A new California law restricting future natural gas unbundlingfits the “vision” of $5-billion utility holding company SanDiego-based Sempra Energy said, and it intends to “activelypromote” similar restrictions in other states in which it operates.

The parent of two multi-billion-dollar utilities, SouthernCalifornia Gas and San Diego Gas and Electric, Sempra has new orexisting utility operations under way or proposed in NorthCarolina, Maine and several other states. “The new law representsa thoughtful treatment of issues of customer choice and safety,”said Tom Brill, Sempra’s director of regulatory policy, quoted in acompany newsletter for employees and stakeholders. “The new lawpreserves both customer safety and customer choice in determininghow the California Public Utilities Commission unbundles the costsof natural gas utilities.” Sempra, and other advocates for the newlaws-notably other utilities and the gas utility workerunions-contend that both utilities and nonutilities alike are freeto “offer products and services with the goal of becoming thepreferred providers in the restructured energy industry.”

Critics argue that the new law (AB 1421) is aimed at keeping gasservices mostly bundled for the smallest, mass market retailcustomers. It was squeezed out of a late night session of thelawmakers just before the last Labor Day weekend, ensuring that theutilities will remain the almost exclusive gas provider for smallcustomers. Observers think the new law is basically consistentwith actions earlier in the summer by the California PublicUtilities Commission that are now being worked out in settlementdiscussions among the state’s major gas industry participants.Those talks, which will resume Nov. 17, focus on the SoCalGas andPacific Gas and Electric transmission and storage systems, mostlyas they relate to large commercial and industrial customers andcore aggregators. The new law (AB 1421) is mainly concerned withcore customers and the utilities remaining the gas merchant forthem.

“We supported the (new law),” said a PG&E utilityspokesperson. “A key element for us is that (it) provides that (we)shall continue to provide services to core customers (revenue cycleand after-meter services). There are obvious safety considerationsin those services, and we wanted to be able to continue to providethem to our core customers.”

“AB 1421 upholds customer safety by preventing unbundling of theutility’s costs for ‘after-meter services’, including leakinvestigation, inspecting customers piping and appliances, carbonmonoxide investigation, pilot relighting and high-billinvestigation,” according to Sempra Energy’s newsletter report. Italso preserves the gas utilities’ monopoly role in providingtransmission, storage-for-reliability and distribution forresidential and small business (“core”) customers. Sempra opensthe newsletter report by stating categorically that it hopes otherstates will follow California’s approach.

The new law is designed to ensure that the state’s majorinvestor-owned gas utilities continue to provide bundled servicefor core customers, except those aggregating their loads under thestate’s eight-year-old program, for which the rules have beenrelaxed in recent years to allow any residential or small businesscustomer to participate. So far, less than 10% of the customershave participated. However, even for those who choose analternative, the law lessens the credit customers can receive fromthe utility and prohibits the after-meter services.

Richard Nemec, Los Angeles

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