As a major power generator/buyer sensitive to wholesale natural gas prices, Southern California Edison Co. said in prepared statements earlier in month that its recent settlement with Sempra Energy’s two California utilities will mean substantial changes in the way Sempra’s utility natural gas transmission and storage system operates for large customers such as the Edison International electric utility. The changes are still contingent upon the California Public Utilities Commission approving the settlement (see Daily GPI, June 15).

As an offshoot of the Sempra utilities’ court-approved class action litigation settlement in a case involving allegations of wholesale price manipulation during the 2000-2001 energy crisis, the utilities and Edison reached a settlement that calls for substantial changes in the way Sempra operates its utility gas system in the southern half of the state. The three utilities jointly filed a motion with the California Public Utilities Commission June 19 to stay a regulatory case examining storage operations.

Edison officials called the deal a chance for the CPUC to institute “a number of important changes to the natural gas market in California,” presumably benefiting all utility customers, not just behemoths such as Edison. “This is a positive development for our customers,” Edison said in a prepared statement that committed Sempra to modifying its gas utility operations “to provide more transparency and certainty.”

The prospective changes involve practices, policies, rates, cost recovery structures and tariffs for Southern California Gas Co. and San Diego Gas and Electric Co. Along with the operating reforms, these changes “will lead to significant benefits in natural gas markets,” Edison said.

Those benefits, according to Sempra’s largest natural gas customer include:

Pending approval from the CPUC, Edison withdrew its opposition to the court settlement and its complaints in the pending state regulatory case examining the Sempra utilities’ past behavior in California’s natural gas market. The agreement states that the three utilities will “cooperatively seek regulatory approvals” for various operations and rate changes by Sempra’s two units.

Southern California Gas Co. and San Diego Gas and Electric Co. received a stay of two other CPUC proceedings since the June 7 decision by a state Superior Court judge in San Diego to finalize the court settlement in a case that was two months into a jury trial before being struck in early January this year. As a result of the new agreement, SoCalGas would make various changes in its storage and backbone gas transmission pipeline operations to make them more transparent for large shippers, such as the Edison International electric utility.

The Edison-Sempra settlement seeks to have the CPUC drop its ongoing statewide investigation of California-Arizona border natural gas prices, and even if the larger settlement is rejected by the state regulators, the three utilities have agreed to meet to settle separately the border price case.

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