PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

ENERGY DIVISION					RESOLUTION G-3250
                                					            MARCH 18, 1999	 

RESOLUTION

RESOLUTION  G-3250.  WILD GOOSE STORAGE INC. SEEKS APPROVAL OF INITIAL TARIFFS FILED IN COMPLIANCE WITH DECISIONS NO. 97-06-091 AND 98-06-083.  APPROVED.

BY ADVICE LETTER 1-G FILED ON DECEMBER 18, 1998 AND SUPPLEMENTAL ADVICE LETTER 1A-G FILED ON JANUARY 19, 1999.
______________________________________________________________________________

Summary

1. 	On December 18, 1998 Wild Goose Storage Incorporated (WGSI) filed Advice Letter (AL) 1-G to establish its initial tariff schedules in compliance with Decision (D.) 97-06-091 as modified by D.98-06-083.  Pursuant to Commission approval of its tariffs, WGSI intends to commence gas storage service operations on April 1, 1999 and charge market based rates to its customers.  WGSI is the first independent gas storage provider certificated as a public utility by the Commission. 

2. 	On January 19, 1999 WGSI supplemented its advice letter with AL 1A-G to make minor changes to its proposed Rule 11 in response to Pacific Gas and Electric Company’s (PG&E) protest to AL 1-G.  As a result of the changes WSGI made in AL 1A-G, PG&E withdrew its protest to AL 1-G.

3. 	WGSI requests a partial waiver of certain tariff format requirements specified in General Order 96-A.  This Resolution approves WGSI’s request for this waiver.

4. 	Roseville Land Development Association (Roseville Land) protested AL 1-G.  It requests that the Commission withhold action on the advice letter until pending litigation over WGSI’s right as a public utility to use Roseville Land’s property is finally concluded.   Roseville Land also requests that the Commission require WGSI to inform its potential customers of the pending litigation.  This Resolution denies Roseville Land’s protest because it raises no issues relevant to the tariffs that WGSI has filed in compliance with D.97-06-091 as modified by D.98-06-083.

5. 	This Resolution approves WGSI’s AL 1-G as supplemented by AL 1A-G.

Background

	Procedural Background

1. 	In D.93-02-013 the Commission adopted policies and rules for natural gas utility storage programs and allowed independent storage providers to enter the storage market and compete with the local distribution companies.  D.97-06-091 in Application (A.) 96-08-058 granted WGSI a certificate of public convenience and necessity (CPCN) authorizing it to develop, construct, and operate an underground natural gas storage facility in Butte County, California, and to provide firm and interruptible storage service.  WGSI’s application was the first to seek authorization to provide independent gas storage service pursuant to D.93-02-013.

2. 	D.97-06-091 required WGSI to file tariffs pursuant to Public Utilities Code Section (Section) 491 before commencing operations.  Gas stored by WGSI will be transported on PG&E’s transmission system, and D.97-06-091 also required WGSI to execute an operating and balancing agreement with PG&E.

3. 	D.97-06-091 allowed WGSI to charge market based rates and to file tariffed rates within a rate window.  The decision required WGSI to file cost data with the Commission to justify that its tariff rates do not fall below its short-run marginal cost.

4. 	WGSI filed a petition to modify D.97-06-091.  D.98-06-083 which addressed WGSI’s petition allowed WGSI to file market based tariffed rates without cost justification.  D.98-06-083 found no evidence that WGSI has significant market power and that there is no need for it to provide this cost data.

5. 	The Commission assessed the environmental impact of WGSI’s application pursuant to the requirements of the California Environmental Quality Act (CEQA).  D.97-06-091 addressed  the CEQA review process.  As a result of this review, Energy Division staff prepared a Negative Declaration requiring that WGSI implement specific measures to mitigate the potential adverse environmental impacts associated with the project.

