Southern California Gas is expected to file with stateregulators a draft interim settlement this week that has backingfrom most of the major end users on its system, but California’sslow-moving gas industry restructuring process still has weeks andseveral alternate proposals to work through before there ismeasurable progress.

An alternate draft proposal from a minority of the stakeholdersled by Enron, calling itself the California Alliance forCompetition, also will be filed, but probably not until after theHolidays. The California Public Utilities Commission earlier inthe fall gave the parties, which number about 75 stakeholders, afinal deadline extension until Jan. 28, 2000 to come up with anall-party settlement. Observers differ on what this means exactly,other than the fact that it is the final deadline for trying toavoid the more costly, time-consuming process of evidentiaryhearings.

One of the parties pointed out that the CPUC may end up withfour draft settlement proposals by its Jan. 28 deadline: SoCalGas’,the alliance offering, and two proposals from Pacific Gas andElectric. PG&E has filed one proposal on the issue of balancingits system through operational flow orders and another proposal todeal with non-OFO issues that need to be changed in its Gas Accordunbundling effort that has been in effect for the past two years.The second PG&E utility proposal is going out for discussion byparticipants this week.

As a result of the diversity, all of the parties who will talkabout the process expect formal hearings to be required. IfSoCalGas follows its plans for an early draft submittal it isquestionable whether the CPUC will do much with it, knowing thatthere are alternates in the wings. In addition, some of the partiesthink SoCal’s proposal is too narrow in scope. “

It just deals with some of the nagging issues shippers havecomplained about at the receipt points, but it doesn’t deal withthe major structural issues of unbundling their transmission,balancing and storage,” said a knowledgeable attorney involved inone of the alternative proposals. “This already has been done inthe PG&E Gas Accord, so people in the competition alliance aretaking the position that they’ve been at work on this fortwo-and-a-half years already.”

Ultimately, all sides say it is time to do something concreteand rationalize the state’s natural gas transportation system sosupplies can be moved north and south in the state more easily.

A major shipper siding with the SoCalGas interim approach atthis point said the SoCal proposal “has more, and — all theimportant, end-users” backing it, calling the alliance’s backers”interlopers” who are generally marketers and new gas players inthe state like the new and proposed merchant underground storageoperators, who are siding with Enron’s approach.

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