You've heard talk lately about the convergence of electricity and natural gas. That idea has grown as commodity markets have matured for gas and emerged for bulk power.
In a case involving San Diego Gas & Electric Co. (SDG&E), the California Public Utilities Commission (CPUC) has OK'd new guidelines for preapproved contracts designed to obtain, attract, or retain new electric customers. The guidelines also apply to contracts designed to stem self-generation or avoid customer flight out of state.
The CPUC also will allow SDG&E to negotiate a rate discount contract with any customer, for any purpose, as long as shareholders absorb 100 percent of revenue losses and rates reflect a price floor based on customer-specific marginal cost.
The guidelines fix a 10-year term limit for the preapproved load retention contracts. They also assign 50 percent of any associated revenue loss to shareholders. In addition, customers must be informed that they will be responsible for any competitive transition charges approved by the CPUC. Contract sales are limited to a maximum of 100 megawatts of load.
Other rate discounts must still pass the CPUC's established approval process. For such contracts, SDG&E must input revenues as if charged at the applicable tariffed rate when calculating the national rate comparison under its performance-based rate plan. Re San Diego Gas & Elec. Co., Application Nos. 91-11-024, 95-10-006, Decision 96-06-033, June 6, 1996 (Cal.P.U.C.).
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