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HomeMy WebLinkAbout49-Council Office o o o o COUNCIL ACTION CORRESPONDENCE To Councilman Steve Marks, Chairman Ways and Means Committee Date October 21, 1986 Sub~ Southern California Gas Company Application No. 86-09-030 & Application No. 86-09029 for Increase in Rates Meetingoate October 20, 1986 Agenda Item No:4 5 , Action The report from the WaY$ and Means Committee regarding Application Nos. 86-09-030 and 86-09-02!f'oftne Southern California Gas Company for rate increases, was continued to November 3, 1986. -----,._._-_........._."""..-~;,.._.-_.,.._.".-...._.._._., ,.~.... ..- ."'..._--~...,.... SC:dc cc: Mayor Wilcox r.)~~:;~ttorney LI'Z1~ -'S'HAUNA CLARK City Clerk 1r. , c o o o co: BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ~ :;,'-' I L_ L.:.-: "'- SOUTHERN CALIFORNIA CAS COMPANY NOTICE TO CUSTOMERS OF FILING OF APPLICATION AND PUBLIC HEARING IN APPLICATION NO. 86-09-030 and APPLICATION NO. 86-09-029 s <"~ The California Public Utilities Commission (Commission) will hold public hearings on the request of Southern California Gas Company (SoCalGas) to increase its rates effective January 1, 1987. The requested rate increase is msde up of several elements. First, Application No. 86-09-030, filed September 19, 1986, requests Commission approval to increase rates by $304.3 million in the November 1986 Consolidated Adjustment Mechanism (CAM). In addition, SoCalGas seeks recovery of $9.7 million it expects to be billed during the forecast period by El Paso Natural Gas Company. Application No. 86-09-030 reflects changes in the cost of gas to be purchased by SoCalGas and gas costs already incurred by SoCalGas, but not yet recovered in rates. Second, SoCalGas filed on September 19, 1986, Application No. 86-09-029 requesting a reduction in rates of $53.4 million to be effective January 1, 1987. This is pursuant to the Commission authorized Conservation Cost Adjustment Mechanism and reflects lower costs associated with previously-authorized conservation programs. Third, SoCalGas filed Advice Letter No. 1653 on September 19, 1986, requesting an increase in rates of $27.9 million as an attrition allowance effective January 1, 1987. In turn, SoCalGas will reduce the balancing account in 1986 by $15.3 million to reflect reduction in return on equity for 1986. An attrition allowance adjustment is authorized by Commission Decision No. 85-12-076 to offset the effect of inflation and other economic factors on the utility's cost of doing business between general rate cases. SoCalGas is requesting that the CAM increase be made effective on January 1, 1987, rather than its normal revision date of November 1, 1986 in order to make all of these rate changes simultaneously to avoid multiple rate changes within a short time period. The combined effect of these rate changes would be a net increase in rates of $277.9 million. SoCalGas has under recovered revenues because some large customers capable of burning oil have switched from gas to oil due to low oil prices. In addition, dramatically lower oil prices have meant SoCalGas had to drastically lower gas prices to retain these customers. When oil prices (and corresponding gas rates) were higher, the revenue from these large customers could subsidize a larger portion of the costs of providing service to residential customers. Although gas prices are lower than they used to be, they are not low enough to allow uS to sell gas at a price competitive with oil and still recover adequate revenue from large customers to subsidize residential customers to the same extent as before. ~ 4 ~ .Jl L c o 2 o o SoCalGas is requesting the net rate increase be recovered by increasing the monthly residential customer charge to $6.30 from the current $3.10, to more nearly cover the cost of providing service to residential customers. SoCalGas has also requested a reduction in the residential baseline allowances in accordance with the baseline statute. The revised monthly baseline allowances would be: SU1IIDer-19 therms for all climate zones; Winter-Climate Zone 1: 55 therms; Climate Zone 2: 72 therms; Climate Zone 3: 95 therms. No change in residential commodity rates is proposed. The effect of the proposed rate adjustment would increase the annual monthly average single family residential customer's bill from $27.84 to $36.46. Pursuant to Commission-set rate design formula, SoCalGas has also proposed to reduce rates to wholesale customers by $4.1 million. This reduction of wholesale revenues means a corresponding increase in retail revenue re qui rement s, If SoCalGas' request is approved by the Commission as proposed, the impact on various customer classes will be as follows: Class of Service M$ Increase (Decrease) % Increase (Decrease) Residential Commercial/Industrial Wholesale 282,688 (716) (4,058) 19.308 (0.062) (1. 308) Total 277 ,914 7.868 The actual rates adopted by the Commission could differ significantly from those requested by SoCalGas and may result in an increase or decrease in your individual rates. The public hearing date listed below gives customers an opportunity to express their views to the Commission. You may submit written comments or make a brief oral statement at these hearings. ' DATE AND LOCATION OF PUBLIC HEARING IN CAM APPLICATION NUMBER 86-09-030 AND CCA APPLICATION NUMBER 86-09-029 BEFORE THE CALIFORNIA PUBLIC UTILITIES COMMISSION Wednesday, October 22, 1986 at 10: 30 a.m. State Office Building 107 South Broadway Los Angeles, California 90012 - ~ - ~ - ~ - . e o 3 o o The Commission welcomes your comments. If you cannot attend these hearings, you may submit written comments to the Commission at one of the addresses listed below, Simply state that you are writing about Application Nos. 86-09-030 and 86-09-029 of Southern California Gas Company. Places of hearing are accessible to the handicapped. A copy of SoCalGas' application may be inspected in its local business offices or at its headquarters or at the Commission offices located at the addresses listed below. Additional hearings days will be devoted to analyzing the need for the required rate increase and ways of allocating any approved increases among residential, commercial/industrial, wholesale and utility electric generation customers, At these hearings the Commission will receive testimony of SoCalGas, and the testimony of other interested parties, and the commission Staff. The Commission staff consists of engineers, accountants, economists and attorneys who independently evaluate the proposals of utilities and present their analyses and recommendations to the commission at public hearings. If you would like to participate in these proceedings and need advice on how to do so write to the Public Advisor, California Public Utilities commission, 505 Van Ness Avenue, San Francisco, ~, 94102. Further information may be obtained from SoCalGas at its headquarters at 810 South Flower Street, Los Angeles, ~, 90017, its local business offices, or from the Commission offices at: 505 Van Ness Avenue San Francisc0, ~ 94102 or 107 South Broadway, Room 5109 Los Angeles, ~ 90012 Any interested party in the above application and related exhibits will be furnished a copy upon written request to: Frederick E. John, Vice President Regulatory Affairs Southern California Gas Company P. O. Box 3249, Terminal Annex Los Angeles, ~ 90051