SoCal Gas Tries to Repel Edison Charges

Southern California Edison, in the unusual role of consumer advocate, blamed Sempra affiliate Southern California Gas for spikes in gas prices along the border during the energy crisis. In final oral arguments before the California Public Utilities Commission November 30, Edison alleged that SoCal Gas abused market power, causing economic damage to its noncore customers. All of the commissioners were present except for Susan Kennedy. "We never engaged in secret plots," Ed Guiles, chair and chief executive officer of Sempra Utilities, testified. He added that the business deals in question were done "not to reap big profits, but as insurance for our customers." The utility faces having to refund more than $28 million it reaped in profits in 2000-01 (Circuit, Nov. 19, 2004). Edison attorney Ken Wiseman claimed SoCal Gas made natural gas loans that had to be repaid in the coldest months, thus forcing it to buy spot gas instead of pulling cheaper supplies out of storage. As a result, the price to noncore customers, including Edison, skyrocketed. Meanwhile, SoCal Gas allegedly reaped illicit profits from the transactions. SoCal Gas responded that the loan repayments were minuscule in the scheme of things and that it saved customers $220 million during the period in question. Despite such strong contentions on Edison's part, consumer advocates The Utility Reform Network and the Office of Ratepayer Advocates distanced themselves from Edison's claim. When cornered by commission president Mike Peevey, ORA analyst Mark Pocta said he did not think SoCal knowingly manipulated the market. TURN attorney Marcel Hawiger said he did not know. At issue is a November 21 proposed decision on the commission's first investigation into gas border prices, calling for the $28 million refund. Administrative law judge Charlotte TerKeurst's decision found SoCal's actions through May 2000 appropriate. Beginning in June 2000, TerKeurst found, the utility used arbitrage. She said, however, that no evidence has been produced to show that SoCal intended to manipulate the market to its advantage. Regulators began a second investigation last week, and the price spikes will be examined in two phases. The first will cover Sempra's utilities and review activity between March 2000 and May 2001. The second phase will involve Southwest Gas, Pacific Gas & Electric, and Edison. As a penalty, the commission could revoke the performance-based mechanism that allows utility shareholders to profit under certain circumstances. Regulators could also require refunds. J.A. Savage

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SoCal Gas Tries to Repel Edison Charges

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