California regulators Thursday approved modifications that Southern California Edison Co. (SCE) sought in its projected fuel costs for 2009 and specifically regarding the handling of tolling rights under the Sempra Energy utilities’ firm access rights (FAR) to its natural gas transmission pipeline system in the southern half of the state.

The California Public Utilities Commission (CPUC) went along with SCE in two consent agenda items approved by voice vote without discussion by the regulators.

Under the FAR bidding process for the Southern California Gas Co.-San Diego Gas and Electric Co. transmission pipeline system, so-called “Step 2” bidding rights will be allocated to parties providing tolling agreements on natural gas supplies for Edison’s electric generation sources. The gas utilities’ firm access bidding involves a three-step open season process.

Sempra’s utilities supported the SCE request for a clarification in the bidding process to allocate FAR to the tolling providers.

In the second action, the Edison International utility’s accounting forecast of its energy resource costs was approved by the CPUC, noting that despite continued decreases in natural gas costs last year, the overall fuel account was expected to need an additional $330 million this year.

Overall, SCE has forecast its fuel and purchased power costs at $3.87 billion, based on a gas price forward curve of $6.60/MMBtu, the CPUC said. This includes a $110.5 million decrease in the fuel and purchased power costs of $3.98 billion last year. Despite the recent reductions in gas prices, however, SCE still expects to have a fuel cost balancing account for the end of 2008 to have an under-collection (in retail rates) of nearly $300 million.

The CPUC put off until its February meeting a major general rate case decision for SCE and it directed the utility to consolidate into one advice letter filing all pending CPUC-authorized revenue requirements from other proceedings to make one change in its rates this year. The general rate case increase is expected to be phased in over several years.

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