The perception that there is no need to “rush” natural gasunbundling and customer choice has prevailed in Californiafollowing actions by the state legislature and energy regulators.That allows the major investor-owned gas utilities to prepare formore competition and gain more experience in wide-rangingsettlements that they negotiated with their major suppliers,shippers and marketers.

Despite the fact that 1998 began with projections of a naturalgas industry overhaul by the end of year, California has run intoutility and legislative concerns that have pushed back unbundlingand full customer choice for another year under a revised timetableestablished by the California Public Utilities Commission earlierthis month. This is a new “road map” in response to new statelegislation (SB 1602) that delays major gas changes until the year2000.

A Pacific Gas and Electric utility spokesperson said itsso-called Gas Accord settlement with its major shippers containsprovisions against some unbundling while the five-year agreement isstill in effect. Further, the PG&E utility still “has concernsabout safety issues that need to be investigated,” the spokespersonsaid.

A pre-hearing conference by the California Public UtilitiesCommission will be held Nov. 4 in San Francisco to start theprocess leading to a full report and recommendations to the statelegislature by mid-part of next year. For now, all of the sameoutstanding issues-many of which are controversial among thestate’s investor-owned gas utilities-will be covered in theupcoming hearings, according to a CPUC staff analyst familiar withthe gas case.

That means everything from unbundled billing/meter readingservices to competitive intrastate transmission/storage services isin play-at least theoretically- although the state’s three majornatural gas utilities collectively have expressed a lot of concernswith proposals to unbundle gas to the same degree as the electricindustry is being opened up. Concerns about public safety andconsumer protection have been strongly expressed by SouthernCalifornia Gas, PG&E and San Diego Gas and Electric.

“Timing is the main difference” now as opposed to where the CPUCwas headed earlier in the year on natural gas, said the CPUC staffanalyst, noting that the issues on the table are still the same,including a proposed divestiture of intrastate transmission andstorage assets, along with the formation of a third-partyindependent (transmission pipeline) system operator, or ISO, likethe one currently operating most of California’s electricitytransmission grid.

Under the delayed schedule, evidentiary hearings will be held inDecember, briefs by the parties will be filed in January, oralarguments will be held in February, and a final report withproposed actions will be provided to the state legislature bymid-year. Under current state law, the CPUC cannot begin furtherunbundling gas services until 2000.

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