Involuntary Diversions

Involuntary Diversions may occur when supply destined for the core market is insufficient to meet forecast core demand. When deliveries to core customers are threatened, Pacific Gas and Electric Company may divert noncore gas supplies to core customers in order to meet the forecast core demand. An Emergency Flow Order (EFO) is also in effect during Involuntary Diversions.

Gas Rule 14 defines provisions for Involuntary Diversions.

If conditions are such that supply is insufficient to meet core demand, it may become necessary for Pacific Gas and Electric Company to implement Involuntary Diversions. To avoid the need for Pacific Gas and Electric Company to divert noncore supply, Core Transport Agents and Pacific Gas and Electric Company’s Core Procurement Group, on behalf of their core customers, should first attempt to secure and deliver additional supply sufficient to meet forecast core demand.

Core Transport Agents and Pacific Gas and Electric Company’s Core Procurement Group can use the following sources based on availability:

• Their firm backbone transmission capacity
• As-available backbone transmission capacity on the system at any receipt point
• Gas supply or backbone transmission capacity made available from noncore end-use customers or backbone transmission system customers pursuant to voluntary supply diversion arrangements
• Their storage withdrawal capacity

If Involuntary Diversions are necessary in order to meet forecast core demand, Pacific Gas and Electric Company will determine the volume of noncore gas supply that must be diverted from backbone transmission system gas supplies. Supply destined to the core market will not be diverted. Noncore gas supplies will be diverted in the following order:

• As-available supplies will be diverted first. Supply scheduled under as-available backbone transmission service will be diverted in order of increasing transmission contract price. Volumes transported under the same price will be diverted on a pro-rata basis.
• Second, supply scheduled to on-system noncore end-use customers under firm backbone transmission service will be diverted on a pro-rata basis. Off-system supply scheduled under firm backbone transmission service is not subject to diversion.
• Deliveries scheduled to on-system noncore end-use customers from on-system storage will be treated as the highest priority firm backbone transmission service and will be diverted on a pro-rata basis after all other firm backbone transmission service has been diverted.

During Involuntary Diversions, customers whose usage exceeds their post-diverted supply will be assessed noncompliance charges. Compliance will be based on the following:

• Noncore end-use customers with Automated Meter Reading (AMR) - actual daily metered usage and post-diverted supply event is called and original supply before Involuntary Diversions

• Noncore end-use customers without AMR - actual daily metered usage and post diverted supply
• Noncore Balancing Aggregation Agreement (NBAA) agents - aggregated actual daily metered usage and aggregated post-diverted supply
• Core Procurement Groups - latest available core load forecast prior to the time the event is called and original supply before Involuntary Diversions

Total Noncompliance Charges during Involuntary Diversions are ($100 plus the Daily Citygate Index)/Dth. This includes the following components:

• EFO Noncompliance Charge of ($50 plus the Daily Citygate Index)/Dth
• Diversion Usage Charge of $50/Dth.

Backbone transmission customers whose supply is diverted during Involuntary Diversions receive the following compensation:

• Holders of as-available backbone transmission capacity will receive a credit based on the current market price of the diverted supply on the day of the diversion. Please refer to gas Rule 14 for the calculations used to determine the market price.

• Firm backbone transmission contract holders will receive a credit of $50/Dth.

When Involuntary Diversions are called, Pacific Gas and Electric Company will notify gas suppliers via the same channels used for OFO notification. Pacific Gas and Electric Company will take the following actions:

• Pacific Gas and Electric Company will notify gas suppliers which nomination cycle the diversion pertains to.
• Once processing of nominations is complete and scheduled deliveries with interconnecting pipelines are finalized, Pacific Gas and Electric Company will determine which backbone transmission supplies will be diverted.
• Upon completion of the diversion process, Pacific Gas and Electric Company will make the following reports available through INSIDEtracc:
  • Confirmed Nominations and Scheduled Volumes (110 Report)
  • Involuntary Diversion Summary by Transportation Exhibit (902 Report)

It may be several hours before these reports are available since supply information will not be final until the scheduling and diversion processes have been completed. Pacific Gas and Electric Company will notify customers via INSIDEtracc and the Pipe Ranger Web site when these reports are available.

It is crucial that suppliers understand their role during Involuntary Diversions. The following information and suggestions may be helpful in preparing for these events:

• Discuss with noncore end-use customers the potential that their supply may be diverted depending on the type of transmission service under which the supply is flowing.
• Be familiar with the usage needs of each individual noncore end-use customer within the NBAA.
• Pacific Gas and Electric Company is not required to inform individual noncore end-use customers within the NBAA that their supply has been diverted. Pacific Gas and Electric Company may contact noncore customers, providing them with post-diverted supply, and monitor use to ensure system integrity.
• Prepare an Involuntary Diversion notification plan for each customer within the NBAA. Include a 24-hour customer contact/alternate contact list designating which employee within your company will perform notifications. Include the method of notification to be used, such as phone, e-mail, fax, etc.
• Plan in advance which customers should reduce usage in order to maintain a balance between total usage and total post-diverted supply under the NBAA.
• Be prepared to notify NBAA customers of when, what time and for what duration to reduce usage. Keep in mind that post-diverted supply volumes will apply to the meter readings beginning at 12:00 midnight, Pacific time, on the day of the Involuntary Diversion notification.
• When assigning nomination destination rankings, keep in mind that any gas remaining after the diversion process is completed will be reallocated based on destination ranking. Once notification of a diversion is issued, destination rankings cannot be altered.
• Discuss each noncore end-use customer’s ability to reduce usage during Involuntary Diversions and consider potential diversion credits and/or noncompliance charges as part of those discussions.
• In order to minimize the risk of service interruptions, nominate to each end-use customer.

Following the diversion process, noncore end-use customers may be required by their supplier to reduce gas usage depending on the supplier's remaining gas supply. The following suggestions may help noncore end-use customers prepare for such a request:

• Discuss with your supplier the type of transmission service level you require.
• Plan in advance how you will reduce usage if you receive a request from your supplier to do so.
• Discuss with your supplier how you will be notified of the need to reduce usage, as Pacific Gas and Electric Company is not required to inform the individual noncore end-use customers within an NBAA that their supply has been diverted.