6. 	Roseville Land participated in the phase of A.96-08-058 which dealt with the CEQA review process.  Prior to the close of the proceeding it filed a petition to set aside submission, renotice, and reopen the proceeding for additional evidence.  The assigned administrative law judge (ALJ) denied Roseville Land’s petition, and D.97-06-091 affirmed the ALJ’s ruling on the petition.  Roseville Land subsequently filed an application for rehearing of D.97-06-091 challenging the legality of the Negative Declaration and alleging other errors in the decision relating to issuance of  the CPCN.  In D.97-10-070 the Commission found that Roseville Land’s allegations had no merit and denied its application for rehearing.  Roseville Land filed a petition for writ of review of D.97-06-091 and D.97-10-070 with the California Supreme Court, which was denied.

	WGSI’s Proposed Tariffs

7. 	D.97-06-091 ordered WGSI to file an advice letter prior to commencing operations, including accompanying tariff schedules which meet the criteria set forth in the decision and the requirements of General Order (G.O.) 96-A.  WGSI filed its compliance advice letter on December 18, 1998 to establish tariffs for new storage services which, pursuant to Commission approval, WGSI plans to commence on April 1, 1999.

8. 	The tariffs that WGSI filed in AL 1-G provide a range of market based rates.  Pursuant to D.98-06-083, WGSI is not required to justify the costs underlying these rates.  AL 1-G includes schedules for base load and short-term storage service (Schedules BLS and STS) which show a range of rates.  The actual rates and terms of service for each customer will be negotiated by WGSI and the customer and will be included in a separate Appendix.  AL 1-G provides sample appendices for Schedules BLS and STS for a hypothetical customer.

9. 	WGSI requests a partial waiver of G.O. 96-A format requirements.  First it requests to omit certain rules required by the General Order on the basis that they do not apply.  These rules and the reasons for excluding them are summarized below:

•	Rule 7 - Deposits: WGSI does not require deposits from customers.
•	Rule 11 - Discontinuance and Restoration of Service:   WGSI has no need for such procedures.  The applicable provisions governing curtailment and force majeure affecting storage service are provided in Rule 14.  WGSI proposes to substitute its proposed Rule 11 “Measurement of Service” for this rule.
•	Rule 12 - Optional Rates:  WGSI does not provide optional rates.
•	Rule 13 - Temporary Service:  WGSI does not provide temporary service.
•	Rule 15 - Extensions:  WGSI does not have distribution lines so the requirement for a rule relating to line extensions is not applicable.
•	Rule 16 - Service Connections/Facilities on Customers’ Premises:  WGSI has no reason to connect gas lines or facilities at any customer’s premises.
•	Rule 18 - Meter Tests/Bill Adjustments for Meter Error:  Under Rule 11 of WGSI’s proposed tariffs, the connecting pipeline measures the amount of gas delivered to the customer or WGSI, and any adjustments to these measurements will be done in accordance with the connecting pipeline’s tariffs.  The Terms and Conditions portion of the proposed tariffs address bill adjustments required by errors in the connecting pipeline’s meters.
•	Rule 19 - Supply to Separate Premises and Resale:  WGSI does not deliver gas to end-use customers’ facilities or operate a distribution system to which a customer may connect a master or submeter.  Thus, Rule 19 is not applicable.

10. 	WGSI also requests a waiver of the provisions of Section II.C.(1)(b) of G.O. 96-A which requires that newer sheets have higher numbers that the sheets they replace.  WGSI proposes that the replacement sheets have the same number as the sheets they replace and be indicated by “first replacement sheet”, “second replacement sheet”,  etc., as newer sheets are filed.  Finally, WGSI requests a waiver of Section II.C.(4), to allow it to include rules which are very short in length on the same page.

Notice 

Notice of  Advice Letter 1-G and 1A-G was made by publication in the Commission’s Daily Calendar and it was distributed to parties in accordance with Section III-G of General Order 96-A and to all parties of record in A.96-08-058.
Protests

1. 	PG&E and Roseville Land filed timely protests to AL 1-G.  PG&E limited its protest to WGSI’s proposed Rule 11.  PG&E noted that the proposed rule would violate the PG&E/WGSI operating and balancing agreement (OBA) because it implied that a WGSI customer’s gas delivered to or from the WGSI facility would be measured by PG&E via a metering device.

