CA Adopts One Gas Rate for Generators
California regulators last Thursday approved a series of rate
adjustments for Southern California Gas and San Diego Gas and
Electric that are designed to encourage future merchant natural gas
pipeline and electric power plant projects, as well as result in a
$248 million gas utility net rate decrease.
For SoCalGas that equals $210 million in rate cuts, the bulk of
the reduction ($158.9 million) going to residential and small
business customers. SDG&E's gas rates drop a total of $37
million, $18 million of which is for small, core customers.
Although voting for the rate change, Richard Bilas, the former
president of the California Public Utilities Commission, cautioned
that the regulators' establishment of a single rate for electric
generators is another example of "central planning" that he is
philosophically against. It means Los Angeles-area generators now
enjoying a lower rate compared to ones in San Diego County will
have to "susbsidize" the plants at the extreme southern end of the
state, he said.
The CPUC took its action in response to the urging of a
coalition of merchant power plant operators in San Diego that
includes Reliant Energy and Duke. The combined single rate, which
will vary depending on the annual volumes used, will cover the
service territories of both SoCalGas and SDG&E, both of which
are now part of San Diego-based Sempra Energy.
The rate decision is part of what the CPUC calls its Biennial
Cost Allocation Proceeding (B-CAP), a process set up to eliminate a
special gas charge labeled as "anti-competitive" for
commercial/industrial customers taking at least a portion of their
gas supplies from competing pipelines to SoCal's
transmission/storage system. This is the "residual load service"
(RLS) tariff, and a last-minute addition sponsored by Commissioner
Bilas left open the question of whether the tariff should be
market- or cost-based and provided more flexibility as to when it
may be eliminated.
"The RLS tariff is continued for one year, or until a
replacement peaking rate is adopted, whichever comes later," the
CPUC said in its announcement of the decision. Gas pipeline
competitors and some large customers had recommended that the CPUC
eliminate the RLS tariff.
In taking its action, the CPUC noted that several of the issues
dealt with in this decision are part of the board, two-year-old
natural gas restructuring proceeding, including the RLS tariff, as
part of ongoing major settlement talks among SoCalGas and about 75
stakeholders in California's natural gas industry. Richard
Nemec, Los Angeles
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