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Gas Accord Unlocks PG&E Market Hold

Fortnightly Magazine - October 15 1997

The California Public Utilities Commission has approved "Gas Accord," a settlement that enhances competition by restructuring the way natural gas is bought, sold and transported (Decision 97-08-055, Docket A.92-12-043).

"This is a landmark step to further deregulate the natural gas industry here in California," said Jack Jenkins-Stark, PG&E senior v.p. "These changes parallel those in the electric industry."

The collaborative settlement unbundles rates for transporting natural gas on PG&E's system.

Signed by PG&E and about 25 gas industry participants and regulatory agencies, the agreement resolves issues concerning the utility's October 1991 decision to build Line 401. The line is the intrastate portion of a natural gas pipeline from Alberta, Canada to Kern River Station near Bakersfield, Calif. PG&E will pay about $300 million to settle lawsuits by potential competitors.

Since 1988, California's large industrial customers have had the option of buying natural gas directly from the supplier of their choice or paying PG&E only for transmission and distribution costs. Residential and small commercial customers have recently had the option of buying natural gas from suppliers other than PG&E, but participation has been minimal. The Gas Accord should remove market barriers and give all customers options to buy natural gas from suppliers other than PG&E.

The PUC said PG&E favored instate pipelines carrying Canadian gas supplies, rather than pipelines accessing California producers and Southwestern U.S. suppliers. The PUC adopted a discounting rule to allow fair competition. Now, whenever PG&E offers a discount on instate transportation for Canadian gas, it must offer the same discount on pipelines transporting Southwestern and California gas. (em LAB

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