Pacific

Although it gets 13 parties to agree on solving the naggingproblem of imbalances, a new Pacific Gas and Electric settlementagreement on transmission and storage is just the first of a numberof changes anticipated under California’s ongoing gas industryrestructuring. Even for this step, state regulators still mustreact to the agreement and then market participants must assesswhether the provisions will result in the market efficiencies andcost-savings that shippers are anticipating.

Although getting 13 parties to agree on how to solve the naggingproblem of imbalances, a new Pacific Gas and Electric Co.settlement agreement on its transmission and storage operations isjust the first of a number of changes that are anticipated underCalifornia’s ongoing gas industry restructuring program. Even forthis step, state regulators still must react to the agreement andthen market participants must assess whether the provisions willresult in the market efficiencies and cost-savings that shippersare anticipating.

Pacific Gas & Electric issued a low-inventory Stage 1 OFOfor today. It carries penalties of $1/dth for negative dailyimbalances exceeding a relatively stringent 2% tolerance range.

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.

As the first of a two-part move toward an all-party settlementregarding California’s future natural gas restructuring, PacificGas and Electric is expected this week to file with stateregulators a proposed settlement for the tighter management ofsystem imbalances – both their frequency and cost. A proposal,including provisions for using individual operational flow orders(OFOs), will be sent to the California Public Utilities Commissionfor approval Oct. 20, according to sources close to thenegotiations last week.

Over the weekend Pacific Gas & Electric issued ahigh-inventory OFO with 10% tolerance on positive daily imbalancesfor Sunday but did not continue the OFO Monday.

Both Florida Gas Transmission and Pacific Gas & Electricextended low-linepack OFOs (see Daily GPI, Oct. 5)-FGT through Tuesday and PG&Ethrough today. Neither changed the OFO conditions. PG&E posts OFOsa day in advance, while FGT usually re-evaluates system conditionseach morning before deciding whether to declare one for that gas day.

Pacific Gas and Electric is attempting to block Denver-basedWestern Gas Resources’ plans for moving into a heavilyindustrialized part of the utility’s East San Francisco Bay serviceterritory by converting a proprietary gas pipeline to astate-regulated, open-access supply line serving proposed newmerchant power plants in Pittsburg, CA, along with surroundinglarge industrial loads.

For the second week in a row, Pacific Gas & Electricdeclared an unusual weekday low-inventory OFO. The order, effectivetoday, carries $1/dth penalties for negative imbalances exceeding10%.