2. 	In response to PG&E’s protest, WGSI filed AL 1A-G which made two minor modifications to its proposed Rule 11 to conform the rule with the provisions of the OBA.  First, WGSI modified the language to state that the measurement referred to in the rule applied to scheduled gas volumes (as specified by the OBA) and not delivered gas volumes.  Additionally, WGSI eliminated meter test language from the rule.  Although WGSI may request a meter test under the OBA, there is no need to include meter test provisions in the tariff.  After receiving and reviewing WGSI’s supplement, PG&E withdrew its protest by a letter to the Energy Division dated January 25, 1999.

3. 	No party protested WGSI’s supplemental AL 1A-G.
	
4. 	Roseville Land alleges in its protest that WGSI does not have the right to take or use, or allow its customers the right to use the real property of Roseville Land, through which WGSI has installed a pipeline. Roseville Land has made this same allegation in an eminent domain action filed by WGSI against Roseville Land in Butte County Superior Court in January 1998, and in an appeal on that case which Roseville Land is seeking in the California Third District Court of Appeals.

5. 	In its protest Roseville Land requests that the Commission a) withhold action on WGSI’s advice letter until the courts have acted with finality and b) require WGSI to advise any potential customers of the existence and effect of the pending litigation if WGSI intends to enter into contracts with customers before the courts have acted with finality.

6. 	WGSI filed a timely response to Roseville Land’s protest.  WGSI states that Roseville Land’s protest is an improper attempt to delay approval of WGSI’s tariff and that the Commission should deny the protest.  WGSI’s response also provides background on Roseville Land’s intervention in A.96-08-058, and describes the status of the eminent domain case.

 Discussion

1. 	WGSI filed its advice letter in compliance with D.97-06-091, as modified by D.98-06-083, to establish tariffs which meet the criteria set forth in these decisions and the requirements of G.O. 96-A (D.97-06-091, Ordering Paragraph 3).  The issues that this Resolution addresses must therefore focus on the extent to which WGSI’s proposed tariffs adhere to these criteria and requirements.

2. 	WGSI’s proposed tariffs reflect market based rates which the Commission has allowed it to offer its customers.  These rates will be individually negotiated between WGSI and each customer.  The rates WGSI intends to offer will fall within a “filed rate zone”, as shown in its Schedules BLS and STS.  WGSI is not required to justify the floor and ceiling rates it proposes (D.98-06-083, Ordering Paragraph 8).  The rates that WGSI proposes meet the criteria set forth in D.97-06-091, as modified by D.98-06-083, and should be adopted.

3. 	WGSI’s proposed tariffs substantially conform to the requirements set forth in G.O. 96-A.  As described above in the “Background” section, WGSI requests a partial waiver of some of the format requirements of the General Order.  WGSI has made a proper showing that Rules 7, 12, 13, and 18 do not apply given the structure of its rates and the services it will provide.  Similarly, WGSI has shown that Rules 11, 15, 16 and 19 are not applicable in its case since it provides only gas storage services and does not transport or distribute gas to end-use customers.   WGSI’s request to omit these rules from its tariffs is approved.

4. 	WGSI’s request for a waiver of provisions of Section II.C.(1)(b) of G.O. 96-A regarding the numbering of replacement sheets is reasonable.  It is a logical way to number successive sheets and will make it easier to follow the tariffs.  WGSI’s request for a waiver of Section II.C.(4) of the General Order to include shorter rules on the same page is also reasonable since it will reduce the volume of pages that need to be filed and reviewed.   WGSI’s request for a waiver of these provisions of G.O. 96-A should therefore be approved.

5. 	Roseville Land’s protest raises no issues that are relevant to the tariffs that WGSI has filed in compliance with D.97-06-091 as modified by D.98-06-083.  Roseville Land has failed to show that any portion of the tariffs filed in AL 1-G or supplemental AL 1A-G is inconsistent or non-compliant with any portion of these decisions or G.O. 96-A.  The Commission has not conditioned the implementation of WGSI’s tariffs on any final court action or on WGSI’s notification of potential customers regarding any pending litigation.  Accordingly, Roseville Land’s protest is denied.

