Belatedly, the California Energy Commission (CEC) is getting inits two-cents-worth in the state’s remaining natural gas settlementtalks focused on Southern California Gas Co. which resumed Tuesdayin Los Angeles. A regulatory proceeding earlier in the monthbroadened the scope of the talks at the same time concludingsimilar negotiations centered on Pacific Gas and Electric Co.’snatural gas system in the northern half of the state.
Two proposed settlements regarding PG&E’s system are pendingat the California Public Utilities Commission. The overall thrustof the remaining talks should be to unbundle more, limit themonopoly utilities’ roles, and establish user fees so that onlycustomers who use certain services pay for them, the CEC hassuggested, mirroring stances it has taken in electric restructuringproceedings.
According to several of the ongoing settlement talkparticipants, the CEC had been mostly quiet throughout the gastalks last year, preferring to monitor the negotiations, but onMondaythe CEC’s Bill Wood notified settlement participants thathis agency is advocating more unbundling of the so-called revenuecycle services, an examination of the future role of regulatedlocal distributors and statewide applicability of the SoCalsettlement to address impending problems such as the perceivedpipeline deliverability crunch to the far southern end of the statein San Diego County.
“In light of the (CPUC’s) expanding the scope of issues forconsideration in the settlement,” the CEC would like to see thesettlement parties address these issues outlined above, Wood toldsettlement participants.
In the context of recommending more unbundling of the retail gasdistribution business in California, the CEC’s Wood urged thesettlement talks to examine the LDC role “with respect toprovisioning RCS (revenue cycle services) and DAS (direct accessservices), and decide that the LDC should not provide most of theservices (they) presently provide.” Both the bundled and theunbundled customers should pay for RCS on a fee-for-service basis,and utilities, ESPs and other nonutility companies shouldcompetitively provide those services.
Over time, the CEC suggests that the LDCs be phased out of theRCS services. A new class of nonutility companies — “providers oflast resort” (POLR) — would be created to assure that customersnot wishing to leave the LDC would have adequate RCS from a defaultprovider other than the utility.
A staff source at the CEC noted that the commission has beenadvocating the complete unbundling of RCS on the electric side.”Essentially what we are trying to is raise the issue in thesettlement process,” the staff member said. “If no one wants to gowith it, that’s fine. It is something that needs to be raised,though.”
In response to its perception that the CPUC’s administrative lawjudge on the gas proceeding has encouraged the SoCalGas settlementto apply statewide, the CEC said its analysis “indicates thatpotentially (there) will be a need for new pipeline receivingcapacity in the San Diego Gas and Electric Co. territory. Thiswould not only be due to the addition of new generation capacity inRosarito (Baja, Mexico) and potentially Otay Mesa (southeast of SanDiego), but also be due to the growing SDG&E electricity demandto meet summer air-conditioning needs.”
The CEC’s Wood noted the added gas capacity might be needed asearly as this summer, “but certainly within the next severalyears.” He went on to suggest building pipeline extensions westfrom SoCalGas’ Arizona-border receiving point at Erhenberg, AZ.,bringing part of SoCal’s southern system supplies over to San DiegoCounty.
“The whole notion of new power plants and how they are going toaffect the San Diego gas system is something that the settlementparties need to be aware of,” the CEC staff source said. “So we’retrying to raise those issues in the context of the discussions. Wecertainly don’t want to raise the issue in a hearing phase afterthe settlement has been filed.”
The CEC staff has volunteered to be available to all partiesprior to the next settlement meeting on Feb. 23 to work on both theRCS and capacity issues.
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