With strong opposition from the state’s two major private sector utilities, a proposal to merge the natural gas-buying portfolios of San Diego-based Sempra Energy’s two utilities will be delayed until after a newly-ordered statewide regulatory investigation is completed, according to one of the commissioners on the five-member California Public Utilities Commission.

In the meantime what are considered “the less controversial parts of a proposed decision” by the CPUC will be dealt with separately, such as allowing the largest industrial customers of Southern California Gas Co. and San Diego Gas and Electric Co. to get bundled service if they want it, said the CPUC’s Geoffrey Brown, a moderate among the Democratic majority on the regulatory body.

In action last month, Brown joined the CPUC’s newest commissioner, and its lone Republican holdover, Michael Peevey and Henry Duque, respectively, in a vote against CPUC President Loretta Lynch. The president had wanted to conduct an investigation aimed only at Sempra’s SoCalGas and its alleged collaboration with El Paso Natural Gas Co. and other interstate gas interests to drive up the price at the Arizona-California border in the winter of 2000–2001.

The other two major utilities, Southern California Edison Co. and Pacific Gas and Electric Co., both struggling to regain their investment-grade financial status, have alleged that SoCalGas and El Paso worked in tandem, but Brown said there is no regulatory record supporting the allegation.

“You have to go by the record,” Brown said during a wide-ranging interview with NGI earlier this month. “You can’t just say you think that’s what they did. It may still be proven, but it hasn’t been yet.”

In this context, the other utilities are suspicious of the proposed Sempra gas-buying merger, suspecting it will give the already-powerful SoCalGas operation more market clout.

“There was a lot of finger-pointing by the two utilities (PG&E and Edison), alleging that Sempra had manipulated its prices, but there was no record of that,” Brown said. “However, until we have resolved that question, I would be reluctant to go along with a merger of the two companies’ (SDG&E-SoCalGas’) portfolios.”

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