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Enron Mail |
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.
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