step,”according to the CPUC staff member, who also characterized as newthe notion of pursuing a settlement among the parties as proposedby Enron and supported by a number of other participants in thecase.

The major interest stakeholders in the state’s gas industry havehad their say in the regulatory arena, and now it is up to theregulators to decide how the process unfolds from here, said theCPUC staff member close the proceedings. The ball definitely hasnow been tossed to the CPUC’s court.

Richard Nemec, Los Angeles

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