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PG&E Settlement Approved; SoCal Still Stalled

PG&E Settlement Approved; SoCal Still Stalled

California regulators approved a settlement last week dealing with Pacific Gas and Electric's imbalance procedures and operational flow orders (OFO). The California Public Utilities Commission (CPUC) however, did not act on the much tougher issues included in the proposed interim and comprehensive settlements filed earlier this year by Southern California Gas.

No specific dollar-value was placed on the OFO settlement, but the various stakeholders all realize cost-savings, according to CPUC Commissioner Richard Bilas, the assigned commissioner in the gas restructuring proceedings. Among the stakeholders agreeing to PG&E's gas utility settlement were marketers, shippers, suppliers, wholesale and retail customers, storage operators and utility unions.

Bilas noted that the PG&E settlement is "broad-based" and will help the state regulators avoid a lot of time and money holding administrative hearings on the issues, such as the complicated way imbalances on the pipeline system are handled with OFOs.

According to the settlement, OFO noncompliance charges are lowered from 10 cents/therm to 2.5 cents/therm, and shippers with monthly charges of less than $1,000 are exempted from the noncompliance charges. The agreement aims at lessening the number of systemwide OFOs that are inconvenient and costly to all customers on the system.

Also under the agreement non-core customers may choose to balance their supplies and deliveries on a daily basis, instead of monthly, and may receive a credit for doing so; electronic trading systems will be developed to trade monthly and OFO imbalances and secondary market pipeline capacity; greater storage flexibility will be available for Core Transport Agents (CTA) which purchase gas for specified groups of residential or small business customers; and new pilot programs will be established for customers to acquire their own meters and meter add-on devices.

"I wish this [same broad-based settlement] would occur in Southern California," Bilas said. California's long-delayed natural gas industry restructuring effort has lasting more than two years. Last July, the CPUC ordered PG&E and SoCal Gas to seek negotiated deals on major issues affecting the further unbundling of their extensive transmission and storage operations.

Many of the tougher issues for the PG&E system had been addressed in its earlier adopted Gas Accord, but SoCalGas began more from scratch, and hence, it has had less success in gaining an uncontested settlement.

Richard Nemec, Los Angeles

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