Subject: Bad Proposed Decision
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Mon, 27 Nov 2000 01:20:00 -0800 (PST)

Attached below is the CPUC's proposed decision in the Gas Industry 
Restructuring proceeding.  Essentially, it adopts the Interim Proposal with a 
few modifications.  The CPUC states that they are taking a "cautious" 
approach to deregulation in light of recent market events in both electricity 
and gas, and therefore, rejected the more robust reforms outlined in the 
Comprehensive Settlement.  The CS was offered by SoCal Gas and supported by 
many of the settlement parties, including Enron and Transwestern.

The good news is that, with respect to Hector Road, the maximum volume at 
Hector is limited to 50 MMcf/d, similar to the proposal made by the 
Comprehensive Settlement.  I've included the section from the PD that deals 
with this issue for your convenience.  The full document is also attached.

excerpt at at page 50 regarding Hector Road:

(1) Receipt Points/ Intrastate Transmission
As we have already discussed above, we now judge that intrastate transmission 
unbundling is not wise at this time for the SoCalGas system.  However, 
SoCalGas, intrastate transmission system can still be made more accessible 
and understandable to its users.
In R. 98-01-011, the record reflects dissatisfaction among customers and 
shippers with the lack of clarity on how SoCalGas schedules gas shipments 
through its windowing system, and SoCalGas, sole use of the Hector Road 
interconnection as a receipt point. (Exh. 8 in R. 98-01-011, pp. 29-31 
(Southern California Edison Company Market Conditions Report), (Panel Hearing 
Testimony of  Mr. Paul Carpenter, Southern California Edison, Tr. pp. 
931-932, Jan 25, 1999).) Our decision in D. 99-07-015 directed investigation 
into using the Hector Road interconnection, even on an interim basis, and the 
publication of SoCalGas, windowing criteria in tariffs.  SoCalGas filed 
Advice Letter 2837, which detailed its process of basing a maximum amount of 
gas scheduled for shipment through a receipt point on the prior day,s 
nominations, except at the first of the month.  Early in the instant 
proceeding, the ALJ held in abeyance active consideration of the windowing 
procedure tariff SoCalGas filed, pending the resolution we reach today.  
(Prehearing Conference of September 1, 1999, p. 34.)
We are approving on an interim basis the replacement of the current windowing 
process with a system under which SoCalGas will establish receipt point 
capacities, subject to daily revision, on the basis of the physical maximums 
for each receipt point under the operating conditions expected for that day.  
Customers and shippers will know the daily maximums because they will be 
posted on SoCalGas, GasSelect system daily prior to the nomination 
deadlines.  If, in the aggregate, customers nominate more than the physical 
capacity at any receipt point, gas will be scheduled based on the upstream 
pipeline,s capacity rights system.  For Wheeler Ridge, at which more than one 
upstream pipeline delivers gas, the maximum daily physical capacity would be 
allocated between upstream sources pro rata on the basis of the prior day,s 
scheduled deliveries from each source.
This system eliminates the mystery in how pro-rations are made, provides 
continuity in capacity rights between the interstate and intrastate systems 
and provides flexibility for customers in nominating at the most 
cost-effective receipt point on any given day.  We recognize that it does not 
provide for long-term planning, but the alternative under the CS of paid-for 
firm receipt point rights for the term of the settlement has the disadvantage 
of locking customers into a receipt point that may lose value over the term.  
In this period of gas price volatility, we believe that the more flexible 
plan is the right one.
Thus, we direct SoCalGas to withdraw Advice Letter 2837 and file a new advice 
letter within 10 business days implementing the proposed receipt point 
physical capacity system.  This may be the same as the exemplary tariff filed 
with the IS or updated as necessary pursuant to subsequent proceedings.  This 
tariff revision will be effective within 30 days after the filing unless 
rejected by the Energy Division.
In R.98-01-011, PG&E and Edison particularly complained about the 
restrictions at Wheeler Ridge. (Exh. 15 in R. 98-01-11, pp. 7-9 (PG&E 
Rebuttal to Market Conditions Report), and Exh.8 in R. 98-01-011, pp. 29-31, 
(Southern California Edison, Market Conditions Report).) One response in the 
IS to these complaints is the establishment of a formal receipt point at 
Hector Road for all customers, subject to Wheeler Ridge access fees and 
surcharges.  Its capacity will be 50 MMcfd or greater as long as there are 
nominations of that volume and Mojave Pipeline Company delivers that much in 
response to those nominations.  This provision should allow greater 
flexibility for shippers and customers as well as leveling the playing field 
between SoCalGas and others at this interconnection.  We will support 
SoCalGas, application to the Federal Energy Regulatory Commission for 
approval of Hector Road as a formal delivery point by Mojave.
El Paso Natural Gas Company objected strongly to the provision in the IS for 
automatically expanding of Wheeler Ridge capacity  While this was not an 
option specifically mentioned in D.99-07-015, we do not choose to stand on 
that technicality to exclude it from consideration here.  Once a proceeding 
is open to settlement, the dynamics of settlement talks may bring in matters 
outside the delineated scope, as they have done here with regard to Wheeler 
Ridge expansion and, for instance, pooling.  Both proposals respond to 
concerns raised in R.98-01-011, (see citations in text above as well as Panel 
Hearing Testimony of Mr. Benjamin C. Campbell, PG&E, Tr. pp. 267-268, Jan 19, 
1999)) and neither was specifically excluded from further consideration in 
D.99-07-015.  We therefore view them as within the scope of this proceeding.  
To the extent that other receipt points are also viewed as constrained, we 
welcome evidence to that effect in a future proceeding, as well as proposals 
for criteria to determine when expansion should be applied for.  by 100MMcfd 
if a certain number of curtailments occurred, and for automatically allowing 
the expenses of that expansion to be rolled into rates.  We do not wish to 
approve automatic rate increases for all ratepayers for a facility for which 
only some may have use, but we believe that developing criteria for expansion 
of receipt points is useful.  Hector Road may not entirely alleviate the 
problem of constraints on northern gas flowing to the south.
Therefore, we approve that portion of Section III of the IS that sets forth 
criteria for expansion, but provide that upon the meeting of that criteria, 
SoCalGas shall submit an application for an expansion of the receipt point 
capacity.  That application shall be processed in the regular way, with the 
issues of need in the context of the entire system and foreseeable market 
conditions considered.  Moreover,  rolled-in or incremental rates, allocation 
of cost among classes and consequent rate design will remain open for 
decision in that proceeding.
Thus, the modification to the IS that we make is in the first sentence of the 
first full paragraph on page 8.  The words &apply to8 should be inserted 
after &SoCalGas will8.  We specifically disapprove the IS language in the 
middle on page 8 beginning with the words &This Settlement8 through the end 
of the paragraph, and the concomitant language in Appendix A setting the cost 
at $12 million in 1999 dollars.
---------------------- Forwarded by Jeffery Fawcett/ET&S/Enron on 11/27/2000 
08:45 AM ---------------------------
From: Jeff Dasovich on 11/22/2000 06:28 PM
Sent by: Jeff Dasovich
To: Jeffery Fawcett/ET&S/Enron@ENRON, Susan Scott/ET&S/Enron@ENRON
cc:  

