CPUC Allows Gas $ Sharing,Eases Agency Escape from Power Biz

By Published On: December 5, 2008

The California Public Utilities Commission December 4 affirmed a settlement that splits revenues between Southern California Gas and San Diego Gas & Electric ratepayers and shareholders. The unanimous vote dealt with the first phase of the utility’s current biennial natural gas cost proceeding. Net revenues from gas storage were set to be divided as follows: -The first $15 million at the rate of 90 percent/10 percent respectively for ratepayers and shareholders; -The next $50 million 75 percent/25 percent ratepayers to shareholders -After that, the next $30 million would be split 50 percent/50percent between customers and shareholders. Other parts of the approved settlement include a requirement for SoCal Gas to increase its gas storage injections. The settlement is in effect from 2009 to 2014. Another approved decision may blur the lines between church and state when it comes to energy efficiency outreach. The decision is for small and multi-jurisdictional utilities--the Bear Valley utility in Southern California was noted. The efficiency outreach order is meant to prod those small utilities, but at the same time recognize they do not have the same resources that the state’s big investor-owned utilities have for getting efficiency concepts across to low-income customers. Commissioner Tim Simon said it encourages “faith-based” organizations to participate in outreach. In its meeting November 21, regulators provided the state’s Department of Water Resources a path to help get it out of buying energy for the state. The California Public Utilities Commission voted to appoint a working group to find ways to extricate the agency from its remaining power purchase contracts. “Today’s decision opens the door to renegotiation or reassignment of the long-term contracts for electricity signed by the state at the height of the deregulation disaster, despite a warning from legislative leaders not to pursue such a course of action,” warned The Utility Reform Network. In 2004, the Legislature entertained a bill to accomplish that end. “We shouldn’t rush to dive back in to direct access,” said Simon--even though he voted for the measure. However, commissioner John Bohn welcomed the decision. “It tries expeditiously to return what could be millions of dollars to ratepayers,” he said. That return may be accomplished by the working group. This stakeholder group is set to review the remaining power contracts. Its first targets are two contracts the department holds. One is a $6.6 billion deal with Sempra Energy Resources and the other is a $2.3 billion agreement with Coral Power. Neither DWR nor the utility can unilaterally require any of these counterparties to renegotiate their contracts. “It’s a consensus that these contracts pose the biggest challenges,” said Mike Peevey, commission president. The department has been trying to get out of the power buying business. It was forced by the state to be a buyer of last resort during California’s 2000-01 energy crisis when investor-owned utilities did not have the financial means to purchase electricity during the deregulation meltdown. Ratepayers paid dearly for the emergency contracts credited with averting rolling blackouts. The latest move is part of regulators’ process to reconsider direct access for utility customers. Organizations representing small consumers, like TURN, oppose direct access. Organizations representing large consumers, like the California Manufacturers & Technology Association, are pushing for rekindling direct access. Direct access allowed consumers to avoid bundled utility service. Consumers could contract directly with power providers for their needs. It was allowed for both small and large consumers during the mid-1990s’ deregulation. It was halted when the energy crisis hit. In other commission moves, regulators approved a $1.3 million water/energy pilot program. “It’s reducing energy consumption by reducing consumption of water,” said Bohn. “The nexus of water and energy is critical.” Commissioners overrode the administrative law judge’s recommendation to deny the pilot.

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