Pacific Gas and Electric Co. attorneys expect to file a proposedsettlement with state regulators today for reducing imbalances andOFOs on its transmission pipeline system in northern California. Atleast 10 parties have signed in support of the proposed changes,including statewide consumer advocate The Utility Reform Network(TURN), the City of Palo Alto municipal electric utility andmerchant underground natural gas storage operator Wild GooseStorage.

Small editing changes to the settlement agreement were stillbeing made yesterday and attorneys were not able to disclose thedetails, but the agreement is expected to include a floor onproposed customer-specific operational flow orders (OFOs) and anelection process to clear operating imbalance carryovers of lessthan 5,000 Dth on a monthly basis.

The settlement is expected to adjust operations of PG&E’sso-called Gas Accord, particularly the handling and billing ofbalancing the system. It is designed to reduce the number ofsystem-wide OFOs, reduce the OFOs’ market impact and streamline thePG&E gas transportation and storage system.

Meanwhile, meetings continued this week on the tougher,all-encompassing Southern California Gas Co. settlement. The latestreports are that parties are envisioning going to the CPUC’s Oct.27 deadline hearing “En masse to request more time because progressis being made,” according to one observer close to some of theparticipants. However, there is still a major split among the morethan 75 parties over those who are willing to have a narrower,interim settlement with a three-year timetable to finalize abroader agreement, and those who want to push ahead with moredramatic changes more quickly, according to the same reliablesource.

One major shipper said the split into two camps is becomingentrenched, and they may take competing settlement concepts to theCPUC and ask for more time to meld them into one settlement deal.This observer characterizes the activist camp as being an expandedversion of an informal “California Alliance for Competition,”spearheaded by Enron. It includes such players as SouthernCalifornia Edison Co., Dynegy, Western Hub Properties, Calpine,Wild Goose, Green Mountain.com and Transwestern Pipeline, amongothers.

The second major faction has rallied around Southern CaliforniaGas Co.’s proposed interim proposal, with a multi-year aggressiveschedule to forge a permanent settlement. Those players, besidesSoCalGas, include: Coral, California’s largest industrialend-users, BP Amoco, the CPUC’s ORA, Conoco, Chevron and majormunicipal utilities including LADWP. In addition, PG&E,Southwest Gas, TURN and the City of Long Beach municipal gasutility are supposedly leaning toward support of the SoCalGasapproach.

The two camps loosely can be divided between “those who writechecks to SoCalGas and those that don’t,” according to one observerattending the latest session.

This source characterized Enron as taking somewhat of a”belligerent” approach to SoCalGas, despite the fact that theinterim proposal includes their sought-after additional Southwestreceipt point (Hector Road). “If nothing can be cobbled together atthe next scheduled meeting (Oct. 26), [the CPUC] is going to gettwo proposals along with a lot of whining, requesting a delay towork out things,” said the observer, noting a sense of annoyancewith the sheer number of parties (more than 75) involved in thetalks.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.