Subject: Bad Proposed Decision

Well, this shows the direction in which the "new" Commission is heading.  The 
very good news, though, is that  TW's proposal was included in both 
settlements (now that's hedging!).  Thus,  the benefits to TW were preserved 
under both proposals.  Congratulations.  That's fantastic--hard work that 
paid off.

We will of course express out extreme dissappointment with the PD, and point 
out that this decision condemns California to a 20th century infrastructure, 
when the state's 21st century economy demands much, much better.  

We should discuss.  Since the PD empowers the likes of Norm and Florio, it 
will be important to play very close attention to implementation of Hector.

Sorry to have to be the one to deliver the news.   But we have a knack of 
making lemonade out of lemons and we'll do out best to do the same here, 
whatever turns up at the end.

Best,
Jeff
----- Forwarded by Jeff Dasovich/NA/Enron on 11/22/2000 05:53 PM -----

	[email-masked]
	11/22/2000 05:27 PM
		 
		 To: [email-masked], [email-masked], [email-masked], 
[email-masked], [email-masked], [email-masked], 
[email-masked], [email-masked]
		 cc: [email-masked], [email-masked]
		 Subject: 

The PD in the Gas Restructuring is out.   I have yet to read the whole
thing, but the title "Approval With Modifications Of The Interim
Settlement..." does not bode well.  According to Steve Watson (and I only
have Steve's statement second hand), the decision reflects a fear that the
timing is wrong in light of the current volatile gas price market.

(See attached file: Proposed.doc)

--
Michael S. Alexander
Southern California Edison
626-302-2029
626-302-3254 (fax)

 - Proposed.doc