Jeff,
Are you planning on being at the CPUC on Thursday?


Expanding SoCal Supply, Transport on CPUC Agenda 
California regulators this week could start to remove some of the uncertainty 
surrounding the in-state markets in the first of a series of natural gas 
infrastructure decisions that ultimately could greatly expand the two major 
utility intrastate transmission/storage systems. 
When the California Public Utilities Commission meets in a special 
continuation business session Thursday, it will consider allowing Southern 
California Gas Co. to free up about 24 Bcf of cushion gas at its idle 
Montebello Underground Storage Facility slated to eventually be abandoned. 
However, a bigger move by the CPUC would be to act on the long-stalled 
comprehensive settlement to open up the SoCal's intrastate transmission and 
storage system. 
The CPUC held an en banc information hearing for its five commissioners 
earlier in May to hear arguments for and against the settlement. Indications 
are the commissioners are ready to move, but it would still take several 
months of processing before a comprehensive settlement could be okayed by the 
state regulators. 
"It appears to be back on (the CPUC's) radar screen and we're still hopeful 
that they will do the right thing," said Lad Lorenz, gas operations director 
at SoCalGas. "They are apparently taking a fresh look at the whole thing, but 
they haven't given any indication when they might act." 
SoCalGas has been criticized by a coalition of Southern California generators 
for having little incentive to expand its pipeline capacity because of 
current rules that allow it to re-sell supply and related services in a tight 
market. Added pipeline capacity could hurt SoCal's storage business, some 
critics charge. 
"The uncertainty of what the ultimate regulatory structure is going to be on 
a going-forward basis is causing everyone in the market, including us, 
concern, making it difficult to make decisions," said Lorenz, noting that 
SoCal since last August has had a proposed global settlement before the 
regulators. 
Part of the provisions of the overall settlement, Lorenz said, would make it 
easier for determining when system expansions are necessary because it is 
based on customer commitments and contracts for capacity on the system. 
"Absent that, we're in the current regulatory system and we build the system 
based on consumer needs," he said. "We've always done that, and we haven't 
had any curtailments in 10 years now." (He added that SoCal doesn't expect 
shortages when things get tight this summer.) 
Under the current scheme, however, SoCal determines new construction on a 
least-cost basis and then tries to recover the costs in the next rate case. 
Another problem with the current design is that SoCal cannot sign up 
customers for firm backbone transmission with guaranteed receipt and delivery 
points. 
The proposed settlement would allow SoCal to hold open seasons for specific 
points to determine customer interest. Customers could either commit to new 
capacity on an incremental cost basis or SoCal could seek rolled-in rates for 
expansion projects. This is the system the state's other major gas utility, 
Pacific Gas & Electric Co. has in place. 
Despite the rigors of the bankruptcy court, the PG&E utility has scheduled an 
open season for expansion of its backbone and storage system in a proposal it 
intends to make to the CPUC later in June (see Daily GPI, May 31 
<http://intelligencepress.com/subscribers/daily/news/d20010531i.html>). 
While its pipe and storage infrastructures are thought to be "adequate" for 
this year, the PG&E utility is expecting continued high load factors and 
prices over the summer and winter periods. 
Of concern to both utilities is the current interest among elected officials 
and regulators to increase reserve margins to the double-digit levels. Their 
question is who is going to pay for maintaining the excess capacity; the same 
question applies to the electric side, too. 
In implementing current plans to add 375 MMcf/d of pipeline capacity, 
SoCalGas would increase its overall capacity to about 3.9 Bcf/d. "Our 
indications are that is going to be more than adequate and will add 
substantial excess capacity," SoCal's Lorenz said (see Daily GPI, May 29 
<http://intelligencepress.com/subscribers/daily/news/d20010529e.html>). 
The existing expansions now before the CPUC but not part of the global 
settlement struck last year would be re-evaluated in light of the settlement 
should it be adopted in the next two or three months, Lorenz said.