California regulators approved a settlement last week dealingwith Pacific Gas and Electric’s imbalance procedures andoperational flow orders (OFO). The California Public UtilitiesCommission (CPUC) however, did not act on the much tougher issuesincluded in the proposed interim and comprehensive settlementsfiled earlier this year by Southern California Gas.

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

Bilas noted that the PG&E settlement is “broad-based” andwill help the state regulators avoid a lot of time and moneyholding administrative hearings on the issues, such as thecomplicated way imbalances on the pipeline system are handled withOFOs.

According to the settlement, OFO noncompliance charges arelowered from 10 cents/therm to 2.5 cents/therm, and shippers withmonthly charges of less than $1,000 are exempted from thenoncompliance charges. The agreement aims at lessening the numberof systemwide OFOs that are inconvenient and costly to allcustomers on the system.

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

“I wish this [same broad-based settlement] would occur inSouthern California,” Bilas said. California’s long-delayed naturalgas industry restructuring effort has lasting more than two years.Last July, the CPUC ordered PG&E and SoCal Gas to seeknegotiated deals on major issues affecting the further unbundlingof their extensive transmission and storage operations.

Many of the tougher issues for the PG&E system had beenaddressed in its earlier adopted Gas Accord, but SoCalGas beganmore from scratch, and hence, it has had less success in gaining anuncontested settlement.

Richard Nemec, Los Angeles

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