News

On May 18, 2000, the California Public Utilities Commission (CPUC) approved the Comprehensive Gas OII Settlement Agreement filed by Pacific Gas and Electric Company and 26 other parties.

Both the recent OFO Settlement and the OII Settlement are results of a 1998 CPUC investigation which identified the "most promising options" for restructuring the state's natural gas industry.

Some of these options were addressed through the OFO Settlement. This OII Settlement offers PG&E's customers ten additional service options. The service customers currently receive is not expected to be impacted unless they choose to participate in one of the new options.

PG&E expects to file tariffs implementing the OII Settlement mid-July, 2000. These tariffs may become effective as early as October 1, 2000. Some of the new options offered by the OII Settlement will be effective on this date, but most will not be implemented until 2001.

Each of these new options is summarized below, including target implementation dates. Target implementation dates are estimates only and subject to change.

Self Balancing
Target Implementation Date: April 1, 2001 with elections February 2001

Currently Pacific Gas and Electric Company allocates 2.2 Bcf of storage inventory to pipeline balancing. Customers are responsible for balancing their load on a monthly basis.

By choosing self balancing, customers withdraw from Pacific Gas and Electric Company's bundled balancing service and receive a $0.005/Dth credit. Customers choosing this option are required to balance their load to within plus or minus 10% on a daily basis or face a $1.00/Dth penalty. In addition, customers who self balance may not have an accumulated daily imbalance that exceeds 1% of their predetermined monthly use at any time during the month or they face an additional $1.00/Dth penalty. On OFO days, self balancing customers must comply with the OFO tolerance band rather than the 10% daily limit.

Pacific Gas and Electric Company's California Gas Transmission will market balancing capacity made available by those choosing self balancing.

Anonymous Monthly Imbalance Trading
Target Implementation Date: February 2001

Currently customers with imbalances are responsible for finding partners and negotiating the prices and volumes of their trades. With this new option customers may choose to anonymously and electronically trade their imbalances.

Utilizing Altra Energy Technologies, Pacific Gas and Electric Company will offer balancing agents the ability to post either a bid to purchase or an asking price to sell imbalance gas. When two parties agree on price and volume, Altra will manage the transaction by adding imbalance gas to the buyer's account and subtracting imbalance gas from the seller's account. Customers are then billed or paid accordingly, using the figures from the electronic trade. Altra will notify Pacific Gas and Electric Company of the transaction and Pacific Gas and Electric Company will update its records.

Customers choosing to use this trading platform will be charged a trading fee by Altra.

Trading OFO Day Imbalance Rights ("Chip Trading")
Target Implementation Date: February 2001

This new option gives customers an additional opportunity to reduce OFO charges by trading imbalance rights from the previous month's OFO days. At the end of each month Pacific Gas and Electric Company will calculate, for each OFO day, the amount in decatherms each balancing entity is within its allowable OFO tolerance band. Pacific Gas and Electric Company will assign imbalance rights (or "chips") for each decatherm that an entity's imbalance is below its OFO tolerance band for the given OFO day.

Chips may be bought and sold at market prices on the Altra trading platform for a fee. Each OFO day is mutually exclusive; chips may only be traded with chips from the same OFO date.

At the end of the chip trading period each customer's imbalance for a given OFO day will decrease by the number of chips purchased. If a customer's imbalance has been reduced such that it is no longer outside the OFO tolerance band, no OFO penalties will be charged. If the imbalance remains outside of the OFO tolerance band, the balancing entity will be billed OFO charges for the adjusted imbalance.

Unbundle Utility Storage Costs for Core Customers Served by Core Transport Agents (CTAs)
Target Implementation Date: December 1, 2000

Currently, CTAs are allocated a share of core firm storage assets. With this new option CTAs may accept or decline their annual allocation of core storage. If the allocation is declined, the CTA must provide peaking service from another acceptable source and documentation of the alternate resource with Pacific Gas and Electric Company.

CTAs may adjust their annual election for increases or decreases in loads during an Intra-Year Adjustment period. Participation in the program is initially capped at 5% of core storage capacity, with a 5% annual increase through March 2003. The first 5% declined by CTAs will be returned to Pacific Gas and Electric Company Core Procurement Department. Any volumes declined beyond this level will be marketed by Pacific Gas and Electric Company California Gas Transmission.

Establish a Secondary Market Trading System
Target Implementation Date: February 1, 2001

Today, shippers may post a public text message on INSIDEtracc announcing their interest in the purchase or sale of Pacific Gas and Electric Company transmission capacity. The transaction is negotiated and completed separately, usually during a phone call between the two parties.

