FYI, this relates to the SoCal Gas / SDG&E Settlement Workshop to be held on 
Wednesday in San Francisco. 

Will any of you be attending or sending representatives? 

Michael Rochman 

?-----Original Message----- 
From: ? Michael Rochman? 
Sent:?? Monday, June 12, 2000 12:10 PM 
To:???? Nancy W McVay (E-mail) 
Cc:???? Alethea Imperial; Brian Cherry (E-mail) 
Subject:??????? Suggestions to improve SMEPRA core aggregation program 

Nancy, 

Per our conversation, I will ask Alethea Imperial of our office to hand this 
out at the meeting on Wednesday, since I will not be able to attend:

Customer migration to transport-only service will occur in significant 
numbers, and the benefits of a competitive commodity market will accrue, only 
if (a) the Utility Distribution Company exits the merchant function (as in 
California noncore, Atlanta Gas & Light examples), or (b) non-regulated 
suppliers have a realistic opportunity to "beat" the UDC price. 

Over time, as customers migrate from bundled service, the emphasis on beating 
the UDC price will fade (as it has in telecom), and end-users will actually 
get a lower price, as the competitive suppliers' risk premiums associated 
with targeting the price of a specific dominant competitor (the UDC) is 
removed from prices.

Examples of methods to beat the price include: 

shopping credits (as in New Jersey);
regulatory actions (as in the temporary price advantage due to core 
interstate unbundling if the SoCal Gas Comprehensive Settlement is approved); 
or
UDC monthly commodity price includes all actual retail-related costs 
calculated on an account-average basis, such as billing, customer service, 
marketing, etc., without reliance on economies of scale due to UDC 
performance of transportation function. Currently, the UDC prices tend to 
give wholesale, rather than retail, price signals and costs remain covered in 
local transportation rates. 

Suggestions for SEMPRA in this regard include: 

Include the current "pipeline credit" ($0.0282 /MMBtu) as a component of the 
posted core procurement rate, rather than as a deduction from local 
transportation rates.
Establish a well-publicized fund to be paid to those who switch to transport 
service on a first-come, first-serve basis. (This is John Leslie's 
"prime-the-pump-and-get-good-publicity-for-the-UDC" suggestion.) 
Commit to pricing for a 6 to 24 month period to be expressed as NGI SoCal 
CityGate plus or minus, so long as it is computed to include all retail, 
fully-delivered cost components. 
Compute core procurement price to send retail price signal, either by 
re-allocation of costs, by actual separation of procurement function to a 
separate, regulated utility under the SEMPRA umbrella, or by outsourcing 
procurement function to third party(ies).
Post a (projected or actual) "standard offer" price in advance for a 6 to 24 
month period, so long as it is computed to include all retail, 
fully-delivered cost components. 
Make a clear policy statement that SEMPRA wishes to exit the merchant 
function, even if only at some date to be determined in the future. 
To help educate consumers, all SEMPRA invoices should show core procurement 
price as applied to prorated therms consumed during the meter read cycle, 
rather than current practice of simply stating the monthly procurement 
price(s) but only showing the total, bundled price for each cycle on the 
invoice. For example, show "100 therms at April price of $0.25 = $25.00, plus 
50 therms at May price of $0.30 = $15.00, plus transport fee of $50.00, 
equals $90.00"; rather than the current practice of showing "usage of 150 
therms from April 10 to May 10 equals $90.00.")
All SEMPRA materials regarding core aggregation should emphasize advantages 
of transport-only service: the availability of fixed or other pricing plans 
to more closely meet end-user risk management needs (emphasizing that SEMPRA 
has only a one-size-fits-all pricing option), the availability of customized 
bill presentment and delivery (potentially saving multi-site end-users 
thousands of dollars per year and reducing paper for all end-users), 
availability of discounts on other goods or services not offered by SEMPRA, 
etc.