The contentiousness and philosophical split among the five member California regulatory commission surfaced again Monday in a year-end business wrap-up meeting in which the more than year-old order for implementing a Southern California Gas Co. settlement leading to the restructuring of its markets has been effectively “nullified,” in the words of one of the state regulators.

As a result, the California Public Utilities Commission (CPUC) put off until its Jan. 16 business meeting to deal with whether to still try to have SoCalGas open up its market per the settlement, or order the utility to re-start the settlement process for a new agreement on unbundling its natural gas operations somewhat along the lines of what Pacific Gas and Electric Co. did several years ago with its so-called “Gas Accord.”

At issue are accusations by two of the remaining CPUC commissioners who voted for the Dec. 11, 2001 approval of the SoCalGas settlement. They claim the two dissenting commissioners attempted to stifle the implementation of the unbundling, forcing the utility to file nine separate informal filings (“advice letters”) totaling more than 1,000 pages. Now one of the options before the regulators is whether to require SoCalGas to resubmit an applications to implement an unbundling of gas operations in the southern half of the state.

The arguments for re-doing the deal and the CPUC order are that over the past year the market has changed and the provisions of the settlement were no longer “relevant.” The proponents of a re-do say the Dec. 11, 2001 order is “out of date, and needs to be refreshed,” said CPUC Commissioner Geoffrey Brown, who is sponsoring an alternative to that approach.

Brown thinks there has been “an intentional delay with the calculation of attempting to kill a lawful order passed by a majority of this commission.” In the first six months of 2002, Brown said, SoCalGas filed nine advice letters.

Although he wasn’t prepared to support Brown’s alternative approach, Commissioner Michael Peevey said he “shares” his colleague’s concern that the original CPUC order was being subverted. Peevey asked to hold the matter until Jan. 16. “Subverting the will of the majority by a minority is inappropriate under any circumstances and in any body, including this commission,” Peevey said “My strong inclination is to vote for (Brown’s alternative) in January.”

One of the two commissioners strongly opposing the settlement, Carl Wood, said a recent letter from state legislative leaders was a giant wake-up call to he and the other commissioners to remember that the origins of the problem go back much further than 2001 to 1997 and 98 when the state legislature was “looking very seriously” at blocking the CPUC from pushing ahead with additional “gas industry deregulation.”

Wood said the CPUC back in summer 1999 had made “promises” to the legislature for a report to allay concerns of the state lawmakers about further energy deregulation in the state. The report would give the state lawmakers some options, and “to date that report has never been submitted.” Wood supported holding over the issue, noting that he is “very much hopeful the CPUC will re-consider the direction it is going with respect to the natural gas industry and take into consideration all that has happened over the past year.”

CPUC President Loretta Lynch agreed with Wood, noting that she thought the CPUC’s earlier decision had turned into a “misuse” of the regulatory advice letter process, and that the energy staff’s recommendation to re-do the process in a formal applications process before the regulatory is the “right approach.”

“This decision highlights the growing problem of this commission setting policy through advice letters,” Lynch added.

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