Using the new option, customers can electronically trade Pacific Gas and Electric Company transmission capacity in the secondary market. Altra will develop a system to allow electronic secondary buyers and sellers to anonymously post bids and offers for capacity. Once a buyer and a seller agree on price, Altra will clear the transaction, notify Pacific Gas and Electric Company of the trade and post the trading price to provide price discovery. Altra will charge a fee for trades completed using its system.

Provide Real-Time, Customer Specific Usage Data
Target Implementation Date: Survey conducted Summer 2000

Pacific Gas and Electric Company will survey the marketplace to determine the level of interest in fee-based access to additional real-time usage data. Pacific Gas and Electric Company will survey the market's interest in three alternatives:

1. Dial-in access to automated meter read (AMR) data
2. An internet web page of meter access options
3. Internet access to full AMR data

Dial-in access to AMR data would use specific software to dial into Pacific Gas and Electric Company AMR-equipped meters and download recent hourly metering data. The internet web page of meter access options would provide customers information concerning electronic access to their own meter data. The page would provide cost estimates, equipment specifications, installation fees and other related information. Internet access to full AMR data would provide customers their AMR data in hourly increments for the previous gas day via the Internet.

Pilot Program for Customer Meter Ownership and Meter Choice
Target Implementation Date: Effective with OII Settlement implementation tariffs

For new meter installations at noncore customer facilities, the customer may own its gas meter. This ownership option does not apply to the replacement of an existing Pacific Gas and Electric Company owned meter. The meter model must be approved by Pacific Gas and Electric Company and customers will be responsible for any incremental costs incurred by Pacific Gas and Electric Company to install or maintain the meter.

Pilot Program for Customer Ownership of Meter Add-Ons
Target Implementation Date: Effective with OII Settlement implementation tariffs

Customers may own add-on devices to Pacific Gas and Electric Company meters for the purpose of accessing meter data for internal use or for providing data to a third party. Customers are responsible for all costs associated with meter add-on devices.

Termination of Informational Bill Requirement
Target Implementation Date: Effective with OII Settlement implementation tariffs

CTAs performing consolidated billing may choose to include the required Pacific Gas and Electric Company provided charges, bill inserts, customer protection information and market-index commodity prices in end-use customer bills, eliminating the need for Pacific Gas and Electric Company energy statements containing the same information. For CTAs contracting to provide this information, Pacific gas and Electric Company will no longer send an informational bill to those CTAs' customers. Customers of contracted CTAs will receive monthly gas bill credits of $0.71 for each residential customer and $1.00 for each commercial customer.

Billing Credits for CTA-Consolidated Billing
Target Implementation Date: Effective with OII Settlement implementation tariffs

End-use customers aggregated under a CTA will receive an avoided cost gas billing credit to their transportation rate. If an Energy Service Provider (ESP) is also a CTA and performs both gas and electric consolidated billing, the ESP's dual-commodity customer will receive both the CTA consolidated gas billing credit and the applicable electric credit.

Most Promising Options Already in Place for Pacific Gas and Electric Company

The OII Settlement specifically recognizes that Pacific Gas and Electric Company has established a number of "most promising options" identified by the CPUC. Further discussions of these issues may occur for the post-Gas Accord period. They include:

1. Create firm, tradable intrastate transmission rights
2. Establish a secondary market for intrastate transmission capacity
3. Place the utility at risk for unused transmission resources
4. Create firm, tradable storage rights
5. Establish a secondary market for intrastate storage capacity
6. Place the utility at risk for unused storage resources
7. Separate utility hub services from procurement functions
8. Unbundle utility interstate capacity costs for core customers
9. Eliminate core subscription service

Several Options Deferred to Future Discussions

The OII Settlement recognizes that a number of "most promising options" and other issues need not be addressed by the OII Settlement. However, parties expect discussions to continue and resolution to be reached in other proceedings. Specifically, the deferred options are:

1. Develop clear procedures for allocating firm capacity
2. Revise Pacific Gas and Electric Company's transmission interconnection policy, terms and conditions
3. Revise Pacific Gas and Electric Company's electric generation rate design
4. Review Pacific Gas and Electric Company's local transmission reliability, design standards and curtailment provisions
5. Investigate mechanisms to reduce the costs of transmission service for noncore customers connecting to or located close to Pacific Gas and Electric Company's backbone transmission facilities

If you have any questions, please call your CGT Account Services Representative.