Comments

1. 	On February 11, 1999 the Energy Division mailed the draft resolution in this matter to parties  in accordance with Section 311(g), and requested comments within 20 days. WGSI and Roseville Land filed comments.

2. 	WGSI’s comments express support for the draft resolution, and provide further information on the status of the litigation described in Roseville Land’s protest.

3. 	Roseville Land makes several allegations in its comments.  Among them are that the Public Utilities Act does not permit negotiated rates, and that WGSI’s proposed tariffs “appear” to violate various PU Code Sections.  Roseville Land also reiterates its request that the Commission should require WGSI to notify potential customers of the pending litigation.  The issues that Roseville Land raises in its comments are not relevant to the matters which the draft resolution addresses, i.e., whether WGSI’s proposed tariffs comply with D.97-06-091 as modified by D.98-06-083.   Therefore, Roseville Land’s comments do not require that any changes be made to the draft resolution.

Findings

1. 	WGSI filed Advice Letter 1-G on December 18, 1998, and supplemental Advice Letter 1A-G on January 19, 1999.

2. 	Notice of AL 1-G and supplemental AL 1A-G were made by publication in the Commission’s daily calendar.  WGSI also distributed copies of the advice letters to parties in accordance with Section III-G of G.O. 96-A.

3. 	PG&E and Roseville Land filed protests to AL 1-G.  After receiving and reviewing supplemental AL 1A-G, PG&E withdrew its protest.

4. 	D.97-06-091 granted WGSI a CPCN authorizing it to develop, construct, and operate an underground natural gas storage facility in Butte County, CA.
	
5. 	D.97-06-091 as modified by D.98-06-083 allows WGSI to charge market based rates for storage services within a filed rate zone, without having to justify its proposed rate ceiling or floor.

6. 	D.97-06-091 as modified by D.98-06-083 ordered WGSI to file an advice letter prior to commencing gas storage operations, including accompanying tariff schedules which meet the criteria set forth in those decisions and the requirements of G.O. 96-A.

7. 	Pursuant to Commission approval of its tariffs, WGSI intends to commence offering gas storage services to customers on April 1, 1999.

8. 	The rates proposed by WGSI in AL 1-G meet the criteria specified in D.97-06-091 as modified by D.98-06-083.

9. 	The tariff schedules proposed by WGSI in AL 1-G and supplemental AL 1A-G substantially conform with the requirements of G.O. 96-A.

10. 	WGSI’s request for a  partial waiver of Section II.C.(4) of G.O. 96-A  to omit Rules 7, 11, 12, 13, 15, 16, 18, and 19 from its tariffs is reasonable and should be approved.

11. 	WGSI’s request for a waiver of the provisions of Section II.C.(1)(b) of G.O. 96-A regarding the numbering of replacement sheets is reasonable and should be approved.

12. 	WGSI’s request for a waiver of the provisions of Section II.C.(4) of G.O. 96-A to include rules which are short in length on the same page is reasonable and should be approved.

13. 	The issues raised in the protest of Roseville Land are not relevant to the tariffs WGSI filed in compliance with D.97-06-091 as modified by D.98-06-083.  Accordingly, Roseville Land’s protest is denied.

Therefore it is ordered that:

1.	WGSI’s Advice Letter 1-G as supplemented by 1A-G is approved. 

2. 	The protest of Roseville Land is denied.

3. 	This resolution is effective today.

I certify that the foregoing  resolution was duly introduced,  passed, and adopted at a conference of the Public Utilities Commission of the State of California held on  March 18, 1999.  The following Commissioners voting favorably thereon:
									      
									  ___________________
  WESLEY M. FRANKLIN
									       Executive Director

                                                                                                                  RICHARD A. BILAS
                                                                                                                           President
                                                                                                                   HENRY M. DUQUE
                                                                                                                    JOSIAH L. NEEPER
                                                                                                                         Commissioners