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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.
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cc:
Mayor Wilcox
r.)~~:;~ttorney
LI'Z1~
-'S'HAUNA CLARK
City Clerk
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BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE
STATE OF CALIFORNIA
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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
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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.
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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
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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