Details for: SDGE Reply to Protest - AL 2633-G.pdf


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Clay Faber - Director
Federal & CA Regulatory
8330 Century Park Court
San Diego, CA 92123-1548
CFaber@semprautilities.com

January 9, 2018
Energy Division Tariff Unit
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, California 94102
Re:

Reply to Protest of Advice Letter (AL) 2633-G: Modifications to the Transportation
Imbalance Tariff – Schedule G-IMB

Energy Division Tariff Unit:
Pursuant to General Rule 7.4.3 of the California Public Utilities Commission’s (“Commission”)
General Order 96-B, San Diego Gas & Electric Company (“SDG&E”) hereby submits its Reply
to the Protests by Shell Energy North America (US), L.P. (“Shell Energy”) and Southern
California Edison Company (“SCE”) to SDG&E Advice Letter (“AL”) 2633-G.
BACKGROUND
On December 12, 2017, SDG&E filed AL 2633-G proposing revisions to Schedule G-IMB Transportation Imbalance Service. The purpose of the filing was to modify the index used in the
calculation of Schedule G-IMB’s Standby Procurement Charge to be the Southern California
Citygate rather than the Southern California Border. Other than tariff filings to modify the
entities providing the indices relied upon in the Standby Procurement Charge due to changing
licensing issues, the Standby Procurement Charge has not been modified since 2003, when AL
1359-G established the current methodology and structure for calculating the Standby
Procurement Charge.
Summary of Protests
Shell Energy
Shell Energy does not oppose a move to basing the Standby Procurement Charge on the SoCal
Citygate index rather than the SoCal Border if the charge were based on an average monthly
price rather than a highest daily price and if the 150 percent factor were removed.1 Shell
Energy believes that the SoCal Citygate price as a reference price for the Standby Procurement
Charge is sufficient incentive.2 Shell Energy recommends that any modification of the Standby
Procurement Charge to use SoCal Citygate prices instead of SoCal Border prices should be
temporary and revert back to its current calculation when the Commission determines that

1
2

Shell Energy Protest to AL 2633-G at p. 4.
Id. at p. 3.





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Public Utilities Commission January 9, 2018 SoCalGas’ transmission outages no longer significantly impair gas deliveries to the SoCal Citygate.3 SCE SCE believes there is no evidence provided that noncore balancing agents and Core Transport Agents (CTAs) require greater incentive to schedule within their respective tolerances.4 Additionally, SCE states that the occasional price spread greater than $1.00 between the SoCal Border and SoCal Citygate indices are likely not relevant.5 SCE states that SDG&E has not demonstrated why its low OFO and Emergency Flow Order (EFO) procedures are inadequate.6 SCE requests that the Commission hold at least one workshop to discuss whether price spikes are systemic or temporary due to SDG&E’S system conditions, as well as the frequency of low and high OFOs and other operational issues.7 SDG&E’S REPLY Provision of the Standby Procurement Charge In considering the merits of AL 2633-G, it is important to remember that the Standby Procurement Charge applies to customer imbalances that occur at the SoCal Citygate, not at the SoCal Border. Accordingly, standby gas is provided to customers at the SoCal Citygate, not at the SoCal Border. Thus, the SoCal Citygate is the appropriate index location to use in the Standby Procurement Charge calculation. AL 2633-G describes how this modification will provide the proper incentive to all customers, including noncore balancing agents and CTAs, to schedule within their respective tolerances and cure their imbalances. AL 2633-G further contends that, without proper incentives, customers may choose to underdeliver gas supply. SDG&E believes that the index used to set the price for standby gas should be the index for the location at which the provision of the gas is made. Shell Energy’s Recommendations Shell Energy requests that the Standby Procurement Charge be modified to be based on the average monthly Citygate price, rather than the highest daily Citygate price. Shell Energy also recommends that the 150% multiplier be removed from the calculation as well. The current Standby Procurement Charge calculation that was requested and approved in AL 1359-G was modeled after Southern California Gas Company’s (SoCalGas) Standby Procurement charge approved by Resolution (Res.) G-3316.8 As noted previously, the only change SDG&E is seeking in this AL is to update the calculation approved in AL 1359-G to use the more appropriate index, which matches the location at which the imbalance occurs. Anecdotally, Id. at p. 4. SCE Protest to AL 2633-G at p. 2. 5 Id. at p. 2. 6 Id. at p. 2. 7 Id. at p. 5. 8 SoCalGas is making a related filing, Advice No. 5232, proposing the same modification to its Schedule No. G-IMB that SDG&E is requesting in AL 2633-G. 3 4 2
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Public Utilities Commission January 9, 2018 basing the Standby Procurement Charge on average monthly prices and excluding the 150% multiplier would only serve to decrease the effectiveness of the incentive. Additionally, SDG&E disagrees with Shell Energy’s recommendation that the proposed modification of the Standby Procurement Charge calculation be a temporary change that is contingent on when the Commission determines that transmission outages no longer significantly impair gas deliveries to the SoCal Citygate. System conditions do not change the reality that the Standby Procurement Charge applies to imbalances that occur at the SoCal Citygate, not at the SoCal Border. Need for the Proposed Change SCE is concerned that the reason for the proposed modification is speculative. SDG&E cannot predict how SoCal Citygate prices will compare to SoCal Border prices in the future. However, SDG&E has recognized the upward volatility of SoCal Citygate/SoCal Border price spreads in recent months, and does not believe it should wait until spreads potentially climb to a magnitude that makes its Standby Procurement Charge ineffective to propose a change. To SCE’s point, SDG&E noted recent spreads greater than $1.00/Dth between the SoCal Border and SoCal Citygate indices simply to illustrate that the spreads between these two indices are sometimes much greater than the current cost of BTS. SDG&E believes it is prudent to act now to align the Standby Procurement Charge with the location of the imbalance. SCE also asserts that SDG&E’s existing low OFO and EFO rules are effective to prevent the noted harm. While the low OFO tools provide the proper incentive to schedule deliveries within tolerance on days in which a low OFO has been called, SDG&E’s declaration of a low OFO is done in accordance with its gas rules. For the months of September through November of 2017, there were low OFO Declarations on only 11 out of 91 days. If system conditions do not justify the declaration of a low OFO, then SDG&E must depend on other factors to ensure proper incentives. Finally, SCE proposes a workshop to discuss whether price spikes are systemic or temporary due to system conditions as well as the frequency of low and high OFOs and other operational issues. System conditions should not be a determining factor in deciding how the Standby Procurement Charge is calculated. Again, the Standby Procurement Charge applies to imbalances that occur at the SoCal Citygate, not at the SoCal Border; the Standby gas is provided at the SoCal Citygate, not the SoCal Border. The appropriate index to use for the Standby Procurement Charge should not be contingent on system conditions. 3
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Public Utilities Commission January 9, 2018 CONCLUSION For the reasons stated in this Reply and in SDG&E’s AL 2633-G, SDG&E respectfully requests that the Commission approve AL 2633-G as filed. CLAY FABER Director – CA & Federal Regulatory cc: Edward Randolph – Director, Energy Division John Leslie – Attorneys for Shell Energy North America (US), L.P. Russel G. Worden – Southern California Edison Energy Division Tariff Unit Service List A.15-06-020 & A15-07-014 4
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