Although it gets 13 parties to agree on solving the naggingproblem of imbalances, a new Pacific Gas and Electric settlementagreement on transmission and storage is just the first of a numberof changes anticipated under California’s ongoing gas industryrestructuring. Even for this step, state regulators still mustreact to the agreement and then market participants must assesswhether the provisions will result in the market efficiencies andcost-savings that shippers are anticipating.

There is no dollar-value attached to the deal. PG&E hasagreed to absorb any initial implementation costs, but thestakeholders generally are hoping for operating cost savings.

OFO noncompliance charges have been lowered in the settlement(from 10 cents/therm to 2.5 cents/therm), and shippers with monthlycharges of less than $1,000 are exempted from the noncompliancecharges. The imbalances also have to be more than 5,000 Dth. (Ashipper could be out of balance in a percentage sense – 5 or 10% ofits contractual load – but if it equated to less than 5,000 dth,the customer would not be targeted with an OFO.) In addition,PG&E has agreed to improve the volume, flow and accessibilityof operating information, promising more on its Pipe Ranger WebSite.

Individual OFOs can be called on up to 10 customers, under thesettlement. If the number is greater than that, a systemwide OFOwill be called, PG&E officials said.

Among the unresolved issues are those related to PG&E’s gasutility infrastructure, with parties such as Calgary-based AlbertaEnergy’s Wild Goose Storage in northern California arguing thatreal control of the balancing problem is not possible longer termwithout added storage and more extensive metering that providesreal-time (telemetered) information into the PG&E systemcontrol room on an hourly basis.

Imbalances now are handled on a monthly time frame, but theyshould be handled hourly as they are in western Canada, said BenLedene, marketing director for Wild Goose, one of the 13 supportersof the deal. “It is a matter of picking up the pace so you canmanage the market on an hour-by-hour basis.”

PG&E, of course, thinks the proposed settlement is a slamdunk for everyone and that regulators should approve itexpeditiously, but some of the parties are reserving judgment.Under California’s process for negotiated energy settlements,parties have until Nov. 21 to register opposition to the deal,although none has surfaced so far.

“Our hope is that no one will oppose it,” said PG&E attorneyPatrick Golden. “We think this is a reasonable settlement. If thereis some opposition, we would hope that the (regulators) will stilldecide that we can resolve it without a hearing.”

PG&E feels the deal on handling operational flow orders(OFOs) can go into effect while other larger issues are beingworked out in the overall gas restructuring case.

Other parties signing the settlement, which would extend through2002, are: Calpine Corp., Enron, Kern River Pipeline, UtilicorpEnergy Solutions, the CPUC Office of Ratepayer Advocates and thepublic schools’ aggregator, SPURR among other aggregators andagricultural interests.

PG&E’s Golden acknowledged that some of the issues revolvingaround the OFOs were not entirely resolved, but the parties agreedto establish an Internet-based “forum” to collect feedback andresolve operating problems that may arise from the implementationof new customer-specific OFOs as a means to cut down on the morecostly system-wide orders which have steadily grown in number sincethe Gas Accord first went into effect.

Richard Nemec, Los Angeles

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