California regulators last week on a 3-2 split vote dismissed aproposal for allowing natural 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.

Western Gas Resources, Denver, had proposed to buy 170 miles oftwo-inch- and ten-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 compete forresidential 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 theCPUC’s two new appointees, Joel Hyatt, and Josiah Neeper that wouldhave 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. “…the commissionshould not automatically refuse to consider a reasonable proposalon the basis that existing policy does not address all of itsramifications.”

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