SoCalGas Defends Acts in Energy Crisis

Southern California Gas Co. takes exception to Michael Hiltzik’s characterization of our role in serving the natural gas customers of Southern California (“Competition in Natural Gas Market Is Shut Off,” March 31). He mischaracterized and distorted SoCalGas’ role and intentions in the market.

To suggest that we somehow squelched competition to create profit for our shareholders is dead wrong.

First, our commitment is to provide safe, reliable natural gas service at low cost. That has been our guiding mission over our 135-year history. During the energy crisis, it was no different.

Using a combination of stored natural gas, interstate transportation capacity and prudent gas-purchasing strategies, we were able to prevent most of the high gas costs from affecting our customers.

Between November 2000 and March 2001, SoCalGas’ residential, small- and medium-sized business customers paid one-third less for natural gas than the statewide cost of gas paid by customers of other utilities in California -- a net savings to our customers of more than $700 million.

These savings were made possible by actions SoCalGas took under a regulatory pro- gram administered by the California Public Utilities Commission that incentivizes investor-owned utilities to reduce rates for customers, not raise rates. We have a long track record of keeping our gas costs below the national and statewide average. And that’s exactly what we did during the energy crisis.

Second, Hiltzik makes an argument for large gas users to shift their share of the costs of maintaining our pipeline system to residential and small-business customers. If the PUC had endorsed Hiltzik’s and Questar Corp.’s recommendations, our 5 million residential and small-business customers would be paying higher bills so that a handful of large commercial and industrial customers could take service from another pipeline.

Under Questar’s proposal, SoCalGas would be required to provide standby service for these large customers served from an alternative pipeline. These large customers would effectively receive a deep discount, at the expense of our residential and small-business customers.

Finally, Hiltzik referenced allegations from pending civil litigation. The meeting he outlined took place between the Gas Co. and El Paso Corp. but did not cover issues Hiltzik and plaintiffs’ attorneys allege. Instead, the purpose of the meeting was to discuss ways to better utilize the pipeline system serving Southern California with the objective to keep our customers’ costs as low as possible.

By keeping our customers’ costs low, we make our service -- the delivery of natural gas -- more competitive with other forms of energy.

While the plaintiffs’ position is quoted as though it is pure fact, Hiltzik seemed to cast doubt on SoCalGas’ position by describing the company as “loudly” denying all allegations. We do indeed deny these allegations, softly, loudly and in a moderate voice, for they are meritless and without foundation.

The facts in this case will bear us out. We ask only that Hiltzik not act as judge and jury, especially before all the evidence is on the record and a verdict is delivered.

Steven D. Davis

Senior Vice President

Southern California Gas Co.

San Diego