The California Public Utilities Commission has approved an agreement that will resolve a multifaceted case concerning pricing of services and operation of intrastate natural gas pipeline facilities by Pacific Gas and Electric Co.
The agreement, known as the "Gas Accord," also initiated significant changes in the way PG&E operates its business by increasing competition and customer choice. To mitigate the effects of market power held by the company, the commission imposed a series of discounting restrictions on PG&E.
As reported earlier ("Gas Accord Unlocks PG&E Market Hold," Headlines, Oct. 15, p. 12), the case involve issues concerning PG&E's 1991 decision to build Line 401, 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.
To increase competition, PG&E will unbundle rate and service options for gas transmission and distribution systems. The restructuring will leave shareholders at risk for earnings on the transmission portion of its business. (The utility's service territory is served by an integrated high-pressure transmission system that resembles and an interstate gas pipeline system more than a typical local distribution system. The unbundling plan will permit PG&E to operate those facilities similar to an interstate pipeline and to continue to provide distribution service to individual customers.)