On a 3-2 split vote, California regulators last week dismissed aproposal for allowing gas distribution competition in anindustrialized part of the East San Francisco Bay. The majority,led by the current president of the California Public UtilitiesCommission, rejected an alternative proposal by two members of thefive-member CPUC.

Denver-based Western Gas Resources had proposed to buy 170 milesof two-inch- and 10-inch-diameter proprietary gas pipeline andconnect it with the local utility transmission system, effectivelyconverting the pipeline to an open-access CPUC-regulated line thatwould serve nearby industrial load, but could eventually competefor residential load.

The local utility, Pacific Gas and Electric, asked the CPUC todismiss the proposal because the state regulators have no policyallow local gas transmission and distribution competition. Anadministrative law judge (ALJ) subsequently issued a proposed ordersupporting the utility position. The CPUC majority supported theutility and ALJ positions, despite an alternative backed by one ofthe CPUC’s two new appointees, Joel Hyatt, and Josiah Neeper thatwould have allowed the regulators to hold hearings on Western’sapplication before deciding its fate. “PG&E’s approach wouldlimit the commission’s ability to consider, case by case, newcompetitive initiatives, regardless of their individual merits,”Hyatt and Neeper wrote in an alternate decision. “…..[T]hecommission should not automatically refuse to consider a reasonableproposal on the basis that existing policy does not address all ofits ramifications.”

Richard Nemec, Los Angeles

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