Pacific Gas and Electric Co. (PG&E) announced Monday it has reached a three-year agreement on natural gas transportation and storage costs with all stakeholders that will result in lower transportation costs for direct transmission customers and slightly higher distribution costs for bundled commercial and residential customers.
The stakeholders agreeing to the settlement include The Utility Reform Network (TURN), the Office of Ratepayer Advocates (ORA), power plant operators, gas producers and suppliers, business groups representing commercial and industrial gas end-users, independent storage operators and California’s state Department of General Services.
If approved by the California Public Utilities Commission (CPUC), the Gas Accord III Settlement will set natural gas transportation and storage rates for all customers for the next three years, beginning in January 2005 and expiring December 2007. It will continue the Gas Accord market structure for PG&E’s gas transmission and storage system,which was first implemented in 1998.
This rate setting proceeding ensures stability and predictability in the gas transmission and storage industry in Northern California for the next three years. “With much uncertainty in the natural gas market throughout the country, a three-year settlement provides economic stability and predictability in gas deliveries through our entire system,” said Mike Katz, vice president of PG&E’s California Gas Transmission. “For businesses who receive natural gas directly from transmission facilities this agreement will result in significant savings.”
If approved, beginning in 2005, the transportation rate decrease for industrial and electric generation transmission ranges from 6% to 12%. This applies to customers which purchase optional storage and backbone services separately.
Storage and backbone rates are going up slightly for bundled residential and small commercial customers, resulting in a slight overall bill increase of less than one-half of 1% for services covered by the settlement for the next three years.
The Gas Accord III Settlement received support from representatives of residential ratepayers and all sectors of the natural gas and electric power industries, the PG&E announcement said. By providing suppliers the opportunity to continue existing transmission and storage contracts, it also will help stabilize the electric market, since natural gas is a primary fuel for electric generation in California.
It is anticipated that the CPUC may rule on the settlement by mid-December.
In essence, the settlement maintains the current Gas Accord market structure and service options, with the exception of the new backbone level end-use rate option that was ordered by the CPUC.
One change will be occasioned by PG&E Corp.’s pending sale of Gas Transmission Northwest (GTN). When that sale is completed the Accord’s rule that discounts on the Baja path must be commensurate with discounts offered on the Redwood path, which connects to GTN, will be dropped, since there no longer will be an incentive to favor the Redwood path because of the ownership of the upstream pipeline.
Changes have been made to the transportation from storage to accommodate the new independent storage providers, which did not exist when the original Accord was set. Consistent with treatment of customers of on-system storage, the new settlement would allow Mission Path off-system deliveries on an as-available basis at no extra charge. In addition the Accord will allow Redwood path and Baja path firm shippers in effect to use a portion of their contracted firm backbone capacity for storage withdrawals using the Mission Path at no extra charge.
The new backbone level end-use service is available to incremental load after March 1, 1998 that receives service directly from PG&E’s backbone pipelines into their own laterals or into a PG&E-owned lateral serving that customer exclusively. The settlement noted that the eligibility criteria will be narrower than that proposed by Due Energy and the Indicated Producers. Any shortfall or over-collection from local transmission as a result of the new service will be subject to an annual true-up of transportation balancing accounts and will be recovered from or returned to core and noncore customers.
There will be no changes in the current portfolio of storage services or pipeline balancing services, nor will there be an open season for noncore storage or backbone transmission services at the outset of the Gas Accord III Settlement because there is sufficient capacity available for sale on a non-discriminatory basis, the settlement said.
The settlement would phase in over two years a new cost allocation methodology that would result in greater costs to shippers on the Baja path. Load factors for the backbone transmission rates will be 74% in 2005, 75% in 2006 and 76.5% in 2007.
Several rules changes would ease restrictions on transportation agents who compete with PG&E’s core procurement department, including providing access on a single path to supplies from Canada.
©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |