A comprehensive settlement known as the Gas Accord is approved as clarified. The Gas Accord resolves issues in five phases of the first general rate case for Line 401, the California segment of a pipeline expansion project owned and operated by Pacific Gas and Electric Company (PG&E). The five phases cover: (1) market issues, including terms and conditions of service on Line 401; (2) amortization of costs recorded in PG&E’s interstate transition cost surcharge (ITCS) balancing account; (3) a reopening of PG&E’s decision to construct the pipeline expansion; (4) two competing settlements, the Gas Accord and a separate Joint Recommendation; and (5) Line 401 capital costs and operations and maintenance expenses.
While the Commission is approving the Gas Accord, the Commission nevertheless finds that PG&E holds market power in California, that PG&E has a present conflict of interest in marketing Line 401 capacity on behalf of shareholders and brokering unused Southwest capacity on behalf of ratepayers, that under the Gas Accord PG&E will have a conflict of interest in marketing Line 400/401 capacity on behalf of shareholders and against discounting Line 300 capacity on behalf of noncore customers, and that PG&E may have conflicts of interest in its procurement of gas for its core customers. Rather than reject the Gas Accord, the Commission will impose a discounting rule in its order approving the Gas Accord. This rule is necessary to mitigate PG&E’s conflict of interest and to enable fair competition between Canadian, California, and Southwest supply sources. The Commission can further address PG&E’s continuing conflicts of interest in other proceedings.
The Commission leaves undisturbed previous findings that PG&E’s October 25, 1991, decision to construct Line 401 was reasonable. While the Commission will not allow private parties in the Gas Accord to settle alleged Rule 1 violations concerning PG&E’s testimony about its decision to construct Line 401, the Commission finds that a separate settlement of the alleged Rule 1 violations negotiated by the Commission’s Consumer Services Division and PG&E is in the public interest.
The Joint Recommendation is rejected because it would hinder progress toward unbundled rates, and the Gas Accord with a discounting rule reaches a more desirable outcome.
Footnotes are bracketed and in blue