Regulators

After almost 18 months of detailed proceedings and negativelegislative signals, California regulators have pulled backsubstantially from original proposals to unbundle the state’snatural gas industry along the lines of its electric deregulation.

California regulators are scheduled to wrap up the formaldata-gathering phase of their assessment of the state’s natural gasmarkets with an oral argument March 23 in San Francisco. Using thisdata and the record from formal hearings conducted earlier thisyear, the California Public Utilities Commission will establish alist of the most promising options for injecting more competitioninto the state’s natural gas business, beginning next year. Thehalf-day hearing will divide 19 major parties into two discussionpanels: one focused on customer issues and the other oncompetitors. The three utilities will be represented on bothpanels.

After months of debate and compromise between regulators,marketers and LDCs, SB 601 was introduced to the Pennsylvanialegislature earlier this week, moving residential and smallcommercial gas customers one step closer to gas supply choice. Thenext step for the bill will come on March 23, when the SenateConsumer Protection committee will hold a hearing on the bill.

The Iowa Utilities Board (IUB) gave its blessing to the proposedmerger of MidAmerican Energy Holdings Co. and CalEnergy Co. Inc.last week, removing the final regulatory hurdle to a transactionthat will combine and complement the assets and expertise of a U.S.utility with those of a United Kingdom utility. The deal isexpected to be completedon Friday.

California regulators have given the green light to continueindefinitely the three-year-old incentive gas buying program atSouthern California Gas Co., dispensing at year-end 1998 with anannual review of the program, which has even drawn praise from theusually critical Office of Ratepayer Advocates (ORA) at theCalifornia Public Utilities Commission. The program reportedly hassaved millions of dollars for SoCalGas’ smallest customers who relyon the utility to buy their supplies. In 1998, SoCalGas reportsearning a $2 million award for its shareholders for the latest12-month operations of its so-called “Gas Cost IncentiveMechanism.” Based on benchmarked market prices if SoCalGas can dosignificantly better than the market average, resulting inquantifiable savings for its merchant customers, part of thosesavings flow back to its shareholders, who in this case are ownersof the SoCal parent, Sempra Energy. Shareholders have earned $16million in rewards through the incentive gas-purchase program overthe past three years, according to SoCalGas.

The consumer advocacy part of the California Public UtilitiesCommission is trying to get state regulators to second guesswinning bids on the final natural gas-fired power plants PacificGas and Electric Co. auctioned last year. The auction resulted inSouthern Company being awarded three winning bids for plants in theSan Francisco Bay Area totaling 3,065 MW and using up to 50 MMcf/dof gas.

California regulators have given the green light to continueindefinitely the three-year-old incentive gas buying program atSouthern California Gas Co., dispensing at year-end 1998 with anannual review of the program, which has even drawn praise from theusually critical Office of Ratepayer Advocates (ORA) at theCalifornia Public Utilities Commission. The program reportedly hassaved millions of dollars for SoCalGas’ smallest customers who relyon the utility to buy their supplies.

National Fuel Gas Distribution has asked FERC for a one-yearwaiver of the “shipper-must-have-title” policy in order toimplement retail gas unbundling on its entire system by April 1 ofthis year.

Washington Water Power is asking state regulators to approve anew natural gas purchasing plan which will turn the purchasefunction for its residential customers over to Avista Energy, itsunregulated affiliate.