In response to a case forged in the extreme wholesale natural gas price volatility times of December 2000, the California Public Utilities Commission Thursday took the middle ground in applying its policy restricting the switching of large commercial/industry customers back and forth between non-core and core status. In the latter case, customers want utility protection when gas rates spike.

The CPUC upheld its policy prohibiting customers from switching unless their supplier goes out of business, or some other extraordinary situation develops.

On a 4-1 vote the five-member regulatory commission supported an alternate decision by Commissioner Carl Wood, after rejecting two other approaches related to a Southern California Gas Co. customer that, ahead of a regulatory prohibition, requested that the utility switch it to core-elect service. The CPUC ruled that its policy decision applied even to requests for core service status that were made prior to the prohibition being put in place.

CPUC President Michael Peevey said his point in supporting the customer’s contention in this one case was a matter of “equity and fairness.” The company sent its request to SoCalGas Dec. 7, 2000, and four days later, the utility filed an advice letter with the CPUC asking that any non-core transfers back to core service be blocked. Ten more days later (Dec. 21, 2000), the regulatory commission adopted the ban on customers transferring to core status.

“It is somewhat perverse to penalize the company when they asked for something before the rule was adopted,” he said. Another commissioner took the tack that the issue became a contractual dispute now in a local court and that is where the dispute should be resolved. The CPUC, he argued, should not get involved.

The customer involved, Tenby Inc., operates an enhanced oil recovery operation — a huge natural gas-consuming process — and argues that it had a “contract” with SoCalGas for it to switch to core-elect gas rates in the midst of the late 2000 natural gas price spikes. On Nov. 30, 2000, Tenby had received notice from its gas supplier, BP, that in 30 days it was going to terminate Tenby’s gas service.

Before adopting a middle position, the CPUC reiterated that it generally avoids issuing a decision in response to a request for declaratory relief or for an “advisory opinion” to the court in contractual matters, and the latter was being sought in this case. The exception is “extraordinary circumstances,” such as if the matter is of widespread public interest.

“However, here,” the CPUC decision said, “we find that extraordinary circumstances exist or that this matter is of widespread public interest which warrants the issuance of a decision clarifying (the CPUC switching policy, Resolution G-3304). We find that the modifications requested by Tenby and SoCalGas extend far beyond the clear wording of (the policy). Accordingly, the applications to modify the resolution are denied but we clarify the wording of the resolution to avoid ambiguous interpretations.”

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